Contagious Gaming Inc.
TSX VENTURE : CNS

Contagious Gaming Inc.

December 01, 2014 10:26 ET

Contagious Gaming Announces Quarterly Financial Results and Update of Trinity Mirror Goal Time Launch

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec. 1, 2014) -

NOT FOR DISSEMINATION IN THE U.S. OR THROUGH US NEWSWIRE SERVICES

Contagious Gaming Inc. (TSX VENTURE:CNS) ("Contagious" or the "Company") today announced the financial results for the three and six months ended September 30, 2014. In addition, the Company is providing an update of the launch of Goal Time with Trinity Mirror Shared Services Limited, a subsidiary of Trinity Mirror PLC ("Trinity Mirror") in the United Kingdom (the "Trinity Mirror/Goal Time Launch").

Trinity Mirror/Goal Time Launch Highlights:

Contagious is pleased to provide a progress update report on the official launch of Goal Time by Trinity Mirror. The update is as follows:

  • Official launch of Trinity Mirror/Goal Time set for December 21, 2014
    • First betting match: Liverpool F.C. vs Arsenal F.C. at 4pm GMT
    • Advertising/marketing campaign being purchased in advance and deployed through Trinity Mirror's digital media, print and social media channels
  • Development of a web-based Mobile App for Goal Time to be completed in time for the official launch date
  • Hiring of advertising company Oomph Agency to assist in maximizing the launch of Goal Time

Financial Highlights:

2014 2013
For the three months ended September 30 $ $
Revenue 294,063 79,408
Adjusted EBITDA * (24,562 ) (164,269 )
Adjusted Earnings (Loss) * 341 (164,269 )
Basic and diluted Adjusted Earnings (Loss) per Share * 0.000 (0.012 )
As of September 30, 2014
$
March 31, 2014
$
Cash 4,337,044 16,806
Total Assets 15,978,976 1,116,677
Total Liabilities 2,662,917 1,728,619

* Please see below section "Non-IFRS Financial Measures" for definition of the above non IFRS measures.

Peter Glancy, CEO and Director, commented: "We are pleased to release the first interim financial results following our successful go-public transaction. We are also excited that all the hard work of our team can be seen with the official launch of our Goal Time platform with Trinity Mirror being set for late December of this year." He also added "The official launch of Goal Time with Trinity Mirror is a significant milestone for the Company, being the first commercial roll-out of our live in play pari-mutuel sports betting platform."

Trinity Mirror/Goal Time Launch

Contagious provides the following business update in regards to the Trinity Mirror Launch:

Official Launch Set for Goal Time with Trinity Mirror

Contagious has targeted late December of this year as the official launch of Goal Time with Trinity Mirror. The first betting event anticipated is the Liverpool F.C. vs Arsenal F.C. match on December 21, 2014 at 4pm GMT, two of the Premier League's most popular teams. Leading up to the official launch of Goal Time, and throughout the Premier League season, Goal Time will run a marketing campaign utilizing the Company's $1,116,000 (£620,000) marketing credit with Trinity Mirror. The campaign is focused on driving and encouraging new player adoption of Goal Time. As part of the launch, Contagious and Trinity Mirror will combine Goal Time's exposure across all Trinity Mirror's UK assets which incorporates some of the UK's leading and most widely read national and regional news publications, including the Daily Mirror, Sunday Mirror, Daily Record and Sunday Mail as well as its core digital media, and social media channels. Trinity Mirror represents a significant audience and exposure to a potential player base for Goal Time with over 82.0 million monthly digital media users, 7.7 million printed media readers and a soccer focused twitter and Facebook following of more than 2.2 million.

Significant Completion of the Goal Time Mobile Application

Contagious' in-house development team has accomplished major steps towards completion of the first mobile application for Goal Time (the "Mobile App"). Although Goal Time is already available on mobile and tablet devices through a web browser, a dedicated Mobile App is a core asset in the official launch of Goal Time. The Mobile App will allow players to access Goal Time to place bets live in play seamlessly on mobile and tablet devices.

