Backstageplay Inc. Announces Merger With eUnited Esports Inc.

VANCOUVER, BC, June 18, 2020 /CNW/ - Backstageplay Inc. (TSXV: BP) (FSE: DOZC) (OTC Pink: PRYNF) (the "Company") is pleased to announce that it has entered into a merger agreement (the "Agreement") dated June 16, 2020, with eUnited eSports Inc. ("eUnited") and Backstageplay (Delaware Inc.), ("SubCo") a wholly-owned subsidiary of the Company, pursuant to which the Company will acquire eUnited through the merger of Subco with and into eUnited (the "Merger"). Throughout this news release, the entity created following the completion of the Merger is referred to as "MergerCo". Following the completion of the Merger, the Company will carry on the business of eUnited while also utilizing its existing software and intellectual property to expand its social gaming platform into the eSports industry.

The Merger will be an Arm's Length Transaction (as that term is defined under TSX Venture Exchange ("TSX-V") Policy 1.1 - Interpretation).

Background on eUnited

eUnited is a privately held premiere esports organization located in Los Angeles, CA. The company was established in 2016 and has grown into one of the more successful esports teams globally winning multiple world championships including the prestigious 2019 Call of Duty World Championship and the 2018 Smite World Championship. In 2019 eUnited was also one of only 8 companies worldwide nominated as the Esports Organization of the Year. In addition to competing in various titles, eUnited is very active on social media and regularly produces original esports related content.

Merger Structure

Prior to the completion of the Merger, the Company will complete a capital reorganization (the "Capital Reorganization") resulting in the Company having two classes of shares: common shares (the "Common Shares") and a new class of voting shares, holding no rights to participate in dividends or liquidation of assets on dissolution, but holding one vote per such share (the "Voting Shares"). Additionally, the eUnited shareholders will undertake a restructuring (the "eUnited Reorganization") pursuant to which such shareholders will own their interests in eUnited collectively through a new limited liability company, ("eUnited HoldCo") and reorganize eUnited's capital.

Upon the completion of the Merger, MergerCo will have class A common shares (the "Class A Shares") and class B common shares (the "Class B Shares"). The Company will hold approximately 31,668,546 Class A Shares assuming the Financing (as described further below) is completed (assuming 14,000,000 Common Shares are issued in the Financing), representing (i) 40% of the issued and outstanding share capital of MergerCo and (ii) the entirety of the Class A Shares as of the date thereof.

In consideration for the completion of the Merger, the Company will issue to eUnited HoldCo Voting Shares equal to 40% of the outstanding voting rights in the Company, representing the entirety of the class of Voting Shares. Upon completion of the Merger and after the completion of the eUnited Reorganization, eUnited HoldCo will retain:

            (i)               47,500,000 exchangeable shares of
                                MergerCo (the "Exchangeable Shares")
                                representing 60% of the issued and
                                outstanding capital stock of MergerCo,
                                which shall be exchangeable at the
                                election of eUnited HoldCo into
                                47,500,000 Class B Shares of MergerCo,
                                and then into 47,500,000 Common Shares
                                of the Company; and





            (ii)              no less than 7,368,421 preferred
                                securities of MergerCo exchangeable at
                                the election of eUnited HoldCo into
                                Class B Shares of MergerCo, and then
                                into Common Shares of the Company,
                                convertible at the election of eUnited
                                HoldCo based upon the per share price
                                of the Common Shares in the Financing
                                using a liquidation preference of
                                US$2,000,000 plus cumulative dividends
                                of eUnited (including on a
                                participating basis with the Class A
                                and Class B Shares of MergerCo) and
                                containing such additional features
                                and terms as contemplated in the
                                Agreement.

When a sufficient number of Exchangeable Shares have been exchanged such that eUnited HoldCo holds less than 40% of the of the issued and outstanding shares of MergerCo, a corresponding number of Voting Shares will be surrendered for cancellation by eUnited HoldCo so that eUnited HoldCo's applicable ownership of MergerCo reflected by the Exchangeable Shares is the same as the voting position in the Company reflected by the Voting Shares, until such time as there are no Exchangeable Shares of MergerCo outstanding and no Voting Shares of the Company outstanding, and a total of 47,500,000 Common Shares shall have been exchanged for the benefit of eUnited HoldCo.

eUnited HoldCo would grant contractual rights to its equity holders pursuant to which they would be entitled to exchange their pro rata portion of the Exchangeable Securities into Class B Shares and then into Company Shares. At the election of such equity holder, eUnited HoldCo would provide notice of an exchange of the applicable Exchangeable Securities to eUnited and then to the Company. The applicable Exchangeable Securities would be surrendered and cancelled concurrently with the issuance of the applicable Class B Shares and then such Class B Shares would be surrendered and cancelled concurrently with the issuance of the applicable Common Shares.

