SEATTLE, June 6, 2019 /PRNewswire/ -- Following the announcement of a new CEO and a new CFO last month, DigitalTown (OTC: DGTW) shares its assessment and promising progress on clean up efforts.
DigitalTown CEO, Sam Ciacco, comments: "We are delivering on our commitment to clean up the company so we can move it forward, and we continue to hold true to the principles of accountability and transparency to the benefit of shareholders. We knew this was going to be a challenging process, and we continue to be motivated by the encouragement and support we receive from those who reach out to us."
The following summarizes the status of our clean up efforts:
Cost Reduction - Without a viable revenue generation model, all costs have been curtailed, and only those necessary to keep the company compliant with SEC and other regulators are being incurred.
Compliance - Auditors, attorneys, transfer agents, insurers, and others are critical for keeping DigitalTown compliant with the SEC and other regulators. These entities require cash payments. Fortunately, key lenders have stepped in allowing liquid funds to be raised in exchange for shares of company stock.
Balance Sheet Clean Up - The balance sheet had over $3 million of debt with debt service loads that would likely force bankruptcy if not restructured. Starting with the largest and loudest creditors, debt holders are being converted into equity, diluting existing shareholders but staving off bankruptcy. Creditors representing over one third of the debt balance have already committed to settlements.
Year End Audit and 10-K - DigitalTown recently filed an NT 10-K to extend its filing deadline by 15 days. The audit is nearing completion and we anticipate the 10-K to be filed on or before the deadline.
Dilution - Convertible note agreements executed in late 2018 are starting to convert into shares, resulting in dilution of existing shareholders. Due to these notes, issued and outstanding shares increased from 147 million at February 28, 2019 to 862 million at June 5, 2019. This number is expected to continue increasing until notes and debt are fully converted.
Preferred Shares - At the current market price, DigitalTown will not have sufficient common shares in treasury to satisfy conversion requirements or debt conversions, likely forcing bankruptcy. The DigitalTown Board plans to authorize a Preferred Share class of super-voting shares to facilitate an increase of the Authorized Common Stock limit. The additional availability of shares will allow the Company to continue meeting its obligations and secure its ability to fund minimum operating requirements.
Opportunities - Initial efforts to explore new business plans for DigitalTown appear promising.
DigitalTown CFO, Kevin Wilson, comments, "We are starting to look at opportunities that will leverage DigitalTown's history and brand to strategically invest in sustainable growth tech startups aligned with our vision. Please stay tuned as we continue our work in this vital area."
Sam Ciacco adds: "We are fostering a transparent approach to this transformation, which sometimes means sharing hard truths. We are thankful to those who have agreed to settle outstanding debts and liabilities, and to our shareholders for their continued patience. We will continue to provide updates on our progress via our website and social media. We remain optimistic for the future of DigitalTown."
DigitalTown, Inc. (OTC:DGTW) - Founded in 1982, DigitalTown has operated under several different names in the computer hardware, training, domain name, smart city, blockchain and cryptocurrency spaces. New leadership is focused on ensuring the company remains compliant and is in a viable position to pursue new opportunities in the technology and internet industries.
Disclaimer – Forward Looking Statement
Safe Harbor Language: Any statements contained herein related to future events are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act 1995. Readers are cautioned not to place undue reliance on forward-looking statements. DigitalTown, Inc. undertakes no obligation to update any such statements to reflect actual events.
SOURCE DigitalTown, Inc.