Calgary, Alberta–(Newsfile Corp. – November 4, 2020) – Elephant Hill Capital Inc. (TSVX: EH.P) (the “Corporation” or “Elephant Hill“), a capital pool company, further to its press releases dated May 12, June 10 and June 22, 2020, the Corporation is pleased to announce that it has entered into a binding merger agreement (the “Definitive Agreement“) dated November 2, 2020 with Esports Limited, a private company doing business as “Luckbox” (“Luckbox“). The Definitive Agreement sets out the terms and conditions of a proposed transaction (the “Proposed Transaction“) that will result in Elephant Hill acquiring all of the issued and outstanding common shares of Luckbox (the “Luckbox Shares“).

The Proposed Transaction is expected to be completed by way of a three-cornered merger under the laws of the Isle of Man, and will result in Luckbox becoming a wholly owned subsidiary of the Corporation. The proposed Transaction does not constitute a Non-Arm’s Length Qualifying Transaction and is not subject to shareholder approval under the policies of the TSX Venture Exchange (the “Exchange“).

Overview of Elephant Hill Capital Inc.

Elephant Hill is a capital pool company. The Corporation’s principal business activity is to identify and evaluate opportunities for the acquisition of assets or businesses. The Corporation was incorporated on January 15, 2018 and has its registered office in Calgary, Alberta.

Overview of Luckbox

Luckbox is a private esports betting company, incorporated in the Isle of Man on April 25, 2019 and headquartered in the Isle of Man, with a fully licensed betting platform dedicated to serving the global esports community where fans and customers are able to bet, watch, and chat in a safe environment. Luckbox believes that it serves the single largest revenue category in esports today and derives its revenue from one of the most promising verticals in the esports industry. Luckbox has an experienced management team in both esports and betting and a dedicated esports user experience. Website: https://luckbox.com.

Luckbox’s Selected Financial Information

The financial highlights for Luckbox for the year ended December 31, 2018 and 2019, and for the six months ended June 30, 2020, are as follows:

The Proposed Transaction

The Definitive Agreement between Elephant Hill and Luckbox includes representations, warranties, covenants and conditions typical for a transaction of this nature. The Proposed Transaction is subject to, among other things, receipt of all applicable shareholder and regulatory approvals, the final approval of the Exchange and the satisfaction of customary closing conditions, including the conditions described below.

The Corporation intends to hold an annual and special meeting of its shareholders on November 9, 2020 (the (“EH Meeting“), for purposes of approving its annual meeting business and certain matters ancillary to the Proposed Transaction, including: (a) authorization for a consolidation of the common shares of Elephant Hill; (b) for a change of the name of Elephant Hill to a name that the Corporation and Luckbox may determine, which shall be acceptable to the Exchange; and (c) to authorize the directors to approve the adoption of a 20% fixed stock option plan, subject to the approval of the Exchange.

The Definitive Agreement contemplates Elephant Hill completing a consolidation of its common shares on a 4.2:1 basis (the “Consolidation“). Following the closing, Elephant Hill will continue on with the business of Luckbox (Elephant Hill after the Proposed Transaction being referred to herein as the “Resulting Issuer“). In connection with the Proposed Transaction, Elephant Hill intends to list as a Tier 2 Industrial/Technology Issuer on the Exchange.

Each shareholder of Luckbox will receive 1.0 “new” Elephant Hill common share (each, an “Elephant Hill Share” and, collectively, the “Elephant Hill Shares“) in exchange for each one (1) Luckbox Share and each Luckbox stock option and warrant (if applicable) held by such holder shall be exchanged for a stock option and warrant of Elephant Hill on the same terms. The former shareholders or securityholders of Luckbox shall receive 46,062,952 Elephant Hill Shares (which assumes the conversion of the Convertible Note (defined below) and the exchange of the Subscription Receipts (defined below)) at a deemed price of $0.42 per share and there will be an aggregate of 9,462,340 options and warrants of Luckbox outstanding which will, pursuant to the Proposed Transaction, be exchanged for options and warrants to purchase Elephant Hill Shares.

