STREAMPLAY STUDIO LIMITED — Interim / Quarterly Report 2020

Jul 28, 2020

ASX RELEASE

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29 July 2020

Emerge Gaming Quarterly Update and Appendix 4C

Emerge Gaming Limited (ASX: EM1) (“ Emerge ” or the “ Company ”), a leading provider of enhanced eSports capabilities, presents the following activities report for the quarter ended on 30 June 2020 (the “Quarter”).

Emerge owns and operates the eSports tournament platform and lifestyle hub “ ArcadeX ”. This technology is a cutting-edge online eSports and casual gaming tournament and competition facilitation platform.

HIGHLIGHTS

• Emerge signs agreement with MTN to distribute and market Emerge’s mobile competition and tournament platform technology branded MTN Arena

• Emerge was first in the southern hemisphere to demonstrate GameCloud AAA game streaming technology on MTN’s newly launched 5G network in South Africa

• Subsequent to Quarter end, MTN Arena was launched and is live in South Africa and Emerge will shortly report on platform metrics

• Revenues will be reported in next quarter (Q1 FY2021) ending 30 September 2020

ArcadeX Operational Overview – Launch of MTN Arena

During the Quarter, Emerge signed an agreement (ASX: 23 June 2020) with Mobile Telephone Networks Proprietary Limited (Pty) Ltd (“MTN”) to distribute, market and operate Emerge’s ArcadeX platform technology under the brand “MTN Arena”, in South Africa.

The agreement was the culmination of two years of cultivating the relationship with MTN with the result being that Emerge is now the exclusive MTN Mobile esports provider.

About MTN

MTN is a South Africa-based multinational mobile network operator (“MNO”) listed on the Johannesburg Stock Exchange with a market capitalisation of ~A$8.4 billion with ~19,000 employees. As a leading emerging market mobile operator, MTN serves 250 million+ subscribers in 22 countries across Africa and the Middle East, making it the 9th largest MNO globally and the largest MNO in Africa. This agreement aligns with Emerge’s execution strategy with the footprint of MTN firmly in emerging markets. MTN has access to broad-scale distribution via mobile devices. MTN South Africa has ~29 million subscribers.

MTN Arena

MTN Arena is a competition and tournament platform with a social element, which allows casual gamers to enter competitions, win prizes and earn raffles tickets whilst engaging in their favourite casual games. The platform provides an ‘entertainment’ factor with content that encourages reengagement and longer lifetime values of subscribing gamers. MTN Arena is differentiated from typical subscription-based casual gaming content offerings with competitions on premium app and premium HTML5 games that require no download and are easily streamed to mobile devices, an important attribute in emerging markets.

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During the quarter the MTN Arena platform was fully tested and operational resulting in the platform going live post Quarter end (ASX: 8 July 2020). Emerge and MTN developed the MTN Arena Go-toMarket strategy which will be initiated in July 2020. Emerge will earn revenue from the MTN Arena platform in the next quarter i.e. Q1 FY2021 ending 30 September 2020.

Terms of agreement with MTN

The significant terms of the agreement with MTN are:

• Emerge to develop an iteration of the tournament and competition platform branded MTN Arena;

• Emerge will receive a proportion of net revenue generated by the MTN Arena platform;

• Net revenue is determined after agreed direct costs and taxes;

• MTN will market and distribute the platform through direct SMS (“Text”) marketing, promotional marketers, other advertisers and listing on the MTN customer portal;

• The term of the agreement is two years; and

• Emerge will operate and monitor the platform, design and plan tournaments, adjudicate the tournaments, issue prizes and manage engagement with the platform subscribers.

Emerge will operate and monitor the platform, design and plan tournaments, adjudicate the tournaments, issue prizes and manage engagement with the platform subscribers.

Other Initiatives

Emerge continued the business development of its AAA eSports game streaming offering working closely with partners in hardware, communications and games content production. The AAA eSport game streaming technology will stream immersive and interactive high-quality 3D graphic content delivered in high definition video and with surround sound to directly to smartphones, tablets and smart TVs.

AAA eSports Game Streaming – GameCloud Strategy

In the Company’s 2019 annual report, the strategy for AAA eSports Game Streaming was outlined:

“Streaming of cloud-based AAA eSports gaming content on mobile devices is the future of mobile gaming. Hardware and communications infrastructure have placed limitations on the ability to stream AAA eSports gaming content at a level acceptable to gamers. AAA eSports games have therefore traditionally been available on PC and Console.

