DGTL Holdings and Engagement Labs Enter into Arrangement Agreement

- August 13th, 2021

DGTL Holdings Inc. and Engagement Labs Inc. are pleased to announce that they have entered into a definitive arrangement agreement dated August 11, 2021 providing for the merger of DGTL and EL .Summary of the ArrangementPursuant to the Agreement, DGTL has agreed to acquire all of the issued and outstanding common shares of EL by way of a statutory plan of arrangement under the Canada Business Corporations Act . …

DGTL Holdings Inc. (TSXV: DGTL) (OTCQB: DGTHF) (WKN: A2QB0L) (FSE: D0G) (“DGTL” or the “Purchaser”) and Engagement Labs Inc. (TSXV: EL) (“EL” or the “Company”) are pleased to announce that they have entered into a definitive arrangement agreement dated August 11, 2021 providing for the merger of DGTL and EL (the “Agreement”).

Summary of the Arrangement

Pursuant to the Agreement, DGTL has agreed to acquire all of the issued and outstanding common shares of EL (collectively, the “Company Shares“) by way of a statutory plan of arrangement under the Canada Business Corporations Act (the “Arrangement“). Pursuant to the terms of the Arrangement, shareholders of EL (the “Company Shareholders“) will receive common shares of DGTL (“Purchaser Shares“) on the basis of an exchange ratio (the “Exchange Ratio“) that results in the current holders of Company Shares receiving an aggregate of 5,320,000 Purchaser Shares. The basis of the negotiations were centered on a relative share exchange ratio between the two companies and in this connection the stock price of DGTL was approximately twice it’s current stock price when the pricing terms were agreed to months ago. Each Company Shareholder is expected to receive 0.1136 of a Purchaser Share in exchange for each Company Share held, on the basis of a 10-day volume-weighted average trading price per Purchaser Share of $0.322.

It is expected that holders of EL options receive, upon exercise, the same consideration they would have received as if they were Company Shareholders at the closing of the Arrangement, and that holders of EL restricted stock awards will receive Company Shares in accordance with their terms immediately prior to closing of the Arrangement, which will be subsequently exchanged for Purchaser Shares on the basis of the Exchange Ratio.

DGTL will use its reasonable commercial efforts to conduct a financing (the “Concurrent Financing“) of subscription receipts (the “Subscription Receipts“) to be priced within the context of the market for gross proceeds of a minimum of US$2,000,000 on or before October 1, 2021. Immediately prior to the completion of the Arrangement, pursuant to the terms and conditions of the Subscription Receipts, each Subscription Receipt will be exchanged, without any further action on the part of the holder and for no additional consideration, for one (1) Purchaser Share.

Completion of the Arrangement is subject to a number of conditions being satisfied or waived by either or both of DGTL and EL at or prior to closing of the Arrangement, including: approval of Company Shareholders, together with any requisite minority approvals if applicable, the completion of the Concurrent Financing, receipt of all necessary regulatory and court approvals, and the satisfaction of certain other closing conditions customary for a transaction of this nature.

Management and Directors

The Purchaser shall take all necessary actions to ensure that, upon the completion of the Arrangement, Bruce Lev or another representative of Loeb Holding Corp. will be appointed as an observer to the board of directors of the Purchaser (the “Observer“), who shall have the right to attend all meetings of the Purchaser board in a non-voting observer capacity.

On closing, the Purchaser will issue 280,000 Purchaser Shares and 13,750 Purchaser compensation warrants (each, a “Compensation Warrant“) to Oberon Securities, LLC, which assisted the Company as its Financial Advisor. Each Compensation Warrant is exercisable at a price per share equal to a 35% premium to the issue price in the Concurrent Financing for the purchase of one (1) Purchaser Share for a period of five years following the closing date of the Arrangement.

Boards of Directors’ Recommendations

The board of directors of DGTL, and the board of directors of EL have both unanimously approved the proposed Arrangement.

Directors, management and certain key Company Shareholders have signed lockup agreements to vote their respective Company Shares in favour of the Arrangement, and have agreed not to trade the Purchaser Shares that they receive pursuant to the Arrangement for a period of one year following closing.

