Investee Company Update: Subscription into Fralis

RNS Number : 0363R

FastForward Innovations Limited

12 June 2018

 

7.00am     12 June 2018

FastForward Innovations Limited

("FastForward" or the "Company")

Investee Company Update: Subscription into Fralis LLC (Leap Gaming)

On 20th November 2017 FastForward announced that the Company was in negotiations to sell its entire holding in Fralis LLC ("Leap Gaming"), the B2B developer of high-end gaming applications specialising in technology driven products with a focus on Virtual Sports and Casino Games. Negotiations have continued during the period since this announcement was made.

Following detailed negotiations, the Company is pleased to announce that FastForward has concluded an agreement with Leap Gaming under the terms of which the Company will subscribe for 306 new Preferred A Units (the "Purchased A Units"), at a price per Preferred A Unit of €3,265.31 (the "Price per Unit"). The price per unit gives Leap a pre-money valuation of approximately €8,000,000. Concurrently with the Company's investment, IMG Media Ltd., ("IMG Media") a subsidiary of IMG Worldwide, will enter into a strategic partnership with Leap Gaming through its gaming operation.

Strategic Highlights

•      Strengthens and accelerates the growth of Leap Gaming's business -  Leap Gaming has significant strategic momentum, an industry-leading suite of products and a growing global customer base. This investment will facilitate further development in Leap Gaming's industry-leading suite of products, namely increasing the number of its proprietary 3D Virtual Sports titles and casino games across online and retail platforms;

•      Platform for expansion into new markets - following this transaction, Leap Gaming will further bolster its sales efforts in order to extend its reach in key regulated markets globally;

•     Complements IMG Media's gaming portfolio - Leap Gaming expands the reach of IMG Media's gaming content portfolio and supports its group-wide commitment to digital growth.

Lorne Abony, Chief Executive Officer of FastForward commented: "We recognise that the deal announced today is significantly different to the one our shareholders expected but this both reflects rapidly changing market conditions and the ability of the directors of FastForward to react quickly and decisively to maximise shareholder value. I was always reluctant to dispose of Leap Gaming but recognised Leap's need to join with a strategic partner to facilitate its continued growth. While there was an expectation that this could only be brought about by a FastForward disposal, the deal concluded today has enabled Leap to align itself with a leading global brand. Leap Gaming remains an extremely important asset for FastForward. We are excited with what we have already seen Leap Gaming accomplish since our initial investment. This further financing will fast-track the continued growth in a company at the forefront of an industry which will benefit from rapid regulatory change, particularly in the USA."

Freddie Longe, SVP and Managing Director, IMG Gaming, said: "Our partnership with Leap Gaming significantly expands IMG Gaming's touchpoints with the sports betting and gaming sector. We are excited to begin the journey of executing against our shared strategic vision focused on unlocking further value for our global customer base."

Yariv Lissauer, CEO of Leap Gaming, commented: "The strategic partnership with IMG Gaming will accelerate Leap Gaming's growth story and provides substantial benefit and value to Leap Gaming and IMG Gaming's customers."

Use of Proceeds

Leap Gaming is a B2B developer of high-end gaming applications whose games are already offered by leading online and retail gaming operators around the world generating tens of thousands of engagement points with end-users. Leap Gaming intends to use the funds to further enhance its product portfolio, namely increase the number of its proprietary 3D Virtual Sports titles and casino games across online and retail platforms. To support its goals, Leap Gaming intends to significantly strengthen its development power by increasing its development headcount and enhance its technological stack.

Leap Gaming also intends to further bolster its sales and support forces in order to boost growth through allowing improved penetration into key markets and take advantage of favorably evolving regulatory trends across the globe and particularly in North America.

Details of the Preferred A Subscription

Under the terms of the Subscription Agreement the Company will subscribe for a total of 306 Preferred A Units (for total consideration of €1 million) (the "Preferred A Subscription"). Leap Gaming will also make an additional 306 Preferred A Units available to its existing shareholders for a period of 180 days should they wish to subscribe for Preferred A Units on the same terms (if fully subscribed raising an additional €1 million out of €3m placed by Leap) (the "Preferred A Subscription (the "Additional Units").

Immediately following the closing of the Preferred A Subscription, FastForward will own 1,276 units of Leap Gaming (comprising 277 Ordinary Units, 693 Preferred Units and 306 Preferred A Units), representing approximately 37.9 per cent. of the issued Units (on a fully diluted basis) of Leap Gaming. If the Additional Units are fully subscribed, on a fully diluted basis the interest of the Company is 34.7 per cent.

The Preferred A Units subscribed for are "participating preferred" Units entitled to a x1 liquidation preference and a 6% annual dividend preference (the "Preferred A Preferences").

After the Preferred A Preferences have been paid, Preferred Units hold the same rights (liquidation preference and 6% annual dividend preference), following which the Preferred A Units and the Preferred Units participate with the Ordinary Units on an as-converted basis in any remaining proceeds available for distribution to unit holders.

For such time as it remains interested in 30 per cent. of issued Units, the Company maintains the right to appoint two managers to the Board of Leap Gaming (out of a total of six) with two nominees from founders and management, one from IMG, and the final manager elected by all Unit holders voting on an as converted basis.  The Company will have the right to appoint one manager and one Board observer for so long as the Company is interested in greater than 20 per cent. of Leap Gaming's issue Units.

About Leap Gaming

Leap Gaming is a B2B developer of high-end gaming applications whose games are already offered by leading online and retail gaming operators around the world generating tens of thousands of engagement points with end-users. Leap Gaming positions itself in the forefront of realistic 3D game production, which is instrumental for offering high end, immersive and customisable gaming content.

Through 2017 Leap Gaming has more than quadrupled its customer-base and the total number of Daily Active Users who engage with its products. Gross Gaming Yield generated through Leap Gaming's products increased by more than 5 times throughout 2017.  For the 12 months ended 31 December 2017, Leap Gaming incurred a trading loss of US$ 973,000 on turnover of US$537,548 and reported Net Assets as at 31 December 2017 of US$5,575,101.

For further information please visit www.fstfwd.co or contact:

FastForward  Innovations Limited [e-mail]   Sue Saunders/ Ian Burns

Beaumont Cornish Limited (Nomad) Tel: [phone] James Biddle / Roland Cornish

Optiva Securities Limited (Broker) Tel: [phone] Jeremy King

CAUTIONARY STATEMENT

The AIM Market of London Stock Exchange plc does not accept responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. All statements, other than statements of historical fact, in this news release are forward-looking statements that involve various risks and uncertainties, including, without limitation, statements regarding potential values, the future plans and objectives of FastForward Innovations Ltd. There can be no assurance that such statements will prove to be accurate, achievable or recognizable in the near term.

Actual results and future events could differ materially from those anticipated in such statements. These and all subsequent written and oral forward-looking statements are based on the estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. FastForward Innovations assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

 

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