ESE Entertainment Inc.

Form 51-102F6V

Statement of Executive Compensation – Venture Issuers (for year ended October 31, 2020)

GENERAL

The following information, dated June 17, 2021 is presented in accordance with National Instrument 51102 - Continuous Disclosure Obligations and Form 51-102F6V - Statement of Executive Compensation - Venture Issuers , and sets forth compensation for each NEO (as defined below) and each director of ESE Entertainment Inc. (the “ Company ”) during the financial year ended October 31, 2020.

For the purposes of this Statement of Executive Compensation:

“Board ” means the board of directors of the Company;

“compensation securities ” includes stock options, convertible securities, exchangeable securities and similar instruments including stock appreciation rights, deferred share units and restricted stock units granted or issued by the Company or one of its subsidiaries for services provided or to be provided, directly or indirectly, to the Company or any of its subsidiaries;

“CEO” of the Company means each individual who acted as chief executive officer of the Company or acted in a similar capacity for any part of the most recently completed financial year;

“CFO” of the Company means each individual who acted as chief financial officer of the Company or acted in a similar capacity for any part of the most recently completed financial year;

“ Common Shares ” means the common shares in the capital of the Company;

“ named executive officer ” or “ NEO ” means each of the following individuals:

(a) each individual who, in respect of the Company, during any part of the most recently completed financial year, served as CEO, including an individual performing functions similar to a CEO;
(b) each individual who, in respect of the Company, during any part of the most recently completed financial year, served as CFO, including an individual performing functions similar to a CFO;
(c) in respect of the Company and its subsidiaries, the most highly compensated executive officer other than the individuals identified in paragraphs (a) and (b) at the end of the most recently completed financial year whose total compensation was more than $150,000 for that financial year;
(d) each individual who would be a named executive officer under paragraph (c) but for the fact that the individual was not an executive officer of the Company, and was not acting in a similar capacity, at the end of that financial year;

“plan” includes any plan, contract, authorization, or arrangement, whether or not set out in any formal document, where cash, compensation securities or any other property may be received, whether for one or more persons;

“ underlying securities ” means any securities issuable on conversion, exchange or exercise of compensation securities.

DIRECTOR AND NAMED EXECUTIVE OFFICER COMPENSATION

Director and Named Executive Officer Compensation, Excluding Compensation Securities

Set out below is a summary of compensation paid or accrued, excluding compensation securities, during the Company’s two most recently completed financial years to the Company’s directors and named executive officers (“ NEO ”).

executive of	ficers (	“NEO”).
Name and Position	Year(1)	Salary, Consulting Fee, Retainer, or Commission	Bonus	Committee or Meeting Fees	Value of Perquisites	Value of all Other Compensation	Total Compensation
Konrad Wasiela(2) CEO, Director	2020 2019	$180,000 Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	$180,000 Nil
Rob Kang(3) CFO, Director	2020 2019	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil
Ron Segev(4) Director	2020 2019	50,000(5) Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	50,000(5) Nil
Raj Dewan(6) Director	2020 2019	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil
Ryan Maarschalk(7) Former Director	2020 2019	$54,000 Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	$54,000 Nil
Zachary Dolesky(8) Former Director	2020 2019	$6,380 Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	$6,380 Nil
Robert Horsley(9) Former director	2020 2019	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil
Mervyn Pinto(10) Former Director	2020 2019	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil

Notes:

(1) For the years ended October 31, 2020 and October 31, 2019.

(2) Mr. Wasiela was appointed as director and CEO on August 12, 2020. $66,000 of Mr. Wasiela’s total $180,000 consulting fees were paid to his wholly-owned company, Wasiela Services Ltd.

(3) Mr. Kang was appointed as director and CFO on August 12, 2020.

(4) Mr. Segev was appointed as director on August 12, 2020.
(5) Mr. Segev was supposed to be issued 200,000 shares in the financial year ending October 31, 2020. However, such shares had not been issued as at October 31, 2020. Fair value of $50,000 was therefore accrued in the financial year ended October 31, 2020 for the 200,000 shares to be issued in the subsequent financial year.
(6) Mr. Dewan was appointed as director on August 12, 2020.
(7) Mr. Maarschalk resigned as director on April 26, 2021.
(8) Mr. Dolesky resigned as director on August 12, 2020.
(9) Mr. Horsley resigned as director on August 12, 2020.
(10) Mr. Pinto resigned as director on August 12, 2020.