Further Details

The Agreement contains representations and warranties for the benefit of each of DGTL and EL, conditions relating to shareholder, court and regulatory approvals, material adverse changes and compliance with the Agreement as are in each case customary in comparable transactions of this nature.

The Agreement includes deal protection provisions that are customary in Canadian board-supported transactions on the part of both EL and DGTL (subject to customary fiduciary out provisions). There is a termination fee commensurate with a transaction of this size being $250,000 payable by either DGTL or EL depending on the termination event as set out in the Agreement.

Details of the Arrangement, including a summary of the terms and conditions of the Agreement, will be disclosed in a management information circular of EL, which will be mailed to the Company Shareholders and will also be available on SEDAR at www.sedar.com. The Agreement will also be filed on the SEDAR profiles of each of DGTL and EL.

It is expected that the special meeting of the Company Shareholders (the “Meeting“) to approve the proposed Arrangement will be held and, if approved at the Meeting, it is expected that the Arrangement would close in the fourth quarter of 2021.

Based upon the number of issued and outstanding shares in each of the Company and the Purchaser on the date hereof, upon completion of the transaction, and exclusive of the Concurrent Financing, it is expected that the Purchaser will have approximately 43,558,125 Purchaser Shares issued and outstanding on a non-diluted basis, as compared to 37,958,125 Purchasers Shares outstanding as at the date hereof.

The transaction is an arm’s length transaction pursuant to applicable regulatory policies.

This announcement is for informational purposes only and does not constitute an offer to purchase, a solicitation of an offer to sell any shares or a solicitation of a proxy.

Financial and Legal Advisors

Garfinkle Biderman LLP is acting as legal counsel to DGTL.

Oberon Securities is acting as financial advisor to EL. Spiegel Securities & Corporate Law and Roy O’Connor LLP are acting as legal counsel to EL. IJW&Co. will provide a fairness opinion to the board of directors of EL.

About DGTL

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.[1] Learn more by visiting: https://dgtlinc.com/technology.

About EL

Engagement Labs (TSXV: EL) is an industry-leading data and analytics firm that provides social intelligence for Fortune 500 brands and companies.

The Company’s 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.

Contacts – DGTL

John Belfontaine, Director
Email: IR@dgtlinc.com
Phone: +1 (877) 879-3485

Contacts – EL

Vanessa Lontoc
Email: vanessa.lontoc@engagementlabs.com
Phone: +1 (732) 846-6800

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.

Cautionary Note Regarding Forward-Looking Statements:

Certain information in this news release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expect”, “potential”, “believe”, “intend” or the negative of these terms and similar expressions. Forward-looking statements in this news release include, but are not limited to the satisfaction of closing conditions including, without limitation (i) required EL shareholder approval, (ii) necessary court approval in connection with the plan of arrangement, (iii) the necessary approvals from the TSX Venture Exchange in connection with the Arrangement, (iv) the completion of the Concurrent Financing, and (v) other closing conditions, including, without limitation, obtaining certain consents, the operation and performance of the DGTL and EL businesses in the ordinary course until closing of the Arrangement and compliance by DGTL and EL with various covenants contained in the Agreement. In particular, there can be no assurance that the Arrangement will be completed. Forward-looking statements are based on certain assumptions regarding DGTL and EL, including expected growth, results of operations, performance, and industry trends. While DGTL and EL consider these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements also necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; marketing costs; loss of markets; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; income tax and regulatory matters; the ability of DGTL and EL to implement their business strategies; competition; currency and interest rate fluctuations and other risks. Readers are cautioned that the foregoing list is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. DGTL and EL disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. This news release has been approved by the board of directors of each of DGTL and EL. Factors that could cause anticipated opportunities and actual results to differ materially include, but are not limited to, matters referred to above and elsewhere in DGTL’s and EL’s public filings and material change reports that will be filed in respect of the Arrangement which are and will be available on SEDAR.


1 Current and past customers

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