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An Emerging Mobile Gaming Leader Ticker: TAPM APRIL 2016

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Page 1: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

An Emerging Mobile Gaming Leader

Ticker: TAPM

APRIL 2016

Page 2: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

To the extent that statements contained in this presentation are not descriptions of historical facts regarding Tapinator, they are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “targeted,” “may,” “will” “expect,” “anticipate,” “estimate,” “intend,” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. Examples of forward-looking statements contained in this presentation include, among others, statements regarding the quoting and trading of our common stock and our expectations regarding our development and monetization plans for our mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development and monetization of our mobile games, future results, performance or achievements to differ significantly from those expressed or implied by the forward- looking statements. Such risks and uncertainties include, among others, the uncertainties inherent in the hits

nature of the mobile gaming business. Tapinator undertakes no obligation to update or revise any forward-looking statements. The quoting and trading of the company’s common stock on the OTC Bulletin Board and the OTC Market Group’s OTC Link quotation system is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with the company’s operations or business prospects. As a result, there may be volatility in the market price of the shares of the company’s common stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board and the OTC Market Group’s OTC Link quotation system are not stock exchanges, and trading of securities on them is often more sporadic than trading of securities listed on the NASDAQ Stock market or another securities exchange. Accordingly, stockholders may have difficulty reselling any of their shares. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of the company in general, see Tapinator’s disclaimers, which are available here: http://www.tapinator.com/disclaimers

FORWARD LOOKING STATEMENTS

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Page 3: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

W H AT W E D OAn Emerging Mobile Gaming Leader

We Design, Develop,

& Publish Mobile

Games for the iOS,

Android, and Amazon

platforms.

2

Page 4: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

S N A P S H O TAn Emerging Mobile Gaming Leader

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• Our portfolio consists of more than 200 owned and operated mobile gaming titles with over 200mm cumulative downloads

• Our strategy is two-fold: (i) produce a large number of “Rapid-Launch Games,” which have low development costs and predictable returns and (ii) produce a select number of original and licensed “Full-Featured Games” which have higher development costs yet greater upside

• Game genres include Parking, Driving/Stunts, Simulation, Shooting, Arcade, Role Playing, Social Casino, and Sports

• We generate revenues through the sale of: (i) advertisements within our games, (ii) paid downloadable games, and (iii) additional in-game content.

• Our revenues and adjusted EBITDA for 2015 were $2.4mm and $522k, respectively, and we have provided guidance for 2016 of revenues between $3.7 - $4.3mm, with adjusted EBITDA margins of 22%

• We are listed on the OTC Markets and our market capitalization is approximately $12.0mm

• As of December 31, 2015, our total debt was $2.2mm and cash was $1.5mm

• We are based in New York City and have 52 employees and contractors

Page 5: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

I N V E S T M E N T H I G H L I G H T SAn Emerging Mobile Gaming Leader

• Large and growing total addressable market - mobile games & mobile advertising

• Diversified portfolio of 200+ revenue producing games that, together, have achieved network scale

• Low cost and highly efficient development platform

• Rapid revenue growth with high operating leverage; we are EBITDA* positive and growing

• Disciplined ROI-based strategy of blending low cost Rapid-Launch and higher cost Full-Featured Games

• Efficient monetization strategy consisting of programmatic advertising sales and app store transactions

• Veteran management team/board with high-growth and large internet company credentials and a track record of building successful digital media businesses

* EBITDA is a non-GAAP, unaudited financial measure. 4

Page 6: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

T E A M B I O SManagement

IIYA NIKOLAYEV - Chief Executive OfficerCo-Founder and CEO of Familybuilder until the sale of the Company to Intelius in 2011. He grew the business to profitability, acquired over

45 million users on the web, and over 2 million users on mobile. Mr. Nikolayev was also a cofounder of InAppFuel, a developer of patented

minigame software acquired by Tapinator in 2014. Prior to Familybuilder, Mr. Nikolayev worked in banking for JP Morgan and graduated cum

laude with a BA from New York University.

GEORGI DARAKEV - CTO - Full Featured GamesLed all feature development at Familybuilder. Extensive experience developing successful LAMP (Linux,Apache, MySQL, PHP) applications

and web services. Expertise in scaling applications on AWS, S3, and Rightscale. Built products used by millions monthly on both the web &

mobile. Cofounder of InAppFuel. Mr. Darakev earned his BS in Computer Science from Dowling College.

ROBERT CRATES - Independent DirectorOver 25 years of experience in private equity, investing in a broad range of industries and asset categories. Mr. Crates has served on the

board of directors of numerous public and private companies. Mr. Crates earned his BA from Yale University.

