GameSquare Esports Inc. Announces Signing of Definitive Agreement to Acquire Reciprocity Corp. to Build a Leading International Gaming and Esports Company

GameSquare Esports Inc. Announces Signing of Definitive Agreement to Acquire Reciprocity Corp

TORONTO, Jan. 04, 2021 (GLOBE NEWSWIRE) — GameSquare Esports Inc. (CSE: GSQ; FRA: 29Q1) (“GameSquare” or the “Company”), a Canadian gaming and esports company, is pleased to announce that it has signed an arrangement agreement dated December 31, 2020 (the “Agreement”) pursuant to which the Company expects to acquire (the “Acquisition”) 100% of the issued and outstanding shares of Reciprocity Corp. (“Reciprocity”), a privately held gaming and esports company. Under the terms of the Agreement, GameSquare will issue 43,750,000 common shares of GameSquare at a deemed price of C$0.33 per share to certain securityholders of Reciprocity (the “Consideration Shares”). Certain Reciprocity securityholders will also be entitled to receive (i) 5.3 million GameSquare common shares (“Common Shares”) if the Reciprocity business generates a minimum of US$5 million of revenue and US$1 million of EBITDA1 within 12 months of closing of the Acquisition (the “Closing”) and (ii) 9 million Common Shares if the Reciprocity business generates a minimum of US$7 million of revenue and US$1.4 million of EBITDA within 12 months of Closing. The Consideration Shares shall be subject to a 12-month lock-up period, a third of which will be released every four months following Closing. In addition, in connection with the Acquisition, the Company has also agreed to grant (i) 3 million replacement options to certain Reciprocity optionholders exercisable for 24 months to acquire an equal number of Common Shares at an exercise price of C$0.40 per option and (ii) 6,168,000 options to certain Reciprocity securityholders exercisable for 24 months to acquire an equal number of Common Shares at an exercise price of C$1.00 per option. As further described in a press release dated November 25, 2020, the combination of GameSquare and Reciprocity is expected to significantly increase the revenue profile of the combined entity and to result in a company that generates positive EBITDA in the twelve months following Closing. The Company expects to provide more detail relating to the Acquisition in a press release to be issued in early January 2021.
The Acquisition is an arm’s length transaction for the purposes of the policies of the Canadian Securities Exchange (“CSE”) and is being structured as a plan of arrangement. GameSquare is not paying any finder’s fees in connection with the Acquisition. The Closing is subject to the satisfaction of customary conditions precedent, including, inter alia, applicable shareholder and regulatory approvals, including a final court order of the Ontario Superior Court of Justice (Commercial List), and other closing conditions customarily found in transactions similar to the Acquisition. Closing is expected to occur in early March 2021.1 Non-GAAP measure. EBITDA, as used in this press release, represents net earnings before financing expenses, taxes, and amortization.About GameSquare Esports Inc.GameSquare Esports Inc. is an international gaming and esports company headquartered in Toronto, Canada. The Company is seeking to acquire additional assets and entities serving the gaming and esports markets and, more broadly, in sports and entertainment. GameSquare’s acquisition of Code Red Inc. (“Code Red”), an esports talent agency, provided an initial foothold in Europe through its UK operations. Code Red represents leading on-screen talent, players and influencers and works with leading global brands to develop influencer campaigns and esports marketing strategies.About Reciprocity Corp.Reciprocity is a gaming and esports company headquartered in Toronto, Canada and has been operating since 2017. Reciprocity owns three gaming and esports assets: a CrossFire franchise in China that it owns with its partner LGD Gaming, a 40% interest in a League of Legends team that competes in Latin America, and, its wholly owned subsidiary corporation, GCN, Inc., a digital media company focusing on the gaming and esports audience based in Los Angeles, USA.ContactFor further information, please contact Kevin Wright, CEO of GameSquare Esports Inc.:Email: [email protected]
Phone: (416) 861-2267
Forward-Looking InformationThis news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements“) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the Company’s ability to complete the Acquisition, the expected timing of Closing, the receipt of shareholder and regulatory approval in connection with the Acquisition, and other matters related thereto; the business and operations of the Company, the proposed synergies among GameSquare and Reciprocity, and the Company’s ability to execute its business plan. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, GameSquare assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

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