Mr. James Lanthier reports

TANGELO REPORTS 2016 THIRD QUARTER FINANCIAL RESULTS

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

Highlights:

• Tangelo generated revenue of $9.31-million and $30.22-million for the three and nine months ended Sept. 30, 2016, compared with revenue of $5.90-million and $15.70-million for the three and nine months ended Sept. 30, 2015. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) of $2.96-million and $8.72-million was realized for the three and nine months ended Sept. 30, 2016, compared with $1.90-million and $2.67-million for the three and nine months ended Sept. 30, 2015.
• On the back of the company's integration efforts, adjusted EBITDA grew quarter over quarter from $2.76-million in second quarter 2016 to $2.96-million in third quarter 2016.
• In September, 2016, the company entered into a partnership agreement with Leap Gaming, whereby Leap will be providing its virtual sports turnkey product to Tangelo's social gaming platform. The resulting product, a 3-D virtual sports game adapted to fit social casino players, is currently being developed and is planned to be released by the end of the year.
• In October, 2016, Tangelo was included as best social slots operator, affiliate program and slots operator in the shortlist of nominees of the EGR Operator Awards 2016, one of the most prestigious recognitions in the on-line gaming industry.

                  THIRD QUARTER FINANCIAL SUMMARY                                             
            (in $000,000 except for per-share amounts)
                                                                            
                               For the three          For the nine 
                                months ended          months ended
                                  Sept. 30,             Sept. 30,
                               2016       2015       2016       2015

Revenue                       $9.31      $5.90     $30.22     $15.70
Adjusted
EBITDA (i)                     2.96       1.90       8.72       2.67
Due diligence
and transaction
costs,
severance and
restructure
costs,
depreciation of
equipment,
amortization of
intangibles, and
stock-based
compensation                   3.07       3.07      10.17       6.97
Operating (loss)              (0.12)     (1.18)     (1.45)     (4.31)
Other charges
Interest and
accretion,
changes in
value of long-
term debt,
foreign
exchange                       5.94     (19.11)      7.47     (14.04)
(Loss), continuing
operations,
before income
tax                           (6.06)     17.94      (8.92)      9.73
Net (loss), 
continuing
operations                    (5.90)     17.48      (8.36)      9.04
Net
income/(loss),
discontinued
operations                     0.02      (4.00)      0.03      (5.83)
Total net (loss)
for the period                (5.89)     13.48      (8.34)      3.22
Basic and
diluted (loss)
per share,
continuing
operations                    (0.03)      0.11      (0.05)      0.06
Basic and
diluted
income/(loss)
per share,
discontinued
operations                     0.00      (0.02)      0.00      (0.04)

Tangelo third quarter results can be found on the company's website or SEDAR.

James Lanthier, chief executive officer of Tangelo, commented: "We are pleased with our performance in Q3. Our adjusted EBITDA grew quarter over quarter from $2.76-million in Q2 2016 to $2.96-million in Q3 2016. While our revenues experienced the typical slight seasonal dip that accompanies the summer months, we are positive with respect to the KPI trends in the business and are now seeing the benefits from the integration of Akamon and Diwip play out across multiple dimensions."

Scale

The company initiated a head count reduction to take advantage of the combined businesses' economies of scale and in third quarter reduced the head count of the company's operating business by 25 per cent.

Product

Postintegration, Tangelo Games has been incorporating content from the premerger Akamon slots library into the premerger Diwip platform Best Casino, offering its players 15 new high-quality titles such as Fire Wheel 7s, Dragon Eggs, Monte Carlo and Down the Rabbit Hole. This cross-selling has helped drive a 25-per-cent reduction in customer acquisition costs at Akamon.

Subsequent to the quarter-end, Tangelo released Pixies, its first game developed jointly by the combined product group in Barcelona and Tel Aviv, and developed simultaneously for both the Best Casino and Mundigames environments.

Marketing

By using best-in-class marketing platforms and analytical models, the company has significantly improved churn in the Diwip customer base, from 35 per cent in third quarter 2015 to 20 per cent in third quarter 2016.

This is a critical metric for Tangelo's business, as it means it is able to increase customer lifetime value. The company believes there is room for further improvement, and its ultimate goal is to reduce Diwip customer base churn to a number much closer to Akamon's 5 per cent.

Vicenc Marti, president of Tangelo, commented: "Tangelo has now completed the full integration of Akamon and Diwip into a single, seamless social casino platform. The proof is our recently launched game Pixies, jointly developed by our Tel Aviv and Barcelona offices, which for the first time in the history of the company has been launched simultaneously in all of the company s platforms. A fully integrated and experienced company with an efficient costs structure is the perfect baseline to leverage the next wave of opportunity in the young social casino industry, with nascent technology platforms such as bots and VR."

Capital structure update

Tangelo's management team is focused on its obligations to its lender, Third Eye Capital Corp. (TEC), including its requirement to make certain payments by the end of 2016. While the company is not yet in a position to provide a definitive update, management anticipates a positive resolution of its obligations to its lenders before the end of the year. Tangelo's management has a transparent, collaborative relationship with TEC, with which it communicates regularly regarding its business, its prospects and its strategic alternatives. Management is in specific discussions with a number of parties regarding potential strategic and financial transactions, and is evaluating these opportunities in partnership with TEC as a priority.

The company would also like to note that TEC is in fact the company's largest financial sponsor by a wide margin, TEC has been supportive of the company throughout its history, continues to be supportive of the business, and shares management's vision of building a larger, more competitive and geographically diversified social casino business that leverages best practices in product, marketing and systems.

As previously noted, the interactive games space continues to experience a high rate of innovation and corporate activity. Management has advantageously positioned Tangelo within this dynamic marketplace by integrating Akamon and Diwip and realizing efficiencies in scale, analytics and game deployment. Management will update investors as soon as possible upon any definitive developments relating to its end of 2016 obligations or other strategic alternatives.

Credit agreement waiver and amendment

Tangelo also announces that it has 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, TEC.

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.

Board

Tangelo also announces today that Norman Inkster will retire from the board of directors of the company. It is expected that a new fully independent director will be appointed in 2017.

Mr. Lanthier, chief executive officer and director of Tangelo, remarked: "On behalf of the Tangelo board of directors, I would like to thank Norm for his contributions to the growth and development of the company. We wish Norm well in his future endeavours."

About Tangelo

Tangelo, the parent company of Diwip and Akamon, is a developer of social and mobile gaming for PC, Mac, iOS and Android platforms. Diwip and Akamon design, develop and distribute their top-ranked social casino-themed games within on-line social networks (such as Facebook) and mobile platforms (such as Android and iPhone). All of the Diwip and Akamon games are free to play and generate revenue primarily through the in-game sale of virtual coins.

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