TGS Esports Announces Definitive Agreement to Acquire Canadian Scholastic Esports and Digital Media Startup, Volcanic Media

TGS Esports Announces Definitive Agreement to Acquire Canadian Scholastic Esports and Digital Media Startup, Volcanic Media

TGS Esports Inc. (“TGS” or the “Company“) (TSXV: TGS) is pleased to announce that, further to its news release of October 7, 2020 it has entered into a Share Exchange Agreement (the “Agreement“) with Volcanic Media Inc. (“Volcanic“), a leader in scholastic and grassroots Canadian esports (the “Acquisition“).

The Acquisition is the latest step in TGS’ corporate growth strategy and adds a scholastic division to the Company with a focus on events, leagues, and in-class programs for High Schools and Post-Secondary Institutions. It is expected that Volcanic will utilize Pepper Esports Inc.’s (“Pepper“) platform and TGS’ esports expertise to further the development of an all in one esports experience under the TGS banner.

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.

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.

“Taking the next step in this process with Shawn and his team is very exciting,” said Spiro Khouri, CEO of TGS. “The opportunity to bring scholastic programs into the fold presents large opportunities for our company. The utilization of Pepper for these programs truly showcases that TGS is able to offer an all in one esports solution to anyone, regardless of age or location.”

“Volcanic was created to provide high quality esports events in the scholastic space. Now being able to utilize Pepper’s platform and TGS’ expertise in events and production takes us to the next level. We cannot wait to connect with schools all over Canada and show what we can do, for free!” said Shawn Caldera, President of Volcanic.

For more information on Pepper and TGS’ acquisition thereof, please see the Company’s news releases filed on SEDAR on September 1, 2020 and November 2, 2020.

Summary of Acquisition

Pursuant to the terms of the Agreement, on closing of the Acquisition (the “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“). The Consideration Shares may be subject to an escrow period as required by the TSX Venture Exchange (the “TSXV“).

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 user accounts are registered on Pepper’s esports platform or any other TGS platform (the “Platform“) as a result of contracts entered into by Volcanic or otherwise due to the efforts of Volcanic or its principal shareholders (the “Principal Shareholders“); $30,000 on the date that a cumulative total of 40,000 new user accounts are registered on the Platform as a result of contracts entered into by Volcanic or otherwise due to the efforts of Volcanic or the Principal Shareholders; $30,000 on the date that a cumulative total of 70,000 new user accounts are registered on the Platform as a result of contracts entered into by Volcanic or otherwise due to the efforts of Volcanic or the Principal Shareholders; $30,000 on the date that a cumulative total of 100,000 new user accounts are registered on the Platform as a result of contracts entered into by Volcanic or otherwise due to the efforts of Volcanic or the Principal Shareholders; $50,000 on the date that a cumulative total of 150,000 new user accounts are registered on the Platform as a result of contracts entered into by Volcanic or otherwise due to the efforts of Volcanic or the Principal Shareholders; and $50,000 on the date that a cumulative total of 200,000 new user accounts are registered on the Platform as a result of contracts entered into by Volcanic or otherwise due to the efforts of Volcanic or the Principal Shareholders.

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.

Concurrent to and as a condition to Closing, it is expected that each of Shawn Caldera and JP Perez will enter into consulting agreements (together, the Consulting Agreements“) with TGS pursuant to which they will serve the Company as Scholastic Esports Director and Scholastic Esports Manager respectively.

The Acquisition is subject certain conditions, including: (i) the completion of satisfactory due diligence; (ii) the receipt of all necessary consents, waivers and approvals, including the approval of the TSXV; (iii) TGS having completed its acquisition of Pepper; (iv) the entry of the Consulting Agreements; (v) there having been no material adverse effect occurring with respect to the Company or Volcanic; (vi) TGS having agreed to implement reasonable technical measures to allow the parties to determine if a user was registered on the Platform as a result of contracts entered into by Volcanic or otherwise due to the efforts of Volcanic or the Principal Shareholders, and (vii) other closing conditions customary for transactions of this nature.

No finder’s fees are payable in connection with the Acquisition. Following the Closing, Volcanic will become a wholly-owned subsidiary of the Company.

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