Contagious Gaming Inc.
TSX VENTURE : CNS

Contagious Gaming Inc.

February 27, 2015 18:00 ET

Contagious Gaming Announces Quarterly Financial Results and Provides a Quarterly Update

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 27, 2015) -

NOT FOR DISSEMINATION IN THE US OR THROUGH US NEWSWIRE SERVICES

Contagious Gaming Inc. (TSX VENTURE:CNS) ("Contagious Gaming" or the "Company") is pleased to announce the financial results for the three and nine months ended December 31, 2014.

December 31, 2014 Q3 Operational Highlights:

  • Secured an extension till June 2015, to one of its third-party development contracts with Zynga Inc.
  • 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, providing access to a significant database of active players.
  • Announced the acquisition of Chelbis Group of Companies ("Chelbis") who own and operate well established online bingo websites and networks with predominately UK based players. Chelbis has a history of revenue and cash flows with fiscal year ("FY") 2013 Adjusted EBITDA* of approximately $2.3 million and Adjusted Net Income* of approximately $2.2 million.
  • Officially launched Goal Time with Mirror in conjunction with our first major partner Trinity Mirror Group ("Trinity Mirror") on December 21, 2014 with the first betting match being Liverpool F.C. vs Arsenal F.C.
  • Engaged technology-focused marketing firm Oomph Agency to assist on the marketing direction of Goal Time and maximizing the impact of the advertising budget across Trinity Mirror's news publications, digital media and social media channels.

"We have made significant business achievements in our second quarter as a publicly traded company," said Peter Glancy, CEO and Director. "This includes the launch of Goal Time with Trinity Mirror which went live in late December and the announcement of the acquisition of online bingo operator Chelbis. On Goal Time specifically, we are pleased with the initial results to date and continue to focus on increasing the player base and adding additional distribution channels."

* Adjusted EBITDA and Adjusted Net Income are non-IFRS measures that are used in this press release because management believes that they provide useful information regarding Chelbis' ongoing operations. For definitions of Chelbis' non-IFRS measures and reconciliations between Chelbis' FY 2013 net income, Adjusted EBITDA and Adjusted Net Income please refer to the Company's news release dated December 8, 2014 which was filed on SEDAR.com.

Financial Highlights:

2014 2013
For the three months ended December 31 $ $
Revenue 357,099 131,708
Adjusted EBITDA * (438,843 ) (249,617 )
Adjusted Earnings (Loss) * (885,557 ) (282,317 )
Basic and diluted Adjusted Earnings (Loss) per Share * (0.02 ) (0.02 )
As of December 31,
2014
$
March 31,
2014
$
Cash 3,052,615 16,806
Total Assets 14,157,637 1,116,677
Total Liabilities 1,757,036 1,728,619

Summary of Contagious' activities during the three month period ended December 31, 2014 and recent events:

  • The Company generated $357,099 of revenue for the quarter ended December 31, 2014 compared with $131,708 for the comparative quarter ended December 31, 2013. The increase in revenue is a result of entering into larger software development contracts.
  • For the three month period ended December 31, 2014, the Company recorded adjusted EBITDA amounting to a loss of $438,843 compared to a loss of $249,617 for the quarter ended December 31, 2013. The increase in the Adjusted EBITDA loss is primarily due to general and administrative and regulatory compliance costs that Telos Entertainment Inc. (The Company's wholly owned legal subsidiary) did not have until completion of the RTO with Contagious Gaming on September 19, 2014.
  • The Adjusted Earnings (Loss) amounted to a loss of $359,126 or $0.01 loss per share for the quarter ended December 31, 2014 and $282,317 loss or $0.02 loss per share for the quarter ended December 31, 2013.
  • As at December 31, 2014, the Company had total assets of $14,157,637 consisting of: cash of $3,052,615; accounts receivable of $489,551; prepaid expenses of $256,101; accrued revenue of $18,736; due from related parties of $1,499; property and equipment of $13,719; intangible assets of $9,203,735; due from related parties of $75,845; and goodwill of $1,045,836.
  • As at December 31, 2014, the Company had total liabilities of $1,757,036 consisting of: accounts payable and accrued liabilities of $458,947; deferred revenue of $228,127; loans payable of $51,632; due form related parties of $115,526; convertible notes payable of $242,143; and deferred income taxes of $660,661.
  • As at December 31, 2014, the Company had total equity of $12,400,601.

December 31, 2014 quarter Adjusted EBITDA and Adjusted Earnings (Loss) Reconciliation:

Three Months Ended Nine Months Ended
December 31
2014
$
December 31
2013
$
December 31
2014
$
December 31
2013
$
Revenue 357,099 131,708 975,009 268,543
Net loss for the period (1,891,775 ) (319,225 ) (6,166,942 ) (1,803,398 )
Financing costs 12,606 69,017 254,043 257,764
Interest income (8,973 ) - (9,959 ) -
Future income tax recovery (97,020 ) - (97,020 ) -
Amortization of intangible assets 571,854 - 639,467 -
Depreciation of equipment 4,854 591 6,182 1,436
EBITDA (1,408,454 ) (249,617 ) (5,374,229 ) (1,544,198 )
Stock based compensation 289,605 - 584,259 -
Stock based marketing compensation 680,006 - 680,006 -
RTO public listing - - 2,776,724 -
Transaction costs - - 900,000 1,025,000
Adjusted EBITDA (438,843 ) (249,617 ) (433,240 ) (519,198 )
Adjusted EBITDA per Share - basic and diluted (0.01 ) (0.02 ) (0.01 ) (0.04 )
Net loss for the period (1,891,775 ) (319,225 ) (6,166,942 ) (1,803,398 )
Financing costs related to extinguished debt - 36,908 157,952 106,509
Stock based compensation 289,605 - 584,259 -
Stock based marketing compensation 680,006 - 680,006 -
RTO public listing - - 2,776,724 -
Transaction costs - - 900,000 1,025,000
Acquisition costs 36,607 - 61,510 -
Adjusted Earnings (Loss) (885,557 ) (282,317 ) (1,006,491 ) (671,889 )
Adjusted Earnings (Loss) per Share - basic and diluted (0.02 ) (0.02 ) (0.01 ) (0.05 )

December 31, 2014 Third Quarter 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 and nine months ended December 31, 2014, 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 in 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.

About Contagious Gaming

Contagious Gaming Inc. (TSX VENTURE:CNS) is a rapidly emerging developer of unique and engaging software solutions for regulated gaming and lottery markets 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.

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.

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