External Management Companies

Through Wasiela Services Ltd., a company wholly-owned by the Company’s CEO, Konrad Waseila, Mr. Wasiela was paid a monthly fee of $5,500 per month pursuant to a management consulting agreement dated November 18, 2019. All of the monthly fees paid by the Company to Wasiela Services Ltd. are allocated to Mr. Wasiela.

Other than as disclosed above, there were no external consulting agreements with the Company during the most recently completed financial year.

Director and NEO Stock Options and Other Compensation Securities

The following table sets forth incentive stock options (option-based awards) pursuant to the Company’s stock option plan that were granted to NEOs and directors of the Company who were not NEOs during the financial year ended October 31, 2020.

		Compensation Securities Granted in 2020(1)	Compensation Securities Granted in 2020(1)	Compensation Securities Granted in 2020(1)	Compensation Securities Granted in 2020(1)	Compensation Securities Granted in 2020(1)
Name and Position	Type of compensatio n security	Number of compensation securities, number of underlying securities, and percentage of class(2)		Date of issue or grant	Issue, conversion or exercise price ($)	Closing price of security or underlying security on date of grant ($)	Closing price of security or underlying security at year end ($)	Expiry Date
Konrad Wasiela CEO and Director	Stock options	550,000(3)	22.6%	August 17, 2020	$0.25	$0.30	$0.24	August 17, 2025
Rob Kang CFO and Director	Stock options	300,000(3)	12.3%	August 17, 2020	$0.25	$0.30	$0.24	August 17, 2025
Raj Dewan Director	Stock options	300,000(3)	12.3%	August 17, 2020	$0.25	$0.30	$0.24	August 17, 2025
Ron Segev Director	Stock options	300,000(4)	12.3%	August 17, 2020	$0.25	$0.30	$0.24	August 17, 2025
	Common	200,000	N/A	August 17,	$0.25	$0.30	$0.24	N/A

	Shares(5)			2020
Ryan Maarschalk Former Director(7)	Stock options	300,000(6)	12.3%	August 17, 2020	$0.25	$0.30	$0.24	August 17, 2025

Notes:

(1) No compensation securities have been re-priced, cancelled and replaced, had their terms extended, or otherwise been materially modified, in the most recently completed financial year.

(2) Percentage of class represents % of compensation securities granted over the total number of compensation securities of the Company outstanding as of October 31, 2020, being 2,432,537.
(3) 1/6 of the stock options granted vest every six (6) months, beginning on February 17, 2021.
(4) 100% of Mr. Segev’s options vested on the grant date.
(5) The 200,000 Common Shares had not been issued to Mr. Segev as at October 31, 2020. However, the 200,000 shares at $0.25 has been included in the Company’s financial statements as a commitment to issue shares as at October 31, 2020.

(6) 75,000 of Mr. Maarschalk’s options vested on the grant date, and 225,000 options vest in 6 equal tranches every six (6) months, beginning on February 17, 2021.

(7) Mr. Maarschalk resigned as director on April 26, 2020.

The following table sets forth all exercises by directors or NEOs of compensation securities in the financial year ended October 31, 2020.

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Exercise of Compensation Securities by Directors and NEOS
Name and Type of Number of Date of Exercise price Closing price Difference Total value
Position compensatio underlying exercise per security ($) per security on between exercise on exercise
n security securities exercised date of price and closing date ($)
exercise price on date of
exercise
($)
($)
Zachary
Dolesky [(1)]
September
Stock options 7,463 $0.0667 $0.22 $0.1533 $1,144.08
Former 18, 2020
Director
Mervyn
Pinto [(2)]
August 14,
Stock options 210,000 $0.0667 N/A [(3)] N/A [(3)] N/A [(3)]
2020
Former
Director
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Notes:

(1) Mr. Dolesky resigned as director on August 12, 2020.
(2) Mr. Pinto resigned as director on August 12, 2020.
(3) The Company’s shares were halted from trading.

