AGORACOM Small-cap Investor Relations Blog

• Taken the next step in its growth strategy by executing a letter of intent dated October 1, 2020 to acquire Volcanic Media Inc., a leader in scholastic and grassroots Canadian esports
• Volcanic was founded in 2018 and is the creator of the National Esports Scholastic League, a first of its kind initiative that works directly with school districts and educators to create various esports initiatives
• To date Volcanic has worked with over 1000 high school students in 13 different cities spanning 6 school districts
• Acquisition is expected to drive over 200,000 new users to TGS through scholastic leagues, tournaments, and in-class programs

VANCOUVER, BC, Oct. 7, 2020 – TGS Esports Inc. (“TGS” or the “Company“) (TSXV: TGS) is pleased to announce that it has taken the next step in its growth strategy by executing a letter of intent dated October 1, 2020 (the “LOI“) to acquire Volcanic Media Inc. (“Volcanic“), a leader in scholastic and grassroots Canadian esports (the “Acquisition“).

Volcanic was founded in 2018 and is the creator of the National Esports Scholastic League, a first of its kind initiative that works directly with school districts and educators to create various esports initiatives. To date Volcanic has worked with over 1000 high school students in 13 different cities spanning 6 school districts.

Volcanic has been at the forefront of scholastic esports including awarding high school esports scholarships and creating inter-district high school esports leagues, both firsts of their kind in Canada. Volcanic have also started work on indigenous esports efforts, previously working with Binche Keyoh First Nations for pilot esports programs.

Following the closing of the Acquisition (the “Closing“), TGS is also proud to announce that, as part of this new partnership, all high schools looking to utilize Volcanic will be able to do so absolutely free with no fees paid by schools or students. Interested schools can reach out to Shawn Caldera: [email protected].

Acquisition Highlights

• The Acquisition is expected to drive over 200,000 new users to TGS through scholastic leagues, tournaments, and in-class programs.
  
  
• The new users will feed into TGS’ online platform, Pepper Esports, which adds to TGS’ overall strategy of having one central ecosystem that creates an unparalleled esports experience.
  
  
• The Acquisition has the potential to put TGS at the forefront of High School esports in Canada and offer TGS an all new scholastic division led by Shawn Caldera and JP Perez of Volcanic.

“We have been working with Shawn and his team for some time now and it made perfect sense to bring Volcanic into the fold,” said Spiro Khouri, CEO of TGS. “Thirty percent of all gamers are under the age of 181 and that number is growing. By introducing that demographic to TGS it allows them to interact with us early and stay a part of our ecosystem beyond High School.”

“Volcanic was created to provide high quality esports events in the scholastic space. In this regard, the agreement with TGS will allow us to take Volcanic to the next level and work with students not only in High School but beyond,” said Shawn Caldera, President of Volcanic.

Summary of Acquisition

The LOI sets out the principal terms on which the parties have agreed to complete the Acquisition. The parties have agreed to negotiate in good faith to formalize a definitive agreement (the “Definitive Agreement“) on or before October 30, 2020, and to consummate the Acquisition on or before November 30, 2020.

On Closing, the Company will acquire all of the issued and outstanding common shares of Volcanic (the “Volcanic Shares“) in exchange for a purchase price of $240,000 (the “Purchase Price“). The Purchase Price will be payable by the issuance of such number of common shares of TGS (each, a “TGS Share“) that is equal to the relevant payment (collectively, the “Consideration Shares“), which Consideration Shares will be subject to certain mutually agreed upon terms of escrow.