Financing

Concurrently with the closing of the Merger, the Company will conduct a private placement of Common Shares or subscription receipts for Common Shares, for which the size and pricing has not yet been determined, however the financing will be at a minimum price per Common Share or subscription receipt for Common Shares of $0.25 for minimum gross proceeds of $3,000,000 (the "Financing"). The Company may, with the consent of eUnited in its sole discretion, engage an agent for the Financing or alternatively may engage a sponsor as may be required pursuant to TSX-V Policy 2.2 - Sponsorship and Sponsorship Requirements. If the Company does not engage an agent for the Financing, the Company may pay finder's fees, agreed to by eUnited in its sole discretion, to eligible finders.

Management

Upon completion of the Merger, the Company's board of directors shall be reconstituted to consist of five directors, three of whom which shall be nominees of eUnited HoldCo with the remainder being nominees acceptable to eUnited HoldCo, acting reasonably.

Reverse Takeover

The Transaction constitutes a Reverse Takeover under TSXV Corporate Finance Manual Policy 5.2- Changes of Business and Reverse Takeovers and is subject to the approval of the TSXV. Following completion of the Transaction and the closing of the concurrent financing (as defined below), there will be a new "control person" of the Company (as such term is defined by the TSXV). In addition, completion of the Transaction will be subject to the satisfaction or waiver of customary terms and conditions for a transaction of this nature, including receipt of all required consents and regulatory approvals as well as shareholder meetings of both companies. The Transaction is expected to close in the late summer of 2020. No finder's fees are being paid on the Acquisition.

Shareholder Approval

The Company will require prior shareholder approval for the Capital Reorganization. The Company does not anticipate obtaining shareholder approval for the Merger, unless required by the TSX-V, as it is not a Related Party Transaction (as that term is defined under TSX-V Policy 1.1 - Interpretation) and no other circumstances exist that may compromise the independence of the Company or other interested parties.

"We are delighted to have reached this business milestone with our partners at eUnited" said Scott White, Backstageplay's Chief Executive Officer. "We recognize that eSports professionals, teams and the industry as a whole has struggled to provide a forum where effective monetization can occur through gamification. With modest customizations to our technology stack, we can quickly provide the tools for players, teams and the global eSports market to monetize dedicated fan loyalty through social gaming. Combining the access offered by the eUnited organization with our existing platform will give the combined business speed to market allowing us to quickly drive social gaming revenue to players and teams who are searching for ways to reward fan loyalty.

"We are excited to be combining our business with Backstage Play." Said Adam Stein , CEO of eUnited. "Over the past 4 years eUnited has become one of the more popular and successful esports teams competing at the highest levels. We have proven our ability to win world championships and create a globally recognized brand. The merger allows eUnited to continue to grow the competitive side of its business while also building out a platform that leverages the entire esports ecosystem. Marrying our expertise in competitive esports and digital media with the social gaming technology of Backstage Play is powerful and represents the next step in our evolution of creating a dynamic and diversified esports and digital entertainment company."

About Backstageplay Inc.
Backstageplay, Inc. is an online and mobile entertainment and marketing company, engaged in the business of social gaming and retention software and services. For further information, please visit the Company's website at www.backstageplay.com.

About eUnited Inc.

eUnited is a competitive North American based professional eSports organization. eUnited currently has four highly competitive teams and with multiple tournament victories and world championships, eUnited is one of the leading eSports brands in the space today. For further information, please visit the Company's website at www.eunited.gg.

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.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange 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.

The Financing securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "1933 Act"), or under any state securities laws, and may not be offered or sold, directly or indirectly, or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the 1933 Act) absent registration or an applicable exemption from the registration requirements. This news release does not constitute an offer to sell or a solicitation to buy such securities in the United States.

Cautionary Note

All information contained in this news release with respect to eUnited was supplied by eUnited. for inclusion herein, and the Company's directors and officers have relied on eUnited for such information.

Forward-Looking Information Disclaimer

This press release contains certain forward-looking information and statements that reflect the current view and/or expectations of management the Company based on information currently available to the them with respect to performance, business and future events, including, but not limited to, express or implied statements and assumptions regarding the parties' mutual intention to complete the transactions, including but not limited to the Merger and the Financing, contemplated in the Agreement and regarding the terms and conditions relating thereto. The use of any of the words "may", "could", "would", "might", "intend", "plan", "expect", "believe", "contemplate", "anticipate", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and statements and are based on current expectations, beliefs, and assumptions. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which are difficult to predict, such that actual future results and outcomes may differ materially therefrom. Accordingly, the reader should not place undue reliance on forward-looking statements and information in this press release, which are qualified in their entirety by this cautionary statement.

The forward-looking statements in this news release are made as of the date of this release. The Company disclaims any intention or obligation to update or revise such information, except as required by applicable law.

SOURCE Backstageplay Inc.