CONTAGIOUS GAMING ANNOUNCES QUARTERLY RESULTS FOR Q1 2015

VANCOUVER, B.C., August 31, 2015 – Contagious Gaming Inc. (TSX-V: CNS) (“Contagious Gaming” or the “Company”) is pleased to announce the financial results for the three months ended June 30, 2015.

Subsequent Events:

Proposed Acquisition of Sportech PLC

The Company is in discussions with Sportech PLC (“Sportech”) on a possible business combination that would create a combined, technology-focused, sports wagering company and a global leader in regulated pari-mutuel wagering (the “Business Combination”). A proposal has been made to Sportech with respect to the proposed Business Combination which the Company expects to create significant shareholder value for existing and potential new shareholders of Sportech and Contagious Gaming. The proposed Business Combination is subject to a number of conditions, including securing appropriate debt and equity financing. There can be no certainty that the submission of the proposal will lead to Contagious Gaming making a formal offer or, in turn, the completion of the Business Combination.

Sportech is a sports wagering company listed on the London Stock Exchange (LSE: SPO). Sportech is comprised of three business divisions: (i) Sportech Racing and Digital, (ii) Sportech Venues and (iii) The Football Pools. In 2014, Sportech generated revenues of £104 million (approximately $213 million (2)) and Adjusted EBITDA(1) of £24 million (approximately $49 million (2)) in fiscal year 2014.

(1) Adjusted EBITDA is stated before exceptional costs and share option expense as stated in
Sportech’s 2014 Annual Report.

(2) All GBP has been converted to CDN $ at an FX rate of 1:2.05

Extension of Development Contract with Major Publisher

  • In July 2015, the Company signed an extension to one of its third-party development contracts with a major social gaming content publisher. The extension of the contract is for one year for approximately $1 million of services to be provided by the Company.

Operational Highlights:

  • The Company continues to progress with the previously announced acquisition of Digitote Limited and Digitote Software GmbH Deutschland (together “Digitote”), a developer and provider of commercial-grade sports betting and horse racing technology, hardware, and support services to operators across Europe. The definitive acquisition agreement is expected to be signed in September 2015.
  • Entered into a license agreement with Manyx Interactive Ltd. (“Manyx”) to provide the Goal Time software platform within select jurisdictions including Nigeria and Ghana.
  • Secured an extension to one of the Company’s major third-party development contracts.
  • Entered into an affiliate sales agreement with Pronto Games Ltd. (“Pronto”) to sell, distribute and promote Goal Time to its gaming and sports media network across Northern and Eastern Europe, and Asia.

June 30, 2015 Q1 Financial Results:

  • The Company generated $209,398 of revenue for the quarter ended June 30, 2015 compared with $323,847 for the comparative quarter ended June 30, 2014. The decrease of 35% is due to lower revenues from third party development contracts.
  • Adjusted EBITDA for the quarter ended June 30, 2015 amounted to a loss of $546,722 compared to Adjusted EBITDA of $30,163 for the comparative quarter ended June 30, 2014. The decrease in the Adjusted EBITDA is primarily due to general and administrative and regulatory compliance costs the Company did not incur until completion of the RTO on September 19, 2014 and the decrease in revenues from third party development contracts.
  • As at June 30, 2015 the company had a cash balance of $2,128,145 compared to $2,641,989 as at March 31, 2015.

Financial Highlights:

Three Months Ended

June 30, 2015
$
June 30, 2014
$

Revenue 209,398 323,847
Adjusted EBITDA (Loss) (546,722) 30,163
Adjusted Earnings (Loss) (1,020,372) (5,278)
Basic and Diluted Adjusted Earnings (Loss) per Share (0.01) (0.00)
As ofJune 30, 2015
$
As of March 31, 2015
$
Cash 2,128,145 2,641,989
Total Assets 12,955,993 13,813,721
Total Liabilities 2,382,452 2,390,768
Total Equity (Deficit) 10,573,541 11,422,953

June 30, 2015 Q1 Interim Financial Statements and Management Discussion and Analysis:

The Company’s financial statements, notes to the financial statements and Management Discussion and Analysis (“MD&A”) for the three months ended June 30, 2015 are available at www.sedar.com.