KHURRAM SAMAD - CTO - Rapid Launch GamesFounded GeniTeam, an outsourced development Company focused on mobile with over 80 developers in house. Mr. Samad is an

experienced leader of offshore technical teams with access to superb local talent. Mr. Samad earned a BS in Computer Science from

National University of Computer and Emerging Sciences and an MBA from LUMS, both independent research universities in Pakistan.

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ANDREW MERKATZ - President/CFOAn accomplished entrepreneur with 20+ years of financial operations and transactional experience. Mr. Merkatz spent 6+ years at Vision

Capital where he focused on digital media and software technology. Mr. Merkatz was also a cofounder of InAppFuel and Familybuilder

along with Mr. Nikolayev. Mr. Merkatz earned his BA from University of Pennsylvania (cum laude), and his MBA from Harvard University.

TEYMOUR FARMAN-FARMAIAN - Independent DirectorWas CMO/CRO at Spotify, the world’s leading music streaming service, starting in 2011. He helped triple revenue growth to hit a $500

million run rate, and achieve 7.5 million DAU. Before Spotify, Teymour worked at Zynga (ZNGA) as GM of Partnerships and at Google

(GOOG) in various sales and operational roles. Teymour earned his BA from Duke University and his MBA from Harvard University.

Page 7: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

T W O M A R K E T S : M O B I L E G A M I N G & M O B I L E A D V E R T I S I N GMobile Gaming Revenue to Grow From $34.8B in 2015 to $74.6B in 2020

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Page 8: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

T W O M A R K E T S : M O B I L E G A M I N G & M O B I L E A D V E R T I S I N GMobile Advertising Revenue Projected to Grow From $101B in 2016 to $166B in 2018

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Page 9: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

D U A L G A M E T Y P E S T R AT E G YMaximizing Risk Adjusted Returns on Investment of Game Portfolio

Tw o D i v i s i o n s

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RAPID-LAUNCH GAMES FULL-FEATURED GAMESRange of game development time 1 to 3 months 3 to 12 monthsLaunch frequency 20 to 30 per quarter 1 to 2 per quarterTarget lifetime game dev cost $5k to $10k $50k to $500kNumber of games launched in 2015 89 6Technology Unity, MoPub, GameAnalytics Unity, MoPub, GameAnalytics

Adjust, GameSparksGame genres Parking, Driving/Stunts, Simulation,

ShootingArcade, Casino, Sports, RPG

Branded license partners NA MGM, Discovery ChannelTarget contribution margin 70% 33% (25% to 40%)Target average life 18 to 36 months 36 to 60 monthsRisk level Low ModerateTarget lifetime revenue per game $30k ($10k to $400k+) $1.5M ($100k to $4M+)Monetization method Ads, In-Game Content, Paid Downloads In-Game Content, Advertising% of 2015 revenues 93% 7%% of 2016 revenues (est.) 65% to 75% 25% to 35%

Page 10: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

R A P I D - L A U N C H G A M E SHigh Volume, Low Cost, Predictable Returns

• Low cost development platform

• Cross game promotion replaces traditional user acquisition cost

• Over 200 games, 50 of which have achieved 1 million+ downloads

*Historical data from 201 Rapid-Launch games from 7/1/13 through 3/31/16.

*Figures include projected data over estimated remaining life. 9

Average Development

Cost per Game*

Average ROI per Game*

$6.5K 3.4x$22.3K

Average Contribution Margin

per Game*

Page 11: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

R A P I D - L A U N C H G A M E SHigh Volume, Low Cost, Predictable Returns

10

PParking Animal SimsDriving ShootingStunts Career Sims

Page 12: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

F U L L - F E AT U R E D G A M E SLow Volume, Higher Cost, Higher Absolute Returns

Product Focus:

• Unique game play

• Differentiated product vision

• Build unique IP or selectively license studio IP

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Avg. Target Development

Cost per Game

Avg. Target

ROI per Game

$200K 2.5x$500k

Avg. Target Contribution

Margin per Game

Seek out Selective Publishing deals which leverage:

• Promotional power of large installed base

• Best in class monetization techniques

• Relationships with platform operators

Page 13: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

F U L L - F E AT U R E D G A M E SLow Volume, Higher Cost, Higher Absolute Returns

I lya NikolayevCEO

Interviewed on TheStreetDec 1, 2015

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• We have launched ten full-featured games

• Eight were Featured as Best New Games.

