Attention shareholders, partners, and stakeholders,
On behalf of the board, and senior executive, I am pleased to provide you with the quarterly CEO Update below. The following update provides executive summaries on both corporate and business developments over the past 90-120 days. Each section includes hyperlinks (in bold), connected to recent news releases, and market insights, for your reference, and review. As promised, and in the interest of effective corporate communications, the new DGTL leadership team will provide regular shareholder updates, on a quarterly basis, moving forward. Each update will summarize recent releases and highlight key achievements while providing a roadmap for ongoing development. Please review the update below and send any questions to [email protected] and visit our Investor Centre for an updated Investor Presentation.
Thank you for your interest and continued support.
Best regards,
John David A. Belfontaine
CEO and Chairman
DGTL Holdings Inc.
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Executive Strategy
In the first 120 days, the new DGTL executive has performed a thorough review of the past 18 months of operations. As the new CEO and Chairman, I have led this review with a special projects team that included our new Chief Financial Officer, our new Chief Commercial Officer, our new Chairman of the Audit Committee, as well independent third party legal and financial advisors. As a primary objective, the new DGTL leadership team has refocused collective management practices on the restoration of fiscal responsibility, sound corporate governance and executive accountability while streamlining operations of our multiple operating business lines. The new DGTL team is also now dedicated to a culture of communication and collaboration (at all levels) to maximize organizational efficiencies and to encourage scalable growth. In doing so, DGTL is dedicated to long-term shareholder value and towards preparing the Company and its interests for future accretive M&A opportunities. This DGTL special projects team has assessed the legal current financial status inherited from the tenuous management of the previous CEO, COO and CFO, and have now formulated, and actioned, strategic corporate development projects designed to reposition DGTL by rebuilding revenue growth via new business development, optimizing structure and divesting of $5,000,000 in liabilities, expanding products, services and brand materials, and preparing DGTL for portfolio expansion.
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Front Office Update
As seen in a news release on May 9th, DGTL Holdings Inc. recently announced that it has secured a contract extension with a global leader in the consumer-packaged goods (CPG) sector. This annual contract extension includes client licensing to DGTL’s flagship TotalSocial® PaaS (Platform-as-a Service) brand. This client is a Nasdaq listed CPG conglomerate with a current market capital of US $200 billion. Over the past three years, Engagement Labs has spearheaded data intelligence projects for nineteen (19) different CPG brands across this client’s extensive portfolio of consumer products in the RTD, RTE and snack categories.
DGTL also announced a new social content marketing campaign contract with Nasdaq listed leader in the e-sports and gaming sector via a news release on May 18th. This client provides online user access to fantasy sport betting platforms for major league sports sports (e.g., MLB, NHL, NFL, NBA, PGA, UEFA, etc.) and has a current market capital in-excess of $30 Billion. This campaign was focused new user registration for online sports betting across the province of Ontario, Canada and was won as a result of the success of past content campaigns in the states of New York and Illinois, as well as past success in the NFT category, and others.
DGTL also recently announced that the Company has secured an annual multi-service contract with a global leader in premium audio storytelling (i.e. podcasts, audiobooks, etc.). This new key account is a subsidiary of a multinational technology leader, Nasdaq listed, with a market capital of US $1.1 trillion. The new service agreement includes four prolific new title launch studies and a one (1) year PaaS (Platform-as-a-Service) contract with a total value of nearly $1,000,000 (plus options for renewal). DGTL is pleased to have secured this new seven figure deal and anticipates additional growth within this new major account.
As reported, Engagement Labs Inc. is in the process of expanding its product and service offerings to include strategy, execution, measurement and distribution solutions for a full-service social media platform. In doing so, TotalSocial® brand marketing materials, sales tools and processes are being developed to assist in positioning this new full-service PaaS to Fortune 100 clients under management. Under the supervision of the new Chief Commercial Officer, additional business development resources, personnel and sales channels are being developed now for a fall 2022 launch, in order to grow annual revenues of all operating business lines. With a full-service platform, and an increasingly diversified portfolio of clients, the prospect for up and cross-sales has increased, exponentially and DGTL anticipates continued growth in fiscal 2023.
