Real Luck Group Ltd.
Management’s Discussion and Analysis
For the 6 months ended June 30, 2022 and 2021
(Expressed in Canadian {dollars})
INTRODUCTION
The following administration’s dialogue and evaluation (“MD&A”) is dated August 23, 2022, and supplies data in regards to the monetary situation and outcomes of operations of Real Luck Group Ltd. (“Real Luck” or the “Company”), for the six months ended June 30, 2022 (“Q2 2022”). This MD&A must be learn together with the condensed consolidated interim monetary statements for the six months ended June 30, 2022 and 2021 and the associated notes thereto, and the audited consolidated monetary statements for the years ended December 31, 2021 and 2020 and the associated notes thereto. The consolidated monetary statements have been ready in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). All forex quantities are expressed in Canadian {dollars}, except in any other case famous.
Additional data regarding the Company is accessible on the Company’s web site at www.realluckgroup.com. The Company’s annual data kind (“AIF”) and different public filings made by the Company with Canadian securities regulatory authorities might be discovered below the Company’s SEDAR profile at www.sedar.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This MD&A incorporates “forward-looking data” inside the which means of relevant Canadian securities laws (“forward-lookinginformation”). Such forward-looking data entails recognized and unknown dangers, uncertainties and different components which can trigger the precise outcomes, efficiency or achievements of the Company to be materially completely different from any future outcomes, efficiency or achievements expressed or implied by the forward- wanting data. Readers are cautioned to not place undue reliance on these forward-looking statements, which converse solely as of the date the statements had been made, and readers are suggested to think about such forward-looking statements in gentle of the dangers set forth under and as detailed below part “Risks and Uncertainties” on this MD&A.
In some circumstances, forward-looking data might be recognized by means of forward-looking terminology comparable to “anticipate”, “consider”, “expects” or “doesn’t count on”, “estimates”, “outlook”, “prospects”; “projection”, “intends”, “believes”, “ought to”, “will”, “would” or the unfavorable of those phrases, and related expressions meant to determine ahead wanting statements. Statements containing forward-looking data aren’t historic information however as a substitute symbolize administration’s expectations, estimates and projections relating to future occasions or circumstances. There might be no assurance that such data will show to be correct, as precise outcomes and future occasions might differ materially from these anticipated in such data.
Although the Company has tried to determine essential components that would trigger precise actions, occasions or outcomes to vary materially from these described in forward-looking data, there could also be different components that trigger actions, occasions or outcomes to vary from these anticipated, estimated or meant. Forward-looking data contained herein is given as of the date of this MD&A, and the Company disclaims any obligation to replace any forward-looking data, whether or not because of new data, future occasions or outcomes, besides as could also be required by relevant securities legal guidelines. There might be no assurance that forward-looking data will show to be correct, as precise outcomes and future occasions might differ materially from these anticipated in such statements. Accordingly, readers shouldn’t place undue reliance on forward-looking data.
NON-IFRS FINANCIAL MEASURES
This MD&A makes reference to sure non-IFRS measures. These measures aren’t acknowledged measures below IFRS, and don’t have a standardized which means prescribed by IFRS and are subsequently unlikely to be akin to related measures introduced by different corporations. Rather, these measures are offered as extra data to go with these IFRS measures by offering additional understanding of the outcomes of operations from administration’s perspective. Accordingly, these measures shouldn’t be thought of in isolation nor as an alternative choice to evaluation of the Company’s monetary data reported below IFRS. Non-IFRS measures together with “Working Capital” (calculated as present belongings much less present liabilities) had been used so as to facilitate working efficiency comparisons from interval to interval and to arrange annual working budgets and forecasts.
OVERVIEW
Real Luck Group Ltd. (“Real Luck” or the “Company”) was included below the Business Corporations Act of Alberta on January 15, 2018. The head workplace, principal deal with and registered workplace of the Company are situated at 350 seventh Avenue SW, Suite 3400, Calgary, Alberta, T2P 3N9.
On December 11, 2020, the Company accomplished a reverse takeover (the “Transaction”) with EH IOM SubCo Limited (“Elephant Hill Sub Co.”), the Company’s wholly-owned subsidiary), and Esports Limited (“EL”), a personal firm restricted by share capital, included and domiciled within the Isle of Man. The Company acquired all the issued and excellent widespread shares of EL. The Transaction was accomplished by means of a three-cornered amalgamation below the legal guidelines of Isle of Man and resulted in EL changing into an entirely owned subsidiary of the Corporation.
