STREAMPLAY STUDIO LIMITED — Interim / Quarterly Report 2023

Oct 27, 2022

ASX:EM1 | ABN 31 004 766 376

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ASX RELEASE

28 October 2022

Emerge Gaming Quarterly Update and Appendix 4C

Emerge Gaming Limited, (ASX: EM1) (“ Emerge ” or the “ Company ”) a leading provider of competitive casual gaming and eSports technology and products, is pleased to provide its report for the quarter ended on 30 September 2022 (the “Quarter”).

Emerge owns and operates online “Competitive Social Gaming Platform” technology and lifestyle hubs. This technology enables cutting-edge online casual gaming tournament and competition facilitation platforms where subscribers enter tournaments, play their favourite social games, and earn rewards and prizes, while engaging socially.

Emerge currently operates through a B2B2C business model partnering with multinational mobile network operators (“MNOs”), the first instance of which is operated as “MTN Arena”.

HIGHLIGHTS

• A$0.13M in cash receipts from customers for the Quarter to 30 September 2022 (previous quarter A$0.76M)

• During the Quarter, Emerge banked a further A$0.80M from the divestment of MIGGSTER.

• Cash at bank as at 30 September 2022 of A$17.7M (previous quarter A$17.9M)

• Emerge accesses 4% of MTN South Africa’s 34.5 million subscribers with MTN Arena

• Post Quarter end, Emerge and MTN launched a Game Streaming service branded MTN Arena 5G

• MTN Arena 5G game streaming targets affluent segment of MTN South Africa subscribers

• Game Studio completes development of 3 premium games

• MTN Arena to re-launch new feature rich version of platform

• Company targets 4 further MTN Group countries with ± 120 million mobile subscribers

Post the effective date of sale of its B2C business in the preceding quarter (ASX: 3 May 2022), Emerge has refocussed its MNO strategy by concluding an extended agreement with MTN to launch its developed game streaming technology under the product brand MTN Arena 5G with MTN funded promotional support of ~A$100,000 and renegotiated its share of revenue of its existing MTN Arena product to 50% (up from 40%) (ASX: 20 June 2022) as a result of the technology enhancements Emerge is effecting in the planned relaunch of MTN Arena.

The Quarter saw the development of the MTN Arena 5G platform for its launch in the next quarter (ASX: 10 October 2022). Esports initiatives with MTN are scheduled to ramp up with promotion at South Africa’s award-winning go-to mega event for video gaming, technology, esports, geek culture and digital entertainment – rAge Expo 2022 (rageexpo.co.za) in December 2022.

In executing its strategic plans the Company is targeting expansion of its MNO strategy by country expansion, product expansion and targeted acquisitions and is reviewing its B2C business opportunities.

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Emerge Gaming Limited | ABN 31 004 766 376 | emergegaming.com.au | info@emergegaming.com.au | +61 2 9680 8777

ASX:EM1 | ABN 31 004 766 376

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Business Growth Strategy

Emerge has demonstrated the ability to generate cash from the technology it has developed and owns.

With A$17.7M in the bank, Emerge is well capitalised to accelerate growth in its user community and revenues by leveraging developed business models to grow internationally.

In line with the business growth strategy communicated in previous quarters, revenue growth will be targeted through the scaling of to multiple go-to-market (“GTM”) channels, the addition of new revenue streams, enhancing features of the Company’s product offering and seeking new gaming esports products to offer to Emerge’s subscriber community.

Go-to-Market Strategies

Emerge has three GTM strategies for its products and technology: -

• B2B2C partnerships with MNOs (“Telco Strategy”)

• B2C business model leveraging direct selling by consumers

• B2B distribution partnerships

Emerge has strongly established the B2B2C partnerships with MNOs ( MTN Arena ) expanding its product offering ( MTN Arena 5G ) and continues to drive MNO partnership expansion. The recent sale of MIGGSTER as a B2C business Model saw Emerge profit from its exit from this GTM channel whilst acquiring experience and knowledge to undertake other B2C business model opportunities with global scaling potential, in line with the Company’s growth strategy.