Outstanding Compensation Securities

The following table sets forth the outstanding compensation securities held by the Directors and NEOs of the Company as of October 31, 2020:

	Compensation Securities Held at October 31, 2020	Compensation Securities Held at October 31, 2020	Compensation Securities Held at October 31, 2020	Compensation Securities Held at October 31, 2020
Name and Position	Type of compensation security	Number of compensation securities, number of underlying securities	Date of grant	Exercise Price	Expiry Date
Konrad Wasiela CEO and Director	Stock Options(1)	550,000	August 17, 2020	$0.25	August 17, 2025
Rob Kang CFO and Director	Stock Options(1)	300,000	August 17, 2020	$0.25	August 17, 2025
Raj Dewan Director	Stock Options(1)	300,000	August 17, 2020	$0.25	August 17, 2025
Ron Segev Director	Stock Options(2)	300,000	August 17, 2020	$0.25	August 17, 2025
Ryan Maarschalk(4) Former Director	Stock Options(3)	300,000	August 17, 2020	$0.25	August 17, 2025
Zachary Dolesky(5) Former Director	Stock Options	262,537	September 17, 2018	$0.0667	August 23, 2024
Robert Horsley(6) Former director	Stock Options	120,000	September 17, 2018	$0.0667	August 23, 2024

Notes:

(1) 1/6 of the stock options granted vest every six (6) months, beginning on February 17, 2021.

(2) 100% of Mr. Segev’s options vested on the grant date.

(3) 75,000 of Mr. Maarschalk’s options vested on the grant date, and 225,000 options vest in 6 equal tranches every six (6) months, beginning on February 17, 2021.

(4) Mr. Maarschalk resigned as director on April 26, 2021.

(5) Mr. Dolesky resigned as director on August 12, 2020.

(6) Mr. Horsley resigned as director on August 12, 2020.

Stock Option Plans and Other Incentive Plans

The following is a summary of the material terms of the Company’s stock option plan, which was approved by the Company’s shareholders at the Company’s annual general and special meeting of shareholders held on November 15, 2019 (the “ Stock Option Plan ”):

Eligible Optionees. Under the Stock Option Plan, the Company can grant options (the “ Options ”) to acquire Common Shares of the Company to directors, officers, and consultants of the Company or affiliates of the Company, as well as to employees of the Company and its subsidiaries.

Number of Shares Reserved. The number of Common Shares that may be issued pursuant to Options granted under the Stock Option Plan may not exceed 10% of the issued and outstanding Common Shares

from time to time at the date of the grant of Options.

Number of Shares Held by an Individual. The maximum number of Common Shares that may be issued pursuant to Options granted to any individual under the Stock Option Plan is limited to an amount equal to 5% of the then issued and outstanding Common Shares (on a non-diluted basis) in any 12-month period.

Number of Shares Held by a Consultant. The maximum number of Common Shares that may be issued pursuant to Options granted to a consultant under the Stock Option Plan is limited to an amount equal to 2% of the then issued and outstanding Common Shares (on a non-diluted basis) in any 12-month period.

Number of Shares Held by Persons Performing Investor Relations. The maximum number of Common Shares that may be issued pursuant to Options granted to all persons in aggregate who are employed to perform investor relations activities is limited to an amount equal to 2% of the then issued and outstanding Common Shares (on a non-diluted basis) in any 12-month period, provided that such Options vest in stages over a 12-month period with no more than ¼ of the Options vesting in any three- month period.

Maximum Term of Options. The term of any Options granted under the Plan is fixed by the Board and may not exceed ten (10) years from the date of grant.

Exercise Price. The exercise price of Options granted under the Stock Option Plan is determined by the Board but may not be less than the Discounted Market Price (As that term is defined in Policy 1.1 – Interpretation of the TSX Venture Exchange (the “ Exchange ”).

Vesting Provisions. Options granted under the Stock Option Plan may be subject to vesting provisions. Such vesting provisions are determined by the Board or the Exchange, if applicable.

Termination. Any Options granted pursuant to the Stock Option Plan will terminate within 90 days of the option holder ceasing to act as a director, officer, employee of the Company, unless such cessation is on account of death. If such cessation is on account of death, the Options terminate on the first anniversary of such cessation.

Transferability. The Options are non-assignable and non-transferable.

Amendments. Any substantive amendments to the Stock Option Plan will be subject to the Company first obtaining the approvals, if required, of (a) the shareholders or disinterested shareholders, as the case may be, of the Company at a general meeting where required by the rules and policies of the Exchange, or any stock exchange on which the Common Shares may then be listed for trading; and (b) the Exchange, or any stock exchange on which the Common Shares may then be listed for trading.

