On January 7, 2013, AllDigital Holdings Inc. (OTCBB:ADGL) announced
the signing of a definitive agreement to merge with Broadcast
International (OTCBB:BCST) in an all-stock transaction. This merger
was delayed partially due to the discovery of certain encumbrances
and license limitations related to critical Broadcast International
intellectual property. AllDigital is now satisfied with the
resolutions to date, resolutions in process, and agreed upon
actions to address any known IP issues. In addition, AllDigital is
pleased that Broadcast International has been able to successfully
reduce its outstanding accounts payable as the result of negotiated
reductions in accounts payable and the elimination of certain other
liabilities.
AllDigital and Broadcast International have signed a Second
Amendment to the Merger Agreement that includes a number of revised
deal terms. Under these revised terms, AllDigital shareholders will
receive an adjusted number of shares of Broadcast International
common stock representing 58% (adjusted up from 54%) of the
post-closing shares of Broadcast common stock, with both share
totals calculated on a modified fully diluted basis. In addition,
as a condition to closing, Broadcast International is required to
have, and has indicated that it does have, commitments from third
parties for the purchase of not less than $1.5 million in common
stock in connection with the closing of the merger at a pre-money
valuation of the combined company of $15 million on a fully diluted
basis. The end date for the merger, the date after which either
party can terminate without cause, has been moved from July 31,
2013 to October 31, 2013 to allow reasonable time to obtain
shareholder approval.
As part of the transaction, Broadcast International will seek
shareholder approval for a reverse stock split to be effective
prior to closing at a ratio of 1 post-reverse share for each 15
pre-reverse shares to begin to position the company for an eventual
transition to a major exchange such as NYSE MKT LLC (formerly AMEX)
or the Nasdaq Capital Market. The combined company will be called
AllDigital Broadcasting, Inc.
"We are pleased with the results of the improvements to their IP
ownership, reduction in liabilities and commitments from key,
strategic investors to the new, combined company," said Paul
Summers, chairman and CEO, AllDigital. "The addition of significant
working capital at close will greatly enhance shareholder value,
reduce business risk, and add confidence among employees, partners,
clients and prospective customers. We believe that the support of
this investor group is a strong validation of our business
model."
"We are also pleased to announce the launch of AllDigital Cloud.
Our unified digital broadcasting platform provides a scalable,
flexible and secure architecture where various types of digital
media (live events, video-on-demand, digital services and
applications) can target and reach a global audience across mobile,
desktop and digital televisions / TV apps.
Mobile content creation and related high speed, global
broadcasting of that content is an emerging opportunity for
AllDigital across media & entertainment, enterprise, and
non-profit business segments. The combination of Broadcast
International's Digital Broadcasting Platform ("MMS"), CodecSys
transcoding / encoding software, and patent portfolio is expected
to add significant capabilities to our unique, digital broadcasting
platform."
"From a business perspective, our continued migration towards a
platform and cloud services model will also increase monthly
recurring revenues as a percentage of total revenue. We also
anticipate that this shift in business model will lower the
up-front costs of our services with target clients resulting in
more transactional sales among a growing list of clients.
Conversely, we anticipate a decline in 'pure play' integration and
professional services revenue as we continue to make this
transition," added Mr. Summers.
According to Morgan Stanley, the number of global smartphone
users is growing by 42% a year. According to eMarketer, 35.1
million US households are anticipated to use at least one connected
TV on a monthly basis by the end of 2013. Additionally, ABI
Research reports that the international OTT video market surpassed
$8 billion in 2012, and is expected to pass $20 billion by
2015. Forbes also published a recent article that estimates
that the "TV apps" economy will reach $14 billion by 2017.
We believe AllDigital Broadcasting will be well positioned to
capitalize on these trends, with a goal to become the market leader
in providing digital broadcasting solutions to an increasing global
demand for digital media to connected devices.
About AllDigital:
AllDigital was founded to become the leading provider of digital
broadcasting solutions to enterprises, media and entertainment
companies, and non-profit/government organizations. Today,
AllDigital is actively providing our digital broadcasting
technology and services to a growing number of such companies,
enterprises, and organizations. Our AllDigital Cloud platform
enables high definition quality live, VOD and other media assets to
be uploaded, broadcast, and rebroadcast to tens, hundreds, or
thousands of locations, devices, and channels.
