Pursuant to the terms of the Arrangement, holders of common shares of Engagement Labs ("Engagement Labs Shares") received 0.1136 (the "Exchange Ratio") of a common share of DGTL Holdings (each whole share, a "DGTL Holdings Share") for each Engagement Labs Share held. In total, DGTL Holdings acquired 47,704,357 Engagement Labs Shares in exchange for 5,419,173 DGTL Holdings Shares, resulting in former Engagement Labs shareholders holding approximately 11.99% of the total number of issued and outstanding DGTL Holdings Shares. Therefore, immediately after closing, there are currently 45,242,266DGTL Holdings Shares issued and outstanding, inclusive of the Advisor Shares (as defined below). In addition, options to purchase Engagement Labs Shares became exercisable for DGTL Holdings Shares, and, upon exercise, will entitle the holder thereof to receive a number of DGTL Holdings Shares equal to the number of Engagement Labs Shares multiplied by the Exchange Ratio at an exercise price per share equal to the original exercise price divided by the Exchange Ratio.
Immediately prior to the closing of the Arrangement, all directors and certain officers of Engagement Labs resigned, and Engagement Labs is now a wholly-owned subsidiary of DGTL Holdings. Engagement Labs' current Chief Financial Officer, Gilbert Boyer, and Chief Revenue Officer, Steven Brown, will continue in their roles, which is expected to provide continuity to the combined entity by assisting with post-closing transition and integration matters.
It is anticipated that the Engagement Labs Shares will be de-listed from the TSX Venture Exchange ("TSXV") as of the close of trading on March 4, 2022 and Engagement Labs intends to submit an application to the applicable securities regulators to cease being a reporting issuer and terminate its public reporting obligations.
On closing, DGTL Holdings issued 280,000 DGTL Holdings Shares (the "Advisor Shares") and 13,750 compensation warrants (each, a "Compensation Warrant") to Oberon Securities, LLC, which assisted Engagement Labs as its Financial Advisor, and an additional 261,250Compensation Warrants to Ed Keller. Each Compensation Warrant is exercisable at a price of $0.405 for the purchase of one (1) DGTL Holdings Share for a period of five years following the closing date of the Arrangement.
Pursuant to the letter of transmittal mailed to shareholders of Engagement Labs as part of the materials in connection with the special meeting of shareholders of Engagement Labs held on February 14, 2022, in order to receive the portion of the consideration to which they are entitled, registered holders of Engagement Labs Shares are required to deposit their share certificate(s) representing Engagement Labs Shares, together with a duly completed letter of transmittal, with Computershare Investor Services Inc. ("Computershare"), the depositary under the Arrangement. Shareholders whose Engagement Labs Shares are registered in the name of a broker, dealer, bank, trust company or other nominee must contact their nominee to deposit their Engagement Labs Shares.
Further information about the closing of the Arrangement is available on the SEDAR profile of DGTL Holdings on SEDAR at www.sedar.com.
Subscription Receipt Financing
As previously announced, prior to the closing of the Arrangement, DGTL Holdings completed non-brokered private placement, resulting in the sale of an aggregate of 1,068 subscription receipts (the "Subscription Receipts") for aggregate gross proceeds of $1,068,000 (the "Offering"). The proceeds from the Offering were placed into escrow on completion of the Offering, and, after deducting for finder's fees of $49,000 and certain transaction fees and expenses, have now been released from escrow to DGTL Holdings.
Immediately following the completion of the Arrangement, the Subscription Receipts converted on a one-for-one basis into one $1,000 principal convertible debenture, each bearing interest at an annual rate of 7.00% payable in arrears in equal installments semi-annually (each, a "Convertible Debenture"). The Convertible Debentures mature two years following the completion of the Arrangement (the "Maturity Date"), and the principal amount of Convertible Debenture are convertible at the holder's option into DGTL Shares at any time prior to the Maturity Date at a conversion price of $0.30 per DGTL Share. Subject to the approval of the TSXV, in lieu of paying any interest accrued and payable in respect of the Convertible Debentures, DGTL may elect to settle such interest in DGTL Shares, provided that the deemed price at which DGTL may settle such interest may be no less than the Market Price (as defined in the policies of the TSXV) of the DGTL Shares at the time such interest becomes payable.
