DGTL Holdings Inc. Announces Consolidation, Private Placement and Potential Creation of a New Control Person

Toronto, Ontario–(Newsfile Corp. – July 19, 2024) – DGTL Holdings Inc. (TSXV: DGTL) (“DGTL” or the “Company“) reports that it intends to complete a Consolidation (as defined herein) of its outstanding common shares (“Common Shares“) and the potential creation of a new Control Person (as defined herein), Mr. John David Belfontaine (“Mr. Belfontaine“), subject to obtaining requisite approval from the Annual General and Special Meeting of shareholders, scheduled to take place at 11:00 a.m. (EST) on July 30, 2024 (the “Meeting“). In addition, after the Consolidation, the Company is also proceeding with a non-brokered private placement of up to 26,666,666 units (each a “Unit“), priced, on a post-Consolidation basis of $0.075, for gross proceeds up to $2,000,000 (the “Private Placement“).

Each Unit will consist of one post-Consolidation Common Share and one-half of one post-Consolidation Common Share purchase warrant (each whole warrant, a “Warrant“). The Warrants are exercisable for a period of (3) three years at a post-Consolidation exercise price of $0.15 per post-Consolidation Common Share.

The Company intends to use the proceeds from the Private Placement for increased marketing and investor relations activities as well as technology development and general working capital, including retirement of existing accounts payable.

2024 Meeting

Consolidation Approval

As a matter of the upcoming Meeting, the Company is seeking shareholder approval for a proposed consolidation of all of the issued and outstanding Common Shares of the Company on the basis of up to fifteen (15) pre-consolidation Common Shares for each one (1) post-consolidation Common Share (the “Consolidation“). There are currently 76,465,973 Common Shares issued and outstanding. If the Consolidation is approved, and effected on a 15:1 basis, there will be an aggregate of 5,097,731 Common Shares issued and outstanding. The board may determine not to implement the Consolidation at any time after the Meeting and after receipt of necessary regulatory approvals, but prior to effecting the required amendment to the Company’s articles, without further action on the part of the shareholders. The proposed Consolidation is subject to final TSX Venture (“TSXV“) approval.

Creation of a New Control Person

Mr. Belfontaine, the CEO of the Company, currently, directly and indirectly holds 11,058,038 Common Shares, representing approximately 14.46% of the issued and outstanding shares of the Company. The Company filed a management information circular dated May 28^th, 2024, in connection with the Meeting (“Circular“). Included in the Circular was a broad resolution seeking shareholder approval for the creation of a new Control Person. The Company is limiting the scope of that approval to the Private Placement as described in this press release.

Mr. Belfontaine intends to subscribe for up to 3,333,333 Units pursuant to the Private Placement. If the Private Placement is completed for only $250,000, Mr. Belfontaine will have control or direction over, directly or indirectly, 46.93% of the issued and outstanding Common Shares on an undiluted basis, and approximately 58.83% of the issued and outstanding Common Shares on a partially diluted basis. Assuming that the Private Placement is completed for $2,000,000, and Mr. Belfontaine purchases $250,000 of Common Shares, he will have control or direction over, directly or indirectly, 12.71% of the issued and outstanding Common Shares on an undiluted basis and 17.83% of the issued and outstanding Common Shares on a partially diluted basis (the “Belfontaine Subscription“).

Under Policy 4.1 – Private Placements (“Policy 4.1“) of the TSX Venture Exchange Corporate Finance Manual, shareholder approval is required where a transaction creates a shareholder that holds or controls 20% or more of an issuer’s shares (a “Control Person“). The Belfontaine Subscription may result in Mr. Belfontaine becoming a Control Person of the Company. Pursuant to Policy 4.1, if a transaction results in the creation of a new Control Person, the TSXV requires the Company to obtain shareholder approval of the transaction on a disinterested basis, excluding any shares held by the proposed new Control Person and its associates and affiliates.

At the upcoming Meeting, approval for the creation of a new Control Person will be sought, due to the Belfontaine Subscription.

Proxy Deadline

The Company has opted to waive the proxy deadline for the Meeting and will accept proxies up until the start date of the Meeting.

If the Company obtains the requisite shareholder approval for the Consolidation and designation of Mr. Belfontaine as a Control Person, the Company will affect the Consolidation following the Meeting, and then shortly thereafter close the Private Placement.

Related Party Transaction

The Belfontaine Subscription constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“). The Company relies on exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(b) and 5.7(1)(b) in respect of the Belfontaine Subscription as no securities of the Company are listed or quoted on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the United States other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc and the fair market value of the securities to be distributed in the Private Placement does not exceed $2,500,000.

Forward-Looking Statements

Certain information contained herein constitutes forward-looking information or statements under applicable securities legislation and rules. Such statements include, but are not limited to, statements with respect to the proposed Consolidation, the Meeting, any approval thereof by the TSXV or by shareholders of the Company, and the Belfontaine Subscription. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of DGTL to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to: (i) any inability of DGTL to satisfy conditions imposed by the TSXV on the Consolidation or to obtain TSXV approval for the Consolidation for any other reason; (ii) any inability of DGTL to obtain shareholder approval of the Consolidation or the creation of a new Control Person; and (iii) any change in the circumstances of the Company, whether internal or external, whether affecting the Company particularly, or the general global markets, which could cause the Company to reconsider and adjust or abandon the Consolidation and (iv) the ability to attract prospective mergers, acquisitions or funding opportunities on a go forward basis. Although management of DGTL has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking statements. Neither party will update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws. The parties caution readers not to place undue reliance on these forward-looking statements and it does not undertake any obligation to revise and disseminate forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of or non-occurrence of any events.

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.

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