The Company has made a decision to remove the B2C over the top (“OTT”) broadcasting channel activations from its current GTM strategic focus but continues to consider additional GTM channels.

Revenue Sources

Emerge’s customer receipts to the end of the Quarter continue to be derived from user subscription revenues.

The Company continues to seek to grow and diversify revenue, Emerge has begun delivering marketing solutions to corporate brands seeking exposure to the gaming and esports industries. Emerge expects to invoice and receive this division’s first corporate marketing fees in the following quarter.

Emerge continues to explore opportunities to diversify its offerings and revenue streams.

MTN Arena – South Africa “B2B2C” - Operational Overview

Emerge operates its Competitive Social Gaming technology under the MTN Arena brand in South Africa for a leading emerging market MNO, MTN.

MTN Arena is a competition and tournament platform with a social element, which allows casual gamers to enter competitions, win prizes and earn points whilst engaging in their favourite casual games.

During the Quarter, MTN made commitments to accelerate the marketing of the MTN Arena platform with marketing spend that included sponsored prize pools, automated voice message (“AVM”) reengagement campaigns, short message service (“SMS”) re-engagement campaigns, themed engagement campaigns, branded engagement campaigns, social marketing campaigns, MTN channel marketing, outdoor advertising and MTN in store marketing.

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Emerge Gaming Limited | ABN 31 004 766 376 | emergegaming.com.au | info@emergegaming.com.au | +61 2 9680 8777

ASX:EM1 | ABN 31 004 766 376

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The objective of the MTN funded marketing campaigns is to accelerate new subscriber growth and drive re-engagement of existing subscribers.

The platform recorded ~168,000 (30 June 2022: ~182,000) new monthly subscribers in the Quarter. As at 30 September 2022 there were ~290,000 active subscriptions (30 June 2022: ~298,000) and the gross platform revenue generated during the Quarter was ~A$247,000 (30 June 2022: ~256,000). Emerge earns as revenue 50% of the shareable revenue derived from the MTN Arena platform.

Emerge and MTN are targeting accelerated growth in subscriber acquisitions on the MTN Arena platform in South Africa. Marketing activities were conducted at a lower level in the lead up to the launch of new products and features.

During the 2020/2021 year Emerge has invested heavily into its product development and is ready to launch enhanced platform features including enhanced user profiles, improved social engagement, gamification, and brand hosted tournament functionality. Emerge plans to launch an updated feature rich version of MTN Arena in the next quarter to drive value through greater subscriber acquisitions and improved billing success rates.

MTN has 34.5 million mobile subscribers in South Africa alone, and MTN Arena has accessed more than 1.3 million new subscribers, or 4%, of the MTN South Africa subscriber base. There is further opportunity to grow Emerge revenues in this market with MTN Arena 5G targeting the more affluent segment of MTN subscribers.

Game Streaming Service – MTN Arena 5G

Emerge and MTN South Africa have launched a game streaming service (“ MTN Arena 5G ”) with Emerge’s revenue share from this service set at 60% (ASX: 10 October 2022).

The launch of MTN Arena 5G is supported by a promotional launch campaign to be funded by MTN and builds on the momentum of the MTN Arena offering. MTN Arena 5G is a new game streaming service to be offered as a new feature to complement the existing MTN Arena platform.

Game streaming subscribers will redeem ’play tokens’ for entries into tournaments offering custom designed competitive premium games that are streamed through a browser launch web application.

Tournaments will offer streamed games and players will be ranked by high score in the tournament leader boards with the opportunity to win enticing rewards and prizes.

Emerge Game Studio

As previously reported, Emerge launched a game studio consisting of inhouse and outsourced game developers.

During the Quarter, the game studio has continued to work side by side with Emerge’s game streaming platform developers and commercial managers to develop and produce proprietary libraries of high quality premium games using the Unity and Unreal game engines. These game engines enable the delivery of cutting-edge content, interactive experiences and immersive virtual worlds.