On December 16, 2020, the Company modified its title to “Real Luck Group Ltd.” and commenced buying and selling on the TSX Venture Exchange as a Tier 2 Industrial Issuer below ticker image “LUCK”. Effective April 5, 2021, the Company can also be listed on the OTCQB Venture Market below the ticker image “LUKEF”.
DESCRIPTION OF BUSINESS
General
The Company is a completely licensed operator of an award-winning world on-line betting platform, known as “Luckbox” (“the Luckbox platform” or “the platform”), which gives real-money wagering on esports, sports activities and on line casino video games.
Through its proprietary Luckbox platform, the Company at the moment gives gamers the power to guess on skilled aggressive online game occasions and matches throughout 13 recreation titles, and greater than 100 sports activities. The Company added a 3rd income stream within the type of on line casino betting in December 2021.
Through its Isle of Man license, the Luckbox platform is at the moment in a position to settle for gamers from greater than 80 international locations.
COMPANY STRATEGY AND OBJECTIVES
The Company works to keep up wholesome margins by numerous strategies, together with odds creation, decreasing prices and clever participant acquisition and retention – working to lower price per acquisition (“CPA”) and improve participant lifetime worth (“LTV”).
During the fiscal 12 months 2021, the Company centered on persevering with to reinforce its proprietary Luckbox platform by constructing a superior enterprise intelligence infrastructure, which allows the Company to supply a singular and trendy person expertise tailor-made to the subsequent technology of bettors, whereas making certain most protection of esports betting alternatives.
The Company was, by a lot of 2021 and the start of 2022, engaged in an in depth strategy of enhancing its proprietary Luckbox platform, so as to optimize participant conversion and retention. A key milestone was reached in December 2021 with the launch of the Luckbox on line casino, which is meant to enhance the present esports and sports activities betting gives and so as to add an anticipated near-term income stream to the enterprise. The Luckbox on line casino now options greater than 700 video games because of new key partnerships with recreation suppliers together with Microgaming and Pragmatic Play.
The Company believes the Luckbox on line casino is now aggressive with the choices from many casino-dedicated operators (based mostly on metrics comparable to variety of video games obtainable, number of options, person interface and person expertise). Player advertising and marketing efforts had been soft-launched in July with the intent to progressively improve the spend throughout the remainder of the 12 months. The on line casino vertical is designed to enhance our esports and sports activities betting providing with a excessive margin product that can prolong the money runway.
The Company believes the platform is now at a robust baseline. This has enabled the Company to have interaction in significant participant advertising and marketing efforts for the primary time within the Company’s life. These efforts are anticipated to realize
momentum throughout Q3, 2022. Robust enterprise intelligence instruments allow the Company to carefully monitor the effectiveness of participant advertising and marketing campaigns. Management believes buyer acquisition through participant referral websites, or affiliate networks, is especially essential. The Company has, through the first months of 2022, established partnerships with greater than 50 world websites in addition to introduced offers with Raketech which operates greater than 1,700 participant referral websites.
In 2022, the Company additionally labored to strengthen its management staff, appointing Benn Timbury as Chief Operating Officer and Bo Wänghammar to its board of administrators. Mr. Timbury’s most up-to-date function was with certainly one of Europe’s quickest rising igaming start-ups, the Gibraltar-based Lottoland Group, which is energetic in 15 world markets, has over 350 workers and greater than 15 million prospects. Mr. Wänghammar was previously Managing Director of Casino at PokerStars (acquired by Flutter Entertainment for US$6 billion in October 2019) and the CEO at Mr. Green & Co on-line on line casino (acquired by William Hill for £242 million In October 2018). Most lately, the Company appointed Daniel Sanders, as Director of Marketing. With these key hires, our core management staff is now in place.
The Company has commenced improvement of modern software program merchandise designed to have interaction with and convert a brand new and rising digital viewers. Importantly, this effort is not going to improve our present money burn from the roughly $2 million per quarter run-rate which now we have maintained since Q1 2021. Over time, we count on that these new merchandise might considerably broaden our progress trajectory and speed up our path to money circulation break-even. We are witnessing an unprecedented shift in leisure the place gaming is more and more dominant, and we’re working to construct merchandise and a model to focus on this demographic in a means no different operator is.
The Company is aware of what this viewers enjoys, how you can attain them and, importantly, how you can monetize them, based mostly upon the Company’s management staff’s prior obligations and accomplishments. Much of the Company’s focused gamers’ present conduct is already attuned to igaming and the Company is constructing merchandise and options to complement their viewing and enjoying experiences. This supplies the Company with a singular B2C alternative and provides potential for a big B2B component to our Luckbox platform. A B2B providing might be served to gamers through different operators as a white label resolution which provides a further income stream for the Company. These merchandise and instruments can be extremely social and can be utilized by influencers, communities and friends, rising potential virality and adoption.