Emerge’s strategy is to firstly establish the technology and distribution networks for standard and premium casual mobile games, generating a community and scale into which AAA eSports gaming content will be sold.

To achieve AAA eSports delivery to mobile devices, Emerge will leverage its distribution partnership with CloudZen, for the GameCloud technology, together with partners to provide structured localised infrastructure deployment for geographic coverage.

GameCloud not only enables streaming of AAA eSports games at low latency but has a strong focus on premium mobile gaming content with a selection of interactive media features such as live and video streaming. Emerge, combined with the proprietary SDKs of GameCloud to allow game developers and content providers to commercialise and deliver feature-rich AAA eSports cloud optimised games.

Streaming premium gaming content is rising in prevalence with the introduction of 5G mobile communication and the continued growth in smartphone users globally. The distribution and collaboration with Cloudzen is a medium-term strategy for Emerge.”

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In the nine months since the annual report, Emerge is the first in the southern hemisphere to demonstrate GameCloud AAA game streaming technology on a 5G network, showcasing the technology alongside MTN’s launch of its 5G network.

Emerge views the 5G introduction as a revolution in ultra-reliable, high-speed, low-latency, powerefficient, high-density wireless connectivity. During the Quarter, Emerge began working closely with potential partners to establish a scalable, variable-cost infrastructure solution to deliver AAA game streaming to mobile devices using the GameCloud technology.

COVID-19

Emerge reports that, consistent with our previous report, the COVID-19 pandemic impact has to the date not adversely impacted its business operations. To date, the Company has had no reported cases of infections amongst our staff, key services providers and suppliers.

The Company’s operations continue to seamlessly operate in a “remote” environment and business continuity has been maintained. The Company’s existing corporate sales and business development activity continues albeit over digital interaction with key and target customers.

A positive trend from this terrible pandemic is that mobile usage and gaming demand have continued to strengthen along with the mobile users demanding more entertaining content. This has resulted in greater emphasis and interest in the social eSports and casual gaming technology, and strong new interest AAA eSports game streaming technology, from MNOs.

Tantalum International Ltd Update

Shareholders of the Company of record on 3 November 2017 received shares in an unlisted, Australian public Company Tantalum International Limited (“TIL”). For the latest on TIL, shareholders can refer to: https://tantalumint.wixsite.com/tantalumint

Company Financial and Corporate Overview

Cash at the end of the quarter was ~$2.0M.

The Company is targeting a cash outflow of ~$140,000 per month to maintain its operations in the forthcoming quarter. This monthly cash burn does not include any projected revenue amounts to be received, which will offset the expenditure. In comparison, the Company’s cash outflow from operating activities this quarter was ~$95,000 per month. Marketing and other costs are anticipated to ramp up as Emerge looks to support MTN’s efforts in marketing MTN Arena, in that regard, the Company is fully funded to support this launch.

The aggregate amount of payments to related parties and their associates included in the current quarter totalled ~$134,000. These payments consisted of Directors’ fees and salaries paid to directors, accounting and bookkeeping fees, IT development and maintenance services, technical consultancy fees and corporate advisory fees. All payments were on normal commercial terms.

Strategy and outlook

The Company imminently expects to report first metrics from the launch of MTN Arena.

Emerge looks forward to reporting revenues from the launch of the MTN Arena platform in due course.

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For further information:

Australia

South Africa

Bert Mondello Gregory Stevens Chairman CEO E: bmondello@illustrialcapital.com E: greg@emergegaming.com.au P: +61 8 6380 2555 P: +27 72 420 4811

About Emerge Gaming

Emerge Gaming Limited (ASX:EM1) is a leading eSports and casual gaming tournament company. Emerge Gaming operates the online eSports and casual gaming tournament platform and lifestyle hub “ArcadeX”. Via this platform, casual, social and hardcore gamers can play hundreds of gaming titles against each other via their mobile, console or PC.

The platform uses its unique IP, advanced analytics tracking and proprietary algorithms to deliver an optimum tournament gaming experience for users while providing advertisers with the perfect vehicle for delivery of their messaging to a fully engaged audience.