It is expected that all Elephant Hill Shares (including Elephant Hill Shares issued upon exercise of Elephant Hill warrants) and Elephant Hill Share purchase warrants (collectively, the “Elephant Hill Securities“) issued pursuant to the Proposed Transaction, except those certain Elephant Hill Securities issued to U.S. persons, will be freely tradable under applicable Canadian securities legislation, but may be subject to Exchange imposed restrictions on resale. Elephant Hill Securities issued to U.S. persons will not be freely tradable and will be subject to restrictions upon trading under applicable U.S. securities laws. None of the securities to be issued pursuant to the Proposed Transaction have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act“), or any state securities laws, and any securities issued pursuant to the Proposed Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 4(a)(2) and/or Regulation D of the U.S. Securities Act and applicable exemptions under state securities laws. The Elephant Hill Securities issued to U.S. persons may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under applicable U.S. securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

RTO Financing

In connection with the Proposed Transaction, on June 19, 2020, and September 28, 2020, Luckbox completed a brokered private placement of 10,728,272 subscription receipts and a concurrent non-brokered private placement of 190,476 subscription receipts (the “Subscription Receipts“) for aggregate gross proceeds of $4,555,874 (the “RTO Financing“). The gross proceeds of the RTO Financing less 50% of the fees paid to the agents (the “Escrowed Funds“) were placed in escrow and will only be released from escrow to Luckbox upon satisfaction of escrow release conditions customary in a business combination transaction such as the Proposed Qualifying Transaction, including the following conditions: (i) the satisfaction or waiver of all conditions to the completion of the Proposed Qualifying Transaction (other than the release of the Escrowed Funds); (ii) conditional approval of the listing of the Resulting Issuer Shares on the Exchange; (iii) the receipt of all regulatory, shareholder and third-party approvals required in connection with the Proposed Qualifying Transaction; and (iv) the delivery of a release notice and direction to the escrow agent confirming that the escrow release conditions have been satisfied or waived on or before 5:00 pm (Calgary time) on December 31, 2020. In connection with the Merger and closing of the Proposed Transaction, each holder of a Subscription Receipt will receive without payment of additional consideration and without further action on the part of the holder, a unit (each, a “Unit“) of the Resulting Issuer. Each Unit will consist of one (1) common share (each a “Common Share“) of the Resulting Issuer and one-half of one common share purchase warrant (each whole warrant, a “Warrant“), with each Unit priced at C$0.42 per Unit. Each Warrant will be exercisable into one (1) Common Share at a price of C$0.63 per Common Share for a period of 24 months from the closing of the Proposed Transaction, subject to an acceleration right (the “Warrant Acceleration Right“) if on any ten (10) consecutive trading days, beginning on the date that is four (4) months and one (1) day following the closing date of the Transaction, the closing price of the Resulting Issuer’s Common Shares on the Exchange is greater than C$0.84 per share. If the Resulting Issuer exercises the Warrant Acceleration Right, the new expiry date of the Warrants will be the 30th day following the notice of such exercise.

Gravitas Securities Inc. and Beacon Securities Ltd. (the “Agents“) acted as co-lead agents and co-bookrunners, on behalf of a syndicate of agents in connection with the RTO Offering. The Agents received a commission equal to 8% of the aggregate cash proceeds received from the sale of the Subscription Receipts and warrants exercisable at any time prior to the two (2) year anniversary of the closing date of the Proposed Transaction to acquire that number of Units of the Issuer which is equal to 8% of the number of Units sold under the Proposed Offering, at an exercise price equal to C$0.42 per Unit. In addition, Luckbox raised approximately $500,000 through the sale of a convertible note (the “Convertible Note“) that will be converted into Luckbox Shares and warrants to purchase Luckbox Shares prior to completion of the Transaction.

Elephant Hill intends to use the net proceeds of the RTO Financing and existing cash on hand for capital expenditures and working capital of the Resulting Issuer.

