forward-looking statements

A preliminary prospectus containing important information relating to the securities described in this document has been filed with the securities re...
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A preliminary prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in certain of the provinces of Canada. A copy of the preliminary prospectus, and any amendment, is required to be delivered with this document.

The preliminary prospectus is still subject to completion. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final prospectus has been issued. This document does not provide full disclosure of all material facts relating to the securities offered. Investors should read the preliminary prospectus, the final prospectus and any amendment for disclosure of those facts, especially risk factors relating to the securities offered, before making an investment decision. There is no market through which these securities may be sold and purchasers may not be able to resell securities purchased under the prospectus. This may affect the pricing of the securities in the secondary market, the transparency and availability of trading prices, the liquidity of the securities and the extent of issuer regulation. See “Risk Factors” in the Prospectus. The Corporation has applied to list the Common Shares on the TSX Venture Exchange (the “TSXV”). Listing will be subject to the Corporation fulfilling all the initial listing requirements of the TSXV, including distribution of the Common Shares to a minimum number of public holders. See “Plan of Distribution”.

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An investment in the Common Shares is speculative and is subject to a number of risks that should be considered by a prospective purchaser. Prospective purchasers should carefully consider the risk factors described under “Risk Factors” in the prospectus before purchasing the Common Shares. Prospective investors in the Common Shares should rely only on the information contained in the prospectus. Neither the Corporation nor the Agent has authorized anyone to provide investors with any different or additional information. If anyone provides prospective purchasers with any additional or different or inconsistent information, including information or statements in media articles about the Corporation, prospective purchasers are warned not to rely on it. Neither the Corporation nor the Agent is offering to sell the Common Shares in any jurisdiction where the offer or sale is not permitted. Prospective purchasers should not assume that the information contained in the prospectus is accurate as of any date other than the date of the prospectus, or where information is stated to be as of a date other than the date of the prospectus, such other applicable date. Subject to the Corporation’s obligations under applicable securities laws, the information contained in the prospectus is accurate only as of the date of the prospectus regardless of the time of delivery of the prospectus or of any sale of the Common Shares.

An investment in Common Shares is suitable for only those investors who are willing to risk a loss of their entire investment and who can afford to lose their entire investment. Subscribers should consult their own professional advisors to assess the income tax, legal and other aspects of an investment in Common Shares. See “Risk Factors” in the prospectus. 3

Certain statements contained in this presentation constitute forward-looking statements and forward-looking information (collectively, “forward-looking statements”). Such forward-looking statements relate to possible events, conditions or financial performance of the Corporation based on future economic conditions and courses of action. All statements other than statements of historical fact are forward-looking statements. The use of any words or phrases such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “will likely result”, “are expected to”, “will continue”, “is anticipated”, “believes”, “estimated”, “intends”, “plans”, “projection”, “outlook” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, assumptions, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forwardlooking statements. The Corporation believes there is a reasonable basis for the expectations reflected in the forward-looking statements, however no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this presentation should not be unduly relied upon by investors. The forward-looking statements speak only as of the date of this presentation and are expressly qualified, in their entirety, by this cautionary statement. In particular, this presentation contains forward-looking statements pertaining to the following: (i) the use of proceeds of the Offering; (ii) the expected release dates for the PC online version of DT; (iii) the trends in the video game, mobile and Pachinko/Pachislot industries; (iv) the proposed opening of the Corporation’s game development studio in Vancouver; (v) the Corporation’s ability to use RUNE to develop its IP across multiple platforms; (vi) the Corporation’s ability to raise capital; (vii) expected levels of operating costs, general administrative costs, costs of services and other costs and expenses. With respect to forward-looking statements contained in this presentation, the Corporation has made assumptions regarding, among other things: (i) the Corporation’s ability to compete in the video game, mobile and Pachinko/Pachislot industries; (ii) the successful launch of the PC online version of DT; (iii) the Corporation’s ability to obtain and retain key Valhalla Group personnel; (iv) RUNE’s ability to allow development of content across multiple platforms; (v) the Corporation’s ability to secure development contracts; (vi) the Corporation’s ability to secure contracts with distributors and publishers in various jurisdictions; (vii) the Corporation’s ability to source and retain high quality third party offsite game developers; (viii) the Corporation’s ability to operate efficiently and to maintain stable operating costs; (ix) continued significant growth of the gaming market across a wide range of demographics; and the completion of the Offering. The Corporation’s actual results could differ materially from those anticipated in the forward-looking statements as a result of the risk factors set forth below and elsewhere in this presentation: (i) competition within, and to, the video game industry; (ii) inability to hire or retain key officers and employees; (iii) costs of development; (iv) competing products; (v) difficulties in developing and enhancing existing solutions; (vi) platform licensors - competition, manufacturing and approval rights; (vi) platform licensors - fees paid to publish games for platforms or distribute games on networks; (vii) changing player and customer preferences; (viii) defects in the Corporation’s products; (ix) technical issues arising in connection with online product launch, support and maintenance; (x) transitions in console platforms; (xi) market trends of the Pachinko/Pachislot sector; (xii) increases in development costs in the Pachinko/Pachislot sector; (xiii) loss or impairment of proprietary technology and intellectual property rights; (xiv) movements of platform operators; (xv) lack of continued growth and maintenance of the Internet; (xvi) seasonality in the sale of products; (xvii) security breaches; (xviii) foreign exchange; (xix) global economic uncertainty; (xx) responding to innovations in technology; (xxi) country risks; (xxii) inventory write-down risks; (xxiii) recovery of accounts receivable; (xxiv) legal regulations involving online gaming; (xxv) legal regulations involving the settlement of funds; (xxvi) legal regulations involving the Pachinko/Pachislot sector; (xxvii) absence of operating history as a public company; (xxviii) natural disasters and accidents; (xxix) requirement for and/or failure to achieve additional financings; (xxx) issues surrounding enforcement of judgments; and the other factors referred to under “Risk Factors”. Readers are cautioned that the foregoing list of risk factors should not be construed as exhaustive. The forward-looking statements included in this presentation are expressly qualified by this cautionary statement and are made as of the date of this presentation. The Corporation does not undertake any obligation to publicly update or revise any forward-looking statements except as required by applicable securities laws. Subscribers should read this entire presentation and consult their own professional advisors to assess the income tax, legal, risk factors and other aspects of their investment in the Common Shares.