The Company additionally plans so as to add additional in-house capabilities, together with the addition of its personal odds compilation staff which can help the Company in capturing higher worth along with offering a extra streamlined platform.
Most third-party odds suppliers available in the market present restricted occasion protection, rising the complexity of person going through platforms. To get to market rapidly and with as broad an providing as attainable, the Company has elected to make use of a best- of-breedthird-party provider for odds.
As the Company expands and seeks to scale, there’s a enterprise rationale to convey odds creation in-house. A proprietary resolution is not going to solely scale back prices and assist guarantee the very best high quality however can even allow the Company to regulate the one a part of the esports betting worth chain that it doesn’t at the moment carry out in-house.
The Company can also be focusing on progress alternatives in new market segments and geographical areas by in search of to accumulate extra licenses in chosen regulated markets.
SUMMARY OF SIGNIFICANT EVENTS
The Company has undergone an intense and obligatory section of recalibrating the Luckbox platform, with “below the hood” enhancements designed to offer a frictionless buyer acquisition expertise in addition to enhancing participant retention.
The Luckbox platform’s know-how now permits the Company to not solely develop its personal in-house options to seamlessly plug into the platform and person expertise but in addition associate with related third events in a modular style. In order to quickly adapt to enterprise wants. During the present fiscal 12 months, the Company introduced the next partnerships, integrations and appointments which make the platform extra extensible and adaptable to the rising enterprise wants, together with sports activities betting and on line casino:
Re-commences online marketing exercise
February 14, 2022: Real Luck Group signed agreements with a number of key online marketing networks to extend participant visitors to the Luckbox platform’s next-generation esports, sports activities and on line casino real-money betting merchandise.
COO Appointed
March 1, 2022: Appointed Benn Timbury as COO. Mr. Timbury’s most up-to-date function was with certainly one of Europe’s quickest rising start-ups, the Gibraltar-based Lottoland Group, which is energetic in 15 world markets, has over 350 workers, and greater than 15 million prospects.
Board of Director Changes
March 9, 2022: Appointed Bo Wänghammar to the Company’s board of administrators. Mr. Wänghammar was previously Managing Director of Casino at PokerStars (acquired by Flutter Entertainment for US$6 billion in October 2019), and the CEO at Mr. Green & Co on-line on line casino (acquired by William Hill for £242 million In October 2018). Mike Stevens resigned from his place as a director to give attention to his household and charity work.
Agreement with main efficiency advertising and marketing agency Raketech Group
March 24, 2022: Announced a partnership with main affiliate and efficiency advertising and marketing firm Raketech Group
Holding (STO: RAKE). The settlement builds upon prior agreements that Real Luck Group has signed with a number of key online marketing networks to extend participant visitors. Raketech, headquartered in Malta, operates greater than 1,760 websites, driving energetic gamers to igaming manufacturers.
Partnership with Microgaming to reinforce on-line on line casino
April 13, 2022: A partnership with on-line on line casino software program provider Microgaming provides greater than 100 video games to Luckbox’s on line casino, together with 9 Masks of Fire, Book of Oz, Immortal Romance™ and branded titles comparable to Jurassic World™, Game of Thrones™ and Lara Croft®. The Luckbox platform is constructed for a brand new technology of gaming and esports gamers that the Company plans to monetize for many years to come back. This ethos extends to on line casino, the place the Luckbox platform is striving to supply the very best content material and person expertise, constructed upon a robust knowledge analytics pushed strategy and the Company is already seeing a promising preliminary uptake from gamers.
Luckbox shortlisted in two classes at EGR Marketing & Innovation Awards 2022
May 11, 2022: Luckbox was shortlisted in two classes on the EGR Marketing & Innovation Awards 2022. The EGR Marketing & Innovation Awards acknowledges probably the most modern and artistic operators, suppliers and associates within the on-line gaming business, honoring people who have introduced one thing new to the business inside the final 12 months. Luckbox was shortlisted within the Innovation In Esports and Brand of the Year classes.
Virtual AGM issues
The Company held its “digital” AGM on August 11, 2022 and all issues put ahead earlier than the shareholders for consideration and approval had been authorised. It was additionally acknowledged that the Company has commenced participant acquisition as of August, 2022 and that the Balance Sheet stays sturdy, with no debt. Additionally, administration highlighted new enterprise initiatives that included the event of modern (e)sportsbook merchandise and B2B choices to drive income progress with the anticipation that the Company can obtain profitability in H1, 2023.
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