More information: www.emergegaming.com.au and view the ArcadeX platform at www.ArcadeX.co

Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

EMERGE GAMING LIMITED

ABN

Quarter ended (“current quarter”)

31 004 766 376 30 June 2020

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Consolidated statement of cash flows Current quarter Year to date
$A’000 (12 months)
$A’000
1. Cash flows from operating activities
1.1 Receipts from customers - -
1.2 Payments for
(a) research and development (39) (340)
(b) product manufacturing and operating (6) (31)
costs
(c) advertising and marketing (3) (66)
- -
(d) leased assets
(e) staff costs (138) (477)
(f) administration and corporate costs (123) (352)
1.3 Dividends received (see note 3) - -
1.4 Interest received 7 38
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Government grants and tax incentives - -
1.8 Other (provide details if material) 17 38
1.9 Net cash from / (used in) operating (285) (1,190)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
- -
(a) entities
- -
(b) businesses
- -
(c) property, plant and equipment
- -
(d) investments
- -
(e) intellectual property
(f) other non-current assets - -
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ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

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Consolidated statement of cash flows Current quarter Year to date
$A’000 (12 months)
$A’000
2.2 Proceeds from disposal of:
- -
(a) entities
- -
(b) businesses
- -
(c) property, plant and equipment
- -
(d) investments
- -
(e) intellectual property
(f) other non-current assets - -
2.3 Cash flows from loans to other entities - -
2.4 Dividends received (see note 3) - -
2.5 Other (provide details if material) - -
2.6 Net cash from / (used in) investing - -
activities
3. Cash flows from financing activities
3.1 Proceeds from issues of equity securities
- -
(excluding convertible debt securities)
3.2 Proceeds from issue of convertible debt - -
securities
3.3 Proceeds from exercise of options - -
3.4 Transaction costs related to issues of - -
equity securities or convertible debt
securities
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related to loans and - -
borrowings
3.8 Dividends paid - -
3.9 Other (provide details if material) - -
3.10 Net cash from / (used in) financing - -
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of
period 2,277 3,182
4.2 Net cash from / (used in) operating (285) (1,190)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing activities - -
(item 2.6 above)
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ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

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Consolidated statement of cash flows Current quarter Year to date
$A’000 (12 months)
$A’000
4.4 Net cash from / (used in) financing activities - -
(item 3.10 above)
4.5 Effect of movement in exchange rates on - -
cash held
4.6 Cash and cash equivalents at end of 1,992 1,992
period
5. Reconciliation of cash and cash Current quarter Previous quarter
equivalents $A’000 $A’000
at the end of the quarter (as shown in the
consolidated statement of cash flows) to the
related items in the accounts
5.1 Bank balances 992 277
5.2 Call deposits 1,000 2,000
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
5.5 Cash and cash equivalents at end of 1,992 2,277
quarter (should equal item 4.6 above)
6. Payments to related parties of the entity and their Current quarter
associates $A'000
6.1 Aggregate amount of payments to related parties and their 134
associates included in item 1
6.2 Aggregate amount of payments to related parties and their -
associates included in item 2
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of,
and an explanation for, such payments
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ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

7. Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 7.1 Loan facilities - 7.2 Credit standby arrangements - 7.3 Other (please specify) - 7.4 Total financing facilities - 7.5 Unused financing facilities available at quarter end

Amount drawn at quarter end $A’000 - - - - -

7.6 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.

8. Estimated cash available for future operating activities	$A’000
8.1 Net cash from / (used in) operating activities (Item 1.9)	(285)
8.2 Cash and cash equivalents at quarter end (Item 4.6)	1,992
8.3 Unused finance facilities available at quarter end (Item 7.5)	-
8.4 Total available funding (Item 8.2 + Item 8.3)	1,992
8.5 Estimated quarters of funding available (Item 8.4 divided by Item 8.1)	7
8.6 If Item 8.5 is less than 2 quarters, please provide answers to the following questions:
1. Does the entity expect that it will continue to have the current	level of net operating
cash flows for the time being and, if not, why not?

Answer: n/a

1. Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

Answer: n/a

3.	Does the entity expect to be able to continue its operations and to meet its business
	objectives and, if so, on what basis?

Answer: n/a

ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: ...................................................................................

By the Board Authorised by: ...................................................................................

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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