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Entertainment Software and Content Development • •

Video game and entertainment software development company - console, PC online, mobile, pachinko Creator and owner of own game engine (RUNE)

Experienced, Proven, Successful, Branded Team & Partners • • •

Key team members - “Dead or Alive” and “Ninja Gaiden” franchises 16 Million copies sold globally. Publishing partners Nexon & Innova are the world’s top PC online game publishers

Evolving Business – Fundamental change in Business Strategy • • • • •

Emerging growth company that has transformed from a work-for-hire game developer into a hybrid of game developer/publisher with its own IP Released Devil’s Third on Nintendo’s Wii U in 2015 Devil’s Third PC Online was commercially launched in Japan - June 2016 Exploring new commercialization opportunities of new content backed by stable revenue base from software development business Transformed into a Canadian entity that holds all intellectual property and a future development studio based in British Columbia 5

The global games market generated US$74.2 billion in 2015, with North America generating US$23.6 billion alone, and is expected to grow at a 7.75% CAGR to US$100.0 billion by 2019

Key Trends ‒ ‒ ‒ ‒ ‒

Increasing adoption of the free-to-play model and digital distribution of titles Continuing growth of the mobile gaming segment Action and shooter games outperforming other gaming genres Diversified gaming user base across all types of demographics and geographical regions Target market is serious gamers: males 18-35, play long hours, spend money

Valhalla is positioned to capture all of these trends in the global gaming market Number of gamers by geography Latam N. America 10% 10%

Total gamers 1.9 billion in 2015 APAC 48%

EMEA 32%

Breakdown of video game platforms

Best-selling video games genres Action 28.2%

TV, Consoles & VR 27%

Computer Screen 37%

Tablets & Handhelds Smartphone 13% & Watches 23%

RolePlaying 9.5% Fighting 6.0%

Shooter 21.7%

Sports 13.3% Strategy 4.1%

Racing 5.2% Other Games 12.0%

Source: SuperData “Global Games Market Report”, “Newzoo video game research”, Entertainment Software Association, “Essential Facts about the Computer and Video Game Industry,” 2015 The Open Gaming Alliance, 2016

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Game

2015 Revenue (USD MM)

Release Year

Genre

1

League of Legends

$1,630

2009

Action

2

Cross Fire

$1,100

2007

Shooter

3

Dungeon Fighter

$1,050

2005

Action

4

World of Warcraft

$814

2004

MMORPG

5

World of Tanks

$446

2010

MMO Action

6

Lineage 1

$339

1998

MMORPG

7

Maple Story

$253

2003

MMORPG

8

Defence of the Ancient

$238

2013

Shooter

9

Counter Strike: Global Offensive

$221

2012

Shooter

10

Grand Theft Auto V

$205

2015

Action

Source: SuperData

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8

Strategic decision made to list on the TSX Venture Exchange to gain access to a broader range of investors and larger pools of capital to expand the business Seoul Office



