PR85862

BEAVERTON, Oregon, Sept. 30, 2020 /PRNewswire=KYODO JBN/ --

-- Provides Growth Capital as Market for Platform Expands

Digimarc (https://c212.net/c/link/?t=0&l=en&o=2931920-1&h=947111924&u=http%3A%2F%2Fwww.digimarc.com%2F&a=Digimarc )

Corporation (NASDAQ: DMRC), creator of the Digimarc Platform for digital

identification and detection, today announced a $53.5 million investment from

TCM|Strategic Partners led by long time shareholder Riley McCormack.

Logo - https://mma.prnewswire.com/media/319963/digimarc_Logo.jpg 

"We are very pleased by the vote of confidence evidenced in this investment

from TCM|Strategic Partners and look forward to welcoming its principal

investor, Riley McCormack, to our Board of Directors.  Riley is a long time

shareholder, astute investor, and an extremely diligent student of the company

and its strategy who will help guide the company through continuing expansion

of the market for our platform, such as the massive sustainability initiative

announced recently," (https://c212.net/c/link/?t=0&l=en&o=2931920-1&h=832359714&u=https%3A%2F%2Fwww.digimarc.com%2Fabout%2Fnews-events%2Fpress-releases%2F2020%2F09%2F08%2Fdigimarc-at-center-of-pan-european-development-of-digital-watermarking-for-improved-plastic-sortation-and-recycling&a=sustainability+initiative+announced+recently%2C ) said Bruce Davis,

Chairman and CEO. "This investment gives us adequate working capital for

the foreseeable future, allowing management to focus all its energy on growth of

the business and continuing roll out of Digimarc Barcode as successor to traditional barcodes."

Mr. McCormack explained, "TCM|Strategic's decision to make this investment was

the result of two conclusions:

   -- The Legacy Business and the Growth Business are each worth more today

      than the current enterprise value of the entire company.

   -- The Growth Business has not only the opportunity but also the high

      likelihood of being worth significantly more in the future."

TCM purchased approximately 2.5 million shares of common stock, representing

19.9% of the company's outstanding common stock, with the balance of the

investment to be made through the purchase of convertible preferred shares,

subject to the satisfaction of customary closing conditions.  The convertible

preferred shares will convert automatically following shareholder approval

required under Nasdaq Listing Rules 5635(b) and 5635(d).

A summary of the principal terms of the investment follow.  Please refer to the

Form 8-K and documents filed with the SEC for additional information:

   -- Investment Amount:  $53.5 million

   -- Securities Purchased:  

      o 2,542,079 shares of common stock (equal to 19.9% of common stock

        outstanding) for an aggregate purchase price of $36,529,675

      o 16,970 shares of Series B Convertible Preferred Stock for an aggregate

        purchase price of $16,970,000, subject to the satisfaction of customary

        closing conditions

   -- Purchase Price Per Share for Common Stock: $14.37/share, a 15% discount

      to the average closing price of Digimarc common stock for the trading

      days from August 24 – September 28, 2020

   -- Terms of Series B Convertible Preferred:

      o Dividends:  7.5% per year, cumulative; payable in cash or, at the

        option of Digimarc, accumulated and added to the Liquidation Preference

        (described below). Also entitled to participate in dividends declared

        or paid on the common stock on an as-converted basis

      o Conversion:  No conversion unless and until shareholder approval is

        obtained; the preferred will convert automatically into common stock

        following receipt of shareholder approval

      o Conversion Price:  $14.37/share

      o Liquidation Preference: Purchase price plus accumulated and accrued but

        unpaid dividends

      o Payment upon change of control, liquidation or dissolution:  Greater of

        (i) Liquidation Preference, or (ii) amount holder is entitled to

        receive on an as-converted basis

      o Repurchases or Exchanges: participate in offers to repurchase or

        exchange shares of common stock on an as-converted basis  

      o Voting Rights:  Vote with common on an as-converted basis (calculated

        on the basis of the voting conversion price), subject to 19.9% cap on

        combined voting power of common stock and preferred

      o Protective Provisions:  A majority of the outstanding preferred will be

        required to approve specified company actions that could adversely

        affect the preferred stock ((i) creation or issuance of parity or

        senior securities, (ii) amendments or modifications to Articles of

        Incorporation that would adversely affect the rights, preferences or

        voting powers of the preferred stock, (iii) certain business

        combinations and transactions in which preferred stock is not cashed

        out, unless the rights, preferences or voting powers of Preferred Stock

        are not adversely affected, and (iv) certain transactions with

        affiliates)

   -- Restrictions on Transfer:  Subject to specified exceptions, for one year

      following the closing, TCM|Strategic may not transfer shares of common

      stock issued in connection with the investment.  The same restriction

      applies to the preferred shares for six months following the closing.

