DGTL Holdings Inc said it has completed its previously announced acquisition of Engagement Labs (TSX-V:EL) by way of a plan of arrangement.
Engagement Labs is an industry-leading data and analytics firm that provides social intelligence for Fortune 500 brands and companies. Its TotalSocial platform focuses on the entire social ecosystem by combining powerful online (social media) and offline (word of mouth) data with predictive analytics.
The company 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.
Under the arrangement, holders of common shares of Engagement Labs received 0.1136 of a common share of DGTL Holdings 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.
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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 and 13,750 compensation warrants to Oberon Securities, LLC, which assisted Engagement Labs as its financial advisor, and an additional 261,250 compensation warrants to Ed Keller. Each compensation warrant is exercisable at a price of $0.405 for the purchase of one DGTL Holdings share for a period of five years following the closing date of the arrangement.
Private placement completed
As previously announced, prior to the closing of the arrangement, DGTL Holdings completed a non-brokered private placement, resulting in the sale of an aggregate of 1,068 subscription receipts for aggregate gross proceeds of $1,068,000.
The proceeds 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 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. The convertible debentures mature two years following the completion of the arrangement and the principal amount 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.
In addition, DGTL Holdings has issued an aggregate of 81,659 finder'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.
DGTL Holdings acquires and accelerates transformative digital media, marketing and advertising software technologies, powered by Artificial Intelligence (AI). DGTL - 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.
As a wholly-owned subsidiary of DGTL, 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. Its customer portfolio includes global brands in a range of key growth categories, including Anheuser Busch-InBev, Nestle, Post Holdings, Danone (OTCQX:DANOY) and Keurig-Dr. Pepper, Dunkin Brands, The Container Store, TJ Maxx, Ulta Beauty (NASDAQ:ULTA) and Pizza Hut Live Nation, The CW, Scribd, Syneos Health and Novartis.
Contact the author at jon.hopkins@proactiveinvestors.com