After giving effect to the Consolidation and following the completion of the Proposed Transaction it is anticipated that an aggregate of 47,729,618 Resulting Issuer Shares will be issued and outstanding as fully paid and non-assessable shares, 166,666 Resulting Issuer Shares will be reserved for issuance pursuant to the exercise of outstanding stock options of the Resulting Issuer, 9,462,340 Resulting Issuer Shares will be reserved for issuance pursuant to the exercise of share purchase warrants, broker warrants and compensation options for a period of 24 months from the completion of the Proposed Transaction, with exercise prices ranging from $0.42 to $0.63.

The following table summarizes the securities of the Corporation currently issued and outstanding and the securities of the Resulting Issuer to be issued and outstanding following the Consolidation and completion of the Proposed Transaction:

Notes:

(1) These numbers are calculated after giving effect to the Consolidation (4.2 for 1).

(2) The Avatar Note has been converted into Luckbox Shares at a deemed issue price of $0.21 per Luckbox Share, and such Luckbox Shares will be exchanged for Resulting Issuer Shares in connection with the Proposed Qualifying Transaction.

(3) Each Luckbox Subscriber Warrant entitle the holder thereof to acquire one Luckbox Share at an exercise price of $0.63 for a period of 24 months from the Closing. Such Luckbox Subscriber Warrants will be exchanged for Resulting Issuer Warrants in connection with the Proposed Qualifying Transaction.

(4) Each Pre-RTO Broker Warrant and RTO Broker Warrant entitles the holder thereof to acquire one unit of Luckbox at an exercise price per Pre-RTO Broker Warrant or RTO Broker Warrant (as applicable) equal to $0.42 for a period of 24 months from the Closing, and each such unit (which will be equivalent to a Sub Receipt Unit) will be comprised of one Luckbox Share and one Luckbox Share purchase warrant exercisable at $0.63 for a period of 24 months from the Closing. Such Luckbox Shares and Luckbox Share purchase warrants will be exchanged for Resulting Issuer Shares and Resulting Issuer Warrants in connection with the Proposed Qualifying Transaction.

(5) Each Compensation Subscriber Warrant entitles the holder thereof to acquire one Luckbox Share at an exercise price per Compensation Subscriber Warrant equal to $0.63 for a period of 24 months from the Closing. Such Compensation Subscriber Warrants will be exchanged for Resulting Issuer Warrants in connection with the Proposed Qualifying Transaction.

(6) Each Subscription Receipt will be converted into a Sub Receipt Units immediately prior to the Completion of the Proposed Qualifying Transaction with no further acts or payments required of the holder of the Subscription Receipt, and as a result of such conversion, the holder will receive a Sub Receipt Unit comprised of one Underlying Unit Share and one half of one Underlying Unit Warrant (with each whole Underlying Unit Warrant being exercisable at $0.42 per Underlying Unit Warrant for a period of 24 months from the date of the Completion of the Proposed Qualifying Transaction). Such Underlying Unit Shares and Underlying Unit Warrants will be exchanged for Resulting Issuer Shares and Resulting Issuer Warrants in connection with the Proposed Qualifying Transaction.

(7) The Expoworld Note will be converted into units of Luckbox equivalent to the Sub Receipt Units concurrently with the Completion of the Proposed Qualifying Transaction at a deemed issue price of $0.42 per unit, and as a result of such conversion, Expoworld will receive units comprised of 1,190,476 Underlying Shares and 595,238 Underlying Warrants (exercisable at $0.42 per Underlying Warrant for a period of 24 months from the date of the Completion of the Proposed Qualifying Transaction). Such Underlying Shares and Underlying Warrants will be exchanged for Resulting Issuer Shares and Resulting Issuer Warrants in connection with the Proposed Qualifying Transaction.

(8) Each Luckbox Advisory Warrant entitles the holder thereof to acquire one unit of Luckbox at an exercise price per Luckbox Advisory Warrant equal to $0.42 for a period of 24 months from the Closing, and each such unit (which will be equivalent to a Sub Receipt Unit) will be comprised of one Luckbox Share and one half of one Luckbox Share purchase warrant exercisable at $0.63 for a period of 24 months from the Closing. Such Luckbox Shares and Luckbox Share purchase warrants will be exchanged for Resulting Issuer Shares and Resulting Issuer Warrants in connection with the Proposed Qualifying Transaction.