   -- Standstill:  Subject to specified exceptions, for one year following the

      close of the transaction, TCM|Strategic is subject to restrictions on,

      among other things, acquiring securities, assets or indebtedness of

      Digimarc, or effecting a tender or exchange offer, merger or other

      business combination involving Digimarc or its assets.  TCM|Strategic and

      its affiliates may, during this time, make additional purchases that,

      aggregated with this investment, would not exceed 27.5% of the

      outstanding common stock.

   -- Board Representation:  Riley McCormack will be appointed to the board of

      directors of Digimarc Corporation.  

A special meeting of the shareholders to approve the conversion of the

preferred shares into common will be scheduled shortly.

About Digimarc

Digimarc Corporation (NASDAQ: DMRC) is a pioneer in the automatic

identification of media, including packaging, other commercial print, digital

images, audio and video. The Digimarc Platform provides innovative and

comprehensive automatic identification software and services to simplify search

and transform information discovery through unparalleled reliability,

efficiency and security. The Digimarc Platform enables applications that

benefit retailers and consumer brands, national and state government agencies,

media and entertainment industries, and others. Digimarc is based in Beaverton,

Oregon, with a growing supplier network around the world. Visit

www.digimarc.com and follow us @digimarc (https://c212.net/c/link/?t=0&l=en&o=2931920-1&h=282355507&u=https%3A%2F%2Ftwitter.com%2Fdigimarc%3Flang%3Den&a=%40digimarc )

to learn more about The Barcode of Everything(R).

About TCM|Strategic

TCM|Strategic is an investment fund managed by Riley McCormack.  Prior to

founding TCM|Strategic, Mr. McCormack was the founder, CEO and PM of Tracer

Capital Management, a $1.5 billion NY-based global Technology, Media and

Telecommunication Hedge Fund.  Prior to Tracer, Mr. McCormack was a partner at

Coatue Capital and a High Yield research analyst at Morgan Stanley.  Mr. McCormack

graduated Summa Cum Laude from the Wharton School, University of Pennsylvania,

where he was a Benjamin Franklin Scholar and a Joseph Wharton Scholar.

Forward-looking Statements and Additional Information

This press release includes "forward-looking statements" within the meaning of

Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange

Act"), and Section 27A of the Securities Act of 1933. These statements include,

without limitation, statements regarding the investment by TCM|Strategic and

participation of its principal investor, the current and future value of the

Company and its businesses, the continued expansion of the market for our

platform, various initiatives, the adequacy of our working capital and the

increase in the value of our growth business.  Such forward-looking statements

include all other statements that are not historical facts, as statements that

are preceded by, followed by or that include words or phrases such as "may,"

"might," "plan," "should," "could," "expect," "anticipate," "intend,"

"believe," "project," "forecast," "estimate," "continue," and variations of

such terms or similar expressions. These forward-looking statements are based

on our expectations and beliefs concerning future events impacting us, and are

subject to uncertainties and factors which are difficult to predict and, in

many instances, are beyond our control. As a result, our actual results could

differ materially from those expressed in or implied by any such

forward-looking statements, including as a result of the size and growth of our

markets; protection, development and enforcement of our intellectual property

portfolio; adoption or endorsement of our technology by leading companies in

the retail and consumer products industries or standard-setting bodies or

institutions; our future profitability; competition from larger companies or

alternative technologies; and acceptance in our markets of our revenue models

and pricing structures.  Investors are cautioned not to place undue reliance on

such statements, which reflect management's opinions only as of the date of

this release. More detailed information about risk factors that may affect

actual results are outlined in the company's Form 10-K for the year ended

December 31, 2019, and in subsequent quarterly reports on Form 10-Q and current

reports on Form 8-K filed with the SEC and available at www.sec.gov.

Forward-looking statements speak only as of the dates on which they are made

and except as required by law, Digimarc undertakes no obligation to publicly

update or revise any forward-looking statements to reflect events or

circumstances that may arise after the date of this release.

In addition to our forward-looking statements, we may reference or disclose

from time to time statements or information provided to or about us by our

investors, partners and actual or prospective customers. Such statements and

information reflect the beliefs, expectations, views and opinions of the party

making such statements, not of the Company.  The Company cannot verify or vouch

for such information, and investors are cautioned not to place undue reliance

on any such statements.

SOURCE: Digimarc Corporation

CONTACT: Charles Beck, CFO, charles.beck@digimarc.com, +1 503-469-4721