Loeb to Invest US $1.5 Million in Engagement Labs through Convertible Debenture Units

Board and Management to be Re-Aligned to Reflect Loeb’s Role Going Forward

Loeb has Long Standing Expertise in Market Research/Information Technology

Q2 ‘16 Revenue Increased 36% Year Over Year

Company to Focus on its Recently Launched Proprietary TotalSocial Offering to the World’s Top Brands in the US and UK

TORONTO, Ontario — August 30, 2016 - Engagement Labs Inc. (TSXV:EL) today announced that Loeb Holding Corporation (“Loeb”) will invest US $1.5 million and add Directors to the Company’s Board, all subject to shareholder and regulatory approvals. In addition, the Company released its results for its second quarter ending June 30, 2016. Condensed interim consolidated Financial Statements and Management Report are available on www.sedar.com.

Loeb’s US $1.5 million investment will be in the form of Convertible Debenture Units. The Convertible Debenture Units will be priced at Cdn $1,000 per Unit, each Unit convertible into 5,000 common shares at an effective price of $0.20 per share for a period of four years from closing. The Debentures will bear interest of 1% per year to be paid either upon conversion or at maturity, expected to be September 28, 2020. Each Unit will also consist of 5,000 common share purchase warrants entitling the holder to acquire an additional common share at $0.20 per share for a period of four years from closing. The Debentures and the Warrants will separate at closing. Mr. G. Scott Paterson, Chair of the Board, has agreed to purchase an additional Cdn $200,000 in Convertible Debenture Units. PowerOne Capital Markets Limited intends to act as an agent in connection with additional funds raised on the same terms (with up to 8% cash commission payable).

Loeb has agreed to deposit US $1.5 million in escrow which funds will be released to the Company if and when all closing conditions (see details below) have been met. Closing is expected to take place on or about September 28, 2016 following an Annual & Special Meeting (the “Meeting”) of Shareholders which is scheduled for September 26, 2016.

Loeb has previously acquired and as of today’s date owns 4,816,753 common shares of the Corporation.

Amongst other closing conditions, shareholders will be asked to approve a slate of Board nominees which will include current Chairman G. Scott Paterson and Ed Keller, President, who was also appointed CEO of the Company today. In addition, Bruce Lev, managing director of Loeb and former director of the Roper Organization and of the Keller Fay Group, as well as Gilman Anderson and Pat LaPointe will be on Management’s slate of directors at the Meeting. In light of the overall benefits that the Engagement Labs Board sees from this transaction with Loeb, all other current Engagement Labs Board members have agreed to not stand for re-election. It is also a condition of Closing that Loeb be granted a right to name a majority of Management’s nominees to the Board for so long as it holds more than 50% of the Debentures that it purchases, common shares that have been issued on conversion of such Debentures, or a combination of both. This nomination right is subject to shareholder and regulatory approval.

Mr. Lev is a well-respected investor, executive, and corporate director.  He sits on the board of directors of Flagler Construction Co, LLC; Pittsfield Plastics Inc.; and VirtualScopics Inc. (NASDAQ=VSCP). Additionally, Mr. Lev served on the board of directors of Integral Systems Inc., a principal Air Force provider of satellite command and control systems, which was recently sold to Kratos Inc. From 1995 through early 2000 he was Executive Vice President of Corporate and Legal Affairs of Micro Warehouse Inc., a $2.5 billion direct marketer of brand name personal computers and accessories to commercial and consumer markets. He also served on Micro Warehouse's four-person Executive Committee He lives in Westchester County, NY.

Gilman Anderson is a seasoned business and technology executive with a track record of building businesses that exceed P&L expectations, cultivating strong “trusted advisor” client relationships, optimizing operational performance thru “best of breed” technologies and high-performance teams, and building win-win strategic alliances.  Most recently Mr. Anderson was CEO of Allant Group which delivers custom software and SaaS solutions to ad sellers, ad buyers, and marketers.  He helped Allant complete a two-part M&A transaction, with one part to Acxiom and the other part to Vencap Technologies.  Mr. Anderson was previously a Partner/Senior Executive at Accenture and Chief Information Officer of GfK, the world’s fourth largest market research firm with >3.5b euros in annual sales.  Mr. Anderson resides in New York City.

