Next Games Corporation Company Release March 11, 2022 at 6:30 p.m. (EET)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW

On March 2, 2022 Netflix, Inc. (“Netflix” or the “Offeror”) and Next Games Corporation (“Next Games” or the “Company”) announced that they have entered into a combination agreement (the “Combination Agreement”) pursuant to which the Offeror undertook to make a voluntary recommended public cash tender offer for all issued and outstanding shares (the “Shares”) and stock options (the “Stock Options”) in the Company that are not held by the Company or its subsidiary (the “Tender Offer”).

The Board of Directors of the Company (the “Board of Directors”), represented by a quorum comprising the non-conflicted members of the Board of Directors, has pursuant to what is provided herein unanimously decided to recommend that the shareholders and holders of the Stock Options of the Company accept the Tender Offer and has decided to issue the statement below regarding the Tender Offer in accordance with Chapter 11, Section 13 of the Finnish Securities Markets Act (756/2012, as amended).

THE TENDER OFFER IN BRIEF

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Netflix is a corporation incorporated under the laws of Delaware. Netflix and Next Games have on March 2, 2022 entered into a Combination Agreement setting out, among other things, the main terms and conditions pursuant to which the Tender Offer will be made by the Offeror.

The Tender Offer will be made in accordance with the terms and conditions of the tender offer document expected to be published by the Offeror on or about March 14, 2022 (the “Tender Offer Document”).

The Offeror and Next Games have undertaken to comply with the Helsinki Takeover Code issued by the Finnish Securities Market Association (the “Helsinki Takeover Code”) and the Finnish Securities Markets Act (746/2012, as amended) and any related rules and provisions thereof, as applicable.

The share offer price is EUR 2.10 in cash for each Share validly tendered in the Tender Offer (the “Share Offer Price”).

The price offered for each Stock Option validly tendered is EUR 5.74 in cash for each outstanding Stock Option 2015 I (the “Stock Option 2015 I Offer Price”), EUR 3.30 in cash for each outstanding Stock Option 2015 II (the “Stock Option 2015 II Offer Price”), EUR 0.01 in cash for each outstanding Stock Option 2017 I (the “Stock Option 2017 I Offer Price”), EUR 0.96 in cash for each outstanding Stock Option 2017 II (the “Stock Option 2017 II Offer Price”), EUR 0.96 in cash for each outstanding Stock Option 2018 II (the “Stock Option 2018 II Offer Price”), EUR 0.72 in cash for each outstanding Stock Option 2019 I (the “Stock Option 2019 I Offer Price”), EUR 1.25 in cash for each outstanding Stock Option 2019 II (the “Stock Option 2019 II Offer Price”), EUR 1.14 in cash for each outstanding Stock Option 2020 I (the “Stock Option 2020 I Offer Price”), EUR 0.01 in cash for each outstanding Stock Option 2020 II (the “Stock Option 2020 II Offer Price”), EUR 0.50 in cash for each outstanding Stock Option 2020 III (the “Stock Option 2020 III Offer Price”) and EUR 0.79 in cash for each outstanding Stock Option 2020 IV (the “Stock Option 2020 IV Offer Price” and, together with the Stock Option 2015 I Offer Price, Stock Option 2015 II Offer Price, Stock Option 2017 I Offer Price, Stock Option 2017 II Offer Price, Stock Option 2018 II Offer Price, Stock Option 2019 I Offer Price, Stock Option 2019 II Offer Price, Stock Option 2020 I Offer Price, Stock Option 2020 II Offer Price, Stock Option 2020 III Offer Price and Stock Option 2020 IV Offer Price, the ”Stock Option Offer Price”).

