FansUnite Reports Third Quarter 2023 Financial Results

Total revenue for the quarter was $4.8 million, an increase of 12% over the prior year.
Gross margin for the quarter increased to 59%, compared to 50% in the prior year.

Vancouver, British Columbia–(Newsfile Corp. – November 14, 2023) – FansUnite Entertainment Inc. (TSX: FANS) (OTCQB: FUNFF) (“FansUnite” or the “Company”) announced that it has filed its condensed consolidated interim financial statements and associated management’s discussion and analysis (“MD&A”) for the three and nine month periods ended September 30, 2023. All amounts are stated in Canadian dollars unless otherwise indicated.

Q3 Fiscal 2023 Earnings Call Details

Day: Wednesday, November 15, 2023
Time: 10:00 AM (EST) / 7:00 AM (PST)
Topic: FansUnite’s Q3 Fiscal 2023 Financial Results
Registration: https://us02web.zoom.us/webinar/register/WN_o8e4zdIVRoa0gY2rkLrBEg

Third Quarter Fiscal 2023 Financial Highlights:

Total revenue for the three months ended September 30, 2023 was $4.8 million, an increase of 12% as compared to $4.3 million over the same period in the prior year.
Gross margin for the three months ended September 30, 2023 was 59%, an increase of 9% as compared to 50% over the same period in the prior year.
Gross profit for the three months ended September 30, 2023 was $2.8 million, an increase of 27% as compared to $2.2 million over the same period in the prior year.
Total Adjusted EBITDA for the three months ended September 30, 2023 was $0.2 million, an increase of $1.5 million as compared to ($1.3) million over the same period in the prior year.
The Company had net working capital of $1.5 million as of September 30, 2023, as compared to ($4.2) million as of December 31, 2022.

Nine Months Ended Fiscal 2023 Financial Highlights:

Total revenue for the nine months ended September 30, 2023 was $17.2 million, a decrease of approximately 2% as compared to $17.5 million over the same period in the prior year.
Gross margin for the nine months ended September 30, 2023 was 64%, an increase of approximately 10% as compared to 54% over the same period in the prior year.
Gross profit for the nine months ended September 30, 2023 was $10.9 million, an increase of approximately 16% as compared to $9.4 million over the same period in the prior year.
Total Adjusted EBITDA for the nine months ended September 30, 2023 was $1.1 million, an increase of $2.3 million as compared to ($1.2) million over the same period in the prior year.

Third Quarter Fiscal 2023 Operational Highlights:

On August 24, 2023, the Company announced that it reached an agreement with DragonBet, a Welsh-based UK sportsbook, to migrate off the Chameleon Gaming platform on September 3, 2023, as part of the Company’s strategy to streamline its business operations. The migration of DragonBet, combined with the sale of the Company’s Chameleon source code to Betr Holdings, Inc. on May 8, 2023, completed FansUnite’s transition away from business-to-business (“B2B”) platform licensing. As a result of this transition, the Company expects to achieve annualized cost savings of approximately $7.8 million, which includes reductions in salary and selling, general and administrative costs.

“We are pleased to achieve continued growth as highlighted by our financial performance in the third quarter of 2023,” said Scott Burton, CEO of FansUnite. “With a focus on expanding our affiliate business, FansUnite reported substantial increases in our revenues and gross margins during Q3 of this year. These results reflect our strategy to focus on profitability while maximizing our cost efficiencies in all areas of our business.”

Growth Outlook

The Company intends to continue expanding its affiliate operations across North America via Betting Hero by entering new betting jurisdictions as well as growing its additional revenue streams, which include Hero Research and Hero Hotline. Furthermore, FansUnite will continue evaluating new opportunities to achieve cost efficiencies across all business units without disrupting its revenue growth.

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” or “American Affiliate”). AmAff is a North American omni-channel customer acquisition company, covering both retail and digital customer activation for sportsbooks, casinos, poker and fantasy sports platforms.

