Real Luck Group Ltd (TSX-V:LUCK, OTCQB:LUKEF), together with its subsidiary companies, doing business as Luckbox, confirmed that it has received two inconsistent proposals from Adam Arviv of KAOS Capital Ltd, which, if pursued, would not be in the best interests of the company and its shareholders.
Describing the proposals as “opportunistic”, Real Luck noted that Arviv appears to have recently acquired shares of the company and has not indicated his level of ownership.
Arviv initially proposed a merger with a private gambling company valuing the company at nine cents per share, to be paid in shares of the target company only, Real Luck said. Arviv then appeared to change his mind and proposed a "wind-down of the company," ignoring the group's now-finished platform and growing player base, the company added.
Neither proposal reflects the value represented by the company's significantly growing business and is also well below the company's net cash position, Real Luck said.
The company noted that it is undervalued, has a strong cash position, no debt and a robust plan to reach profitability and scale in the next six to 10 months. This makes the company an industry outlier and a target for individuals such as Arviv, seeking to gain access to the company's cash, with no regard for its stakeholders.
The board, therefore, has a duty to resist such “opportunistic conduct”, the company said, adding that the board has retained McMillan LLP as legal counsel, and that DuMoulin Black LLP continues to advise the company.
Notwithstanding the company's concerns regarding whether Arviv is acting in good faith, the company remains prepared to meet with Arviv in his capacity as a shareholder of the company. It noted that the company had previously proposed an in-person meeting with Arviv, which he declined. Another meeting that was suggested by the company was also declined.
Real Luck said it remains committed to optimizing shareholder value. The company continues to execute on its corporate strategy as outlined at the annual general meeting of shareholders in August 2022, which consists of the following key milestones:
- Player acquisition gradually has accelerated growth through Q4 2022 and into Q1 2023;
- Q1 2023 will see products offered to global audience via B2B partnerships;
- Cash flow positive with positive monthly EBITDA (earnings before interest, taxes, depreciation, and amortization) achieved in Q2 2023; and
- Next-gen betting product due in Q3 2023 with proprietary, immersive, live micro market betting
The results of initial marketing efforts were announced in September. Real Luck noted that its early October KPIs (key performance indicators) give confidence to the statement that the company will reach positive EBITDA in the next six to 10 months without any additional financing.
Player registrations for 26 days in October hit 24,411, a record for the group. Deposits grew 254% and global active players grew 14-fold due to the accelerated player acquisition efforts and enhanced customer retention strategy.
Real Luck Group is an award-winning betting company that offers legal, real-money betting, live streams and statistics on all major e-sports and sports on desktop and mobile devices. The company has a business-to-consumer (B2C) platform, and, by leveraging shared technology, data and resources, the company can offer an extensive range of betting options for e-sports tournaments.
The company serves eSports fans in more than 80 territories across the globe.
Contact the author at jon.hopkins@proactiveinvestors.com