Mr. Scott Burton reports

FANSUNITE CEO PROVIDES YEAR END CORPORATE UPDATE

Fansunite Entertainment Inc. is sharing the following corporate update from its chief executive officer, Scott Burton.

As we approach the close of the fiscal year, I want to provide a comprehensive update on the performance and trajectory of Fansunite. Despite the widespread business and macro-economic challenges experienced by many businesses this year, Fansunite has remained resilient and has taken the necessary steps to ensure the company's future.

Strategic response to challenges through successful restructuring

In response to the market challenges over the past year, our team implemented a comprehensive restructuring plan. This initiative was aimed to optimize our operations, streamline processes and align our resources within the dynamic market landscape. The unwavering commitment displayed by our team has played a pivotal role in our successful turnaround. This restructuring plan has also led to the divestment of a number of our assets deemed to be non-core to our future business.

Sale of BetPrep

In February, 2023, Fansunite sold BetPrep, one of the company's affiliate brands, to Stram Entertainment Ltd., doing business as BestOdds. As part of the transaction, BestOdds agreed to pay Fansunite a 30-per-cent revenue share for 36 months subject to a minimum monthly guarantee, after the agreed upon ramp-up period, which ended on Sept. 1, 2023.

Sale of McBookie Ltd.

In May, 2023, Fansunite sold McBookie Ltd., a Scottish-focused sports book and on-line casino in the United Kingdom, for over $5-million in cash. The company recognized a significant profit after initially acquiring McBookie in March, 2020, for a total consideration of $2.2-million, which included a cash payment of approximately $1-million.

Sale of Chameleon gaming platform

In May, 2023, Fansunite sold the source code of its business-to-business Chameleon gaming platform to Betr Holdings Inc. for $10-million in total consideration, which included $3-million in cash, $2-million in Series A2 preferred shares of Betr and milestone payments of up to $5-million payable over 12 months following the closing of the transaction. Fansunite retained the use of the Chameleon gaming platform and source code to further develop and maintain the platform as well as the ability to sell such developments to another buyer in the future.

In September, 2023, Fansunite migrated DragonBet, a Welsh-based U.K. sports book, off the Chameleon gaming platform. This completed our transition away from B2B platform licensing.

Strategic investment

In March, 2023, management elected to accept additional strategic capital to support the business until the company could realize the full cost savings of such asset sales.

During the month, the company closed a $3.04-million private placement of 37,976,242 units of the company at an issue price of eight cents per unit. The financing was led by a strategic investor group, Tekkorp Capital and affiliates, an investment firm that advises and invests in innovative public and private companies within the global digital gaming industry, which itself acquired 13.75 million units. In addition, insiders, management and employees of the company acquired 4,304,742 units, resulting in a total of $1.4-million invested into Fansunite by both Tekkorp and Fansunite's insiders and management.

Strong gross margin and adjusted earnings before interest, taxes, depreciation and amortization growth

During Q3 2023, results began to highlight the positive results from the strategic initiatives we undertook throughout the first half of 2023.

For the nine-month period ended Sept. 30, 2023, the company generated an adjusted EBITDA of $1.1-million, an increase of $2.3-million year over year, while producing a gross margin of 63 per cent, an increase from 54 per cent in the prior year's comparative period. The improved margin was primarily driven by the sale of lower-margin, cash-burning assets such as the Chameleon gaming platform. The strategic divestment of iGaming assets will result in annualized cash savings of $7.8-million.

Attainment of cash flow positivity

I am pleased to announce a significant achievement resulting from our rigorous restructuring efforts and the dedication of our team -- Fansunite has been generating positive operating cash flows since the start of fourth quarter 2023. This accomplishment not only underscores our adaptive capacity but also positions us for sustained success in the years ahead.

Financial stability and self-sufficiency

Despite prevailing economic uncertainties, I am pleased to confirm that Fansunite currently stands in a financially stable position. The combination of positive cash flow and judicious financial management has removed the need for us to seek new capital injections at this time. This financial autonomy allows us to concentrate on our core objectives without the encumbrance of fundraising activities.

Strategic pivot toward growth

With a solid foundation now firmly in place, Fansunite is strategically poised to redirect its focus toward growth. Our market analysis and strategic planning have identified key opportunities that align with our strengths and objectives in the affiliate space.

Gratitude to the team and board

A special acknowledgment needs to be extended to our dedicated team. Their hard work, adaptability and resilience have been instrumental in driving our successful restructuring and path to profitability. Each team member has played a pivotal role in navigating challenges and contributing to the positive outcomes we can celebrate.

Our board of directors has shown unwavering support and guidance throughout the year. Its strategic insights and dedication to our long-term vision have been indispensable, and we express our deep appreciation for its continued hard work.

Looking forward

In conclusion, while this year posed its challenges, the strategic decisions we've made, coupled with the dedication of our team, have positioned Fansunite for a positive future. We eagerly anticipate updating you on our continued progress and success in the forthcoming quarters.

Thank you sincerely for your support.

Scott Burton, chief executive officer, Fansunite Entertainment

About Fansunite Entertainment Inc.

Fansunite is a global sports entertainment and gaming company, focused on the regulated and lawful sports betting affiliate market which includes customer acquisition, retention, support and reactivation. Fansunite has established itself as a leader in the North American affiliate market through its subsidiary American Affiliate Co. LLC. AmAff is a North American omnichannel customer acquisition company, covering both retail and digital customer activation for sports books, casinos, poker and fantasy sports platforms.

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