The Consideration Shares will be distributed upon each of the following milestones being achieved: 40,000 on the Closing; $10,000 on the date that 10,000 new users are registered on Pepper Esports Inc.’s (“Pepper“) esports platform or any other TGS platform as a result of contracts entered into by Volcanic; $30,000 on the date that 40,000 total new users are registered on Pepper’s esports platform or any other TGS platform as a result of contracts entered into by Volcanic; $30,000 on the date that 70,000 total new users are registered on Pepper’s esports platform or any other TGS platform as a result of contracts entered into by Volcanic; $30,000 on the date that 100,000 total new users are registered on Pepper’s esports platform or any other TGS platform as a result of contracts entered into by Volcanic; $50,000 on the date that 150,000 total new users are registered on Pepper’s esports platform or any other TGS platform as a result of contracts entered into by Volcanic; and $50,000 on the date that 200,000 total new users are registered on Pepper’s esports platform or any other TGS platform as a result of contracts entered into by Volcanic.

Subject to the approval of the TSX Venture Exchange (“TSXV“), the Consideration Shares will be issued at a deemed price equal to the Discounted Market Price (as defined in the policies of the TSXV) of the TGS Shares on the date of issuance of the Consideration Shares based on the Volume Weighted Average Price of TSXV’s share price in the ten (10) trading days prior to the relevant payment date. The discount applicable to the Consideration Shares shall be the lesser of 25% and the maximum discount applicable under the policies of the TSXV on the date of issuance of the Consideration Shares.

On Closing, it is anticipated that each of Shawn Caldera and JP Perez will enter into consulting agreements with TGS pursuant to which they will serve the Company as Scholastic Esports Director and Scholastic Esports Manager respectively.

The Acquisition is expected to constitute a “Reviewable Transaction” as defined in TSXV Policy 5.3 – Acquisitions and Dispositions of Non-Cash Assets and is therefore subject to the prior approval of the TSXV. No finder’s fees are payable in connection with the Acquisition. Following the Closing, Volcanic will become a wholly-owned subsidiary of the Company.

Completion of the Acquisition remains subject to a number of conditions, including: (i) the approval of the Acquisition by the shareholders of Volcanic, (ii) the completion of satisfactory due diligence, (iii) the approval of the boards of directors of the Company and Volcanic, (iv) the execution of the Definitive Agreement, (v) obtaining all required consents, waivers and approvals, including the approval of the TSXV, and (vi) other closing conditions customary for transactions of this nature.

About Volcanic Esports Inc.

Volcanic Media Inc. is a private British Columbia esports and digital media startup. Volcanic is a leader in esports growth in Canada, running the National Esports Scholastic League, where students compete for post-secondary scholarship funding. Volcanic also acts as a gateway for digital creators, gamers and media enthusiasts for their future careers. Volcanic works with tech accelerators, tech businesses and educators to help foster grassroots community engagement through Volcanic’s ATLAS platform; a powerful esports engagement platform helping to ensure no esports enthusiast is left behind.

About TGS Esports Inc.

TGS Esports Inc. is an esports organization focused on providing an unparalleled esports experience through its expertise in online and in-person event management, broadcast production, and Pepper Esports tournament software. TGS is the owner of Canada’s first dedicated esports arena, The Gaming Stadium, located in Richmond, British Columbia, which opened in June 2019. The Gaming Stadium hosts regular online tournaments as well as provides high quality broadcast production for any event. For more information, visit www.thegamingstadium.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

On behalf of the Board of Directors

“Spiro Khouri“

Spiro Khouri, CEO
TGS Esports Inc.

Disclaimer for Forward-Looking Information

Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future, including with respect to: Shawn Caldera and JP Perez joining the TGS team, that the Acquisition will increase the number of TGS users and, in turn, feed into TGS’ online platform, that the Acquisition will allow the Company to keep players within its ecosystem, that the Acquisition has the potential to put TGS at the forefront of High School esports in Canada, the execution of the Definitive Agreement and the terms of such Definitive Agreement, the completion of the Acquisition and the acceptance of the Acquisition and terms thereof by the TSXV. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including risks related to factors beyond the control of the Company. The risks include the following: the unknown magnitude and duration of the effects of the COVID-19 pandemic and other risks that are customary to transactions of this nature. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.