Skilled Talent Pool



Game Design Studio



Government Incentives



Company Size / Exchange



Expedited Listing



Access to Capital – Can/USA

Vancouver Office

Sapporo Office Tokyo Office

9

Satoshi Kanematsu

Tomonobu Itagaki

Naoyuki Tsuji

Chief Executive Officer

President / Chief Technology Officer

Vice President / Chief Strategy Officer

1986

Joined Mitsubishi Steel Mfg. Co., Ltd.

1992

Joined Tecmo Co., Ltd

1985

Joined Hudson Soft Ltd.

1993

Joined Tecmo Co., Ltd

2004

Executive Corporate Officer/General Manager of Team Ninja

1990

President of Hudson Soft USA & Europe

2000

Corporate Officer at Tecmo, Inc.

1991

President of “TTI” USA (JV between NEC and Hudson)

2006

Executive Corporate Officer / Vice President of Project Strategy Planning Dept. at Tecmo, Inc.

2000

CFO/Senior Executive Managing Director of “TTI” USA

2008

CFO of Valhalla Game Studios Ltd.

2015

Chief Strategy Officer of Valhalla Game Studios International Ltd.

2007

CEO of Valhalla Co., Ltd.

2015

CEO of Valhalla Game Studios International Ltd.

2006

Executive Corporate Officer/President of High-End Production at Tecmo, Inc.

2008

CTO of Valhalla Game Studios Ltd.

2015

CTO of Valhalla Game Studios International Ltd.

10

Barry Macdonald, Chairman & Director

Makoto Iwai, Chief Marketing Officer

1997

Joined PricewaterhouseCooper LLP

2007

Executive VP and COO at Namco Bandai Games America Inc.

2016

Retired from PricewaterhouseCooper as a Senior Partner

2011

Bandai Label President at Namco Bandai Games America Inc.

2012

Senior VP of Corporate Strategy at Nexon America Inc.

Divyesh Gadhia, Director

20+ years in gaming industry in variety of Sr. leadership roles 1986

Chartered Accountant at PwC Canada

2001

Executive Vice Chairman (2009 – 2010), CEO (2005 – 2009), President (2001 – 2005) and CFO (1992 – 2001) of Gateway Casinos Inc.

Samuel Yik, Chief Financial Officer 1992

Chartered Accountant designation obtained with KPMG

• • •

2004 – 2014

Senior finance roles as VP Finance and CFO to multiple public companies listed on the TSX/TSCV/NYSE-MKT

2015

President of Atiga Investment Inc. Lead Independent Director of Amaya Inc. Director of SPUD.ca & Sensible Soaps Inc.

Kazuhiko Yamaguchi, Director

20+ years of business experience including areas of finance, operations, and marketing , in companies with market caps ranging from $3MM to $6B

2007

Sr. VP & Executive Officer, GM at Hitachi Plant Technologies

Experience in technology and software sectors

2011 2013

Sr. VP & Exec Officer, Group Exec Manager – Hitachi Plant Tech, Industrial Plant Systems group

2013

Corp Advisor – Hitachi Ltd.

Jon Bey, Investor Relations 2008

Hamilton Resource Group – VP Investor Relations

2010 2014

Founded Steel Rose Communications – Canadian IR Firm Chairman CI BC, Board member CIRI National, CPIR - IVEY IR & Corp Dev for multiple public companies in the resource energy & tech sectors listed on TSX/TSXV/AIM markets

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Valhalla Game Studios International Ltd. Canadian Holding Company – Owner of Valhalla’s IP Valhalla Game Studios (VGS) Japanese subsidiary (100%) High quality video game development and operation

Valhalla Networks (VN) Korean subsidiary (100%) Online game development and operations

Valhalla Seven (V7) Japanese subsidiary (100%) Pachinko/Pachislot machine content development

EIN Entertainment (EIN) Japanese subsidiary (100%) Smartphone and mobile game development and operation