Pat LaPointe is Managing Partner, Growth Calculus. Mr. LaPointe is a highly regarded angel and venture investor, and has had a successful track record as an executive driving revenue and margin growth for services companies thru data-driven strategy, smart technology applications, strong customer value delivery, and recruiting/training/coaching/mentoring high-performance sales, marketing, and client services teams. He built 3 strong businesses in founder/partner roles and had multiple successful "exits" where hundreds of millions of dollars were returned to shareholders. The most recent was MarketShare, where Mr. LaPointe served as EVP and which was acquired by Neustar in Q4 2015 for a 7+ multiple on trailing revenue. He resides in Bozeman, Montana.

The Company intends to enter into a Consulting Agreement with Loeb given Loeb’s expertise in market research. In consideration for consulting services, the Company has approved the grant to Loeb of 2,000,000 Stock Options effective immediately at an exercise price of $0.20 per share for a period of five years, of which 1,350,000 have been issued today under the Company’s current stock option plan, with the balance of 650,000 stock options to be issued subject to regulatory and shareholder approval. In addition, the Company is proposing that additional options equal to up to 5% of the common shares outstanding (inclusive of the options granted today), subject to regulatory and shareholder approval, be approved for issue to Loeb with the exercise price to be determined at the time of such future stock option grant. Of the stock options granted today, one-third will vest immediately and one-third on each of the first and second anniversaries of their grant. In the event that the Company does not have adequate stock options available to issue, the Company will issue stock options if and when the pool of options permits with provisions to make up for any improvement in the stock price at the time of issuance.

An additional closing condition is for the existing holders of secured convertible debentures due June 30, 2018 (approx. $2.9 million) to forgo their security interests in such debentures so that they become unsecured debentures, in return for reducing the conversion price of such debentures to $0.20 from $0.255. This proposed amendment is subject to regulatory approval, and the approval of the debentureholders at a meeting to consider this matter which will be held on or about September 26, 2016.

The Company intends to re-align its day to day activities such that, other than technology and senior finance (currently based in Montreal), all sales, client service and product delivery activities will be based in due course in the US and the UK. The Company’s newly launched TotalSocial offering is not available to brands in Canada (due to a lack of availability of certain necessary data). Given this change in geographic focus, Bryan Segal, who is Toronto-based, has stepped down as CEO effective today. Bryan Segal will receive an award of one million common shares in lieu of cash in settlement of his entitlement to compensation on his departure. Of this amount, the issuance of 350,000 of such common shares is subject to shareholder approval. In addition, the Company anticipates issuing up to an additional 600,000 common shares in connection with another executive departure in lieu of cash.

CEO Ed Keller, who is based in the US, is driving the evolution of TotalSocial and has a long standing relationship with Loeb. Mr. Keller was promoted from President to CEO effective today.

TotalSocial is a new and innovative measurement solution for brands and marketers. It is the first tool to measure a brand’s social impact encompassing both online and offline conversation, providing a scorecard ranking for 500+ US and 350+ UK brands across 18 major industry categories, plus diagnostics to guide improvement. Total Social combines in-depth social listening with comprehensive offline conversation measurement tools to assist marketers in identifying the differences between their online and offline conversations and areas of competitive opportunity or significant emerging threats.TotalSocial includes the power of eValue and amplifies it many times over. eValue is a component of TotalSocial estimated to represent 1/8th of the algorithm. In addition, it builds upon and extends the world’s most extensive word of mouth database developed by the Keller Fay Group and acquired in 2015 when Engagement Labs acquired Keller Fay.

Engagement Labs Chair G Scott Paterson said:

“Our entire organization is delighted that Loeb has chosen to increase their investment in Engagement Labs and by virtue of this additional investment become our largest investor and will steer the Company from an oversight position through their Board representation. Loeb sees what we see: the enormous potential of our newly launched product, Total Social, which we believe is poised to add significant value to Brands worldwide and to create, as a consequence, significant shareholder value.”

