TGS Esports Announces Intent To Acquire Leading Competitive Esports Platform, Pepper Esports

VANCOUVER, BC, Sept. 1, 2020 /PRNewswire/ - TGS Esports Inc.
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VANCOUVER, BC, Sept. 1, 2020 /PRNewswire/ - TGS Esports Inc. (" TGS" or the " Company") (TSX-V: TGS) is pleased to announce that it has taken the next step in its growth strategy to provide a consolidated end to end esports experience to players and tournament organizers by executing a letter of intent dated August 28, 2020 (the " LOI") to acquire Pepper Esports Inc. (" Pepper"), a leading competitive esports platform (the " Acquisition"). In addition, the Pepper executive team, Guy Halford-Thompson, Jackson Warren and Ben Hoffman, with over a decade of combined experience in growing early stage companies in the public markets, are expected to join TGS executive team on the closing of the Acquisition (the " Closing"). Under the terms of the LOI, TGS is expected to acquire all of the outstanding securities of Pepper by way of a three-cornered amalgamation.

The Pepper platform offers an advanced suite of tools for league operators, tournament operators, and venue owners to setup and manage esports communities and run world class events. These include key innovations, such as Pepper's automatic game scoring technology, which uses its patent pending AI engine and saves event organizers hundreds of hours of setup time, while also providing players and attendees with a vastly improved experience.

Transaction Highlights

  • Develop New Revenue Streams - the Acquisition is expected to provide TGS with diverse new online revenue streams that include data monetization, payment processing and recurring subscription revenue.
  • Expanded Consumer and Business Base - the combined company will have the ability to acquire users from all over the globe through tournaments of any kind.
  • Highly Accomplished and Experienced Team - the completion of the Acquisition will add a team with over a decade of combined experience in growing early stage companies in the public markets.

"Rather than sending our players to third party platforms for online events, and missing out on key revenue, we will now be able to keep players within our ecosystem while also generating revenue directly from the Pepper platform," said Spiro Khouri, CEO of TGS. "This acquisition brings an important technology platform to TGS, making our business model scalable, global, and with defensible IP."

"This acquisition will fast track our ability to scale the Pepper platform by leveraging the existing customers and expertise of the TGS team, and we hope to bring accelerated revenue growth to TGS once the Pepper platform is fully launched," said Guy Halford-Thompson, CEO of Pepper. "Becoming part of TGS is a big milestone for the company."

The global market for esports tournaments is expected to be USD $1.598 billion by 2023 according to an August 2020 report by Statista, with few dominant game-agnostic service providers that are publicly traded.

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 they have agreed to a mutual exclusivity and due diligence period expiring 45 days from the date of the LOI.

On Closing, the Company will acquire all of the issued and outstanding common shares of Pepper (the " Pepper Shares") in consideration for 43,385,664 common shares of the Company (each a " TGS Share", and such TGS Shares issued as consideration for the Acquisition, the " Consideration Shares") at a deemed price of $0.14 per Consideration Share for aggregate deemed consideration of approximately $6,073,993. The Consideration Shares will be subject to a contractual lock-up, with 20% of the Consideration Shares being released on the Closing and a further 20% being released every six months thereafter.

Each outstanding security of Pepper that is convertible or exchangeable for Pepper Shares will be exchanged for corresponding securities that are convertible or exchangeable for TGS Shares on substantially the same economic conditions.

On Closing, Pepper will have the right to appoint a nominee to the board of directors of the Company.

The LOI contains, and the Definitive Agreement will provide for, customary representations, warranties and covenants including non-solicitation and a right to match any superior proposal. Completion of the Acquisition remains subject to a number of conditions, including: (i) the approval of the Acquisition by the shareholders of Pepper, (ii) the completion of satisfactory due diligence, (iii) the approval of the boards of directors of the Company and Pepper, (iv) the execution of the Definitive Agreement, (v) obtaining all required consents, waivers and approvals, including the approval of the TSX Venture Exchange, and (vi) other closing conditions customary for transactions of this nature.

Haywood Securities Inc. has acted as a financial advisor to Pepper in connection with the Acquisition.

The Company and Pepper deal at arm's length with each other, and the Acquisition is not expected to result in a change of control of the Company.  A finder's fee in an amount to be determined at a later time may be payable in connection with the Acquisition, subject to compliance with applicable securities laws and the approval of the TSXV.

About Pepper Esports Inc.

Pepper is a leading esports platform provider that offers an advanced platform to create and manage communities of players, organizers, spectators and sponsors, all in one place.  By working closely with event organizers and live venue operators over the last two years, Pepper has developed a suite of advanced tools to manage esports communities, run world class esports and operate physical gaming venues.

Pepper's key technologies include its patent pending AI engine, which automatically captures game data to create a tournament experience that extends beyond live gameplay and includes highly demanded features such as global leaderboards, player profiles and statistics, new tournament discovery and digital wallets.

About TGS Esports Inc.

TGS Esports Inc. is the parent company of Myesports. Myesports was created in Vancouver, British Columbia, in 2018, and is an esports organization focused on providing and hosting esports events, tournaments, and leagues at both the amateur and professional levels both online and in person. Myesports is the operator of Canada's first dedicated esports arena, The Gaming Stadium, located in Richmond, British Columbia, which opened in June 2019.  Since its inception, Myesports has hosted esports events for games such as League of Legends and Fortnite, as well as organized and hosted the Pinnacle event at the River Rock Casino and the Burnaby Festival of Learning. Myesports also 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, CEOTGS 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: Guy Halford-Thompson, Jackson Warren and Ben Hoffman joining the TGS team, that the Acquisition will allow the Company to keep players within its ecosystem while also generating revenue directly from the Pepper platform, that the Acquisition will make the Company's business model scalable, global, and with defensible IP, that the Acquisition will fast track Pepper's ability to scale the Pepper platform by leveraging the existing customers and expertise of the TGS team the execution of the Definitive Agreement and the terms of such Definitive Agreement, the completion of the Acquisition, the acceptance of the TSX Venture Exchange, the global market for esports tournaments and that a finder's fee may be payable in connection with the Acquisition. 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.

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SOURCE TGS Esports Inc