Forward-Looking Statements
In addition to historical information, this release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements
encompass AllDigital's beliefs, expectations, hopes or intentions
regarding future events. Words such as "expects," "intends,"
"believes," "anticipates," "should," "likely", "will" and similar
expressions identify forward-looking statements. All
forward-looking statements included in this release are made as of
the date hereof and are based on information available to
AllDigital as of such date. AllDigital assumes no obligation
to update any forward-looking statement. Readers should note
that many factors could affect the proposed combination of the
companies, as well as the future operating and financial results of
AllDigital and/or Broadcast International, and could cause actual
results to vary materially from those expressed in forward-looking
statements set forth in this release. These factors include,
but are not limited to, the risk that the transaction contemplated
by the merger agreement will not close due to lack of shareholder
approval by either party, regulatory hurdles, the failure to
satisfy very conditions to closing or other reasons; the risk that
if the proposed merger does close, the operations of AllDigital and
Broadcast International will not be integrated successfully or at
all; the risk that the parties will be unable to successfully
implement a combined business strategy; the risk that the combined
company will not realize potential synergies and other anticipated
marketing and financial impacts of the proposed merger; the risk
that future financial and operating results of the combined company
will not be as anticipated or suggested; and the risks that the
combined company, which does not currently satisfy the listing
requirements for any stock exchange, will not satisfy such listing
requirements in the future for various reasons, including a failure
to meet the stock price or the shareholders equity
requirement. Additional risk factors, cautionary statements
and other conditions which could cause actual results to differ
from management's current expectations are contained in the filings
of AllDigital with the Securities and Exchange Commission,
including the risk factors identified in its most recent Annual
Report on Form 10-K.
Additional Information and Where to Find It
This information pertains to this document and all related
documents linked from this one. Broadcast International intends to
file with the SEC a joint proxy statement/information
statement/prospectus and other relevant materials in connection
with the merger. The joint proxy statement/information
statement/prospectus will be mailed to the shareholders of
AllDigital and Broadcast International. Investors and security
holders of AllDigital and Broadcast International are urged to read
the joint proxy statement/information statement/prospectus and the
other relevant materials when they become available because they
will contain important information about AllDigital, Broadcast
International and the merger. The joint proxy statement/information
statement/prospectus and other relevant materials (when they become
available), and any other documents filed by AllDigital or
Broadcast International with the SEC, may be obtained free of
charge at the SEC's web site at www.sec.gov. In addition, investors
and security holders may obtain free copies of the documents filed
with the SEC by AllDigital by contacting Stephanie Hargis via email
at ir@alldigital.com, or by phone 949-250-0701, x100. Investors and
security holders are urged to read the joint proxy
statement/information statement/prospectus and the other relevant
materials when they become available before making any voting or
investment decision with respect to the merger.
AllDigital, Paul Summers, AllDigital's Chairman of the Board and
Chief Executive Officer, John Walpuck, AllDigital's Chief Financial
Officer, and certain of AllDigital's other executive officers and
directors may be deemed to be participants in the solicitation of
proxies and consents from the shareholders of AllDigital and
Broadcast International in favor of the merger. The other executive
officers and directors of AllDigital who may be participants in the
solicitation of proxies in connection with the merger have not been
determined as of the date of this filing. A description of the
interests of Mr. Summers, Mr. Walpuck and AllDigital's other
executive officers and directors in AllDigital is set forth in the
AllDigital's Annual Report on Form 10-K for the fiscal year ended
December 31, 2012, which was filed with the SEC on April 1, 2013.
Investors and security holders may obtain more detailed information
regarding the direct and indirect interests of Mr. Summers, Mr.
Walpuck and AllDigital's other executive officers and directors in
the merger by reading the joint proxy statement/information
statement/prospectus when it becomes available.
Copyright ©2013. AllDigital, Inc. All rights reserved. All marks
are the property of their respective holders.
CONTACT: Stephanie Hargis, Investor Relations
Email: ir@alldigital.com
Phone: 949.250.0701
Fax: 949.250.0730
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