For further information, please contact:

Prit Singh, Investor Relations at FansUnite
ir@fansunite.com
(905) 510-7636

DISCLAIMER REGARDING FINANCIAL INFORMATION:‎

This news release contains unaudited financial information for the three and nine months ended September 30, 2023, which has been prepared by ‎management based on information currently available to the Company. ‎Accordingly, such financial information may be subject to change based on the results of the Company’s year-end audit. The making of a modifying or superseding statement shall not be deemed an ‎admission for any purposes that the modified or superseded statement, when made, constituted ‎a misrepresentation for purposes of applicable securities laws.‎

FORWARD-LOOKING INFORMATION: ‎

This news release contains certain statements that may constitute forward-looking information ‎under applicable securities laws. All statements, other than those of historical fact, which address ‎activities, events, outcomes, results, developments, performance or achievements that FansUnite anticipates or expects may or will occur in the future (in whole or in part) should be ‎considered forward-looking information. Often, but not always, forward-looking information can ‎be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, ‎‎”scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations ‎‎(including negative variations) of such words and phrases, or statements formed in the future ‎tense or indicating that certain actions, events or results “may”, “could”, “would”, “might” or ‎‎”will” (or other variations of the forgoing) be taken, occur, be achieved, or come to pass. ‎Forward-looking statements in this news release include, but are not limited to, the Company’s strategic objectives, goals, growth outlook, strategy and focus including scaling Betting Hero’s operations across new markets, growing additional revenue streams and identifying opportunities for financial efficiencies.

Forward-looking statements are based on assumptions and analyses made by the Company in ‎light of its experience and its perception of historical trends, current conditions and expected ‎future developments, including, but not limited to, expectations and assumptions concerning: interest and foreign exchange rates; capital efficiencies, cost saving and synergies; growth and ‎growth rates; the success in the online gambling and sports betting industry; the regulatory environment applicable to online gambling and sports betting; the technological infrastructure and support needed to host the Company’s online gambling and sports betting platforms and applications; any cryptocurrency applications to the Company’s business; and the Company’s growth plan. ‎While FansUnite considers these assumptions to be reasonable, based on information ‎currently available, they may prove to be incorrect. Readers are cautioned not to place undue ‎reliance on forward-looking statements. In addition, forward-looking statements necessarily ‎involve known and unknown risks, including, without limitation, risks associated with general ‎economic conditions; audit-risks; risks associated with the regulatory environments in the jurisdictions the Company operates in; technology-related risks that could adversely affect the Company’s ability to operate its online gambling and sports betting platforms and applications, risks related to the novel coronavirus (COVID-19) global pandemic and any effects it might have on the Company’s business thereto. Readers are cautioned that the foregoing list is not exhaustive. For more ‎information on the risk, uncertainties and assumptions that could cause anticipated opportunities ‎and actual results to differ materially, please refer to the public filings of FansUnite ‎which are available on SEDAR+ at www.sedarplus.ca. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and ‎actual results may differ materially from those anticipated. Forward-looking statements ‎contained in this news release are expressly qualified by this cautionary statement and reflect our ‎expectations as of the date hereof, and thus are subject to change thereafter. FansUnite ‎disclaims any intention or obligation to update or revise any forward-looking statements, whether ‎as a result of new information, future events or otherwise, except as required by applicable law.

FansUnite Entertainment Inc.
Condensed Consolidated Interim Statement of Financial Position

Unaudited (CAD – thousands)	Notes	September 30, 2023 $		December 31, 2022 $
Assets
Current
Cash and cash equivalents		2,291		2,914
Restricted cash		74		646
Receivables	3	5,954		4,711
Due from related parties	9	316		376
Prepaid expenses		106		230
Total current assets		8,741		8,877

Non-current
Equipment		–		67
Goodwill	5	20,125		20,664
Intangible assets	4	28,174		47,391
Digital currencies		45		32
Right of use assets		211		359
Deferred tax asset		1,980		–
Long-term investments		2,048		63
Long-term receivables		139		–
Total assets		61,463		77,453

Liabilities
Current
Accounts payable and accrued liabilities	6	4,372		4,539
Due to related parties	9	34		74
Bank indebtedness	7	2,720		8,233
Deferred and contingent consideration	8	16,347		12,138
Lease liability		145		186
Total current liabilities		23,618		25,170

Non-current
Deferred and contingent consideration	8	3,003		8,688
Deferred tax liability		–		459
Lease liability		62		153
Total liabilities		26,683		34,470

Shareholders’ equity
Share capital	11	122,228		121,208
Reserves		20,037		16,567
Accumulated other comprehensive income		3,710		3,750
Deficit		(111,195	)	(98,542	)
Total shareholders’ equity		34,780		42,983
Total liabilities and shareholders’ equity		61,463		77,453