(9) As of the date of Closing, subject to the approval fo the Exchange, the Resulting Issuer intends to adopt a 20% fixed option plan which is being put before the Shareholders of the Company at its annual general and special meeting to be held November 9, 2020. If approved by Shareholders of the Company and approved by the Exchange, an additional 9,379,258 Resulting Issuer Shares will be available for future grant of Resulting Issuer Options under the Resulting Issuer’s Option Plan.

Conditions to the Proposed Transaction

Completion of the Proposed Transaction is subject to certain conditions precedent including, among other things:

(a) all necessary shareholder and board approvals and requisite approval of the Exchange and all other regulatory authorities and third parties to the Proposed Transaction;

(b) Luckbox having completed the RTO Offering or such other amount as may be necessary to satisfy the initial listing requirements of the Exchange;

(c) the Consolidation and Name Change shall have been approved by the shareholders at the EH Meeting;

(d) Elephant Hill shall have a minimum cash balance of $300,000, not including transaction costs associated with the Proposed Transaction immediately prior the closing date, or such other amount acceptable to Luckbox, acting reasonably;

(e) there shall not be in force any order or decree restraining or enjoining the consummation of the transactions contemplated by this Definitive Agreement, including, without limitation, the merger;

(f) the board of directors of the Resulting Issuer shall consist of those individuals set forth in the Definitive Agreement, namely, Drew Green, Maruf Raza, Lloyd Melnick, Michael Stevens and Quentin Martin;

(g) all the representations, warranties and covenants of each of Luckbox and Elephant Hill shall be true and correct in all material respects as at the closing date; and

(h) no adverse material change shall have occurred in the business, affairs, financial condition assets or operations of Elephant Hill or Luckbox prior to closing.

Proposed Management and Board of Directors of the Resulting Issuer

All of the current officers and all of the current directors of Elephant Hill will resign from their respective positions with Elephant Hill. Subject to applicable regulatory, shareholder and Exchange approval, on completion of the Proposed Transaction, it is currently anticipated that the board of directors of the Resulting Issuer will be fixed at five (5), nominated upon agreement between Elephant Hill and Luckbox.

The following are summaries of the proposed directors and principal management of the Resulting Issuer, including their respective proposed positions with the Resulting Issuer and relevant work and educational background.

Quentin Martin is the CEO of Luckbox and the proposed Chief Executive Officer and a director of the Resulting Issuer. Mr. Martin has over a decade of experience in digital leadership across e-commerce, betting, and mobile gaming. Most recently as general manager at PokerStars and previously as CEO of PSW Ventures, a successful e-commerce site. His experience is reinforced with a past life as a professional gamer in early esports, poker and Magic the Gathering. Mr. Martin holds a Bachelor’s degree from University College London and an MBA from the University of Warwick. Mr. Martin currently works full-time on the affairs of Luckbox, and it is expected he will continue to work full time for the Resulting Issuer.

Ran Kaspi is the Chief Financial Officer of Luckbox and the proposed Chief Financial Officer of the Resulting Issuer. Mr. Kaspi has over 15 Years of experience in corporate finance, business analytics and financial planning in various roles with international listed companies. Up until recently served as the Chief Financial Officer of an ASX listed company, ParaZero Ltd., which develops drone safety solutions. Prior to his role at ParaZero Ltd., Mr. Kaspi served as Finance Director of Global-e, a top European provider of seamless cross-border e-commerce solutions. Mr. Kaspi brings substantial online gaming experience following five and a half years at the London Stock Exchange listed 888.com where he led the economic and performance team.

Michael Stevens is currently the COO of Luckbox and the proposed Corporate Secretary and a director of the Resulting Issuer. Mr. Stevens is a professional poker player, crypto trader and investor. Mr. Stevens is also a gambling focussed entrepreneur who co-founded GambleGeek: a UK sports-centric affiliate marketing website. Formerly Operations Manager at PokerStars covering poker, game integrity, customer support and product launches. Mr. Stevens currently works full-time on the affairs of Luckbox, and it is expected he will continue to work full time for the Resulting Issuer.

