- June 4, 2020
- Posted by: Ajene Watson
- Category: Coffee Talk
In March, we discussed the negotiations that we were having with our executive contractors, in an ongoing effort to reduce the cap table. We were aiming for a reduction of 2M common shares, yet we ended up with over 50% more (3.3M+ common) shares than anticipated being eliminated from the cap table (in exchange for DAMN Series BB Preferred Shares). We also removed $550k+ in payable liabilities from the balance sheet.
What does this mean?
Since 2017, we have reduced the Issued and Outstanding share count down from over 120M shares to today’s roughly 16M shares. We essentially “trimmed the fat” to help:
(i) ensure that our market value would not be inflated due to an unnecessary number of shares in the market;
(ii) curb the rate of possible [excessive] dilution.
We continually strive to create an environment for our shareholders that is conducive to the Company’s growth and success, looking to use every tool available at our disposal to strengthen shareholder confidence and value.
It’s important to note that we achieved these cap table reductions without a single reverse stock split. Again, our focus is equally split between protecting shareholders, while also executing our business model. We’ve been able to accomplish this, in part, because we didn’t have any aggressive stock conversions/issuances working against us.
Why is that?
As mentioned many times, we have a stock issuance floor price of $0.35. This does a lot to quell the type of toxic financing instruments that usually contributes to the rapid decay of a microcap company. And the proof is in the pudding.
In 2017, we began with roughly 2,256,736 shares in the trading float. Today, 39 months later, we have a total of just 4,504,538 in the trading float – meaning, our float has only increased by 2,247,802 shares; making our effective monthly dilution rate roughly 2.6%.
How often do you see that, eh?
Hard Work and Gratitude
Developing a strategy and executing on a business model is difficult enough without the added pressure of being a public company operating within the cruel and unusual bazaar of the microcap markets. Adding to the challenge is DigitalAMN’s business model itself: An ecosystem that promotes economic growth, social empowerment and financial literacy, within the business and investment communities. We do this by helping entrepreneurs build startups and development stage companies, while giving the 99% a platform from which they can make early investments in young businesses that could potentially be the market leaders of tomorrow.
As a business management development consultant specializing in penny stock companies within the microcap space, I know firsthand how difficult it is to bring into alignment the needs of both management and shareholders. I often remind my clients that they too are shareholders — no better than any other shareholder and they should think of each person holding a stake in their company as a member of their extended family. DigitalAMN’s executive contractors (current and former) took this message to heart, and offered their fellow stakeholders more than I was originally asking.
Our executive contractors (current and former) have worked DAMN hard since 2017, to bring DigitalAMN where we are today (as noted in a recent shareholder update). And because we try to limit press releases to what we believe are ‘material events’, it’s often difficult to see the little things that are happening daily. Some examples are, but not limited to:
(i) Increased Revenues 197% (YoY);
(ii) Increased investments into multiple endeavors growing asset position by 246% since 2017 with a 96% increase (YoY);
(iii) Reduced net losses by 58%;
(iv) Observed increases in DigitalAMN’s equity portfolio; giving reason to estimate value increases to be as much as 20x
…just to name a few.
Progress is being made daily, and I believe it takes a lot of integrity and confidence to put others first. That is what a larger shareholder previously did and that is what our executive contractors have done with their restructuring – eliminating 3.3M+ common shares from the cap table and removing $550K+ in payable liabilities from the balance sheet. It is my hope that all shareholders ultimately become the greater benefactors of this action.
First, let’s remember that our current valuation is now technically less than $1M ($0.06 per share); Whoa? Just one of the companies making up our equity portfolio reflects an enterprise value of between $12.5M and $15M (TBD), and given our issuance floor price, we’ve been successful at raising money at close to a $7M valuation ($0.35 per share). With this even tighter market cap, and a look toward decreasing our payables, liabilities and other debt, we’re going to aggressively work toward raising additional capital, growing revenue and increasing the size and value of our equity portfolio.Most important will be the continued effort to create an ecosystem that promotes economic growth, social empowerment and financial literacy, within the business and investment communities. This, by helping entrepreneurs build startups and development stage companies, while giving the 99% a platform from which they can make early investments in businesses that could potentially be the market leaders of tomorrow.