CONTAGIOUS GAMING ANNOUNCES CLOSING OF DIGITOTE ACQUISITION

CONTAGIOUS GAMING ANNOUNCES CLOSING OF DIGITOTE ACQUISITION

NOT FOR DISSEMINATION IN THE US OR THROUGH US NEWSWIRE SERVICES

VANCOUVER, B.C., December 2, 2015 – Contagious Gaming Inc. (TSX-V: CNS) (“Contagious Gaming” or the “Company”) is pleased to announce that it has completed the acquisition of all of the issued and outstanding common shares of Digitote Limited and Digitote Software GmbH Deutschland (together “Digitote”), (the “Acquisition”) for a purchase price of up to C$7,150,000 (€5,000,0000) (“Purchase Price”). The Purchase Price shall be satisfied as follows:

  • Share consideration of C$4,004,000 (€2,800,000) to be satisfied by the issuance of Contagious Gaming common shares at a deemed price per share of $0.50 for a total of 8,008,000 shares (the “Share Consideration”); and,

  • Earn-out consideration of 1x EBITDA (subject to certain adjustments) for each of the four years following the closing of the Acquisition up to a cumulative total of €2,200,000 (C$3,146,000) (the “Earn-Out”).

Digitote is being acquired free of any long term debt and was delivered with positive working capital. All Contagious Gaming shares issued in connection with the Acquisition are subject to a four-month hold period which expires March 31, 2016.

A summary of Digitote’s unaudited financial highlights are as follows:

Digitote Limited

Digitote Software GmbH Deutschland

Twelve Months Ended:

31-Mar-15

31-Mar-15

31-Dec-14

31-Dec-14

£

$

$

Revenue

1,596,588

2,923,672

1,440,642

2,113,278

EBITDA

425,301

778,811

215,078

315,497

Net Income

414,613

759,239

110,450

162,019

Digitote Limited’s unaudited financial highlights for the twelve months ended March 31, 2015 are presented in GBP (converted at an average rate for the period of GBP 1.00 = $1.8312 for the Canadian dollar equivalent) and are prepared in accordance with UK GAAP. Digitote Software GmbH Deutschland’s unaudited financial information for the period ended December 31, 2014 are presented in Euros (converted at an average rate for the period of EURO 1.00 = $1.4669 for the Canadian dollar equivalent) and are prepared in accordance with German GAAP.

We are very excited to announce that we have completed the acquisition of Digitote. The addition of Digitote expands and enhances our sports betting offering and delivers significant synergies with our existing business” said Peter Glancy, CEO and Director of Contagious Gaming. “With the completion of this acquisition we are now able to provide our existing and new customers with a fixed odd sports betting platform alongside Goal Time. Our recent applications with the UK Gambling Commission licenses for online sports betting and casino licenses will further enhance our ability to provide customers with managed service solutions”

Guenter Boyks, CEO of Digitote, comments “We are delighted to complete this transaction with Contagious Gaming. The combined synergies offer huge potential with significant opportunities to expand into international markets and grow the combined entities revenues.”

Digitote Overview

Digitote is a developer and provider of commercial-grade sports betting and horse racing technology, hardware, and support services to operators across Europe. Its business-to-business (“B2B”) software platform (“Xturf”) currently manages the sportsbook operations for a number of large and mid-sized customers in multiple regulated jurisdictions. Digitote’s team are highly experienced technical and industry professionals focused on the continued delivery of cutting edge sports betting solutions.

The Xturf platform is eCOGRA certified and offers sportsbook operators a central system and interface to control all of their betting activities. Key functions include:

  • Multi-channel management and player wallet for interactive (web, mobile) and land-based (retail and self-service terminals) operations

  • Automatic odds adjustments and risk management capabilities

  • Scanning and recognition of physical tickets, betting slips and customer cards

  • Multi-language and multi-currency capabilities

  • 24/7 customer and technical support infrastructure

The Xturf platform is proven platform with a 30-yeat track record, including:

  • $10 billion wagers since inception

  • Over 63 million betting transaction in 2014

  • 30,000 unique events per month

  • 18,000+ live bets (in-running betting) offered weekly

  • Up to 1,000 live fixtures per day

  • 0% down time in 2014

Rationale for the Acquisition of Digitote

  1. Proven commercial-grade sportsbook technology platform

  • 30-year track record of providing best-in-class technology to sportsbook operators in Europe handling over $10 billion wagers since inception

  • Multi-channel software platform offering live in-play and pre-match fixed odds sports betting solutions via web, mobile and land-based terminals with a single shared player wallet

  • Significant sports betting coverage capabilities, with over 30,000 unique events and 18,000+ live events per month covered in 2014

  1. Synergies and growth opportunity

  • Ability to offer both live in-play and fixed odd sports betting alongside Contagious Gaming’s Goal Time in-play pari-mutuel sports betting product

  • Potential operational synergies and cross-selling opportunities

  • Increased customer account funding options for Goal Time

  • Pending UK Gambling Commission licenses will provide the opportunity to leverage the Xturf platform to market sports betting technology on a B2B/white label basis to gaming operators in regulated jurisdictions

  1. Aligned and experienced management team

  • Digitote’s shareholders and management team will become significant Contagious shareholders following the closing of the Acquisition and brings over 30-years of experience in developing, managing and supporting commercial-grade sports betting technology platforms

  1. Attractive purchase price

  • Immediately accretive to EBITDA and earnings

  • 56% of purchase price in Share Consideration

  • 54% of purchase price in Earn-Out consideration over four years

Note: amounts translated from EURO to CAD and vice versa were translated using foreign exchange rate of EURO 1.00 = $1.43.

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 forwardlooking 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 forwardlooking 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 FORWARDLOOKING 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.