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Emerge Gaming Limited | ABN 31 004 766 376 | emergegaming.com.au | info@emergegaming.com.au | +61 2 9680 8777

ASX:EM1 | ABN 31 004 766 376

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The result was the completion of the development of 3 premium games for launch on the MTN Arena 5G platform with further games expected for completion in the next quarter in the genres of adventure and action.

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The Emerge Game Studio is striving to leverage the tools in these engines as it develops and produces further competition ready games in its development roadmap. Development of these bespoke games are a key focus in delivering competition ready premium gaming content for cloud streamed use and commercialisation on Emerge’s tournament platforms.

MNO Expansion Opportunities

Emerge has established itself as an experienced mobile gaming company with proven technology and demonstrated marketing and content production capabilities. Emerge’s established prize distribution logistics and customer relations systems underpin its platform operations.

The results of the MTN Arena platform in South Africa provided the foundation for further extrapolation of this commercial model across the other 20 countries where MTN services more than 240 million subscribers.

The Company will continue to leverage MTN Arena’s performance in South Africa in implementing its MNO expansion strategy and is in discussions targeting 4 countries (Nigeria, Ghana, Cameroon and Ivory Coast) in the MTN Group with a total addressable market of ~120 million mobile subscribers.

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Emerge Gaming Limited | ABN 31 004 766 376 | emergegaming.com.au | info@emergegaming.com.au | +61 2 9680 8777

ASX:EM1 | ABN 31 004 766 376

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Engagement and meetings between MTN country teams, MTN Group and Emerge have led to strong country interest in launching both the MTN Arena platform and MTN Arena 5G.

Emerge continues to market to other multinational MNOs with large subscriber bases and to prospective partners across its various GTM strategies and is seeking strategic acquisitions to grow its revenues.

Emerge’s Core Technology – R&D

Emerge’s developed and owned core technology for gaming platforms with competition, tournament, social engagement, profile, shop, messaging and all other core features is central to its intellectual property.

Emerge has invested into R&D of game streaming technology to stream AAA and premium games, new competition features (such as Head-to-Head competition), extended brand engagement features and new social engagement features.

Emerge developed its own bespoke browser-based game streaming technology together with a configurable controller module consisting of a touch-enabled on-screen display for mobile devices and the ability to integrate popular physical gaming controllers with Bluetooth technology.

Emerge has achieved good results from its R&D activities and will seek to leverage these new features in the continued execution of its GTM strategy.

Company Financial and Corporate Overview

Cash at the end of the Quarter (i.e. 30 September 2022) was AUD$17.7M (30 June 2022: AUD$17.9M).

Emerge banked A$0.13M in cash receipts from customers this Quarter, (decrease of 83% on previous quarter A$0.76M). Amounts due to Emerge and not yet received at the end of the Quarter totalled A$0.5M and had these amounts been received, cash receipts would have been A$0.63M.

The decrease in the cash receipts reflects the decision to divest the Miggster business. On making this decision, promotional marketing suppliers immediately delayed planned promotions of the Miggster product which had an impact on the Miggster subscriptions sold and received.

Business activities expenditure totalled $0.55M for the Quarter consisting of advertising and marketing ($65k), operating costs ($137k) and research and development ($216k) with the balance being administration and staff costs (combined for $284k). Business activities expenditure decreased ~37% on the previous quarter (A$0.83M).

The aggregate amount of payments to related parties and their associates included in the Quarter totalled ~A$160k. These payments consisted of Directors’ fees and salaries paid to directors, technical and other consultancy fees, and corporate advisory fees. All payments were on normal commercial terms.

The management team continue to incur costs with financial and commercial discipline to maximise the Company’s benefit from the spend. The Company has maintained a strong flexibility in its costs through low impact termination clauses allowing for swift supplier changes in a rapidly evolving industry.

Strategy and outlook

Emerge looks forward to implementing its growth and GTM strategies within the context of its strategic execution plans.

