PopReach Announces Closing of Business Combination with Federated Foundry

/(NOT FOR DISTRIBUTION TO US WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)/

TORONTO, April 28, 2022 /CNW/ - PopReach Corporation ("PopReach" or the "Company") (TSXV: POPR) (OTCQX: POPRF) is pleased to announce that it has completed its previously announced business combination (the "Transaction") with 2810735 Ontario Inc. d/b/a Federated Foundry ("Federated"), as described in its prior press releases dated August 17, 2021, October 18, 2021, October 29, 2021, November 29, 2021, February 14, 2022, February 16, 2022, March 23, 2022 and April 18, 2022.

Pursuant to the Transaction, PopReach acquired Federated for an indicative aggregate purchase price of C$160 million, subject to adjustments for assumed debt, working capital and other customary terms and conditions set out in the definitive transaction agreement entered into by the parties for the Transaction. The net purchase price at closing for the Transaction was C$127.24 million, inclusive of the assumption by PopReach of an aggregate US$22.963 million of debt. As a result, each Federated shareholder received approximately 0.7541 common shares in the capital of the Company (the "Common Shares") for each Federated common share (the "Federated Shares") held by them, for a total issuance from treasury by PopReach of 159,053,948 Common Shares (the "Consideration Shares"). Following completion of the Transaction, PopReach has 232,520,102 Common Shares issued and outstanding, with the Consideration Shares issued to former Federated shareholders comprising approximately 68.40% of the issued capital (basic).

Prior to the closing of the Transaction, PopReach and Federated entered into a second amending agreement to the definitive transaction agreement originally entered into on October 18, 2021 and first amended on February 14, 2022, pursuant to which, in lieu of a triangular amalgamation among Federated and a newly-incorporated subsidiary of PopReach to facilitate the issuance of the Consideration Shares, the parties agreed to a direct share exchange between PopReach and the former Federated shareholders whereby PopReach issued the Consideration Shares to the former Federated shareholders in exchange for the Federated Shares held by each such Federated shareholder. Other than the mechanics, all material terms, as well as the commercial result of the Transaction remain the same as set out in the foregoing paragraph.

The Company received conditional approval from the TSX Venture Exchange (the "Exchange") on February 10, 2022 and as announced by press release dated March 23, 2022, at the special meeting of PopReach shareholders held on that date (the "Meeting"), the Transaction was approved by shareholders with over 98% of the votes cast in favour of the Transaction at the Meeting.

Upon closing, the Company will be delivering all documentation to the Exchange required to obtain final Exchange approval. Subject to the final approval of the Exchange and the issuance of the final Exchange bulletin evidencing final acceptance of the Transaction (the "Final Exchange Bulletin"), the Common Shares will resume trading as a Tier 1 Issuer on the Exchange, currently expected to be at the beginning of trading two (2) business days after the issuance by the Exchange of the Final Exchange Bulletin.

"We are thrilled to be closing this transformational business combination, with our shares set to resume trading, as we set out to build the digital media enterprise of the future by leveraging Federated's adtech and digital technologies platform with the game content at PopReach," said Jon Walsh, CEO and Co-Founder of PopReach. "Out of the gate the new PopReach is growing and generating positive cash flow at scale, and with our recent debt refinancing and growth capital in place we are well positioned to capitalize on industry shifts that are creating unprecedented opportunities to acquire and optimize subscale assets across the digital media value chain."

Added Ted Hastings, Executive Chairman of PopReach, "When Federated was founded, we moved quickly to acquire three complementary businesses with good growth profiles at attractive multiples. Now, as part of PopReach, we intend to use this successful playbook with a larger platform that will allow us to collectively grow and drive greater value accretion, and we cannot wait to get started on the pipeline of opportunities we have underway."

