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Wed. 29 Jun 2022, 8:30am ET Benzinga Entertainment, Press Releases, General

VANCOUVER, BC, June 29, 2022 /CNW/ - TGS Esports Inc. ("TGS" or the "Company") (TSXV:TGS) is pleased to announce that, further to its news releases dated February 18, 2022, March 16, 2022, and April 19, 2022, the Company has entered into a Securities Exchange Agreement dated June 28, 2022 (the "Agreement") with NextPlay Technologies, Inc. (NASDAQ:NXTP) ("NextPlay"), Don Monaco and William Kerby, pursuant to which the Company has agreed to acquire a 51% interest in Reinhart Interactive TV AG ("Reinhart") (which is the 100% owner of Zappware) and 100% interest in NextTrip Group LLC ("NextTrip") from NextPlay and Mssrs. Monaco and Kerby, and to complete certain ancillary transactions (collectively, the "Transaction").  Prior to closing of the Transaction (the "Closing"), the Company intends to raise gross proceeds of up to $2,000,000 through the private placement of common shares of the Company (the "TGS Shares") at $0.20 per TGS Share (the "Interim Financing").

About Reinhart Interactive

Reinhart is a private Swiss limited liability company which pursues a buy and build strategy in the digital TV space. Reinhart owns 100% of Zappware BV, a 20-year-old Belgian interactive Digital TV solutions company based in Hasselt, Belgium. Zappware offers video user interfaces for all screen types as well as the back-office platforms to deliver linear and on-demand video services to those screens. Zappware designs, develops and deploys video solutions for service providers.  Zappware seeks to create the demand for video services through its customer experience and fuel the business intelligence to personalise the video service with relevant content suggestions, upsell and loyalty triggers.  

About NextTrip

NextTrip is a technology driven platform delivering innovative solutions for business and leisure travel. NextTrip Business is an all-in-one online corporate travel and expense management solution with a large inventory of travel options and discounted rates. NextTrip Journeys provides leisure travelers personalized vacation experiences on land, sea and across the world. NextTrip Solutions offers travel technologies that makes the jobs of alternative lodging property managers, wholesalers, distributors, and other travel industry players easier and more efficient. For more information, visit nexttrip.com.

Summary of the Transaction

The business combination of TGS, Reinhart (Zappware) and NextTrip is expected to enhance the travel and gaming products offered by NextTrip and TGS respectively, and leverage partnerships by incorporating them into NextTrip's newly launched Travel Magazine metaverse and through the development of a new platforms, which will be distributed using Zappware's reach to millions of viewers across TV, web, and mobile platforms. TGS already partners with Fortune 500 brands, schools, and tournament organizers to build out their esports community with online tournaments, broadcast production and in-person events as well as working with some of the largest brands in the world, including 7-Eleven, Red Bull, HyperX, Pepsi, Shaw Cable, Telcel and Ubisoft, to help them reach the premium demographic of the 18 to 34-year-old esports audience.

TGS Esports CEO, Spiro Khouri, commented, "I began working with Zappware last fall to explore the integration of our esports gaming tournament feeds and content into Zappware's digital media ecosystem, and was advised that esports content had become increasingly high in demand by the TV distributors and telecoms served by Zappware. Upon further investigation, it was evident that NextTrip could bring a travel booking solution in-house to power our in-person tournaments, greatly enhancing our customer experience while allowing us to capture additional revenue, as in-person event activity continues to recover post-pandemic. Our attendance at the Esports Travel Summit last week further confirmed the incredible opportunity ahead in this space. This business combination is a very exciting progression for stakeholders."

NextPlay co-CEO, Bill Kerby stated, "People are searching and watching content more than ever, especially their on-the-go devices, and that includes many hours of gaming and esports content. As the relationship with TGS developed, our team began to realize that we could create greater shareholder value through the combination of Reinhart/Zappware, NextTrip and TGS by taking advantage of the increasing synergies between esports, streaming/over-the-top (OTT) services, and travel booking solutions. We believe that the unique and proven ability of TGS to connect fans and multinational brands through its esports platforms makes them a perfect fit with our Zappware media and NextTrip travel booking technologies."