Non-IFRS Measures:
The following non-IFRS definitions are used in this news release because management believes that they provide useful information regarding our ongoing operations. Readers are cautioned that the definitions are not recognized measures under IFRS, do not have standardized meanings prescribed by IFRS, and should not be construed to be alternatives to revenues and net loss and comprehensive loss for the period determined in accordance with IFRS or as indicators of performance, liquidity or cash flows. Our method of calculating these measures may differ from the method used by other entities and accordingly our measures may not be comparable to similarly titled measures used by other entities or in other jurisdictions.

  • Adjusted EBITDA as defined by the Company means earnings before interest and financing costs (net of interest income), income taxes, amortization, depreciation, RTO public listing, stock based compensation, stock based marketing compensation and transaction costs. Management believes that Adjusted EBITDA is a useful measure because it provides information to management about the operating and financial performance of the Company and its ability to generate operating cash flow to fund future working capital needs, service outstanding debt and fund future capital expenditures.
  • Adjusted Earnings (Loss), as defined by the Company, means net income (loss) plus or minus items of note that management may reasonably quantify and that it believes will provide the reader with a better understanding of the Company’s underlying business performance. For the purposes of the Company’s current quarter MD&A, Adjusted Earnings (Loss) is calculated by adjusting net income (loss) for (i) financing costs related to extinguished debt, (ii) stock based compensation, (iii) stock based marketing compensation, (iv) RTO public listing, (v) transaction costs and (vi) acquisition related costs. Management believes that Adjusted Earnings (Loss) is an important indicator of the issuer’s ability to generate liquidity through operating cash flow to fund future working capital needs, service outstanding debt and fund future capital expenditures and uses the metric for this purpose. Adjusted Earnings (Loss) is also used by investors and analysts for the purpose of valuing an issuer.
  • Adjusted Earnings (Loss) per Share, as defined by the Company, means Adjusted Earnings (Loss) divided by the weighted average number of shares outstanding for the period. Management believes that Adjusted Earnings (Loss) is an important indicator of the issuer’s ability to generate liquidity through operating cash flow to fund future working capital needs, service outstanding debt, and fund future capital expenditures and uses the metric for this purpose. Adjusted Earnings (Loss) per Share is also used by investors and analysts for the purpose of valuing an issuer.

The intent of Adjusted EBITDA, Adjusted Earnings (Loss) and Adjusted Earnings (Loss) per Share is to provide additional useful information to investors and analysts and these measures do not have any standardized meaning under IFRS. Adjusted EBITDA, Adjusted Earnings (Loss) and Adjusted Earnings (Loss) per Share should therefore not be considered in isolation or used as a substitute for measures of performance prepared in accordance with IFRS. Other issuers may calculate Adjusted EBITDA, Adjusted Earnings (Loss) and Adjusted Earnings (Loss) per Share differently.

A reconciliation of the adjusted measures noted above is included in the “Discussion of Operations” section of the Company’s MD&A.

About Contagious Gaming

Contagious Gaming Inc. (TSX-V: CNS) is a rapidly emerging developer of unique and engaging software solutions for regulated gaming and lottery operators around the world. The Company is currently focused on deploying its first-to-market lottery-style sports betting platform in the United Kingdom and its proprietary digital instant lottery content in United States and other international jurisdictions.

Contagious Gaming’s sports betting platform is the first sports betting system to allow players to chase a dynamic jackpot live during Premier League soccer matches. The Company is a first mover in the roll-out of digital instant lottery content in the United States. For more information on Contagious Gaming please visit www.contagiousgaming.com.

For further information please contact:

Justin Barragan, Corporate Development
Email: justin.barragan [at] contagiousgaming [dot] com
Phone: (647) 886-8551

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Certain information in this news release is considered forward-looking within the meaning of certain securities laws and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, among other things, information with respect to the Company’s beliefs, plans, expectations, anticipations, estimates and intentions. The words “may”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan”, “target” and similar words and expressions are used to identify forward-looking information. The forward-looking information in this news release describes the Company’s expectations as of the date of this news release.

The results or events anticipated or predicted in such forward-looking information may differ materially from actual results or events. Material factors which could cause actual results or events to differ materially from such forward-looking information include, among others, risks arising from general economic conditions and adverse industry events.

The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company’s forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME.