Dear Luckbox Shareholders and Partners,
I hope this email finds you and your loved ones safe.
We have enjoyed a highly productive few months as we continue to make considerable advancements towards our TSX Venture Exchange (the “TSXV”) listing (TSXV: LUCK ticker reserved). The team has been working diligently on two fronts — preparing for the go-public business combination (resulting in the listing of the Luckbox business on the TSXV) with Elephant Hill Capital Inc. (“Elephant Hill”) and scaling up our marketing and operational efforts to maintain the very strong growth momentum we saw in the first half of 2020.
Below are some key highlights of what we have been working on and upcoming catalysts.
Go-Public Financing
We are excited to announce that we have successfully closed a heavily oversubscribed financing that positions us well for our much-anticipated go-public in the fall.
In May 2020, we set out on a base financing raise of $2M CAD (via a brokered and non-brokered sale of subscription receipts) in connection with a proposed go-public business combination with Elephant Hill as capital pool company (CPC) listed on the TSXV.
The subscription receipts sold in the financing will be automatically exchanged for securities in Elephant Hill upon the closing of the proposed go-public business combination with Elephant Hill, which transaction will be the “qualifying transaction” for Elephant Hill pursuant to the policies of the TSXV. Upon the closing of the proposed go-public business combination with Elephant Hill, Elephant Hill will remain listed and all of the securityholders of the Company (including those holding subscription receipts sold in the financing) will be exchanged for securities in Elephant Hill, which will retain its listing on the TSXV and will result in the Company being a wholly-owned subsidiary of Elephant Hill.
The brokered portion of the financing was co-led by Gravitas Securities Inc. and Beacon Securities Ltd., along with a syndicate group consisting of Canaccord Genuity Corp., Echelon Wealth Partners Inc. and Haywood Securities Inc. and was heavily oversubscribed and subsequently upsized from the base financing.
In June, we ultimately closed on $5M CAD for the financing — well ahead of our target — and all completed virtually during the COVID-enforced lockdown. We are thankful for the overwhelming support that our financing received from new and existing shareholders in Canada, the U.S. and abroad. Special thank you to Kia Besharat, Senior Managing Director and Head of Capital Markets Origination at Gravitas Securities Inc. and his entire team for their continued support of Luckbox since 2019. The Gravitas team played an instrumental role in securing Elephant Hill as our CPC partner as well as managing a virtual roadshow that consisted of institutional and retail accounts from Canada, the U.S. and abroad.
Listing update
The management team and board of directors have been working hard to prepare for the public listing. We have enjoyed positive discussions with the TSXV, completed the Business Plan required for filing, draft financials are complete, with final audit sign-off expected by end of July. Ultimately, we anticipate receiving listing approval by early October 2020. We are pleased to be working closely with Mike Stephens, a Partner in the Vancouver office of Fasken Martineau DuMoulin LLP. Mike is recognized as a leader in the technology sector and has tremendous experience in advising emerging growth companies from foundation all the way to a go-public. His team has provided quality work and guidance in navigating the capital markets and listing process.
It is also worth noting that we will shortly be announcing three key additions to our board of directors who have considerable experience in entrepreneurship and high-growth companies and corporate governance. The additions are considered thought leaders in their respective fields and will provide Luckbox with the vision and leadership necessary to meet its goals for the rest of 2020 and beyond.
Investor relations
Luckbox is in discussions with a number of well respected Investor Relations firms and expect to announce the selection of the firm in the coming months. There has been considerable inbound interest to represent us in anticipation of listing. Our management team believes that the esports betting market will continue to grow and that Luckbox is one of the bookmakers that will be leading the way globally. It is important that the Luckbox vision and story is presented in a clear and concise manner and we look forward to updating you with further details on our investor relations strategy.
Operational update
Luckbox’s soft launch was in April 2019, when we began welcoming real-money bets from esports fans in more than 100 countries. Luckbox employs more than 25 people and is actively growing the team with a recruitment surge in Summer 2020 set to fill five key positions.
The first half of 2020 has been a busy and successful period for Luckbox as we have worked to continually improve the product, grow the brand and increase Key Performance Indicators (KPIs). Some highlights from 2020 so far include:
- 500% increase in betting volume compared with November 2019
- The addition of new games including FIFA and NBA2K, meaning fans can bet on a total of 13 esports
- The addition of Chinese, Russian, Spanish, German and Portuguese language choices to the platform
- The addition of cryptocurrency payment methods including Bitcoin and Ethereum
Our mission to improve the Luckbox platform is continuous and the team are working on some exciting new updates, included but not limited to:
- Implementation of traditional sports betting
- Implementation of casino games
- Enhanced acquisition and Client Relationship Management (CRM) features, including free bets
- Addition of more esports titles
Marketing
So far, Luckbox’s growth has been almost exclusively organic, with nominal spend on marketing to date. In recent weeks, we have increased our marketing spend and are in the process of ramping this up significantly. Current and planned marketing highlights include:
- Odds-integration deal with Denmark-based HLTV, the world’s most popular Counter-Strike website, with more than 91M monthly pageviews
- Partnership announcement with major affiliate platform provider
- Partnership announcement with top-20 CS:GO organization
- Wide-reaching advertising campaign with esports news sites in target markets
- Advertising deal with Sweden-based Strafe, the most popular esports prediction app, which has more than 300,000 active users.
- Influencer marketing campaigns with prominent esports personalities
Growing global
The Luckbox team will work to continue the rapid growth of our B2C offering, which includes the intention to acquire an additional licence to permit access in key restricted markets within the next 24 months. This will not only allow us to accept more customers, but also opens up marketing channels in our chosen territory to actively acquire high-value players.
Among our key hires that we will announce in the coming weeks will be a Head of Growth, whose remit will be to oversee customer acquisition and to quickly grow the B2C business on a global scale.
Our aggressive growth strategy also includes strengthening our B2B offering with the acquisition of an esports odds provider. This means Luckbox will be able to offer an unparalleled esports betting B2B solution, something we know major traditional sports operators are looking for at the moment and our intention is to sign our first B2B partnership within the next year.
Grabbing attention
Luckbox’s success has not gone unnoticed and we have attracted a host of coverage in recent weeks from outlets such as:
For regular updates from Luckbox, please follow us on LinkedIn.
In summary, Luckbox is pleased to have completed a $5.0M subscription receipt financing in connection with a proposed go-public business combination with Elephant Hill during a challenging period while successfully meeting its Q1 and Q2 roadmap targets which included adding additional languages, user acquisition partners and additional esports titles. We have made tremendous progress in 2020 and look forward to becoming the only second listed esports betting company on a public exchange.
We thank you for your ongoing support and look forward to moving forward in achieving our goals for the remainder of the year.
Sincerely,
Quentin Martin
CEO, Luckbox