The Transaction is an arm's length transaction.  Closing of the Transaction (the "Closing") is subject to a number of conditions, including, without limitation, the required approvals of the TSX Venture Exchange (the "TSXV") and the shareholders of TGS.  A copy of the Agreement will be filed on SEDAR under the Company's profile.  Trading in the TGS Shares is expected to remain halted until Closing.

Terms of the Transaction

TGS has agreed to acquire a 51% interest in Reinhart (the "Reinhart Interest") and a 100% interest in NextTrip (the "NextTrip Interest", and together with the Reinhart Interest the "Target Securities") for USD$15,860,000 (CAD$20,424,428.70) payable by the issuance of an aggregate of 69,714,286 TGS Shares to Mr. Monaco and Mr. Kerby (the "Management Shareholders") at a deemed issue price of USD$0.0525 (CAD$0.068) per TGS Share and the issuance of 232,380,952 non-voting convertible preferred shares of TGS having the special rights and restrictions described in the Agreement (the "TGS Preferred Shares") to NextPlay on Closing.  Of the total consideration paid, USD$7,660,000 (CAD$9,864,509.70) is allocated to the purchase of the NextTrip Interest and USD$8,200,000 (CAD$10,559,919.00) allocated to purchase of the Reinhart Interest.  Each TGS Preferred Share is convertible into one TGS Share without the payment of additional consideration upon: (i) the Company becoming listed on a U.S. senior exchange (a "Qualified Listing"), or (ii) upon the mutual consent of TGS and NextPlay. On conversion, subject to the terms of the TGS Preferred Shares and a Right of First Refusal and Distribution Agreement to be entered into between TGS and NextPlay at closing of the Transaction, the TGS Preferred Shares will be converted to common shares, and NextPlay will set a shareholder record date for a special dividend to distribute all of NextPlay's TGS Shares issued on conversion of the TGS Preferred Shares to the shareholders of NextPlay.  If the conversion does not occur within four years of issuance of the TGS Preferred Shares, the shares are either automatically converted to TGS Shares or redeemable in cash for CAD$0.068 per share, at the option of the holder.  The creation and issuance of the TGS Preferred Shares contain additional terms not described herein and is subject to approval of the TSXV and the shareholders of TGS.  The directors, officers and certain shareholders of TGS have signed voting support agreements representing TGS Shares in connection with the entry into the Agreement, and intend to vote in favour of the creation of the TGS Preferred Shares at a meeting of the shareholders of TGS that is expected to be called for approval of such matters (the "Meeting").  The Company intends to prepare a management information circular in connection with the Meeting which will be sent to shareholders and filed on SEDAR, and will include additional information regarding the Transaction, NextTrip, Reinhart, the proposed directors and officers of the resulting issuer and additional information pertinent to the matters to be voted on at the Meeting in the information circular.

An aggregate of 11,619,048 TGS Shares (the "Escrowed Shares") will be subject to a voluntary escrow agreement on Closing, pursuant to which the shares will be released from escrow over four years from the Closing upon delivery of a Trigger Notice (as defined in the Agreement) for each of the following events: (i) at the time of the conversion by NextPlay of the TGS Preferred Shares, at the last traded price of TGS' Shares equal to or greater than CAD$0.0782 per share, which is equivalent to a 115% premium on the TGS Shares, or (ii) at the time of a redemption or sale of TGS' Preferred Shares by NextPlay, the TGS Preferred Shares are sold for a price of CAD$14,030,000 or greater, which is equivalent to a 115% premium to the value of the TGS Preferred Shares (the "Voluntary Escrow").  In addition to the Voluntary Escrow, the TGS Shares and TGS Preferred Shares issued in consideration for the Target Securities may be subject to addition restrictions under applicable TSXV policies and securities laws, including such reasonable restrictions that may be imposed on such new insiders of the resulting issuer.

As part of the Transaction, NextPlay has agreed to provide funds to support the integration and initial working capital needs for the NextTrip and Reinhart/Zappware combination with TGS.  NextPlay has already contributed USD$1.5 million to NextTrip, and has agreed to fund an additional commitment of USD$1.5 million to be paid by NextPlay to NextTrip over a 10-month period commencing July 1, 2022.