Drew Green is a proposed director of the Resulting Issuer. Mr. Green is Chief Executive Officer of Indochino Inc., one of the top 500 e-Commerce companies in North America; founder and chairman of Emerge; and was selected as Entrepreneur of the Year 2018 by Ernst and Young. It is expected that, following completion of the Proposed Qualifying Transaction, Mr. Green will devote 5% of his working time towards the affairs of the Resulting Issuer.

Maruf Raza is a proposed director of the Resulting Issuer. Mr. Raza is the National Director of MNP LLP’s Public Companies practice and an Assurance Partner in the Toronto office. Mr. Raza serves as an advisor to public companies and private companies planning on going public through direct initial public offerings or reverse mergers. Mr. Raza currently serves on the PDAC-CPA Canada joint Mining Task Force. Mr. Raza also serves as a director to a TSX listed company and has been a past board chair of a TSX-V listed company. It is expected that, following completion of the Proposed Qualifying Transaction, Mr. Raza will devote 5% of his working time towards the affairs of the Resulting Issuer.

Mr. Melnick is a proposed director of the Resulting Issuer. Mr. Melnick is the Executive Vice President, Casino at VGW Holdings Ltd., leading the Chumba Casino team – a North American focused social casino company. A serial builder of businesses (senior leadership on three exits worth over $700 million), successful in big Disney, Stars Group, Zynga and small companies (Merscom LLC., Spooky Cool Labs LLC.) with over 20 years’ experience in the gaming and casino space. It is expected that, following completion of the Proposed Qualifying Transaction, Mr. Melnick will devote 5% of his working time towards the affairs of the Resulting Issuer.

Halt of Trading of Common Shares of the Corporation

In accordance with the policies of the Exchange, the common shares of the Corporation are currently halted from trading and will remain halted until further notice.

Sponsorship

Sponsorship may be required by the Exchange unless exempt in accordance with Exchange policies. The Corporation intends to apply for an exemption from the sponsorship requirements. There is no assurance that an exemption from this requirement will be obtained.

All information contained in this press release with respect to the Corporation and Luckbox was supplied by the parties, respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Further Information

Investors are cautioned that, except as disclosed in the disclosure document to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.

For further information, please contact:

Elephant Hill Capital Inc.
Mohammad Fazil, President, Chief Executive Officer, Director
Email: [email protected]
Phone: (403) 613-7310

ESports Limited
Quentin Martin, Chief Executive Officer
Email: [email protected]
Phone: (+44) 7498 181 863

NEITHER THE 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.

All information contained in this press release with respect to Elephant Hill and Luckbox was supplied by the parties, respectively, for inclusion herein, and Elephant Hill and its directors and officers have relied on Luckbox for any information concerning such party.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable, pursuant to the requirements of the TSXV, majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder and regulatory approval is obtained. There can be no assurance that the Proposed 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 Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative.

This press release is not an offer of securities for sale in the United States. The securities described in this press release have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act of 1933, as amended) absent registration or an exemption from registration. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction where such offer, solicitation, or sale would be unlawful.

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 press release.

Cautionary Note Regarding Forward-Looking Statements: This release includes certain statements and information that may constitute forward-looking information within the meaning of applicable Canadian securities laws. All statements in this news release, other than statements of historical facts, including statements regarding future estimates, plans, objectives, timing, assumptions or expectations of future performance, including the terms and conditions of the Proposed Transaction; the terms and conditions of the RTO Financing; and future developments and the business and operations of the “Resulting Issuer” after the Proposed Transaction, are forward-looking statements and contain forward-looking information. Forward-looking statements are based on certain material assumptions and analysis made by the Corporation and the opinions and estimates of management as of the date of this press release. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Corporationto be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Important factors that may cause actual results to vary, include, without limitation, that the terms and conditions of the Proposed Transaction will not be as anticipated by management or will not close at all; future developments and the business and operations of the “Resulting Issuer” after the Proposed Transaction will not be as anticipated by management. 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 and forward-looking information. The Corporation does not undertake to update any forward-looking statement, forward-looking information or financial out-look that are incorporated by reference herein, except in accordance with applicable securities laws.

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