Administration. The Stock Option Plan is administered by such director or other senior officer or employee as may be designated by the Board from time to time.

Board Discretion. The Stock Option Plan provides that the number of Common Shares subject to each Option, the exercise price, the expiry time, the extent to which such option is exercisable, including vesting schedules, and other terms and conditions relating to such Options will be determined by the Board.

Employment, Consulting, and Management Agreements:

The Company has no current employment agreements with any of its NEOs.

On November 6, 2019, the Company entered into a management consulting agreement with 1176149 BC Ltd., a company controlled by Ryan Maarschalk, for the position of CFO commencing on December 1, 2019 for a period of six months at a monthly rate of $4,000 per month and on a month to month basis thereafter (the “ Maarschalk Agreement ”). On August 12, 2020, Mr. Maarschalk resigned as CFO and became a director and financial controller of the Company. The Maarschalk Agreement continued on the same terms following his resignation as CFO in consideration for his services as financial controller.

On November 12, 2019, the Company entered into a management consulting agreement with Konrad Wasiela for the position of CEO for a period of one year at a monthly rate of $9,500 per month which shall automatically be renewed annually unless one party provides written notice at least one month prior to the end of the term.

On November 18, 2019, the Company entered into a management consulting agreement with Wasiela Services Ltd. for management and advisory services for a period of one year at a monthly rate of $5,500 per month which shall automatically be renewed annually unless one party provides written notice at least one month prior to the end of the term.

Oversight and Description of Director and NEO Compensation

Philosophy and Objectives

The compensation program for the senior management of the Company is designed to ensure that the level and form of compensation achieves certain objectives, including:

(a) attracting and retaining talented, qualified, and effective executives;
(b) motivating the short and long-term performance of those executives; and
(c) better aligning their interests with those of the Company’s shareholders.

In compensating its senior management, the Company has employed a combination of base salary and equity participation through its Stock Option Plan.

Elements of the Compensation Program

The significant elements of compensation awarded to the NEOs are a cash salary and stock options. The Company does not presently have a long-term incentive plan for its NEOs. There is no policy or target regarding allocation between cash and noncash elements of the Company’s compensation program. The Board annually reviews the total compensation package of each of the Company’s executives on an individual basis, against the backdrop of the compensation goals and objectives described above.

Cash Salary

As a general rule, the Company seeks to offer its NEOs a reasonable compensation package that is in line with the Company’s shareholder value, operating results, and liquidity considerations, consideration of compensation packages offered by other companies similar in size and complexity, and as a means of rewarding the NEOs for efforts expended on behalf of the Company.

Equity Participation

The Company believes that encouraging its executives and employees to become shareholders is the best way of aligning their interests with those of its shareholders. Equity participation is accomplished through the Company’s stock option plan. Stock options are granted to senior executives taking into account a number of factors, including the amount and term of options previously granted, base salary and bonuses, and the Company’s goals. Options are generally granted to senior executives and vest on terms determined by the Board.

The Board has not conducted a formal evaluation of the implications of the risks associated with the Company’s compensation policies. Risk management is a consideration of the Board when implementing its compensation policies and the Board does not believe that the Company’s compensation policies result in unnecessary or inappropriate risk taking, including risks that are likely to have a material adverse effect on the Company.

Use of Financial Instruments

The Company does not have a policy that would prohibit a NEO or director from purchasing financial instruments, including prepaid variable forward contracts, equity swaps, collars or units of exchange funds, that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the NEO or director. However, Management is not aware of any NEO or director purchasing such an instrument.

Perquisites and Other Personal Benefits

The Company’s NEOs are not generally entitled to significant perquisites or other personal benefits that are not offered to the Company’s other employees.

Pension Plan Benefits:

The Company does not have any pension plans that provide for payments or benefits to the NEOs at, following, or in connection with retirement, including any defined benefits plan or any defined contribution plan. The Company does not have a deferred compensation plan with respect to any NEO.

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ESE Entertainment Inc. Remuneration Information 2021

47700_rns_2021-07-13_eacdc48c-b4b7-4037-8b29-37bc717ad7d8.pdf

Form 51-102F6V