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Back Office Update
Post the acquisition of Engagement Labs, the DGTL financial team has now standardized accounting principles, policies and reporting procedures. Under our new Chief Financial Officer, DGTL has synchronized the fiscal year end of its subsidiaries and is now preparing consolidated financials for the Q4 FYE 2022 filing (due Sept. 30, 2022) with auditor appoint, Baker Tilly Inc. As the Engagement Labs acquisition closed March 1st 2022, this audited annual filing will include a PPA (Price Purchase Allocation) report, being prepared now by third party valuation firm, Evans & Evans. By virtue of attaining new revenues from acquisition, and via the financial restructuring of subsidiaries listed below, DGTL anticipates significant YoY (year-over-year) financial statement improvements in the pending audited annual reports, and moreover in the Q1 2023 due Oct 30th.
In response to the current state of the junior equities markets (see TSXV Composite Index) As seen in a July 1st news release, DGTL has begun a transformation stage in its development via a strategic restructuring of its wholly owned subsidiaries, Hashoff LLC and Engagement Labs Inc. The goal of this restructuring project is to streamline business operations, improve financial reports and optimize corporate organizational structures. In doing so, Hashoff LLC retained Lindenwood Associates (a New York based restructuring firm) as well as Klestadt Winters Jureller Southard & Stevens, LLP to provide corresponding legal services. This third party advisory team has completed a thorough viability assessment on the current state of Hashoff LLC as inherited from the tenuous management of the previous executive. After reviewing the facts, in context withe state of the market, the DGTL board has voted unanimously to accept the Lindenwood recommendation report to commence a formal and orderly wind down of Hashoff LLC over the next 30-60 days.
Proactive budget cuts were also implemented at the DGTL and Engagement Labs levels. In fact, by implementing numerous cost savings and efficiency measures, DGTL has reduced operating expenses of Engagement Labs by an estimated 50%. This financial restructuring provides a viable entity which will now serve as DGTL’s flagship subsidiary, with multiple operating business lines. Thus, Engagement Labs Inc. will expand its product and service offerings to include social; strategy, execution, measurement and distribution solutions to serve DGTL’s Fortune 100 clients as a full-service social media PaaS (Platform-as-a-Service).
The estimated result of this strategic restructuring project will be divestiture of an estimated $5,000,402 in liabilities and (one year of) operating expenses. This estimate is based on a single year of operating expenses under the previous structure (and would double at the four year mark). This initiative allows DGTL to retain current revenues from multiple business lines and achieve scalable revenue growth with near-term cashflow positivity. DGTL has 44,549,265 commons shares issued and outstanding with a current market capital of $4.5M, making a $5,000,000 divestiture of liabilities a significant improvement to the company’s financial position.
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Mergers & Acquisitions
As noted, DGTL Holdings Inc. remains dedicated to the long-term expansion our digital media portfolio while diligently scaling existing media businesses. Last quarter, DGTL announced the successful acquisition of Engagement Labs Inc. (and its patented PaaS, TotalSocial®). Engagement Labs is now DGTL’s flagship subsidiary and will provide a full-service social media platform including content, analytics and distribution services to DGTL’s Fortune 100 clients under management. DGTL’s social media category is now complete as Engagement Labs expands its current product and service offerings under the TotalSocial® brand to allow for multiple revenue generating business lines service current, past and new prospective clientele. DGTL continues to evaluate new and viable M&A opportunities focusing on fully commercialized enterprise solutions in high growth areas of the digital media sector. Areas of interest include the mobile, gaming, streaming (A/V) and OTT (Over-The-Top) categories. The recent acquisition of Engagement Labs, and the financial improvements from the strategic restructuring empowers DGTL Holdings Inc. to attract higher quality prospects for future accretive merger and acquisition opportunities and continue to pursue its vision of becoming a digital media house conglomerate with disruptive software and service solutions in key high growth categories.
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Closing Remarks
In closing, within the first 120 days, the new DGTL leadership team has re-implemented fiscal responsibility, sound corporate governance, management accountability and leadership while building a culture of communication and collaboration at all levels. DGTL now has a solid platform to serve its expanded client base of Fortune 100 level customers with multiple operating and growing business lines with strong financial fundamentals and a more efficient corporate structure. The new DGTL leadership is fully engaged and dedicated to scalable portfolio growth alongside responsible management practices, in order to support the acceleration of our operating business lines and ready DGTL for future M&A.
Lastly, key projects in the current fiscal Q1 2023 are the completion (and timely filing) of the Q4 audited financials, expansion of products and services under the TotalSocial® platform, and the expansion of the business development team to ensure continued growth in fiscal Q2/3 2023. We look forward to providing a CEO Update on these projects in the next quarterly CEO Update. In the interim, please visit our Investor Centre for an updated Presentation, or visit our Learning Hub webpage for past CEO Updates as well as market insights and industry news.