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Emerge Gaming Limited | ABN 31 004 766 376 | emergegaming.com.au | info@emergegaming.com.au | +61 2 9680 8777

ASX:EM1 | ABN 31 004 766 376

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For further information:

Investor relations:

E: info@emergegaming.com.au P: +61 2 9680 8777

About Emerge Gaming

Emerge Gaming Limited (ASX:EM1) is a leading competitive social gaming and eSports technology company. Emerge Gaming owns and operates an online casual gaming tournament platform technology and lifestyle hub. Emerge has built a competition layer for casual mobile gaming and via this platform, casual, social and hardcore gamers can play hundreds of gaming titles against each other via their mobile, console or PC, earning rewards, winning prizes and experiences.

Our products create unique gaming platform experiences for customers and marketing opportunities for businesses. 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.

As a global B2B and B2C technology provider, we distribute our products internationally through proven go-to-market strategies. More information: view www.emergegaming.com.au

Forward-looking Statements

This Announcement has been made by the authority of the Board of the Company and may contain forward-looking statements. Any forward-looking statements contained in this document are not guarantees of future performance. Such statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Company. Readers should not place undue reliance upon any forward-looking statements and the Company disclaims any responsibility for any reader who does so. All numbers presented in this Announcement are unaudited.

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Emerge Gaming Limited | ABN 31 004 766 376 | emergegaming.com.au | info@emergegaming.com.au | +61 2 9680 8777

Rule 4.7B

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

Name of entity

EMERGE GAMING LIMITED

ABN

31 004 766 376

Quarter ended (“current quarter”) 30 September 2022

Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Others 1.9 Net cash from / (used in) operating activities	131 (216) (137) (65) - (107) (178) - 19 - - - -	131 (216) (137) (65) - (107) (178) - 19 - - - -
	(552)	(552)
2. Cash flows from investing activities 2.1 Payments to acquire or for: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets	- - (2) (460) - -	- - (2) (460) - -

ASX Listing Rules Appendix 4C (17/07/20) + 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

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 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		- 834 - - - - - - -	- 834 - - - - - - -
		372	372
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. 4.1 4.2 4.3	Net increase / (decrease) in cash and cash equivalents for the period Cash and cash equivalents at beginning of period Net cash from / (used in) operating activities (item 1.9 above) Net cash from / (used in) investing activities (item 2.6 above)	17,868 (552) 372	17,868 (552) 372

ASX Listing Rules Appendix 4C (17/07/20) + 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

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A’000	Year to date (3 months) $A’000
4.4 4.5 4.6	Net cash from / (used in) financing activities (item 3.10 above) Effect of movement in exchange rates on cash held Cash and cash equivalents at end of period	0 (10)	0 (10)
		17,678	17,678
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts		Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)		17,678 - - -	17,868 - - -
		17,678	17,868
6. Payments to related parties of the entity and their associates			Current quarter $A'000
6.1 Aggregate amount of payments to related parties and their associates included in item 1 160 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.			160
			-

ASX Listing Rules Appendix 4C (17/07/20) + 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. 7.1 7.2 7.3 7.4 7.5 7.6	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 Amount drawn at quarter end $A’000 Loan facilities - - Credit standby arrangements - - Other (please specify) - - Total financing facilities - - Unused financing facilities available at quarter end 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.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
		-	-
		-	-
		-	-
		-	-

8.	Estimated cash available for future operating activities	$A’000
8.1 8.2 8.3 8.4 8.5 8.6	Net cash from / (used in) operating activities (item 1.9) (552) Cash and cash equivalents at quarter end (item 4.6) 17,678 Unused finance facilities available at quarter end (item 7.5) - Total available funding (item 8.2 + item 8.3) 17,678 Estimated quarters of funding available (item 8.4 divided by item 8.1) 32.0 Note: if the entity has reported positive net operating cash flows in item 1.9, answer item 8.5 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.5. If item 8.5 is less than 2 quarters, please provide answers to the following questions: 8.6.1 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?	(552) 17,678 -
		17,678
	Answer: n/a
	8.6.2 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
	8.6.3 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
	Note: where item 8.5 is less than 2 quarters, all of questions 8.6.1, 8.6.2 and 8.6.3 above must be answered.

ASX Listing Rules Appendix 4C (17/07/20) + 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: 28 October 2022

Authorised by: By the board

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 (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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