East Side Games arranges $3.5-million financing

• On May 1, 2026, East Side Games Group announced a non-brokered private placement to raise up to $3.5 million CAD.
• The company will issue up to 31,818,182 units at $0.11 per unit (a 22% discount to the five-day VWAP).
• Each unit comprises one common share and one full warrant exercisable at $0.14 for three years.
• Director Derek Lew is participating with a $1 million investment, acquiring approximately 9.89% of the company on a partially diluted basis post-closing.
• Proceeds are designated to repay debt owed to Royal Bank of Canada (RBC), fund operating expenses, and provide working capital.
• The financing includes finders' fees in shares and warrants valued at $150,000 plus additional broker warrants.
• Total securities issuable under the placement could reach 66,254,545 common shares (including warrant exercises/finders), representing approximately 86.10% of total outstanding common shares on a non-diluted basis upon completion.

• Dilution Severity: The proposed issuance represents an extreme dilution event, potentially increasing the share count by nearly 86%. This significantly reduces existing shareholder equity value per share.
• Distress Signal: The financing price of $0.11 is below the recent trading range ($0.13-$0.14) and well below the 52-week high ($0.62), indicating severe market distress and lack of investor confidence at current levels.
• Debt Resolution vs. Equity Cost: While the capital addresses the immediate covenant breach with RBC disclosed in March 2026, it does so by transferring substantial value from existing shareholders to new investors (including insiders).
• Revenue Context: This financing follows a March 31, 2026 guidance cut where FY2026 revenue was lowered from $77.6M (FY2025) to $50-$56M. The need for emergency equity confirms the business contraction is more severe than initially hoped.
• Insider Confidence: Director Derek Lew's $1 million investment provides some validation of survival, but at a price that suggests management expects further downside or requires significant capital to stabilize operations.

• Overview: East Side Games Group is a mobile game developer focused on casual and mid-core titles, primarily in the match-3 and idle genres.
• Flagship Projects: Core portfolio includes The Office: Somehow We Manage, RuPaul's Drag Race: Match Queen, Squishmallows Match, and Trailer Park Boys: Greasy Money.
• Strategy Shift: The company is pivoting toward lower-risk, prepaid platform partnership projects and reducing user acquisition spend to improve margins.
• Performance: FY2025 revenue was $77.6M with A-EBITDA of $0.8M. Q4 2025 showed a slight recovery in ARPDAU ($1.09) but overall guidance for 2026 is significantly reduced.