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The Share Offer Price represents a premium of approximately:

• 125.6 percent compared to EUR 0.93, i.e. the closing price of the Next Games Share on First North Growth Market Finland maintained by Nasdaq Helsinki Ltd (“First North”) on March 1, 2022, the last trading day immediately preceding the announcement of the Tender Offer;
• 69.6 percent compared to EUR 1.24, i.e. the six-month volume-weighted average trading price of the Next Games Share on First North immediately preceding the announcement of the Tender Offer; and
• 38.8 percent compared to EUR 1.51, i.e. the twelve-month volume-weighted average trading price of the Next Games Share on First North immediately preceding the announcement of the Tender Offer.

The Share Offer Price has been determined based on 30,050,385 Shares and the Stock Option Offer Price has been determined based on 2,567,141 Stock Options. Should the number of Shares issued and outstanding in Next Games increase on or after the date hereof as a result of a new share issue, issue of stock options, reclassification, stock split (including a reverse split) or any other measure with such dilutive effect, or should Next Games distribute a dividend or otherwise distribute funds or any other assets to its shareholders, or if a record date with respect to any of the foregoing shall occur prior to the consummation of the Tender Offer, the Share Offer Price and the Stock Option Offer Price will be reduced accordingly on a euro-for-euro basis.

Certain major shareholders of Next Games, i.e. Jari Ovaskainen and AMC Networks Ventures LLC, together representing in aggregate approximately 43.3 percent of the Shares and votes in Next Games, have irrevocably undertaken to tender into the Tender Offer, subject to certain customary conditions.

The completion of the Tender Offer is subject to the satisfaction or waiver by the Offeror of certain customary conditions on or prior to the Offeror’s announcement of the final result of the Tender Offer and the Offeror having gained control of more than ninety percent (90 %) of the Shares and votes in Next Games on a fully diluted basis.

If the Offeror is able to obtain more than ninety percent (90 %) of the Shares and votes in the Company, on a fully diluted basis, the Offeror will commence as soon as reasonably practicable compulsory redemption proceedings in accordance with Chapter 18 of the Finnish Companies Act (624/2006, as amended) to redeem the remaining Shares in the Company, and thereafter cause the Company’s Shares to be delisted from First North as soon as permitted and practicable under applicable laws and regulations.

The detailed terms and conditions of the Tender Offer as well as further information on the Tender Offer will be included in the Tender Offer Document.

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The funds immediately available to the Offeror suffice for completing the Tender Offer and for financing the potential compulsory redemption proceedings in accordance with the Finnish Companies Act. The Offeror’s obligation to complete the Tender Offer is not conditional upon availability of financing.

The offer period under the Tender Offer is expected to commence on or about March 14, 2022, and to expire on or about April 8, 2022, unless the Offeror extends the offer period to satisfy the conditions to completion of the Tender Offer. The Tender Offer is currently expected to be completed during the second quarter of 2022.

BACKGROUND FOR THE STATEMENT

The Board of Directors has prepared a public statement regarding the Tender Offer in accordance with the Finnish Securities Markets Act. Pursuant to the Finnish Securities Markets Act, the statement must include a well-founded assessment of the Tender Offer from the perspective of Next Games, its shareholders and holders of the Stock Options as well as of the strategic plans presented by the Offeror in the Tender Offer Document and their likely effects on the operations of, and employment at, Next Games.

For the purposes of issuing this statement, the Offeror has submitted to the Board of Directors a draft version of the Finnish language Tender Offer Document on March 9, 2022 (the “Draft Tender Offer Document”).

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In preparing its statement, the Board of Directors has relied on information provided in the Draft Tender Offer Document by the Offeror and certain other information provided by the Offeror and has not independently verified this information.

ASSESSMENT REGARDING STRATEGIC PLANS PRESENTED BY THE OFFEROR IN THE DRAFT TENDER OFFER DOCUMENT AND THEIR LIKELY EFFECTS ON THE OPERATIONS OF, AND EMPLOYMENT AT NEXT GAMES

Information given by the Offeror

The Board of Directors has assessed the Offeror’s strategic plans based on the statement made in the Offeror’s announcement regarding the Tender Offer published on March 2, 2022, and the Draft Tender Offer Document.

