DGTL Holdings Inc. (TSX-V:DGTL, OTCQB:DGTHF) said it has initiated a strategic restructuring of its wholly-owned subsidiaries, Hashoff LLC and Engagement Labs (TSX-V:EL) Inc, as part of plans to reposition the company for scalable revenue growth and long-term shareholder equity.
The company said it expects to divest $5,000,402 in liabilities and operating expenses from the restructuring, which will turn it cashflow positive in the near term.
“Within the first 120 days under the leadership of the new DGTL executive team, the company has proactively divested over $3,234,743 in current and non-current liabilities and an additional $1,891,500 in annual operating expenses totalling an estimated first year reduction of $5,000,402 in long-term debt and on-going operating expenses,” the Vancouver-based company said.
DGTL said its board had voted unanimously to accept the recommendations of Lindenwood Associates, a New York-based strategic development and restructuring firm retained by Hashoff to assess its legal and financial viability, to commence a formal orderly wind down and subsequent dissolution of Hashoff in accordance with Section 18-801 of the Delaware Limited Liability Company Act.
The result of the Hashoff wind down is the divestment of an estimated $1,939,053 in accounts payable and accrued expenses as well as $572,849 in contingent liabilities from the DGTL consolidated balance sheet.
Meanwhile, the restructuring has produced a 50% reduction in annual operating expenses for Engagement Labs, which will now serve as DGTL's flagship social media subsidiary, with an expanded product and service offering including strategy, execution, measurement and distribution Platform-as-a-Service (PaaS) solutions provider.
In addition, Hashoff has had $177,000 in Paycheck Protection Program (PPP) loans forgiven by the Small Business Association (SBA), a US federal administration agency that administers small business relief loans, while Engagement Labs had $420,000 in loans forgiven, totaling $597,000 in interest-bearing loans removed from DGTL’s balance sheet.
“The new DGTL executive team is dedicated to restoring fiscal responsibility, accountability and sound corporate governance in order to maximize long-term value of shareholder equity,” DGTL said. “Reducing liabilities and post-restructure operating expenses by an estimated $5,000,402 is a major material improvement to the consolidated financial position of the company."
It added that financial improvements will begin to be reflected in the first quarter of fiscal year 2023 and in subsequent filings.
DGTL will host a video webinar on Wednesday July 6th, 2022 at 1:00pm ET, which will include a CEO update on the company and its current operations and future business interests. Details of the meeting are here.
DGTL Holdings acquires and accelerates transformative digital media, marketing and advertising software technologies, powered by artificial intelligence (AI). DGTL - Digital Growth Technologies and Licensing - specializes in accelerating commercialized enterprise-level Software-as-a-Service (SaaS) companies in the sectors of content, analytics and distribution, via a blend of unique capitalization structures.
Contact the author at jon.hopkins@proactiveinvestors.com