Magnet Forensics Announces $74.4 Million Bought Deal Secondary Offering

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WATERLOO, ON, Dec. 7, 2021 /CNW/ - Magnet Forensics Inc. ("Magnet Forensics" or the "Company") (TSX: MAGT), a developer of digital investigation software used globally by public safety organizations and enterprises, announced today that certain shareholders, including Jad Saliba, our Founder, President & Chief Technology Officer, Adam Belsher, our Chief Executive Officer, certain other members of management and In-Q-Tel, Inc. (collectively, the "Selling Shareholders"), have entered into an agreement with an underwriting syndicate led by Canaccord Genuity Corp. and BMO Capital Markets (collectively, the "Underwriters") for the sale, on a "bought deal" basis, of an aggregate of 2,456,814 subordinate voting shares at an offering price of C$30.30 per share for aggregate gross proceeds to the Selling Shareholders of C$74.4 million (the "Offering").

Each of Jad Saliba and Adam Belsher will sell their respective portions of the offered shares, being 900,000 subordinate voting shares each, through holding companies controlled by them. In-Q-Tel, Inc., a not-for-profit strategic investor, will be selling all 431,814 subordinate voting shares held by it and will not hold any shares following closing of the Offering. The remaining shares will be sold by certain other members of management through holding companies controlled by them.

The Underwriters have also been granted an over-allotment option, exercisable for a period of 30 days from the date of the closing of the Offering, to purchase at the offering price from the holding companies controlled by Messrs. Jad Saliba and Adam Belsher up to an additional 368,522 subordinate voting shares in the aggregate, representing 15% of the aggregate subordinate voting shares to be sold pursuant to the Offering. If exercised in full, this would increase the total size of the Offering to approximately C$85.6 million.

In connection with the Offering, the Company will file a prospectus supplement to its short form base shelf prospectus dated October 29, 2021 with the securities regulatory authorities in each of the provinces and territories of Canada. Prospective investors should read the base shelf prospectus and the prospectus supplement before making an investment decision. Copies of the base shelf prospectus and prospectus supplement will be available on SEDAR at www.sedar.com.

To satisfy the sale under the Offering, an aggregate of 1,800,000 multiple voting shares of the Company currently held, directly or indirectly, by Messrs. Jad Saliba and Adam Belsher will be converted into subordinate voting shares on a one-for-one basis (2,168,522 multiple voting shares of the Company if the over-allotment option is exercised in full). Following completion of the Offering, our principal shareholders, being Messrs. Jad Saliba, Adam Belsher and Jim Balsillie, will continue to beneficially own or control, directly or indirectly, 100% of our multiple voting shares, representing 96.2% of the total voting power of our issued and outstanding shares (96.1% if the over-allotment option is exercised in full), with Messrs. Jad Saliba, Adam Belsher and Jim Balsillie beneficially owning or controlling, directly or indirectly, multiple voting shares representing 38.8%, 37.0% and 20.4% of the total voting power of our shares, respectively (38.6%, 36.8% and 20.6%, respectively, if the over-allotment option is exercised in full).

Closing of the Offering is expected to occur on or about December 14, 2021, subject to customary closing conditions. Following the closing of the Offering (assuming no exercise of the over-allotment option and no other issuances of shares as a result of the exercise of options or conversion of shares), the total number of issued and outstanding shares of the Corporation is expected to be 40,688,439 of which 11,416,614 will be subordinate voting shares and 29,271,825 will be multiple voting shares, and certain calculations relating to the share ownership of our principal shareholders following the Offering contained in this news release have been calculated on such basis.

No securities regulatory authority has either approved or disapproved the contents of this press release. The subordinate voting shares have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws. Accordingly, the subordinate voting shares may not be offered or sold within the United States unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the subordinate voting shares in any province, state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such province, state or jurisdiction.

About Magnet Forensics

Founded in 2010, Magnet Forensics is a developer of digital investigation software that acquires, analyzes, reports on, and manages evidence from digital sources, including computers, mobile devices, IoT devices and cloud services. Magnet Forensics' software is used by more than 4,000 public and private sector customers in over 90 countries and helps investigators fight crime, protect assets and guard national security.

Forward-Looking Statements

This news release contains "forward-looking information" within the meaning of applicable securities legislation, which reflects the Company's current expectations regarding future events. In some cases, forward-looking information is identified by words such as "will", "expects", "anticipates", "intends", "plans", "believes", "estimates" or similar expressions concerning matters that are not historical facts. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Forward-looking information contained in this news release, includes, but is not limited to, statements with respect to the Offering, including the expected timing of closing of the Offering, the number of shares to be sold by each Selling Shareholder and the exercise of the over-allotment option, the filing of the prospectus supplement, the conversion of the multiple voting shares into subordinate voting shares, the expected number of issued and outstanding shares following closing of the Offering and the calculation of ownership levels of certain of our shareholders. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. Actual results could differ materially from those projected herein.

Forward-looking information is based on a number of opinions, estimates and assumptions that, while considered by the Company to be appropriate and reasonable as of the date of this news release, are subject to a number of known and unknown risks and uncertainties, many of which are beyond the Company's control. Such risks and uncertainties include, but are not limited to, risks related to failure to complete the Offering and those factors discussed in greater detail under "Risk Factors" in the Company's short form base shelf prospectus dated October 29, 2021 and under "Summary of Factors Affecting our Performance" section of the Company's MD&A for the three and nine months ended September 30, 2021, both of which are available under the Company's SEDAR profile at www.sedar.com, and should be considered carefully by prospective investors.

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents our expectations as of the date specified herein, and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws.

All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements.

SOURCE Magnet Forensics Inc.

Neil Desai, Tel: [phone], [email protected]