Mr. Kim Oishi reports

DATABLE TECHNOLOGY PROVIDES UPDATE ON LOI TO SELL SAAS BUSINESS TO LOCAL MARKETING SOLUTIONS GROUP

Datable Technology Corp. has provided an update to the letter of intent (LOI) to sell its software-as-a-service (SaaS) business to Local Marketing Solutions Group Inc. (LMSG) signed on June 15, 2023 (see press release dated June 16, 2023). Under the LOI, LMSG will purchase all of material assets and liabilities related to Datable's SaaS business for equity in LMSG, such that post-transaction Datable will own 15 per cent of LMSG.

Datable and LMSG are in discussions to restructure the proposed transaction due to material changes in the businesses of Datable and LMSG coupled with changing market conditions. Further they have agreed to extend the deadlines for reaching a definitive agreement and for closing dates to be determined by the structure of a revised transaction.

LMSG provides marketing solutions and technology to national and international brands that drive revenue through local sales and marketing channels across the United States. LMSG's customers include some of the largest global companies as well as small and medium-sized businesses (SMBs) across the U.S. Datable and LMSG believe that a combination of the two companies will result in a company that can accelerate organic growth by better serving its customers with expanded products and services offered by a consolidated U.S. based sales team. To that end, the companies signed a cross-selling agreement (see press release dated Jan. 30, 2023) and are working together to sell integrated products and services to the combined customer base.

Business update

LMSG and Datable both restructured their businesses in 2023 as they prepared for the transaction and looked for ways to further enhance the combined business.

Datable reduced cash operating expenses by close to 48 per cent and increased gross margin as a percentage of revenue to 49 per cent (from 40 per cent in 2022) for the nine-month period ended Sept. 30, 2023. Revenue decreased by 26 per cent for the nine-month period ended Sept. 30, 2023, but was offset by the reduced expenses and increased gross margin percentages, such that net loss decreased by 57 per cent for the period. Datable expects similar results for the year ended Dec. 31, 2023.

LMSG reduced its operating expenses and returned to operating profitability during 2023. It expects to report over $11-million (U.S.) of revenue in 2023 after restructuring its business due to the sale of a significant subsidiary. LMSG had grown organically and by acquisition to $61-million (U.S.) in revenue by 2021, before selling its print media business, mainly due to COVID-related logistics and supply chain issues.

In 2023, LMSG restarted its growth by acquisition strategy and has signed three letters of intent to acquire U.S.-based marketing companies that generated approximately $50-million (U.S.) of revenue and $12.6-million (U.S.) of EBITDA (earnings before interest, taxes, depreciation and amortization) in 2023. These companies provide products and services complementary to LMSG's offering and have long-term relationships with corporate and government customers that have significant marketing budgets. In addition to the companies under letters of intent, LMSG is building a pipeline of additional acquisition targets that meet their criteria for financial metrics, cross-selling opportunities and management succession, all facilitated by a fragmented market sector that is ripe for consolidation and by their expertise in managing acquisitions.

In January of 2024 LMSG made a significant investment to be an agency partner of a natural language processor (NLP), providing autonomous, AI (artificial intelligence) driven outbound and inbound telephonic agent software-as-a-service solution. NLP agents is an explosive new capability to deliver more efficient and effective customer acquisition and customer service workflow. LMSG will leverage this capability internally and will also deliver it to its customer base as a component of LMSG's SaaS services.

The acquisition of Datable's SaaS business adds Platform3, Datable's proprietary consumer data and marketing platform to LMSG's technology hub. Platform3 is used by Fortune 500 companies to drive incremental revenues, enhance consumer engagement and build consumer loyalty. Cross-selling Platform3 to LMSG's current customers and those of its acquisitions under LOI is expected to drive the growth of high-margin recurring revenues and enhance customer retention.

Updated letter of intent

Due to the material changes in the businesses of LMSG and Datable, the two companies are in discussions to update the LOI signed on June 15, 2023. Datable and LMSG both believe that the economies of scale and cross-selling opportunities that can be realized by a consolidation of complementary marketing companies at accretive valuations will drive shareholder value. LMSG and Datable have agreed to combine to provide a platform that will acquire and support the growth of U.S.- and Canadian-based marketing companies. To provide access to capital and support the acquisitions that LMSG has under letter of intent, LMSG and Datable are considering a number of options with capital partners, including consolidating as a public company.

"We have proven that our SaaS platform provides value to some of the largest enterprises in the U.S. through the monetization of first party consumer data," said Rob Craig, chief executive officer of Datable. "By becoming part of the LMSG consolidation, we see a clear path to scaling. We have started the process of cross selling and lead generation with LMSG, that we expect will return us to revenue growth in 2024, particularly with access to the new customers that come with the proposed acquisitions."

"LMSG has returned to our growth-through-acquisition strategy, starting with integrating Datable's SaaS platform, team and clientele into our operations," said Al Croke, president and CEO of LMSG. "During 2023, we looked at many marketing companies that met our criteria for acquisition and selected three targets that have complementary offerings and strong profitability. The marketing sector is large and fragmented with many founders looking for succession plans or for ways to accelerate growth. With the markets stabilizing we do see the appeal of becoming a public entity to facilitate acquisitions."

About Datable Technology Corp.

Datable has developed Platform 3, a proprietary consumer life cycle and data management platform that is sold to global consumer brands. Platform 3 is delivered as a subscription service (SaaS model), and is used by some of the world's most valuable consumer brands to access new consumer communities and engage them while collecting, analyzing and managing their first party data. Platform 3 incorporates proprietary technology to monetize the consumer data, including demographics and purchasing behaviour, by sending consumers targeted offers by e-mail and text messages.

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