eUnited Enters Agreement to Go Public on TSXV Through Reverse Merger

Los Angeles-based esports organization eUnited entered into a merger agreement with Toronto Stock Exchange Venture Exchange (TSXV)-listed mobile entertainment and marketing company Backstageplay, which would result in a reverse takeover of Backstageplay and the public listing of eUnited on the TSXV.

Prior to the proposed merger, both companies will complete a capital reorganization, as part of which eUnited’s shareholders will organize their ownership stakes collectively through a new limited liability holding company. Following the completion of the reverse takeover, the surviving company will carry on the business of eUnited while also utilizing its software and intellectual property to expand its social gaming platform into esports.

The holding company of eUnited’s current shareholders will retain 60% of the merged company’s outstanding capital stock and roughly 7.4M of the company’s preferred securities after the business transaction is completed. Furthermore, it will nominate three of the five members on the merged company’s board of directors and approve of the remaining two.

Simultaneously, with the merger’s closing, the company is looking to conduct a private placement investment to raise a minimum of $3M CAD ($2.2M USD) in gross proceeds. At the time of writing, Backstageplay has a market capitalization of just under $2M (1.5M).

On June 1 Backstageplay, which generated a net loss of $127K ($94K) in the first quarter of 2020, released a management discussion and analysis of its Q1 2020 financial results, which marked the third consecutive quarter of zero revenues generated. The company’s management determined “that the path to material revenue would be to focus on launching tier 1 customers or looking at other opportunities in the entertainment sectors. As a result, the company has reduced its operational spend while it pursues these opportunities.”

“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,” Backstageplay’s CEO Scott White said in a release. “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.”

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