Hiring of Oomph Agency

As part of the official launch of Goal Time in the United Kingdom, Contagious and Trinity Mirror have engaged technology-focused marketing firm Oomph Agency ("Oomph"). Oomph has worked with Trinity Mirror previously on a number promotions including its fantasy sports product other Oomph client companies, include mobile telecom giant Vodafone. Oomph has been brought in to assist in focusing the marketing direction and in maximizing the impact of the Company's $1,116,000 (£620,000) marketing credit with Trinity Mirror.

Summary of Interim Results

Summary of Contagious' activities during the three month period ended September 30, 2014 and recent events:

  • For the three month period ended September 30, 2014, Contagious recorded Adjusted EBITDA loss of $24,562 compared to Adjusted EBITDA loss of $164,269 for the quarter ended September 30, 2013 primarily due to costs associated with the Company's go-public transaction. When Adjusted EBITDA is adjusted for additional acquisition related expenses, Adjusted Earnings (Loss) amounted to $341 income or $0.000 income per share for the quarter ended September 30, 2014 and a $164,269 Adjusted EBITDA loss or $0.012 loss per share for the quarter ended September 30, 2013;

  • For the three month period ended September 30, 2014, Contagious recorded a net loss of $4,239,139 or $0.21 loss per share. This net loss includes $294,063 of software development revenue, $112,715 of direct development costs and $4,420,487 of net expenses. The most significant factors driving Contagious' 2014 loss are (i) RTO and transaction costs of $3,676,724 (which is a non-cash and non-recurring expense), (ii) cash financing costs of $190,226 (majority of which is a non-recurring expense), and (iii) the $294,654 stock based compensation;

  • As at September 30, 2014, the Company had total assets of $15,978,976 consisting of cash and cash equivalents of $4,337,044, receivables of $502,174, prepaid expenses of $198,018, accrued revenue of $36,223, property and equipment of $18,696, intangible assets of $9,765,140, due from related parties of $75,485 and goodwill of $1,045,836; and,

  • As at September 30, 2014, the Company had total liabilities of $2,662,917 consisting of $1,637,742 of current liabilities and $1,025,175 of non-current liabilities.

Q2 2014 Adjusted EBITDA and Adjusted Earnings Reconciliation:

Three Months Ended
September 30, 2014
$
September 30, 2013
$
Revenue 294,063 79,408
Net loss for the period (4,239,139 ) (1,328,653 )
Financing costs 190,226 138,793
Interest income (986 ) -
Amortization of intangible assets 52,997 -
Depreciation of equipment 962 591
RTO public listing 2,776,724 -
Stock based compensation 294,654 -
Transaction costs 900,000 1,025,000
Adjusted EBITDA * (24,562 ) (164,269 )
Acquisition related legal costs 24,903 -
Adjusted Earnings (Loss) * 341 (164,269 )
Adjusted Earnings (Loss) per Share - basic and diluted * 0.000 (0.012 )

* Please see below section "Non-IFRS Financial Measures" for definition of the above non IFRS measures.

2014 Second Quarter Financial Statements and Management's Discussion and Analysis

The Company's financial statements, notes to the financial statements and Management's Discussion and Analysis for the three and six months ended September 30, 2014, are available at www.sedar.com.

About Contagious Gaming Inc.

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' sports betting platform is the first sports betting system to allow players to chase substantial jackpots live during 8 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.

Non-IFRS Financial Measures

The following non-IFRS definitions are used in this press 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.

(1) 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, share-based 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.
(2) Adjusted Earnings (Loss), as defined by the Company, means Adjusted EBITDA 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 Adjusted EBITDA for 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.
(3) 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) per Share 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 the measure does 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.

Disclaimer in Regards to Forward-Looking Statements

Certain statements included herein, including those that express management's expectations or estimates of our future performance constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Investors are cautioned not to put undue reliance on forward looking statements. Except as required by law, the Company does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events.

Additional information identifying risks and uncertainties is contained in Contagious Gaming Inc.'s filings with the Canadian securities regulators, available at www.sedar.com.

Contact Information