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Charity micro-payments platform Activistic is soon to trade again after a pivot to sport lotteries.

Activistic (ASX:ACU) this week announced a private placement of $2.5 million at 1c a share – as it works to re-comply with ASX listing rules related to its company classification.

The shares last traded in April 2017 at 1.5c, valuing the company at $6.7 million.

Activistic told investors the money would be used to pay creditors, fund working capital and return to the bourse.

The question of classification involves Activistic’s acquisition of online betting and social gaming play Plus Connect and its Lotto betting platform MyLotto24 — first announced in July.

Activistic bought into Plus Connect because it “presented an ability to reach positive cash flow in the short term, off-setting the much longer revenue conversion timeline of the micro donations products”.

Activistic last year shifted its focus away from “micro donations” — technology that allows regular payments or contributions using mobile phones — because of high costs and a long road to profitability.

Activistic last traded at 1.5c in 2017.
Activistic last traded at 1.5c in 2017.

Now, the company’s business model must be reviewed by the ASX and given approval before the transformed business is presented to shareholders.

It’s a process that is still to take several months, but the company is optimistic it will be back on the market come the end of May — at which point they will shake the tin again.

“The board believes that completing a larger re-compliance placement would be highly dilutive to existing shareholders at this stage.

“It is expected that a public offer of shares can be completed in connection with the re-compliance on more favourable terms to existing shareholders.”

With the addition of the latest round of capital, the company has more than 800 million ordinary shares on issue, plus 49 million performance shares expiring in May.

As part of satisfying ASX requirements, it is proposing to complete a consolidation at a 20:1 ratio, so each security would be worth 20c.

From micro-donations to betting

Activistic was hopeful micro donations could make big profits, but after a strategic review in January last year, realised short-to-medium term profitability was a long way off.

The company is in talks to set up a strategic alliance in the US while it focuses on PlusConnect’s lotto platforms.

Plus Connect has a gaming licence from the Northern Territory and designs and operates “socially responsible” lotteries.

The first with Collingwood Football Club, called Magpie Millions, was established in February last year.

By tapping into the club’s supporter network, each week Magpie Millions players have the opportunity to win $2 million, as well as being in the running for other ‘money can’t buy’ type experiences.

Off the back of its success, a second partnership with the Brumbies Rugby Club was signed late in October.

“Support for charities and sporting bodies will remain a key feature of the Company’s business model as a responsible corporate citizen operating with high standards of ethical behaviour. In addition, the Company will also rely on commercial lottery products and user engagement tools in order to drive revenue growth.”

According to the company, the Australian market for charity and not-for-profit lotteries is estimated at $600 million annually.

In the last quarter the company recorded $21,000 in revenues, and had $80,000 left in the bank after paying its directors $70,000.

It anticipated spending of $710,000 in the current quarter.