In addition, DGTL Holdings has issued an aggregate of 81,659finder's warrants to certain eligible finders, each entitling the holder thereof to purchase one DGTL Holdings Shares at a price of $0.40 for a period of 36 months.
Financial and Legal Advisors
Garfinkle Biderman LLP acted as legal counsel to DGTL Holdings. Spiegel Securities & Corporate Law and Roy O'Connor LLP acted as legal counsel to Engagement Labs, and IJW&Co. provided a fairness opinion to the board of directors of Engagement Labs.
About Engagement Labs
Engagement Labs (TSXV: EL) is an industry-leading data and analytics firm that provides social intelligence for Fortune 500 brands and companies.
Engagement Labs' TotalSocial® platform focuses on the entire social ecosystem by combining powerful online (social media) and offline (word of mouth) data with predictive analytics. Engagement Labs has a proprietary ten-year database of unique brand, industry and competitive intelligence, matched with its cutting-edge predictive analytics that use machine learning and artificial intelligence to reveal the social metrics that increase marketing ROI and top line revenue for its diverse group of clients.
To learn more, visit www.engagementlabs.com.
About DGTL Holdings
DGTL Holdings Inc. acquires and accelerates transformative digital media, marketing and advertising software technologies, powered by Artificial Intelligence (AI). DGTL (i.e. Digital Growth Technologies and Licensing) specializes in accelerating commercialized enterprise level SaaS (software-as-a-service) companies in the sectors of content, analytics and distribution, via a blend of unique capitalization structures. DGTL Holdings Inc. is traded on the Toronto Venture Exchange as "DGTL", the OTCQB exchange as "DGTHF", and the Frankfurt Stock Exchange as "A2QB0L". For more information, visit: www.dgtlinc.com.
HASHOFF LLC
As a wholly owned subsidiary of DGTL Holdings Inc., Hashoff is an enterprise level self-service CaaS (content-as-a-service) built on proprietary Artificial Intelligence and Machine Learning (AI-ML) technology. Hashoff's AI-ML platform functions as a full-service content management system, designed to empower global brands by identifying, optimizing, engaging, managing, and tracking top-ranked digital content publishers for localized brand marketing campaigns. Hashoff is fully commercialized and currently serves numerous global brands by providing direct access to the global gig-economy of over 150 million freelance content creators.
Hashoff's customer portfolio includes global brands in a range of key growth categories, including Anheuser Busch-InBev, Nestle, Post Holdings, Danone and Keurig-Dr. Pepper, Dunkin Brands, The Container Store, TJ Maxx, Ulta Beauty and Pizza Hut Live Nation, The CW, Scribd, Syneos Health and Novartis, etc. Learn more by visiting: https://dgtlinc.com/technology.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
CONTACT INFORMATION
DGTL Holdings Inc.
John Belfontaine, Director
Email: IR@dgtlinc.com
Phone: +1 (877) 879-3485
Cautionary Statements Regarding Forward-Looking Information
Certain statements in this press release are "forward-looking statements" within the meaning of NI 51-102. Forward-looking statements include all passages containing words such as "will,""aims,""anticipates,""becoming,""believes,""continue,""estimates,""expects,""future,""intends,""plans,""predicts,""projects,""targets," or "upcoming." Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. These forward-looking statements in this press release may include, without limitation, the de-listing of the Engagement Labs Shares from the TSXV, the issuance of DGTL Holdings Shares to former shareholders of Engagement Labs and the potential settlement of interest accrued and payable in respect of the Convertible Debentures through the issuance of DGTL Holdings Shares and the effects on the liquidity of DGTL Holdings Shares, and the conversion of the Convertible Debentures. The risks and uncertainties that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements include, without limitation, potential litigation involving DGTL Holdings, global economic conditions, geopolitical events and regulatory changes, and access to additional financing. The foregoing list of factors is not exclusive. More information about factors that potentially could affect the DGTL Holding's operations or financial results is included in DGTL Holding's consolidated financial statements for the year ended May 31, 2021 and in the other reports filed on SEDAR since that date. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this press release. Except as required by law, DGTL Holdings undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.
Neither the TSXV nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.
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