According to the information provided in the Draft Tender Offer Document and the Offeror’s announcement on the Tender Offer, the Tender Offer will enable Next Games to join Netflix as a core studio in a strategic region and key talent market, furthering the two companies’ shared vision and passion for games. Next Games will expand Netflix’s game studio capabilities to enhance development of a portfolio of world-class games for members to enjoy around the world. As part of Netflix, Next Games will be able to utilize Netflix’s global infrastructure and gain access to new customers in additional geographies. Netflix intends to invest time, resources, and capital to support Next Games in continuing to build out its creative and operational capabilities. Netflix will also enable Next Games to improve upon its core strengths of developing entertainment franchise-based mobile games and live services, as well as invest in new business opportunities.

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The Offeror has informed in the Draft Tender Offer Document and the Offeror’s announcement on the Tender Offer that the Tender Offer is not expected to have any immediate material effects on the operations or the position of the management or employees of Next Games.

Board assessment

The Board of Directors considers that the information on the strategic plans of the Offeror concerning the Company is given on a fairly general level. Based on the Offeror’s statements, the Board of Directors believes that the Company can benefit from the Offeror’s global infrastructure and will be able to gain access to new customers in additional geographies.

The Board of Directors considers that the Offeror’s intention to invest time, resources, and capital to support the Company in continuing to build out the Company’s creative and operational capabilities will benefit the activities of the Company in the future. The Board of Directors shares the Offeror’s view that the Netflix will also enable Next Games to improve upon its core strengths of developing entertainment franchise-based mobile games and live services, as well as invest in new business opportunities. The Board of Directors also believes that Next Games as a part of Netflix could be better positioned to attract new employees.

The Board of Directors considers that the completion of the Tender Offer will not have any immediate material effects on the operations or the position of the management or employees of Next Games apart of the composition of the Board of Directors of Next Games, which the Offeror intends to change after the completion of the Tender Offer.

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The Board of Directors considers that, in addition to the Share Offer Price and the Stock Option Offer Price, the credibility of the Offeror as an owner as well as the support by major shareholders for the Tender Offer, support Offeror’s ability to reach more than ninety percent (90 %) ownership of the voting rights carried by the Shares.

ASSESSMENT OF THE TENDER OFFER FROM THE PERSPECTIVE OF THE COMPANY AND ITS SHAREHOLDERS

When evaluating the Tender Offer, analysing alternative opportunities available to the Company and concluding on its statement, the Company has considered several factors, including, but not limited to, the Company’s recent financial performance, current position and future prospects, the historical performance of the trading price of the Company’s share and the conditions for the Company and the Offeror to complete the Tender Offer.

The Board of Directors’ assessment of continuing the business operations of the Company as an independent company has been based on reasonable future-oriented estimates, which include various uncertainties, whereas the Share Offer Price and the premium included therein and the Stock Option Offer Price are not subject to any uncertainty other than the fulfilment of the conditions to completion of the Tender Offer.

In order to support its assessment of the Tender Offer, the Board of Directors has received a fairness opinion, dated March 2, 2022, concerning the Share Offer Price and the Stock Option Offer Price (the “Fairness Opinion”) from the Company’s financial advisor, Alexander Corporate Finance Ltd (“ACF”). The Fairness Opinion is attached as Appendix 1 to this statement.

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The Board of Directors believes that the consideration offered by the Offeror to the shareholders is fair to the shareholders based on its assessment of the matters and factors, which the Board of Directors has concluded to be material in evaluating the Tender Offer. These matters and factors include, but are not limited to:

• the information and assumptions on the business operations and financial condition of the Company as at the date of this statement and their expected future development;
• the Share Offer Price and the Stock Option Offer Price and the premium offered for the Shares and Stock Options;
• the historical trading price of the Shares;
• transaction certainty, and that the conditions of the Tender Offer are reasonable;
• valuations and analysis made and commissioned by the Board of Directors as well as discussions with external financial advisors;
• valuation multiples of the Shares compared to the industry multiples before the announcement of the Tender Offer;
• the ability to respond to possible third-party proposals if necessary to comply with the Board of Directors’ fiduciary duties;
• other terms of the Tender Offer;
• the undertakings by certain shareholders of the Company to accept the Tender Offer as referred to above; and
• the Fairness Opinion issued by ACF.