Six reached the Top 50 in Games

• We have evolved our full-featured strategy

over the last six months to shift from quick-fix

arcade games to products with: (i) in-depth

content (ii) high retention and (iii) best-in-

class monetization techniques

Page 14: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

F U L L F E AT U R E D G A M E P I P E L I N ENine Announced Launches for 2016

Q1 2016 Q2 2016 Q3 2016 Q4 2016

13

To Be Announced

To Be Announced

*June 30, 2016

Page 15: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

M U LT I P L E R E V E N U E S O U R C E SAdvertising, Paid Downloads, & In-App Purchases

Current: 80% of Revenue

24 Month Target: 50% of Revenue

Current: 20% of Revenue

24 Month Target: 50% of Revenue

AdsApp Store Purchases

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(Paid Downloads + IAPs)

Page 16: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

M O N E T I Z AT I O N B E S T P R A C T I C E SOur Advertising Does Not Disrupt Gameplay

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No Ads During Gameplay Ads Shown Between Levels

When Game Ends Users Can Purchase New Items or Levels

1 2

3 4

Page 17: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

Free to Play

Monetize Gameplay with Consumables & Non-Consumables

M O N E T I Z AT I O N B E S T P R A C T I C E S Our In-App Purchases Enhance Gameplay

1

2

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Page 18: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

O P E R AT I O N A L E X C E L L E N C E Creating Barriers to Entry

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• Zero paid marketing to acquire game’s first 100k players

(replaces market CPIs of $3-$5)

• Publishing opportunities

• Top search placement

• Ability to move games up the leaderboards

• Eight “Best New Games”

• Potential appstore placement for all full-featured games

• Mobile gaming is a live ops business

• Player analytics, attribution, and ad optimization are all crucial

• Cross Promotion System

• App Store Optimization

• Platform Relationships

• Data Analytics

200+ Games

400,000+ Daily Installs

10m+ MAU

200m+Installs

Page 19: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

P L AY E R & G A M E M E T R I C SRobust Network Growth

M e t r i c s a s o f Q 1 2 0 1 6 :

· Average DAUs – 743,000; up 174% year-over-year

· Average MAUs – 11.7 million; up 154% year-over-year

· Average New Daily Downloads – 476,000; up 159% year-over-year

· Cumulative Downloads – 210 million as of March 31, 2016; up 224% year-over-year

· Game Library – 214 active titles as of March 31, 2016; up from 114 year-over-year

· Game Concentration – Diverse portfolio with no single game accounting for more than 12%

of total revenues during the last 12 months

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Page 20: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

F U T U R E O P P O R T U N I T I E SPublishing, New Platforms, M&A and Geographic Expansion

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• Explore publishing transactions that leverage our net-

work, platform relationships, and operational excellence

• Extend game library to new platforms including VR,

Windows Mobile, Facebook, Apple TV, Apple Watch,

and others

• We regularly pursue accretive acquitions within ever-

green areas such as social casino

• Extend game IP that is successful in Western markets

to select, high-growth international markets, including

Asia and MENA

Page 21: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

C O M P E T I T I V E L A N D S C A P ERapid Launch and Full Featured Strategies Complement Each Other

Higher CPI, Higher ARPU

Lower CPI, Lower ARPU

Lower number of

users

Higher number of

users

FULL-FEATURED

RAPID-LAUNCH

20

MIDCORE

GAMES

HARDCORE

GAMES

CASUAL

GAMES

Page 22: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

M o b i l e G a m i n g P u b l i c C o m p s

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Page 23: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

R E V E N U E

O P. I N C O M E ( L O S S )

N E T I N C O M E ( L O S S )

A D J U S T E D E B I T D A*

C A S H

T O TA L A S S E T S

T O TA L L I A B I L I T I E S

S T O C K H O L D E R S ’ E Q U I T Y

6 mo. (inception)DEC 31, 2013

(audited)

$2,448,051

(893,718)

(1,924,008)

522,892

1,487,196

2,837,097

1,080,043

1,757,054

22

12 monthsDEC 31, 2014

(audited)

12 monthsDEC 31, 2015

(audited)

$943,449

24,447

7,892

101,762

121,740

1,569,712

390,206

406,007

$130,980

(17,807)

(17,807)

2,320

12,418

64,254

42,561

21,693

F I N A N C I A L H I G H L I G H T S

* Unaudited. See Adjusted EBITDA footnote on following page.

Page 24: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

*Adjusted EBITDA Disclaimer:We believe Adjusted EBITDA, a non-GAAP, unaudited financial measure, is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. We believe that:· Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and· It is useful to exclude non-cash charges, such as depreciation and amortization, stock-based compensation and one-time charges from Adjusted EBITDA because the amount of such expense in any specific period may not directly correlate to the underlying performance of our business operations and these expenses can vary significantly between periods.

We use Adjusted EBITDA in conjunction with traditional GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. Adjusted EBITDA should not be viewed in isolation nor considered as a substitute for other measures of financial performance reported in accor-dance with GAAP. There are limitations to using non-GAAP financial measures. One principal limitation is that this measure excludes significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, while depreciation and amortization are non-cash charges, and therefore excluded from Adjusted EBITDA, the assets being depreciated and amortized may have to be replaced in the future. Adjusted EBITDA is subject to inherent limitations as it reflects the exercise of judgment by management about which expenses and income are excluded or included in determining this non-GAAP financial measure. Additionally, other companies may calculate Adjusted EBITDA differently than we do.We compensate for the inherent limitations associated with using Adjusted EBITDA through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income (loss). The Company urges investors to review the reconciliation of its Adjusted EBITDA to the comparable GAAP financial measure which may be found in our quarterly and annual results press releases which may be found at http://www.otcmarkets.com/stock/TAPM/news.