Pursuant to the Agreement, the Company has also agreed to reconstitute its board of directors on Closing such that there will be a total of 7 directors comprised of 5 nominees of Messrs. Kerby and Monaco and 2 nominees of Mr. Khouri (the "Board Re-Constitution").  Messrs. Kerby and Monaco, both nominees of NextPlay, and Mr. Khouri, a nominee of TGS, are expected to be on the board of directors of the Company following Closing.  The other nominees to the board have not been determined at this time.  Additional information regarding the directors and officers of the resulting issuer will be disclosed when available.  Following Closing, Mr. Monaco will become Chairman of the Company, Mr. Kerby will become Chief Executive Officer and Mr. Khouri will become Chief Gaming Officer.  The Board Re-Constitution will be subject to TSXV approval and approval of the TGS shareholders at the Meeting.

The Company has also agreed, pursuant to the Agreement, that following Closing but prior to a Qualified Listing, it will complete a consolidation of the TGS Shares on the basis of up to 40 pre-consolidation shares for 1 post-consolidation shares (the "Consolidation").  The Consolidation will be subject to TSXV and shareholder approval. The Company is also considering its options for equity financing, in addition to the Interim Financing, which would close concurrently with closing of the Transaction.

The Company intends to change its name to "TGS Inc." on Closing and to keep the stock symbol "TGS".  Following Closing, the Company is expected to remain listed on the TSXV as a Tier 2 technology issuer.

Certain finder's fees are payable to arm's length parties in connection with the Transaction.  Pursuant to finder's fee agreements, the Company has agreed to pay 3% of the transaction value to Seastar Ventures Inc. by the issuance of 9,062,205 TGS Shares and 2.5% of the transaction value to CRM Global Capital by the issuance of 7,521,838 TGS Shares (collectively, the "Finder's Fee Shares"). The Finder's Fee Shares will be issued at a deemed price of CAD$0.068 per share and will be subject to a hold period expiring four months and one day after Closing.  The issuance of the Finders Fee Shares is subject to TSXV approval.

On Closing, the outstanding voting shares of TGS, being the TGS Shares on an undiluted basis, are expected to be held approximately as to 60.5% by current TGS shareholders, 30.5%% by the Management Shareholders, 1.7% by subscribers to the Interim Financing, and 7.2% by the finders.  The TGS Preferred Shares are non-voting.

The Closing is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including but not limited to: (i) receipt of all requisite consents, waivers and approvals for the Transaction, including the approval of TSXV, including, but not limited to, the listing of the TGS Shares issued to the Management Shareholders and those TGS Shares issuable upon the conversion of the TGS Preferred Shares; (ii) the absence of any material adverse change in the business, affairs or operations of TGS, Reinhart or NextTrip, as applicable; (iii) completion of the Interim Financing; (iv) the Board Re-Constitution; (v) the delivery of a fairness opinion to TGS, opining on the fairness of the consideration paid for the Target Securities, as of the date of the Agreement; (vi) the approval by the shareholders of TGS of those rights, preferences and privileges necessary for the creation of the Preferred Shares; and (vii) NextTrip having received a waiver or termination, in a form acceptable to NextPlay, from the owners of the Reinhart Interests terminating such owners' option to require NextPlay to purchase the Reinhart Interests not owned by its and not included in the Target Securities.

The Transaction is an arm's length transaction and expected to constitute a reverse takeover of TGS pursuant to the policies of the TSXV.  The Transaction, certain ancillary corporate matters discussed above and such additional matters in connection with the Transaction as may be required by the TSXV will require the approval of the shareholders of TGS for their respective authorizations and implementations.

Interim Financing

The Company seeks to complete the Interim Financing by the issuance on a private placement basis of up to 10,000,000 TGS Shares at an issue price of CAD$0.20 per TGS Share for gross proceeds of up to CAD$2,000,000.  The proceeds of the Interim Financing are expected to be used by the Company to pay for the costs of the Transaction, to fund the Company's business operations and for general working capital purposes.  Finder's fees and commissions may be paid to eligible persons in connection with the Interim Financing.  The TGS Shares issued pursuant to the Interim Financing will be subject to a hold period expiring four months and one day after the date of issuance, and may be subject to additional resale restrictions under applicable TSXV policies and securities laws.  The Company expects to close the Interim Financing prior to completion of the Transaction.