Pursuant to the terms of a Tier 1 Value Security Escrow Agreement dated April 28, 2022 among the Company, TSX Trust Company, as escrow agent, and certain Federated shareholders (the "Escrow Agreement"), an aggregate 109,368,486 Common Shares issued to Federated shareholders have been placed in escrow, whereby 25% of such securities will be released immediately upon the issuance of the Final Exchange Bulletin and the balance of such securities will be released in separate 25% tranches every six months over a period of 18 months thereafter. An additional 42,704,639 Common Shares issued to Federated shareholders are subject to the Exchange's Seed Share Resale Restrictions ("SSRR") with the same release schedule. The remaining approximately 6.98 million Consideration Shares that are not subject to Exchange escrow or SSRR are subject to the contractual lock-up in favour of PopReach with the same release schedule.

In addition to the foregoing Exchange escrow, SSRR and contractual lock-up, all 159,053,948 Consideration Shares are subject to a four month hold period ended August 29, 2022 pursuant to applicable Canadian securities laws.

As a result of the closing of the Transaction, and as approved by PopReach's shareholders at the Meeting, the directors and officers of the Company are now:

By way of update to the disclosure set out in the Company's management information circular dated February 14, 2022 for the Meeting (the "Circular"), on April 11, 2022, Jeff Collins, the new Chief Development Officer of the Company, sold 2,455,474 Federated Shares held by him to another, unrelated arm's length shareholder of Federated. As a result, Mr. Collins held, immediately prior to closing of the Transaction, 11,708,230 Federated Shares, resulting in Mr. Collins holding 8,829,436 Common Shares (3.80% basic) immediately upon closing of the Transaction (instead of 14,163,704 Federated Shares and 10,815,551 Common Shares (4.61% basic), respectively, as originally anticipated and disclosed in the Circular). All of the Common Shares held by Mr. Collins remain subject to the Escrow Agreement, and all of the Common Shares issued in exchange for the 2,455,474 Federated Shares transferred by Mr. Collins also remain subject to the SSRR on the same release schedule.

Further details on the Transaction are set out in the Circular available under the Company's SEDAR profile at www.sedar.com.

PopReach, a Tier 1 Issuer on the TSX Venture Exchange, with shares also trading on OTCQX® Best Market, is a multi-platform technology company focused on acquiring, optimizing and growing companies and assets that provide services, technology or products within the digital media ecosystem. The Company's portfolio includes: PopReach Games, a free-to-play mobile game publisher with over 25 games enjoyed by millions of players; notifyAI, a push notification subscription and monetization platform; Q1Media, a digital media advertising services provider; and Contobox, an award-winning personalization, eCommerce and creative advertising technology platform.

Additional information about the Company is available at www.sedar.com.

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the 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.

Investors are cautioned that, except as disclosed in the management information circular 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.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

This news release contains "forward-looking information" within the meaning of Canadian securities legislation. Forward-looking information generally refers to information about an issuer's business, capital, or operations that is prospective in nature, and includes future-oriented financial information about the issuer's prospective financial performance or financial position.

The forward-looking information in this news release includes disclosure about the resumption of trading of the Common Shares on the Exchange and the receipt of Exchange final approval.

PopReach and Federated made certain material assumptions, including but not limited to: prevailing market conditions; general business, economic, competitive, political and social uncertainties; delay or failure to receive board, or regulatory approvals; and the ability of the resulting issuer to execute and achieve its business objectives, to develop the forward-looking information in this news release. 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 forward-looking statements.

Actual results may vary from the forward-looking information in this news release due to certain material risk factors. These risk factors include, but are not limited to: adverse market conditions; the inability of to obtain Exchange final approval on the terms disclosed in this news release, or at all; the unavailability of exemptions from prospectus requirements for the issuance of PopReach shares; the risks associated with the marketing and sale of PopReach shares; refusal of the proposed directors or officers to act for any reason, including conflicts of interest; reliance on key and qualified personnel; and regulatory and other risks associated with the technology, media and digital gaming industries in general. The foregoing list of material risk factors and assumptions is not exhaustive.

PopReach assumes no obligation to update or revise the forward-looking information in this news release, unless it is required to do so under Canadian securities legislation.

SOURCE PopReach Corporation

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