5th Planet Games A/S — Management Reports 2019

Nov 5, 2019

32-2019 5th Planet Games Will Reduce Costs with Almost 1M DKK per Month in Order to get Closer to Profitability

32-2019 5th Planet Games Will Reduce Costs with Almost 1M DKK per Month in Order to get Closer to Profitability

COPENHAGEN, November 5th, 2019: 5th Planet Games A/S (OAX: FIVEPG) has a clear ambition of becoming a profitable company. But we must also admit that so far, we have failed in delivering profitability, including in Q4, 2019 due to a disappointing performance of Dawn of the Dragons: Ascension.

We have therefore decided to cut our cost base significantly. The logic is as follows:

a. Today we are burning approximately DKK 1,700,000 per month.

In order to reduce this amount significantly, we have decided to implement the following cost-saving actions:

b. Close down our Rocklin studio, which will result in savings of DKK 800,000 per month.

c. Cut costs in our Copenhagen office, which will result in savings of DKK 150,000 per month.

When the above-mentioned initiatives in Rocklin and Copenhagen has been fully implemented, it will leave our offices with a monthly burn rate of DKK 150,000 in Copenhagen and DKK 600,000 in Berlin.

With the upcoming releases of the Doodle Jump game, currently in soft launch, in February 2020 (new date) and the Adventures of Tintin game in March 2020, we believe that we have implemented the short-term actions necessary to close this now much smaller gap between costs and revenue, and thereby reach profitability.

5th Planet Games is still in a passable position regarding liquidity and capital. As of October 31, 2019, the company has cash of DKK 5.0 million in the bank and the expectation of the future cash situation is DKK 5.3 million as per December 31st, 2019. In case of future capital needs, we still have access to additional NOK 34,218,000 as a result of our agreement with Formue Nord Fokus A/S.

Medium-term, 5th Planet Games will have the following focus:

1. Build attractive Match-3 games in Berlin on the standard game engine that is currently being developed for the upcoming Tintin game. We have a great team of specialists in Berlin with a proven track record in other very successful companies.

2. Acquire 3rd parties IP’s, which we have a proven track record in doing, and team up with small world-class independent 3rd party studios who are specialists within their specific category of games. This reduces both financial risk and enables us to publish many more games, as we do not need to build and run all the studios ourselves.

Long-term, 5th Planet Games will take on the role of being a consolidator within the industry. We will operate from the following philosophy:

1. Many smaller profitable gaming companies are looking to sell their company either partly of fully.

2. These small profitable gaming companies will typically not “move the needle” for the large companies, therefore they often have difficulties securing their exit.

3. 5th Planet Games is an interesting match for these small gaming companies, due to our status as a publicly listed company with a management team that has experience in building scaled businesses.

4. We see a tremendous opportunity to accelerate our growth by acquiring these sub-scale gaming companies.

5. Today, public gaming companies are traded on an average of 16x their EBITDA.

In order to reach the next step, there are some immediate practicalities to be implemented:

1. When closing our Rocklin studio, this has a negative impact accounting wise of approximately DKK 15.5 million impairment loss on non-current assets and consequently covered by the rules of capital loss in Danish Companies Act section 119. Therefore the company will reestablish the share capital by reducing it from DKK 25,528,601 to DKK 2,552,860.10 through a nominal share price reduction from DKK 0.50 to DKK 0.05.

2. A shareholder announcement calling for an Extraordinary General Meeting to support the above-mentioned actions will follow soon.

As a consequence of the cost reductions at our Copenhagen office, an agreement has been made with CFO Anders Søgaard who will leave the company. Furthermore, an agreement has been made with board members Jesper Theill Eriksen and Kevin Terkelsen, who will leave the board soon.

We would like to thank them all for their great effort in supporting 5th Planet Games on our journey so far.

Henrik Nielsen, CEO

5th Planet Games A/S

About 5th Planet Games: 5th Planet Games is a mobile games developer and publisher located in Copenhagen and Berlin. We cooperate with strong IP´s as the Adventures of Tintin and premium sports brands as Cristiano Ronaldo and Nyjah Huston. We are proud to expand the world of the Vikings TV series, the legendary game Doodle Jump and Dawn of the Dragons. For more information see www.5thplanetgames.com or contact CEO Henrik Nielsen +45 27 200 200