Loan Arrangement

Prior to the entry into of the Agreement, further to the Company's news releases dated February 18, 2022 and March 16, 2022, TGS received drawdowns in the aggregate amount of CAD$1,000,000 from Don Monaco and Bill Kerby, both arms' length lenders to TGS who are affiliated with NextPlay and agreed to advance funds to the Company as an unsecured loan (the "Loan").  The Loan does not bear interest and matures on August 24, 2022.  The Company has used the proceeds of the loan to fund business operations, working capital requirements and costs associated with the Transaction.  Following Closing, the Loan will be considered a related party transaction as the lenders will be directors and officers of the Company.  For more information on the Loan as well as the intended use of proceeds therefrom, please refer to the Company's February 18, 2022 and March 16, 2022 news releases filed under its profile on SEDAR.

Additional Information

All information contained in this news release with respect to the Company and NextPlay was supplied, for inclusion herein, by each respective party and each party and its directors and officers have relied on the other party for any information concerning such other party.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable, disinterested shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this news release.

About TGS Esports Inc.

TGS Esports builds gaming strategies for brands looking to connect with any gaming community. This includes planning and executing live and digital tournaments, live broadcasting, influencer campaigns, and scholastic integration. Tournaments are held on TGS' proprietary social gaming platform Pepper allowing communities to interact and engage in one space. The combination of TGS esports event expertise and next generation software creates an unparalleled esports experience that allows brands to reach their desired gaming demographic.

About NextPlay Technologies Inc.

NextPlay Technologies, Inc. (NASDAQ:NXTP), a Nevada corporation, is a technology solutions company offering games, in-game advertising, crypto-banking, connected TV and travel booking services to consumers and corporations within a growing worldwide digital ecosystem. NextPlay's engaging products and services utilize innovative AdTech, Artificial Intelligence and Fintech solutions to leverage the strengths and channels of its existing and acquired technologies. For more information about NextPlay Technologies, visit www.nextplaytechnologies.com and follow us on Twitter @NextPlayTech and LinkedIn.

On behalf of the Board of Directors

Spiro Khouri, CEO

TGS Esports Inc.

Disclaimer for Forward-Looking Information

Certain statements in this news release are forward-looking statements, which reflect the expectations of management regarding the Company's completion of the Transaction and related transactions. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future, including but not limited to, the Company completing the Transaction, the completion of the Interim Financing, the anticipated use of proceeds of the Interim Financing, the conditions to be satisfied for completion of the Transaction, the approval by the shareholders of the Company for the adoption of the rights, preferences and privileges of the Preferred Shares, the name and business carried on by the Resulting Issuer, the Board Re-Constitution, the reliance on a prospectus exemption for the issuance of the Shares and the Preferred Shares, and obtaining a waiver from the TSXV sponsorship requirements. Such statements are subject to assumptions, 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 requisite corporate and shareholders approvals of the directors and shareholders of the Company or NextPlay, as applicable, may not be obtained; the Company may be unable to close the Interim Financing in full or in part; the TSXV may not approve the Transaction; that the parties may be unable to satisfy the closing conditions in accordance with the terms and conditions of the Agreement; and other risks that are customary to transactions of this nature. The novel strain of coronavirus, COVID-19, and ongoing dispute between the sovereign state of Ukraine and Russia also pose risks that are currently indescribable and immeasurable. 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. The reader is cautioned not to place undue reliance of any forward-looking statements. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

This news release does not constitute an offer to sell, or solicitation of an offer to buy, nor will there be any sale of any of the securities offered in any jurisdiction where such offer, solicitation or sale would be unlawful, including the United States of America. The securities being offered as part of the Interim Financing have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and accordingly may not be offered or sold in the United States except in compliance with the registration requirements of the U.S. Securities Act and any applicable state securities laws, or pursuant to available exemptions therefrom.

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.

SOURCE TGS Esports Inc

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