Soleil VGS subsidiary (100%) High quality game development

Licensing Co-development

Contract Transaction revenue

Development

Commission fee Contingent bonus

Platform Businesses and Publishers Sales Distribution

Sales Transaction revenue

User 12

VGS and Soleil

Valhalla Networks

Valhalla Seven

EIN Entertainment

• High-quality console and PC game development, sales, and marketing of games • Some of the world’s most acclaimed and talented video game developers

• Specializing in online games • Various pipelines with gaming companies worldwide • Management with experience in developing and operating online games at leading game companies such as Nexon • Network security knowhow related to cheat prevention

• Arcade machine software development, currently focused on Pachinko/Pachislot machines • Track record of securing contracts from Pachinko/ Pachislot makers • Majority of staff previously directors for the Pachinko/ Pachislot division at Tecmo

• Smartphone, tablet and PC game development • Experience in developing both casual and high-end games • Flexible development framework allows for personnel organization tailored to each project, whether contracted or in-house • Experience in operating social and online games, implementing freemium and running concept events to maintain user interest

“RealUltimateNinjaEngine”RUNE • Gaming engine developed and owned by Valhalla which significantly reduces development costs and timing of new titles • Soleil under contract with major Japanese Publishers

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Maximizing Valhalla’s IP

Increasing in-house development

• Plans to utilize Devil’s Third content in PC, mobile and Pachinko software platforms • Valhalla retained IP rights related to Devil’s Third outside of the Wii U platform • Plans to develop a sequel and cross-utilize the content • Content created by other subsidiaries will be cross-utilized

VGS Devil’s Third Console

Devil’s Third 2 Console

VN

EIN

PC Online

Smartphone

Pachinko/ Pachislot

PC Online

Smartphone

Pachinko/ Pachislot

• Retain 100% of associated IP • Enable cross–utilization • Increase profitability and maximize efficiency

V7

Vertical expansion: Development of sequels/series Horizontal expansion:Utilization of another business’ IP

Swords

Guns

Hand-to-Hand

• Using RUNE, new content can be created dramatically faster with significant savings

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Stages of Development Wii U version published in Japan, Europe and North America in late 2015 Wii U version publication fulfilled commitment to Nintendo ‒ Global PC Online and mobile game sales growing significantly faster than the Wii U and other console game sales ‒ Company currently focusing on PC Online version ‒ ‒

Japan

Russia

North America

PC Distributor:

Nexon Co., Ltd. (Japan)

Innova Intellectual Properties S.a.r.l.

Published by Valhalla Networks Ltd., distributed by Gravity Interactive, Inc.

Closed Beta Test:

April 2016

Late April 2016

Q3 2016

Open Beta Test:

May 2016

Q3 2016

Q3 2016

Expected Release:

June 2016

Q3 2016

Q3 2016

Europe

China

Latin America

PC Distributor:

In Discussion

Nexon Co., Ltd.

In Discussion.

Closed Beta Test:

Q4 2016

Q4 2016

Q1 2017

Open Beta Test:

Q4 2016

Q4 2016

Q1 2017

Expected Release:

December 2016

Q1 2017

Q1 2017 16

Free-to-Play Model Game is free to download and includes basic gameplay Promote and charge the user for in-game upgrades, customization & other enticements that enhance gameplay

Free-Play User is converted to a Paying User Make constant updates, improvements and offer new enticements

Increase average spend per Paying User 17

Valhalla Networks earns 20-25% of total revenues when partnering with external publishers Nexon (Japan, China) & Innova (Russia)

Valhalla Networks earns 60-65% of total revenues when self publishing Valhalla Networks self publishes Devil’s Third Online in North America and Europe

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Use

Dollar

Portion

$600,000

12.0%

Expand Sales and Marketing

$1,000,000

20.0%

Fund Game and Software Development

$1,145,000

22.9%

Promotion

$300,000

6.0%

Complement Working Capital Reserves

$945,000

18.9%

Protection of Corporate IP

$100,000

2.0%

Agent’s Fee

$300,000

6.0%

IPO Expenses

$610,000

12.2%

$5,000,000

100%

Establish Canadian Studio

Total:

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Name

Shares

Portion

Management & Principals

12,967,770

47.0%

WWI*

8,960,000

32.4%

4,401,163

15.9%

26,328,933

95.3%

1,292,500

4.7%

27,621,433

100.0%

Other Shareholders Total Basic Shares Outstanding: Options Fully Diluted Shares Outstanding:

* Management has the following beneficial ownership in WWI: Kanematsu (CEO) (32.7%), Itagaki (President & CTO) (32.7%), Tsuji (CSO) (16.4%) and LTI (18.2%) 20