Mr. James Lanthier reports

TANGELO REPORTS 2016 SECOND QUARTER FINANCIAL RESULTS WITH STRONG MOBILE REVENUE GROWTH

Tangelo Games Corp. has released its financial results for the second quarter of 2016 (the three- and six-month period ended June 30, 2016).

Q2 highlights

Strong business fundamentals

Revenue from the company's mobile games continued to grow at a rate that significantly outpaces the industry average, with 13-per-cent growth in Q2 2016 from first quarter 2016, while performing in line with industry averages for Facebook/Web. According to Eilers Research, mobile revenue for the entire social casino space grew 3.4 per cent quarter over quarter. Tangelo's mobile game growth was, in particular, driven by strong performance from its Old Vegas game, which offers players a classic-style slot machine experience.

The company is continuing to press forward on accelerating its mobile growth by leveraging its broad game library, creating a multigame environment for its Spanish-language leading game title Mundijuegos and creating a common infrastructure that will allow Tangelo to develop new games faster. Additionally, Tangelo has begun integrating Akamon game content into the Best Casino app.

Operational consolidation

In Q2 2016, the company decisively moved forward to integrate its businesses into one consolidated operating unit. As previously announced, the company reached an agreement with the founders of Diwip that included their resignation from their full-time roles as managers of the Diwip business and, subsequent to the quarter-end, a settlement of all outstanding amounts owed under the acquisition agreement. Subsequent to the quarter-end, the company moved forward with an initiative to rightsize its organization and realize operating efficiencies, reducing its work force by 25 per cent.

In connection with its operational consolidation, subsequent to the end of the quarter, the company appointed Dvir Ackerman as head of new product of Tangelo based in Tel Aviv. Mr. Ackerman will specify market requirements for current and future products, analyze and execute potential partner relationships for the company, and synchronize all product areas to deliver on the company's planned product pipeline. Mr. Ackerman is a seasoned technology executive with more than 10 years of expertise in the gaming industry and specifically in social casinos.

To better reflect the consolidation of its operations and management structure, in the quarter the company received shareholder approval to rebrand itself and change its name to Tangelo. The name change was effective June 28, 2016.

Financial highlights

Tangelo generated revenue of $10.05-million and $20.91-million for the three and six months ended June 30, 2016, compared with revenue of $5.89-million and $9.81-million for the three and six months ended June 30, 2015. Adjusted earnings before interest, taxes, depreciation and amortization of $2.76-million and $5.76-million were realized for the three and six months ended June 30, 2016, compared with 16 cents and 77 cents for the three and six months ended June 30, 2015.

                      SECOND QUARTER FINANCIAL SUMMARY                                            
                  (in $000,000 except per-share amounts)        
                
                      For the three months ended    For the six months ended 
                                         June 30                     June 30         
                              2016          2015          2016          2015

Revenue                      10.05          5.89         20.91          9.81
Adjusted EBITDA               2.76          0.16          5.76          0.77
Due diligence and
transaction costs,
severance and
restructure costs,
depreciation of
equipment,
amortization of
intangibles, and
stock-based
compensation                  3.61          3.38          7.09          3.90
Operating (loss)             (0.85)        (3.23)        (1.33)        (3.13)
Interest and
accretion, changes in
value of long-term
debt, foreign
exchange                      3.57          3.06          1.53          5.07
(Loss), continuing
operations, before
income tax                   (4.42)        (6.28)        (2.86)        (8.21)
Net (loss), continuing
operations                   (4.28)        (6.14)        (2.46)        (8.44)
Net income/(loss),
discontinued
operations                    0.02         (1.27)         0.01         (1.83)
Total net (loss) for the
period                       (4.26)        (7.42)        (2.45)       (10.27)
Basic and diluted (loss)
per share, continuing
operations              $    (0.02) $      (0.05) $      (0.01) $      (0.06)
Basic and diluted
income/(loss) per
share, discontinued
operations              $     0.00  $      (0.01) $       0.00  $      (0.01)

James Lanthier, chief executive officer of Tangelo, commented: "Our rapid mobile growth in Q2 demonstrates that Tangelo is on the right track. While desktop still makes up the majority of our revenue, our business is geared towards the future and growing faster than the industry rate.

"In the quarter and subsequent to its end, we moved forward to realize synergies from integrating our operating businesses. While we have now achieved significant cost savings, we expect further benefits by applying best practices, particularly in the areas of data, marketing and predictive analytics.

"Observers of the games and gaming markets will note that there continues to be robust [merger and acquisition] activity. Management evaluates M&A opportunities in this regard with a particular focus on opportunities that would allow the company to improve its capital structure."

Vicenc Marti, president of Tangelo, commented: "Q2 has been one more decisive step towards the integration of our Tel Aviv and Barcelona teams, our commitment to a mobile-first social casino company and the continuation of our leadership of the industry as the most geographically diversified company. Tangelo [is] in a unique position to leverage the faster-than-industry-average growth of mobile social casino in emerging markets."

Tangelo Q2 results can be found on its website or SEDAR.

Credit agreement amendment and waiver

The company has also reached an agreement with its lenders to amend certain terms of its outstanding credit agreement. Tangelo previously completed a secured debt financing pursuant to an amended and restated credit agreement dated Nov. 16, 2015, which amended the terms of a prior credit agreement dated Jan. 30, 2015, as amended, among the company, as borrower, the subsidiaries of Tangelo, as credit parties, a syndicate of lenders and the lenders' administrative agent, Third Eye Capital Corp.

The company and its subsidiaries have entered into a waiver and amendment to the credit agreement with TEC, on behalf of the lenders, waiving breaches by the company of certain covenants and amending the covenant thresholds for future periods. As consideration for these amendments, among other things, the company agreed to pay to the lenders a fee.

About Tangelo Gaming Corp.

Tangelo Gaming is a developer of social and mobile gaming for PC, Mac, iOS and Android platforms. Formally Imperus Technology Corp., Tangelo Games was formed through the acquisition of Diwip and Akamon Entertainment.

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