DeepMarkit Announces Strategic Invesment

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 Calgary, Canada – June 24, 2019 – DeepMarkit Corp., (“DeepMarkit” or the “Company”) (TSX-V:MKT) is pleased to announce that it has entered into a strategic investment agreement with Hong Kong Datang Investment Holding Corp. (“HK Datang”), an arm’s length, private Hong Kong investment company. Under the terms of the Investment Agreement, HK Datang, subject to certain conditions, including a 10:1 consolidation of DeepMarkit’s outstanding common shares, will purchase 29,527,120 post-consolidation common shares at a price of $0.075 per share (post-consolidation) for total subscription proceeds of $2,214,535 (the “Transaction”). 

 Following completion of the Transaction, HK Datang will own approximately 72% of the outstanding post-consolidation common shares and accordingly, will result in a change of control of DeepMarkit. 

HK Datang’s investment is subject to certain conditions precedent, including: 

1. consolidation of the DeepMarkit common shares on the basis of 10 pre-consolidation shares for one post-consolidation share; 

2. the parties shall have entered into the Debenture Amending Agreement (as defined below); 

3. delivery of agreements by DeepMarkit’s option holders for the cancellation of all outstanding stock options; 

4. elimination of certain related-party debt; 

5. shareholder approval of the share consolidation, the debenture amendment and HK Datang as a new control person of the Company; and 

6. TSX Venture Exchange approval. 

The Transaction is subject to shareholder approval and approval by the TSX Venture Exchange. It is anticipated that following the closing of the transaction, HK Datang will appoint two nominees, and one additional independent director will be appointed to the DeepMarkit Board. No other management changes are presently contemplated. 

As a condition to completing the Transaction, concurrent with closing of the Transaction, the Company will be required to enter into an agreement with the holders of DeepMarkit’s outstanding 12% participating debentures due July 14, 2020 (“Debentures”) to (i) repay $1,000,000 owing under the Debentures directly following closing of the Transaction; (ii) eliminate all Participation Interest, (iii) reduce basic interest to 10%, (iv) defer all interest payments to the maturity date, and (v) provide for conversion, at the option of DeepMarkit, into common shares at a conversion price of $0.33 per share, provided that for the 20 days prior to the maturity date, DeepMarkit’s common shares have traded on the TSX Venture Exchange at or above the price of $0.33 per common share (the “Debenture Amending Agreement”). 

DeepMarkit has scheduled an Annual General and Special Meeting of Shareholders for August 1, 2019 in order to consider the necessary approvals for the Transaction. 

The proceeds from the Transaction will be used to repay $1,000,000 outstanding under the Debentures and for general working capital and corporate purposes. 

The Transaction is expected to proceed pursuant to an application by the Company to the TSX Venture Exchange for a waiver from the minimum $0.05 price (on a pre-consolidation basis) for private placements pursuant to the TSX Venture Exchange Bulletin dated April 7, 2014, entitled “Discretionary Waivers of $0.05 Minimum Pricing Requirement”. The waiver has been granted and is conditional upon the Company completing the consolidation. 

The common shares of the Company issued pursuant to the Transaction are subject to a hold period expiring four months following the date of issuance, in accordance with the policies of the Exchange and applicable securities laws. 

Related Party Transaction 

As some of the Debentures are held by an insider of the Company, the Debenture Amending Agreement will be deemed to be a “related party transaction” as defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“). 

The Debenture Amending Agreement will not be subject to the formal valuation requirements of MI 61-101, and the Company intends to rely upon the exemption from the shareholder approval requirement pursuant to Section 5.7(1)(b) of MI 61-101 as the fair market value of the consideration to be received by the interested party is less than $2,500,000 and the other conditions set out in Section 5.7(1)(b) either have been met or are expected to be. 

About HK Datang 

HK Datang is a Hong Kong headquartered investment holdings company focused on investment and business incubation as well as brand growth and expansion. HK Datang is controlled by Chongqing Tangsen Network Technology Ltd., a private Chinese company (“Tangsen“). Tangsen is a software, technology and R&D company which, among other activities, operates a China-focused e-commerce platform posed to become a cross-border e-commerce platform. Tangsen is controlled by two individuals, both of whom are expected to join the DeepMarkit Board, subject to approval by the TSX Venture Exchange. 

The minority shareholder of HK Datang is Datang Telecom, a Chinese national telecommunications company. 

About DeepMarkit 

DeepMarkit is an ecommerce technology company inventing new ways to engage consumers and other audiences. The Company’s proprietary platform enables online merchants to create a wide variety of branded marketing displays and promotional campaigns that incentivize customers, thus driving sales, capturing data and generating leads. 

DeepMarkit’s shares are listed on the TSX Venture Exchange, symbol MKT. To try out our games and see the power of the platform, please visit www.deepmarkit.com 

For more information, please contact: 

President & CEO Darold H. Parken 

Tel: 403-537-0067 

Email: dparken@deepmarkit.com 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release. 

CAUTIONARY STATEMENT 

Statements in this press release may contain forward-looking information including, statements regarding the potential investment by HK Datang or the required shareholder and regulatory approvals. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of DeepMarkit. Factors that could cause the actual results to differ materially from those in forward-looking statements include, failure to obtain necessary shareholder approvals, failure to obtain necessary regulatory approvals, the failure to close the proposed investment transaction as a result of due diligence investigations or other causes. The reader is cautioned not to place undue reliance on any forward-looking information. 

The forward-looking statements contained in this press release are made as of the date of this press release and DeepMarkit does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities law. 

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