News Room

Magnet Forensics Closes $115 Million Initial Public Offering

TORONTO, ON, May 3, 2021 – Magnet Forensics Inc. (“Magnet Forensics” or the “Company”), a developer of digital investigation software that acquires, analyzes, reports on, and manages evidence from digital sources, announced today the closing of its initial public offering (the “Offering”)of 6,773,500 subordinate voting shares of the Company (“Subordinate Voting Shares”) at a price of C$17.00 per share, which includes the exercise in full by the Underwriters (as defined below) of their option to purchase up to 883,500 additional Subordinate Voting Shares, for total gross proceeds of C$115,149,500. The Company expects to use the net proceeds from the Offering to strengthen its balance sheet, providing it with flexibility to fund its future growth strategies.

The Subordinate Voting Shares began trading on the Toronto Stock Exchange (“TSX”) on April 28, 2021 under the symbol “MAGT”.

“I’m proud of the team that has gotten Magnet Forensics to this important milestone,” said Adam Belsher, Magnet Forensics’ CEO.  “Our customers are seeing significant growth of cybercrime and digital evidence related to their investigations globally. The investment in Magnet Forensics, through the IPO, is ultimately an acknowledgement of the importance of these challenges and provides resources to tackle them more aggressively.”

The Offering is being made through a syndicate of underwriters led by BMO Capital Markets and Canaccord Genuity Corp, as co-lead underwriters and joint bookrunners, and CIBC Capital Markets, National Bank Financial Inc., RBC Dominion Securities Inc. and Scotiabank (collectively, the “Underwriters”).

The Offering was completed pursuant to the Company’s supplemented PREP prospectus dated April 28, 2021 (the “Prospectus”), and filed with the securities regulators in each of the provinces and territories of Canada, a copy of which is available under the Company’s profile on SEDAR at www.sedar.com.

The securities under the Offering have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or the securities laws of any state of the United States and may not be offered, sold or delivered, directly or indirectly, in the United States, except pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This news release does not constitute an offer to sell or solicitation of an offer to buy any of these securities in any jurisdiction in which the offering or sale is not permitted.

Early Warning Reports

On April 30, 2021, in connection with and prior to closing of the Offering, the Company completed a series of transactions (the “Pre-Closing Reorganization”) pursuant to which, among other things, the Company amalgamated with 2415112 Ontario Ltd. (“Holdco”), a holding company owned and controlled by Mr. Belsher, Jad Saliba, President and Chief Technology Officer of the Company, and Jim Balsillie, Chair of the Board of Directors of the Company (collectively, the “Principal Shareholders”). As a result of such amalgamation, among other things, the common shares of the Company held by Holdco were cancelled and the common shares of Holdco held by the Principal Shareholders were converted into multiple voting shares of the Company (“Multiple Voting Shares”) in proportion to their respective interests in Holdco. In addition, as part of the Pre-Closing Reorganization, the common shares of the Company indirectly held by Jim Balsillie were converted into Subordinate Voting Shares and exchanged for Multiple Voting Shares.

Prior to the completion of the Pre-Closing Reorganization, none of the Principal Shareholders owned or controlled any Multiple Voting Shares or Subordinate Voting Shares. Immediately following the Pre-Closing Reorganization but before giving effect to the Offering, Mr. Belsher directly owned and indirectly controlled (in his capacity as the sole trustee of The Belsher 2014 Family Trust) 12,162,096 Multiple Voting Shares (representing approximately 39.1% of the issued and outstanding Multiple Voting Shares), Mr. Saliba directly owned and indirectly controlled (in his capacity as the sole trustee of The Saliba 2014 Family Trust) 12,710,679 Multiple Voting Shares (representing approximately 40.9% of the issued and outstanding Multiple Voting Shares), and Mr. Balsillie indirectly owned and controlled (through Amolino Holdings Inc., a holding Company indirectly controlled by Mr. Balsillie) 6,199,050 Multiple Voting Shares (representing approximately 20.0% of the issued and outstanding Multiple Voting Shares).

After giving effect to the Pre-Closing Reorganization and the Offering, Mr. Belsher directly and indirectly owns or controls 12,162,096 Multiple Voting Shares (representing approximately 39.1% of the issued and outstanding Multiple Voting Shares), Mr. Saliba directly and indirectly owns or controls 12,710,679 Multiple Voting Shares (representing approximately 40.9% of the issued and outstanding Multiple Voting Shares), and Mr. Balsillie indirectly owns or controls 6,199,050 Multiple Voting Shares (representing approximately 20.0% of the issued and outstanding Multiple Voting Shares).

Pursuant to the terms of the Multiple Voting Shares, they are each convertible into Subordinate Voting Shares on a one-for-one basis, and will convert automatically upon the occurrence of certain events. Upon completion of the Offering, assuming that only the Multiple Voting Shares directly and/or indirectly owned and/or controlled by any one of Messrs. Belsher, Saliba, or Balsillie, as applicable, are converted into Subordinate Voting Shares in accordance with their terms, the Multiple Voting Shares directly and/or indirectly owned and/or controlled by any one of Messrs. Belsher, Saliba, or Balsillie will represent approximately 56.9%, 58.0% and 40.2%, respectively, of the issued and outstanding Subordinate Voting Shares, on a partially-diluted basis, as the case may be.

The Multiple Voting Shares referenced in this press release were issued pursuant to the Pre-Closing Reorganization effected in connection with the Offering and were acquired for investment purposes. The Principal Shareholders may further purchase, hold, vote, trade, dispose or otherwise deal in the securities of the Company, in such manner as it deems advisable from time to time, subject to applicable laws and the terms of the Corporation’s articles and of the lock up agreements, coattail agreement and investor rights agreement entered into by each of the Principal Shareholders, each as described in the Prospectus.

The Subordinate Voting Shares are currently listed for trading on the Toronto Stock Exchange, while the Multiple Voting Shares are not listed on a marketplace. For further information and to obtain a copy of the early warning reports to be filed under applicable Canadian securities laws in connection with the foregoing matters, please see the Company’s profile on SEDAR at www.sedar.com.

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, including statements with regard to expected use of the net proceeds for the Offering, the commencement of trading of the Subordinate Voting Shares on the Toronto Stock Exchange and the expected growth of cybercrime and digital evidence investigations globally. Forward-looking information is based on a number of assumptions, including but not limited to the projected market size of the global digital investigations and intelligence market, and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Prospectus filed on SEDAR. Actual results could differ materially from those projected herein. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained in this news release is provided as of the date of this news release and Magnet Forensics does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws.

For further information, please contact:

Neil Desai

Tel: 226-243-6337

PR@magnetforensics.com