“There is an enormous opportunity for Engagement Labs in the United States and the United Kingdom and this where we intend to focus our efforts for the foreseeable future,” Paterson added.

Bryan Segal said: “I have been delighted to have been part of Engagement Labs evolution over the past 21 months and I am a huge believer in the potential of TotalSocial. It is a game changer for Brands and for Engagement Labs.”

Ed Keller said: “Our Keller Fay team joined Engagement Labs just over a year ago with a view to building TotalSocial. We are proud to have successfully launched the product in July 2016 and already have four customers with the expectation of introducing and signing tens of customers in the coming months.”

Bruce Lev, managing director of Loeb Holding Corporation said, “Loeb has known Ed Keller for many years and we have great respect for his ability to drive innovation and successful business outcomes. We believe that what Ed and his team are building with TotalSocial has the potential to be a must-have product by major brands.”

2nd Quarter Financial Results

In Q2 the company undertook the beginning of a focus re-alignment to have all of its technology resources dedicated to its new TotalSocial product which was launched in July 2106. The company announced that Q2 revenue increased by 36% from $839,005 in Q2 2015 to $1,144,059 in Q2 2016. Excluding change in fair value of investment in shares and loss on extinction of debt and equity components of convertible debentures, operating expenses decreased by 10% from $2,312,893 in Q2 2015 to $2,073,974 in Q2 2016. Non-GAAP Adjusted EBITDA loss for the period was $1,180,636 compared to a non-GAAP Adjusted EBITDA loss of $1,266,867 for Q2 2015. Basic and diluted loss per share was ($0.03) for the quarter ended June 30, 2016 compared to ($0.05) for the quarter ended June 30, 2015 and ($0.03) for the quarter ended March 31, 2016.

Six-Month Period Financial Results

Total revenue for the first half of 2016 increased by 51% to $2,477,505, compared to $1,639,345 for the first half of 2015. While total revenue grew by 51% for year over year 6-month period, the operating expenses, excluding change in fair value of investment in shares and loss on extinction of debt and equity components of convertible debentures, decreased by 13% to $4,021,586 compared to $4,622,809 for the same period last year.

Non-GAAP Adjusted EBITDA loss for the 6-month period was $2,385,319 compared to a non-GAAP Adjusted EBITDA loss of $2,599,088 for the first half of 2015.

As at June 30, 2016, the Company was holding cash and restricted cash of $3,593,740, compared to $3,044,742 as at March 31, 2016. Basic and diluted loss per share decreased by 50% to -$0.06 for the first half of 2016, from -$0.12 for the first half of 2015.

Stock Options were granted (100,000) for a consultant to the Company who is focused on Total Social and RSUs for various parties were approved by the Board.

About Engagement Labs

Engagement Labs (TSXV:EL) is the world's first TotalSocial™ company, offering intelligent data, analytics and insights for marketers. We are leaders in tracking, measuring and benchmarking the social impact of conversations happening around a brand and industry -- both online and offline. Consumer conversations are a proven driver of critical business outcomes, including sales. Engagement Labs' TotalSocial measurement solutions provides brands with unique data fueled insights and powerful analytics to understand online and offline social impact and drive business results.

Engagement Labs has a suite of proprietary tools including, TotalSocial an industry first conversation mapping system for companies to understand online and offline social data in a single integrated score. eValue™ Analytics is the global benchmarking tool for social media scoring offering real-time analysis to measure a brand's social media performance. TalkTrack® is the only data system to measures the totality of word of mouth. Engagement Labs maintains offices in Canada -- Toronto, ON and Montreal, QC, U.S. -- New Brunswick, NJ,and UK -- London.

Disclaimer in regards to Forward-looking Statements

Certain statements included herein constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Investors are cautioned not to put undue reliance on forward-looking statements. Except as required by law, Engagement Labs does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events.

Neither 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 release.

For media inquiries please contact:
Jessica Dell’Aquila
Marketing Director – Engagement Labs
647-776-4100 ex 214