Real Luck : 2022 Second Quarter ending June 30, 2022 MDA

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 info regarding 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 foreign money quantities are expressed in Canadian {dollars}, until in any other case famous.

Additional info regarding the Company is offered on the Company’s web site at www.realluckgroup.com. The Company’s annual info type (“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 accommodates “forward-looking info” inside the that means of relevant Canadian securities laws (“forward-lookinginformation”). Such forward-looking info entails identified and unknown dangers, uncertainties and different elements 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- trying info. Readers are cautioned to not place undue reliance on these forward-looking statements, which converse solely as of the date the statements have been made, and readers are suggested to contemplate such forward-looking statements in gentle of the dangers set forth beneath and as detailed below part “Risks and Uncertainties” on this MD&A.

In some circumstances, forward-looking info might be recognized by means of forward-looking terminology reminiscent of “anticipate”, “imagine”, “expects” or “doesn’t count on”, “estimates”, “outlook”, “prospects”; “projection”, “intends”, “believes”, “ought to”, “will”, “would” or the destructive of those phrases, and comparable expressions supposed to determine ahead trying statements. Statements containing forward-looking info will not be historic information however as a substitute signify administration’s expectations, estimates and projections concerning future occasions or circumstances. There might be no assurance that such info will show to be correct, as precise outcomes and future occasions might differ materially from these anticipated in such info.

Although the Company has tried to determine essential elements that might trigger precise actions, occasions or outcomes to vary materially from these described in forward-looking info, there could also be different elements that trigger actions, occasions or outcomes to vary from these anticipated, estimated or supposed. Forward-looking info contained herein is given as of the date of this MD&A, and the Company disclaims any obligation to replace any forward-looking info, whether or not because of new info, future occasions or outcomes, besides as could also be required by relevant securities legal guidelines. There might be no assurance that forward-looking info will show to be correct, as precise outcomes and future occasions might differ materially from these anticipated in such statements. Accordingly, readers mustn’t place undue reliance on forward-looking info.

NON-IFRS FINANCIAL MEASURES

This MD&A makes reference to sure non-IFRS measures. These measures will not be acknowledged measures below IFRS, and should not have a standardized that means prescribed by IFRS and are due to this fact unlikely to be similar to comparable measures introduced by different firms. Rather, these measures are supplied as further info 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 info reported below IFRS. Non-IFRS measures together with “Working Capital” (calculated as present belongings much less present liabilities) have been used with a view 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 tackle and registered workplace of the Company are positioned 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 turning into a completely owned subsidiary of the Corporation.

On December 16, 2020, the Company modified its identify to “Real Luck Group Ltd.” and started 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 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, referred to as “Luckbox” (“the Luckbox platform” or “the platform”), which presents real-money wagering on esports, sports activities and on line casino video games.

Through its proprietary Luckbox platform, the Company at the moment presents 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 capable of settle for gamers from greater than 80 nations.

COMPANY STRATEGY AND OBJECTIVES

The Company works to keep up wholesome margins by means of numerous strategies, together with odds creation, reducing 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 boost its proprietary Luckbox platform by constructing a superior enterprise intelligence infrastructure, which allows the Company to supply a novel and fashionable consumer expertise tailor-made to the following technology of bettors, whereas making certain most protection of esports betting alternatives.

The Company was, by means of a lot of 2021 and the start of 2022, engaged in an in depth strategy of bettering its proprietary Luckbox platform, with a view 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 enrich the prevailing esports and sports activities betting presents 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 reminiscent of variety of video games obtainable, number of options, consumer interface and consumer expertise). Player advertising efforts have 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 enrich our esports and sports activities betting providing with a excessive margin product that can lengthen 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 efforts for the primary time within the Company’s life. These efforts are anticipated to achieve

momentum throughout Q3, 2022. Robust enterprise intelligence instruments allow the Company to intently monitor the effectiveness of participant advertising campaigns. Management believes buyer acquisition by way of 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 group, appointing Benn Timbury as Chief Operating Officer and Bo Wänghammar to its board of administrators. Mr. Timbury’s most up-to-date position was with one in every of Europe’s quickest rising igaming start-ups, the Gibraltar-based Lottoland Group, which is lively in 15 world markets, has over 350 workers and greater than 15 million clients. 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 not too long ago, the Company appointed Daniel Sanders, as Director of Marketing. With these key hires, our core management group is now in place.

The Company has commenced growth of revolutionary software program merchandise designed to have interaction with and convert a brand new and rising digital viewers. Importantly, this effort won’t improve our present money burn from the roughly $2 million per quarter run-rate which we’ve maintained since Q1 2021. Over time, we count on that these new merchandise might considerably develop our development trajectory and speed up our path to money stream 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 manner no different operator is.

The Company is aware of what this viewers enjoys, the way to attain them and, importantly, the way to monetize them, based mostly upon the Company’s management group’s prior obligations and accomplishments. Much of the Company’s focused gamers’ present habits is already attuned to igaming and the Company is constructing merchandise and options to complement their viewing and taking part in experiences. This supplies the Company with a novel B2C alternative and provides potential for a big B2B ingredient to our Luckbox platform. A B2B providing might be served to gamers by way of different operators as a white label resolution which provides an extra income stream for the Company. These merchandise and instruments will probably be extremely social and can be utilized by influencers, communities and friends, growing 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 group which is able to support the Company in capturing higher worth along with offering a extra streamlined platform.

Most third-party odds suppliers out there present restricted occasion protection, growing the complexity of consumer going through platforms. To get to market shortly and with as broad an providing as potential, 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 carry odds creation in-house. A proprietary resolution won’t solely cut back prices and assist guarantee the very best high quality however can even allow the Company to manage the one a part of the esports betting worth chain that it doesn’t at the moment carry out in-house.

The Company can be concentrating on development alternatives in new market segments and geographical areas by in search of to amass further licenses in chosen regulated markets.

SUMMARY OF SIGNIFICANT EVENTS

The Company has undergone an intense and mandatory part of recalibrating the Luckbox platform, with “below the hood” enhancements designed to supply a frictionless buyer acquisition expertise in addition to bettering 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 consumer expertise but in addition associate with related third events in a modular trend. 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 affiliate marketing online exercise

February 14, 2022: Real Luck Group signed agreements with a number of key affiliate marketing online networks to extend participant site 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 position was with one in every of Europe’s quickest rising start-ups, the Gibraltar-based Lottoland Group, which is lively in 15 world markets, has over 350 workers, and greater than 15 million clients.

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 concentrate on his household and charity work.

Agreement with main efficiency advertising agency Raketech Group

March 24, 2022: Announced a partnership with main affiliate and efficiency advertising firm Raketech Group

Holding (STO: RAKE). The settlement builds upon prior agreements that Real Luck Group has signed with a number of key affiliate marketing online networks to extend participant site visitors. Raketech, headquartered in Malta, operates greater than 1,760 websites, driving lively gamers to igaming manufacturers.

Partnership with Microgaming to boost 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 reminiscent of 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 return. This ethos extends to on line casino, the place the Luckbox platform is striving to supply the absolute best content material and consumer 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 essentially the most revolutionary and inventive operators, suppliers and associates within the on-line gaming business, honoring those 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 have been accredited. It was additionally said that the Company has commenced participant acquisition as of August, 2022 and that the Balance Sheet stays robust, with no debt. Additionally, administration highlighted new enterprise initiatives that included the event of revolutionary (e)sportsbook merchandise and B2B choices to drive income development with the anticipation that the Company can obtain profitability in H1, 2023.

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