Based on overall assessment and taking into account the factors described above, the Board of Directors has concluded that the Tender Offer is a favourable alternative for the shareholders and holders of the Stock Options.

RECOMMENDATION OF THE NEXT GAMES BOARD OF DIRECTORS

The Board of Directors has carefully assessed the Tender Offer and its terms and conditions based on the Draft Tender Offer Document, the Fairness Opinion, and other available information.

Based on the evaluations and facts given above, the Board of Directors considers that the Tender Offer and the amount of the Share Offer Price and the Stock Option Offer Price are, under the prevailing circumstances, fair from the perspective of the Company’s shareholders and holders of the Stock Options.

Based on the foregoing, the Board of Directors of Next Games, represented by a quorum comprising the non-conflicted members of the Board of Directors, has unanimously decided to recommend that the shareholders and holders of the Stock Options of Next Games accept the Tender Offer.

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Four out of six members of the Board of Directors have participated in the decision-making concerning this statement. Jari Ovaskainen and Nicholas Seibert, who are both members of the Board of Directors, did not participate in the decision-making. Jari Ovaskainen has given an irrevocable undertaking, subject to certain customary conditions, to accept the Tender Offer. AMC Network Ventures LLC, which has given an irrevocable undertaking, subject to certain customary conditions, to accept the Tender Offer, is a company represented by Nicholas Seibert. For these reasons, Jari Ovaskainen and Nicholas Seibert have refrained from decision-making in the manner referred to in the Helsinki Takeover Code.

CERTAIN OTHER MATTERS

The Board of Directors notes that the transaction may, as is common in similar arrangements, involve unforeseeable risks.

The Board of Directors notes that the shareholders and holders of the Stock Options of Next Games should also take into account the potential risks related to non-acceptance of the Tender Offer. If the acceptance condition of more than ninety percent (90 %) of the Shares and votes is waived, the completion of the Tender Offer would reduce the number of the Company’s shareholders and the number of Shares, which would otherwise be traded on First North. Depending on the number of Shares validly tendered in the Tender Offer, this could have an adverse effect on the liquidity and value of the shares in the Company. Furthermore, pursuant to the Finnish Companies Act, a shareholder that holds more than half (1/2) of the shares and voting rights carried by the shares present in a company’s general meeting has sufficient voting rights to decide on the appointment of board members and distribution of dividends, and a shareholder that holds more than two-thirds (2/3) of the shares and voting rights carried by the shares in a company has sufficient voting rights to decide upon certain corporate transactions, including, but not limited to, a merger of the company into another company, an amendment of the articles of association of the company and an issue of shares in the company in deviation from the shareholders’ pre-emptive subscription rights.

Pursuant to Chapter 18 of the Finnish Companies Act, a shareholder that holds more than ninety percent (90 %) of all shares and votes in a company shall have the right to acquire and, subject to a demand by other shareholders, also be obligated to redeem the shares owned by the other shareholders. In such case, the Shares held by the Company’s shareholders, who have not accepted the Tender Offer, may be redeemed through redemption proceedings under the Finnish Companies Act in accordance with the conditions set out therein.

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This statement of the Board of Directors of Next Games does not constitute investment or tax advice, and Next Games does not specifically evaluate herein the general price development or the risks relating to the Shares or Stock Options in general. Shareholders and holders of the Stock Options must independently decide whether to accept the Tender Offer, and they should take into account all the relevant information available to them, including information presented in the Tender Offer Document and this statement as well as any other factors affecting the value of the Shares or the Stock Options.