FansUnite Entertainment Inc.
Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

		For the three months ended September 30				For the nine months ended September 30
Unaudited (CAD – thousands)	Notes	2023 $		Restated Note 2(c) 2022 $		2023 $		Restated Note 2(c) 2022 $

Revenue	13	4,822		4,322		17,176		17,469
Cost of revenue		(1,985	)	(2,155	)	(6,250	)	(8,069	)
Gross margin		2,837		2,167		10,926		9,400

Expenses
Selling, general and administrative	14	(7,969	)	(12,431	)	(26,109	)	(32,211	)
Loss before other items		(5,132	)	(10,264	)	(15,183	)	(22,811	)

Other items
Interest and other expenses, net	14	(405	)	(3,145	)	(1,950	)	(9,577	)
Revaluation of contingent consideration		331		51,755		562		51,755

Income tax recovery (expense):
Current		(152	)	212		(153	)	–
Deferred, net		1,081		3,844		2,423		4,478
Net income (loss) from continuing operations		(4,277	)	42,402		(14,301	)	23,845

Loss from discontinued operations, net of income taxes	19	(1,753	)	(13,751	)	(5,833	)	(18,874	)
Gain on disposal of discontinued operations, net of income taxes	19	–		–		7,482		–
Net income (loss) from discontinued operations		(1,753	)	(13,751	)	1,649		(18,874	)

Net income (loss)		(6,030	)	28,651		(12,652	)	4,971

Other comprehensive income
Revaluation gain (loss) on digital currencies		12		10		13		(61	)
Currency translation adjustment		871		3,490		(53	)	4,502
Total comprehensive income (loss)		(5,147	)	32,151		(12,692	)	9,412

Income (loss) per share – basic and diluted
Continuing operations		(0.01	)	0.13		(0.04	)	0.08
Discontinued operations		(0.01	)	(0.04	)	0.00		(0.06	)
Net income (loss)		(0.02	)	0.09		(0.04	)	0.02
Weighted average number of common
shares outstanding – basic and		357,577,800		324,295,194		347,129,849		304,726,288
diluted

FansUnite Entertainment Inc.
Condensed Consolidated Interim Statements of Cash Flows

For the nine months ended Unaudited (CAD – thousands)	Notes	September 30, 2023 $		Restated Note 2(c) September 30, 2022 $
Operating activities:
Net income (loss)		(12,652	)	4,971
Restricted cash		309		(55	)
Adjustments for non-cash items:
Depreciation of equipment		172		134
Amortization of intangible assets	4	14,954		15,686
Impairment loss		113		11,279
Accretion on liabilities	8	1,399		9,358
Revaluation gain on contingent consideration	8	(562	)	(51,755	)
Gain on sale of asset		(3,064	)	–
Gain on sale of business		(4,382	)	–
General & administrative expenses paid with common shares		–		462
Marketing expenses paid with digital currencies		–		10
Unrealized fair value loss on investments		–		153
Share-based payments	12	1,551		5,731
Interest and other income, net		566		17
Deferred income tax recovery		(2,423	)	(4,497	)

Changes in non-cash working capital	17	706		2,608

Net cash flows used in operating activities		(3,313	)	(5,898	)

Investing activities
Payment of contingent consideration	8	(2,288	)	(8,639	)
Proceeds on sale of business	19	5,268		–
Payment of net working capital adjustment		–		(3,802	)
Purchase of intangibles	4	–		(13	)
Proceeds on sale of intangibles	18	3,029		–
Proceeds on sale of investments		–		843
Purchase of equipment		(4	)	(42	)
Net cash flows provided by (used in) investing activities		6,005		(11,653	)

Financing activities
Repayment of lease liability		(133	)	(149	)
Repayment of bank indebtedness		(5,513	)	8,233
Proceeds from brokered financing, net	11(i)	2,965		–
Proceeds from warrant/option exercise		–		73
Repurchase of shares	11(ii)	(25	)	(58	)
Interest paid, net		(662	)	–
Repayments from (payments to) related parties		20		(427	)
Net cash flows provided by (used) in financing activities		(3,348	)	7,672

Effect of foreign exchange		33		481

Change in cash		(623	)	(9,398	)
Cash, beginning of the period		2,914		13,974
Cash, end of period		2,291		4,576