Debt: Reducing & Extinguishing Legacy Convertible Debt

Can’t Stop, Won’t Stop.

This past Friday an investor phoned in asking, ‘what do I think the catalyst will be that will bring DigitalAMN to the forefront.’ My reply was simply “consistency—can’t stop, won’t stop”.

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What I meant by “Consistency—can’t stop, won’t stop”, is that we don’t swing to bat home runs without the bases first being loaded. That means there is no one single event that we count on to make us popular. We don’t believe in playing scratch tickets. We’ll drag ourselves towards the finish line no matter what.

With that said, the agenda we have consistently pushed is creating an environment that would be attractive to investors. In doing so, as I’m sure you’re aware by now that over the past 36 months, we have worked diligently to restructure our cap table without deliberately hurting shareholders. We did this by reducing the issued and outstanding share count down from over 120M shares to below 20M shares—all without a single reverse stock split.  

Consider this. While many microcap companies generally experience a heavy rate of dilution year-over-year, our year-end cap table reflected an issued and outstanding share count of 26,215,852 shares in 2018, 19,291,273 shares in 2019, and 15,314,183 shares in 2020. Talk about rigorous persistence.  

And by no means am I insinuating that there will never be dilution. In fact, we have worked this hard to help create an environment where future dilution could be well received and hopefully supported by our shareholders—so long as it’s reflective of the Company’s progress. Particularly as it pertains to raising substantive capital that could potentially propel DigitalAMN forward in a real, long-lasting and meaningful way.

Now, as we move towards making what we believe might be the final reduction, if all goes well with our negotiations—approximately 3 million common shares—what we’re very excited about is our most recent endeavor to eliminate and/or restructure convertible debt. 

In a snapshot:

  1. Over the past 6 months the majority of the capital we raised has been achieved with non-convertible notes. And while yes, these notes have their own costs and caveats, there is no risk of toxic convertibility. This means, these notes will not affect the long-term interest of a DigitalAMN shareholder in the way a toxic dilutive instrument potentially could.
  1. Over the past 6 months, we have moved to extinguish debt with a combination of cash and stock. Up until today these amounts have, for all intents-and-purposes, been minimal in relation to the Company’s overall debt—where roughly 40% belongs to me and/or an entity I control. However, I’m very excited that this month we’ve been working on our first real, significant debt reduction; anticipated to hopefully extinguish just over $250K in legacy convertible debt. We will look to accomplish this through a combination of stock, cash, and/or a securities’ exchange agreement.

Why does restructuring and reducing debt matter?

Well, there are several facets to a business that both a company’s management and its stakeholders should pay attention to (i.e., product, operations, revenue/expenses, management, etc.). Attracting additional investment capital for growth at competitive rates is one of those facets, and we give a great deal of attention to this detail. So, it should come as no surprise, that we would turn our attention to restructuring and extinguishing legacy convertible debt.

While we don’t envision being debt free, particularly not in the short-term, what matters is that we aggressively deal with legacy convertible debt to help support and foster shareholder confidence. In doing this, we might potentially (i) be successful in fully extinguishing legacy convertible debt from the books, (ii) further stave off excessive dilution, and most importantly, (ii) offer future investors an environment conducive to more significant capital raises.

You know the saying, ‘there’s no time like the present’, right? Well, that’s how we feel about the actions we are taking in anticipation of hopefully supporting our shareholders and the future growth of DigitalAMN and the PAI Ecosystem. We look forward to addressing and eliminating as much legacy convertible debt as we possibly can. If successful, this initial $250K+ may prove to be a great start!

Are you a DigitalAMN shareholder, an entrepreneur, or investor? Find out more or contact us at info@digitalamn.com with your inquiries.