Next Games has appointed LionTree Advisors LLC and ACF as financial advisers and Castrén & Snellman Attorneys Ltd as legal adviser in connection with the Tender Offer.

The Board of Directors of Next Games

Appendix 1: Fairness Opinion

ADDITIONAL INFORMATION:

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Next Games
Saara Bergström, Chief Communications Officer
+358 (0) 40 588 3167Media: [email protected]
Investor relations: [email protected]

Certified Adviser: Alexander Corporate Finance Oy, tel. +358 (0) 50 520 4098

IMPORTANT INFORMATION

THIS RELEASE MAY NOT BE RELEASED OR OTHERWISE DISTRIBUTED, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO, AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW.

THIS RELEASE IS NOT A TENDER OFFER DOCUMENT AND AS SUCH DOES NOT CONSTITUTE AN OFFER OR INVITATION TO MAKE A SALES OFFER. IN PARTICULAR, THIS RELEASE IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES DESCRIBED HEREIN, AND IS NOT AN EXTENSION OF THE TENDER OFFER, IN, AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA. INVESTORS SHALL ACCEPT THE TENDER OFFER FOR THE SHARES ONLY ON THE BASIS OF THE INFORMATION PROVIDED IN A TENDER OFFER DOCUMENT. OFFERS WILL NOT BE MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE EITHER AN OFFER OR PARTICIPATION THEREIN IS PROHIBITED BY APPLICABLE LAW OR WHERE ANY TENDER OFFER DOCUMENT OR REGISTRATION OR OTHER REQUIREMENTS WOULD APPLY IN ADDITION TO THOSE UNDERTAKEN IN FINLAND.

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THE TENDER OFFER IS NOT BEING MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW AND, WHEN PUBLISHED, THE TENDER OFFER DOCUMENT AND RELATED ACCEPTANCE FORMS WILL NOT AND MAY NOT BE DISTRIBUTED, FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAWS OR REGULATIONS. IN PARTICULAR, THE TENDER OFFER IS NOT BEING MADE, DIRECTLY OR INDIRECTLY, IN OR INTO, OR BY USE OF THE POSTAL SERVICE OF, OR BY ANY MEANS OR INSTRUMENTALITY (INCLUDING, WITHOUT LIMITATION, FACSIMILE TRANSMISSION, TELEX, TELEPHONE OR THE INTERNET) OF INTERSTATE OR FOREIGN COMMERCE OF, OR ANY FACILITIES OF A NATIONAL SECURITIES EXCHANGE OF, AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA. THE TENDER OFFER CANNOT BE ACCEPTED, DIRECTLY OR INDIRECTLY, BY ANY SUCH USE, MEANS OR INSTRUMENTALITY OR FROM WITHIN, AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA AND ANY PURPORTED ACCEPTANCE OF THE TENDER OFFER RESULTING DIRECTLY OR INDIRECTLY FROM A VIOLATION OF THESE RESTRICTIONS WILL BE INVALID.

THIS COMPANY RELEASE HAS BEEN PREPARED IN COMPLIANCE WITH FINNISH LAW, THE RULES OF FIRST NORTH AND THE HELSINKI TAKEOVER CODE AND THE INFORMATION DISCLOSED MAY NOT BE THE SAME AS THAT WHICH WOULD HAVE BEEN DISCLOSED IF THIS ANNOUNCEMENT HAD BEEN PREPARED IN ACCORDANCE WITH THE LAWS OF JURISDICTIONS OUTSIDE OF FINLAND.

Information for shareholders and holders of the Stock Options in the United States

Shareholders and holders of the Stock Options in the United States are advised that the Shares are not listed on a U.S. securities exchange and that Next Games is not subject to the periodic reporting requirements of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is not required to, and does not, file any reports with the U.S. Securities and Exchange Commission (the “SEC”) thereunder.

