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.