R E V E N U E & A D J U S T E D E B I T D AInvesting In Measured Growth

23

Page 25: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

2 0 1 5 R e s u l t s a n d 2 0 1 6 G u i d a n c eInvesting In Measured Growth

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* 2015 revenue of $2,448,051; up 159% year-over-year

* 2015 annual Adjusted EBITDA of $522,894; up 414% year-over-year

* Q4 2015 quarterly revenue of $692,682; up 87% year-over-year

* Q4 2015 quarterly Adjusted EBITDA of $149,707; up 187% year-over-year

* $1.49 million in cash and cash equivalents as of December 31, 2015

* 2016 Revenue Guidance: $3.7 million - $4.3 million

* 2016 Operating Income Guidance: Breakeven

* 2016 Adjusted EBITDA Guidance: $814,000 - $946,000 (22%)

Use the link below to access complete Q4 and Annual 2015 earnings release:

http://bit.ly/1qCOmML

* See Adjusted EBITDA footnote on previous page 24

Page 26: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

K E Y FA C T S

SHARE STATISTICS

Trading Symbol (OTC) TAPM

Stock Price (04/18/16) $0.21

Shares Outstanding (03/31/16) 57.1mm

30d Avg. Volume (04/18/16) 36,780

Market Cap (04/18/16) $12.0mm

Float (03/31/16) 8.1mm shares

Insider Ownership (03/31/16) 66.9%

OTHERPersonnel 52

Fiscal Year Ends 12/31

Website Tapinator.com

Corporate HQ New York, NY

Legal Quick Law Group

Auditor Liggett & Webb, P.A.

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Page 27: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

T H A N K Y O U

For more information and a copy of our presentation, go to: http://tapinator.com/investors

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Page 28: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

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A P P E N D I XFull-Featured Game Pipeline

Select Pipeline Products:

• Video Poker VIP

• Big Sport Fishing 2016

• ROCKY

• Combo Quest 2

Page 29: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

F U L L F E AT U R E D G A M E P I P E L I N EVideo Poker VIP (with Multiplayer Mode)

B e s t I n C l a s s V i d e o P o k e r

· New spin on the players’ favorite video poker

variants including Jacks or Better, Deuces Wild,

Bonus Poker, and Double Bonus. Mechanics that

have proven themselves in slot games

· In Q2, we will be launching Multiplayer mode,

which is unique within the video poker segment

· Opportunity to own the video poker space on

mobile with a differentiated, highly polished

product

· The social casino industry will grow from its

current $3.4 billion level to $4.4 billion by 2017*

* Source: Eilers Research, Social Casino Tracker, Nov. 2015 28

Page 30: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

F U L L F E AT U R E D G A M E P I P E L I N EPublishing Deal: Big Sport Fishing 2016

S e q u e l t o H i t F i s h i n g G a m e

· Debuted on Google Play in 2010 and

has since accumulated over 15 million

downloads. This sequel will bring the

game to iOS for the first time

· Turns players phones into virtual

fishing rods within a 360 degree,

simulated reality fishing environment

· Evergreen category with more than

55m Americans going on at least one

fishing trip in 2013 spending $42b*

· Mega hit potential given the success

of the hunting category on mobile

* Source: Statista 29

Page 31: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

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F U L L F E AT U R E D G A M E P I P E L I N EROCKY

G a m e B a s e d o n t h e L e g e n d a r y F r a n c h i s e

· Agreement with MGM covers creating an

interactive boxing mobile game based on the

entire ROCKY motion picture franchise

· ROCKY is one of only a handful of

brands that are recognizable across age

groups and demographics, especially given

the success of the Creed sequel

· The ROCKY franchise has grossed more

than $1 billion. Our game will launch in

early Q3 2016

Page 32: Ticker: TAPM An Emerging Mobile Gaming Leader… · mobile games. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development

F U L L F E AT U R E D G A M E P I P E L I N ECombo Quest 2

S e q u e l t o H i t C Q 1

· Unique Time-Tap Mechanic

· Mass Appeal RPG for All Ages

· Version 1.0 Launched on 01/08/15 as a 99 cent,

paid game. Became the #1 Paid RPG on iOS

· CQ1 was featured by Apple four times: as a

“Best New Game”, twice as “Best New Update”

and as a “Free App of the Week”

· CQ2 is the freemium sequel with monetiza-

tion and retention built into the game from the

ground up

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