An anonymous director reports

AXION VENTURES ANNOUNCES CORPORATE UPDATE AND CONVERTIBLE DEBENTURE FINANCING

Axion Ventures Inc. has provided the following corporate update pertaining to its video game portfolio including its flagship video game, Rising Fire, which is under a distribution partnership with Tencent Holding Ltd.

Summary:

• Rising Fire continually improves and is moving closer to full commercial launch;
• Co-development deal signed with a leading global video game developer on favourable terms;
• Multiple distribution contracts are in negotiation for commercial launch of Invictus: Lost Soul;
• Closing a convertible debenture of $1,375,000 (U.S.).

Rising Fire

After five years of development and testing, Rising Fire is in the late stages of being tuned to the market in open-beta release by Tencent. Rising Fire represents over 800 man years of development and management is confidently expecting that full commercial launch is approaching.

"Axion has experienced a thorough tuning process working towards a commercial launch that is typical of the video game industry. As an analogue, one of Tencent's current games, Crossfire, was subjected to an almost 24-month tuning-to-market process prior to full commercial launch. Crossfire is now in its 10th year of revenue generation and is Tencent's highest-grossing lifetime video game. The scope, size and potential of Rising Fire are reflected in the amount of time that Axion and Tencent have attributed to ensuring the programmed success of the game at commercial launch," said Todd Bonner, chief executive officer of Axion Ventures.

"After the delivery of Rising Fire Season 1 in June of 2019, Tencent began testing the June delivery in late July. As a result, the game took a major step towards our expected outcome and management is optimistic that a fully marketed commercial launch will commence in China in the near future. Management is also in late-stage discussions with multiple publishers in various jurisdictions to launch Rising Fire, which we expect to be announced shortly," added Mr. Bonner.

The rate of capital expenditure that has been invested in Rising Fire over the last five years should decline materially as the video game is largely complete and hence past its peak financing phase.

Co-development deal

As announced on July 22, 2019, Axion entered into a major co-development contract for a new video game that will require a reallocation of developers and capital. As a part of the contract, Axion will realize revenue from its partner for development work completed and the first revenue billing from the co-development project will be paid to Axion upon the completion of the game prototype, expected by the end of September.

"Axion has been developing a portfolio of video games for the last seven years during which we utilized the company's revenues and resources to fund the expansion of a deep IP portfolio perhaps unrivalled by any independent studio in Asia. This capability was recognized by our partner in the new IP ownership project, which provides our company with a fiscally sound model to leverage the prowess of the partner's global leadership as an IP creator while the majority of the development costs shall be underwritten by the partner. As a company, we are reaching an inflection point where our major games are reaching commercial launch and will enter an exciting and rewarding monetization phase for the company, and we have since been approached by several other leading studios to form similar co-development partnerships," added Mr. Bonner, CEO of Axion Ventures.

Invictus: Lost Soul

After a very successful open-beta launch in May, 2019, of the company's first mobile game, the retention numbers that were generated during this period were highly encouraging and, as such, gained the attention from multiple distribution partners globally. The company is currently fine tuning the game and adding new content, such as armour, weapons, skins and emotes, and monetization mechanics while engaged actively in multiple negotiations for wide-scale distribution.

"Invictus: Lost Soul cost just $1.4-million (U.S.) to develop and the retention metrics that we have encountered from the beta release firmly indicate a major industry hit. We are extremely confident that it is a formative example of our value as a studio by way of generating substantial returns on our investment and the creation of a portfolio of video game IP ownership," said Mr. Bonner, CEO of Axion Ventures.

Convertible debenture

The company recently announced a shareholder loan of $873,000 (U.S.) (see news release dated Aug. 16, 2019) to provide capital for growth and continuing expenses. The majority of expenses are attributed to the company's 2,000-plus man-year portfolio that continues to grow and gain traction with major video game distributors.

Axion has also closed a non-brokered private placement of convertible debentures, pursuant to which it has issued debentures in the principal amount of $1,375,000 (U.S.). The debentures are convertible into common shares of the company at a conversion price of 90 cents per share. The debentures mature one year from the date of the closing of the financing and bear interest at the rate of 10 per cent per annum.

At any time after the issue date, the then outstanding principal amount may be prepaid in whole or in part upon payment from the company to the holder of an early repayment penalty amount equal to 120 per cent of the outstanding principal (which amount includes payment of any accrued and unpaid interest). The holder has the option to exercise the holder's rights of conversion for a period of 30 days after receipt of notice from the company regarding prepayment.

The proceeds of the financing will be used for financing the company's portfolio companies and for general working capital. The company did not pay any finders' fees in connection with the financing. The securities issued in connection with the closing of the financing are subject to a restricted period that expires on Dec. 23, 2019. The financing is subject to final TSX Venture Exchange approval.

Comprehensive portfolio update: October, 2019

Management is also expecting to provide a full corporate update to shareholders in October.

About Axion Ventures Inc.

Axion Ventures is an investment issuer with majority ownership in Axion Games, an on-line video game development and publishing company headquartered in Shanghai, China, as well as in True Axion Interactive Ltd., its video game development company headquartered in Bangkok, Thailand, co-founded with True Corp. Axion Ventures also maintains holdings in other innovative technology companies.

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