Mr. Alan Thorgeirson reports

SPARX ANNOUNCES REORGANZATION AND SALE OF OPERATING ASSETS

Sparx Technology Inc. has entered into a binding letter of intent dated Jan. 7, 2024, with Blok Sports LLC, a private, arm's-length company with a head office in Los Angeles, Calif., to sell its operating assets, including all of the issued and outstanding shares of its United States operating subsidiary, iPowow USA Inc., to Blok.

Blok is an early-stage, venture-backed technology company established in 2019 by Mitchell Chun, its current chief executive officer, that has developed a suite of social sports betting, fan engagement and AI (artificial intelligence)-driven content and analytics solutions. Its core offering is a regulated, decentralized sports betting exchange developed using next-generation blockchain technology to ensure an unparalleled level of trust, fairness and transparency for its users around the globe.

Pursuant to the sale transaction, Sparx's Canadian operating subsidiary, Sparx Technology Corp. (Subco), will transfer all of its operating assets and certain liabilities to iPowow, prior to its acquisition by Blok. Certain liabilities of Sparx will also be transferred to iPowow prior to completion of the sale transaction. It is anticipated that following completion of the sale transaction, Sparx will have no operating assets and no material liabilities. Subject to the approval of the TSX Venture Exchange, the listing of Sparx's common shares on the exchange are expected to transfer to the NEX.

It is also anticipated that an aggregate of 34,127,103 currently outstanding common shares of Sparx will be cancelled on closing of the sale transaction, pursuant to the terms of a surplus escrow agreement dated March 23, 2022.

As consideration for the sale transaction, Sparx is expected to receive approximately 14 per cent of Blok's outstanding common units on a posttransaction basis, which is subject to increase upon the satisfaction of certain revenue related criteria.

The sale transaction is subject to a number of conditions, including: (i) completion of a $500,000 (U.S.) financing by Blok; (ii) the receipt by Sparx of an independent fairness opinion in respect of the aggregate consideration (including the debt assumptions) to be received by Sparx in the sale transaction; and (iii) all necessary regulatory, creditor and shareholders approvals.

Alan Thorgeirson, Sparx's CEO, commented: "We are excited about the opportunity to build the Sparx business under the Blok umbrella and believe this reorganization transaction will allow our stakeholders an opportunity to realize further value through a stake in the combined entity. We believe that the operating efficiencies and synergies to be achieved by the combination of the two companies will provide a stronger platform to attract additional financing and further grow the business. Through this transaction, Sparx, as a public company, will position itself to pursue alternative transactions to enhance shareholder value."

Sparx intends to convene a meeting of its shareholders in late February to consider the sale transaction and related matters. Further details will be made available once finalized.

About Sparx Technology Inc.

Sparx is an interactive media technology company whose principal activities are providing media companies and sports teams with technologies to engage audiences. The patented Sparx platform enables broadcasters, streamers and video producers to engage viewers for longer, generate new revenue opportunities and create lean-forward experiences for audiences eager to join the action. Millions of users can connect to the Sparx platform and interact simultaneously on their mobile phone, tablet or computer, anywhere in the world, in real time.

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