The Tender Offer will be made for the issued and outstanding shares and stock options of Next Games, which is domiciled in Finland, and is subject to Finnish disclosure and procedural requirements. The Tender Offer is made in the United States pursuant to Section 14(e) and Regulation 14E under the Exchange Act, subject to the exemption provided by Rule 14d-1(d) (“Tier II Exemption”) under the Exchange Act, and otherwise in accordance with the disclosure and procedural requirements of Finnish law, including with respect to the Tender Offer settlement procedures, withdrawal and timing of payments, which are different from those of the United States. In particular, the financial information included in this announcement has been prepared in accordance with applicable accounting standards in Finland, which may not be comparable to the financial statements or financial information of U.S. companies. The Tender Offer is made to the shareholders and holders of the Stock Options resident in the United States on the same terms and conditions as those made to all other shareholders and holders of the Stock Options to whom an offer is made. Any informational documents, including this announcement, are being disseminated to U.S. shareholders and holders of the Stock Options on a basis comparable to the method that such documents are provided to other shareholders or holders of the Stock Options.

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The Offeror, its affiliates and affiliates of its financial adviser may purchase or arrange to purchase securities of Next Games in compliance with Finnish law if certain conditions are satisfied. These restrictions include the following, among others: (i) such purchases cannot occur in the U.S., (ii) to the extent information about such purchases or arrangements to purchase is made public in Finland, such information must be disclosed by means of a press release or other means reasonably calculated to inform U.S. shareholders of Next Games and holders of the Stock Options of such information, and (iii) the consideration in the Tender Offer must be increased to match any consideration paid outside of the Tender Offer.

Neither the SEC nor any U.S. state securities commission has approved or disapproved the Tender Offer, passed upon the merits or fairness of the Tender Offer, or passed any comment upon the adequacy, accuracy or completeness of the disclosure in relation to the Tender Offer. Any representation to the contrary is a criminal offence in the United States.

The receipt of cash pursuant to the Tender Offer by a U.S. shareholder or holder of Stock Options may be a taxable transaction for U.S. federal income tax purposes and under applicable U.S. state and local, as well as foreign and other, tax laws. Each shareholder or holder of Stock Options is urged to consult its independent professional advisers immediately regarding the tax consequences of accepting the Tender Offer.

It may be difficult for shareholders or holders of the Stock Options to enforce their rights and any claims they may have arising under the U.S. federal securities laws, since Next Games is located in a non-U.S. jurisdiction and some or all of its respective officers and directors may be residents of non-U.S. jurisdictions. Shareholders or holders of the Stock Options may not be able to sue Next Games or its respective officers or directors in a non-U.S. court for violations of the U.S. federal securities laws. It may be difficult to compel Next Games and its respective affiliates to subject themselves to a U.S. court’s judgment.

Disclaimer

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LionTree Advisors LLC is acting exclusively for the Company and no one else in relation to the Tender Offer or the matters referred to in this document, will not regard any other person (whether or not a recipient of this document) than the Company as its client in relation to the Tender Offer and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for providing advice in relation to the Tender Offer or any other transaction or arrangement referred to in this document.

Alexander Corporate Finance Ltd is acting exclusively for the Company and no one else in relation to the Tender Offer or the matters referred to in this document, will not regard any other person (whether or not a recipient of this document) than the Company as its client in relation to the Tender Offer and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for providing advice in relation to the Tender Offer or any other transaction or arrangement referred to in this document.

About Next Games

Next Games is the first publicly listed mobile game developer and publisher in Finland, specializing in games based on entertainment franchises, such as movies, TV series or books. The developers of the critically acclaimed The Walking Dead games redefine the way franchise entertainment transforms into highly engaging service-based mobile games. Next Games works on multiple new games based on beloved global IPs. The Company’s latest game, Stranger Things: Puzzle Tales, is based on Netflix’s hit 80s horror drama series.

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Attachment

• Next Games – Fairness Opinion – 2.3.2022