London, 2nd February 2001 – e-comsport has today entered into a conditional agreement (the ‘Agreement’) to acquire TMG for total consideration of £2.8 million (the ‘Acquisition’). The Acquisition is classified as a substantial transaction for the purpose of the AIM rules.

Information on TMG

TMG is engaged in the development and exploitation of commercial sports rights, primarily in Formula One. TMG was established in 1998 and has worked extensively for British American Racing GP Limited (‘BAR’) and British American Tobacco plc (‘BAT’) on consultancy, licensing and merchandising projects.

TMG has offices in the UK, Hong Kong, Canada and the USA. In its first sixteen months of trading to 31 December 1999, TMG generated sales of £6.7 million and, after start up costs, made a loss before tax of £0.56 million. The major contracts during this period were with BAR and BAT.

During 2000, TMG has been successful in negotiating a number of additional contracts with Formula One and US CART teams including Jordan Grand Prix, Benetton Formula One and Mo Nunn Racing.

TMG has fourteen employees and, as at 31 December 1999, had net assets of (£0.173 million).

Reasons for the Acquisition

TMG owns commercial and media sports rights in Formula One and has demonstrated the ability to generate multiple revenue streams with major sports brands and sponsorship partners.

Since flotation, e-comsport has completed the development of its sports product portfolio and is securing third party relationships to facilitate the rollout of the properties internationally and across all major sports.

The strategy of the combined Company will be to leverage these assets through licensing to facilitate the development and exploitation of commercial and media rights of major sports brands.

Details of the Agreement

The Company has conditionally agreed to acquire TMG for £2.8 million, satisfied as follows:

the issue of 9.111 million new ordinary shares to the vendors of TMG (the ‘Vendors’) at a deemed price of 17.5 pence per share (‘Initial Consideration Shares’), valuing the Initial Consideration Shares at £1.6 million;

the issue of an unsecured loan note to the Vendors of £0.75 million (the ‘Vendor Loan Note’);

a vendor placing of new ordinary shares to raise £0.45million (‘Vendor Placing Shares’).

Under the terms of the Agreement, the Initial Consideration Shares and the Vendor Placing Shares (to the extent under the terms of the Agreement that such Vendor Placing Shares are retained by the Vendors) will together comprise a maximum of 29.7 per cent of the Company’s then enlarged share capital.

The Vendor Loan Note will be subject to a single repayment 30 months following completion and be capable of conversion into new ordinary shares at six monthly intervals after completion at the price then prevailing. Any rights of conversion will be subject to the Company obtaining appropriate authority at a general meeting of the Company and the Vendors not holding more than 29.9 per cent. of the Company’s then enlarged share capital.

The Initial Consideration Shares will be subject to a lock-in (together with any shares converted under the Vendor Loan Note) for 12 months following completion. Thereafter the Vendors will be permitted to sell 50 per cent. of the Initial Consideration Shares during the subsequent 12 months.

The Acquisition is subject, inter alia, to the following conditions:

the Company using best endeavours to place the Vendor Placing Shares of £0.45 million subject to a minimum of £0.225 million being reached (or such lesser amount as the Vendors may agree);

and the Company obtaining additional working capital of £0.75 million which may include the placing of 1.5 million new ordinary shares in the Company (‘Cash Placing Shares’).

The Agreement allows for 21 days following exchange of contracts to satisfy the above conditions or 28 days by mutual consent.

Subject to completion of the Acquisition, the Initial Consideration Shares, the Vendor Placing Shares and the Cash Placing Shares will rank, pari passu, with the existing issued ordinary shares of the Company and application will be made for such shares to be admitted to trading on the Alternative Investment Market.

Proposed directors

In accordance with Rule 16.22(g), it is currently proposed that the following directors join the board of e-comsport following completion:

Scott Poulter (32), current chief executive and founder of TMG. It is proposed that Scott will be paid a salary of £100,000, certain benefits in kind (including life insurance, medical, company car and pension contributions) and that his contract will have a notice period of 6 months;

and Peter McMaster (50), current managing director of TMG. It is proposed that Peter will be paid a salary of £85,000, certain benefits in kind (including life insurance, medical, company car and pension contributions) and that his contract will have a notice period of 6 months.

Commenting on the announcement, Angelos Kotonou, chief executive of e-comsport, said:

‘TMG is a great transaction for e-comsport. It immediately takes us into the highly commercial arena of Formula One motor sport and adds to our developing portfolio of other sports interests. It also brings additional revenues and wider skills in licensing and merchandising which will have applications elsewhere in the Company. Finally, the transaction brings a very capable and entrepreneurial team under Scott Poulter. Overall the acquisition of TMG is a significant step forward for the Company.’

Enquiries:

Angelos Kotonou, Chief Executive, e-comsport. Tel: 020 7423 0400
John Withers, Finance Director, e-comsport. Tel: 020 7423 0512

David Simonson or Sadhbh O’Gorman
Merlin Financial. Tel: 020 7606 1244
dsimonson@merlinfinancial.com