- December 17, 2018
- Company Update
The Management of DBMM filed its 10-K for 2018 (“10K18”) with the Securities & Exchange Commission on December 14, 2018 as required under the extension period allowed. For clarification, as an analogy, US individuals can file for an extension to extend the April 15th tax report due date to October, with no penalties. Fully-reporting public companies can file for a similar, albeit shorter, standard extension via an NT under Rule12b-25 and are considered to be filing on time. Such a practice is within the ordinary course of business. This is the link for SEC access. LINK
As DBMM announced in its last Shareholders Update on May 31, 2018, the Company filed its Super 10-K for 2015-2016-2017 on the same date as planned and fulfilled its compliance commitment for 10Q for 1Q18 on June 22, 2018, 2Q2018 on June 25, 2018 and 3Q18 on July 18, 2018 fulfilling the Company’s intent to remain compliant following the Super 10-K.
Coincident with this enormous work effort, DBMM settled its litigation with Asher Enterprises on June 18, 2018. “A Satisfaction of Judgment through the Settlement Addendum was coincidently filed. The litigation was closed.” (10K18, Item 3, p.6 and Note 11, p.35.)
The Company’s Management encourages its shareholders and the public at large who are potential shareholders, to read the 10-K in its entirety. The Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) sets the stage for an executive discussion of the overall industry, the competitive environment and the background for the Company’s overall Business Plan. The context is the framework for comparative results and forward guidance.
Further to the broad environmental outlook, it is important to understand the explanatory PCAOB accounting policies/rules and SEC regulations under which the Company’s requisite financial reporting is provided. It is further recommended that the business development document entitled the “Creds Deck.” See Link which preceded the M,D&A (10K18, Item 7, p.8) be read as a roll out of the business plan as our brand, Digital Clarity, (“DC”) enters a growth phase following several years of neutral revenues because of parent company external challenges. Need we say again that the mitigating circumstances were through no fault of DBMM? No. The continuing positive news is the MD&A reinforces the fact that since its acquisition Digital Clarity has been cash flow positive and an industry leader for its size.
KEY FACTS FOR CONSIDERATION GOING FORWARD:
- Revenues up 10%. This is the most important metric in the digital business model. The uptick has occurred while the parent company was eliminating its mitigating circumstances from litigation to capital raise.
- Derivative Liabilities (“DL”) drives cash flow reporting while very confusing as it is not what occurred in results, but rather what may occur with Convertible instruments in a worst case scenario. It is necessary to get in the weeds a bit, so here goes: The category of Derivative Liabilities is not impacted by revenues at all, but impacts the Net (Loss) Income portion of the Cash Flow Report. To make a correlation to revenues is inaccurate and a false equivalency. (10K18, p. F-8 and F-9). Admittedly, it is a bit counter-intuitive to see a (Loss) in 2018 of $ (456,410), following Income of $564,423 in 2017, while Convertible Instruments outstanding remained exactly the same in both years. The measurement is exactly the same through the Black-Scholes/binomial model, but volatility in the overall market impacts the result. In a word, we recommend a focus on revenues year-on-year and growth spend as cost of sales. That is what has taken place, not what may happen. DBMM did not in any way focus on “Income” in 2017 as a positive factor, nor should there be a focus on the loss in 2018. Repeat, always focus on revenues and growth as key factors in any digital model. Many digital companies have no revenues for many years as they concentrate on growth and have valuations that are sky-high. DC has a strong foundation and capital infusion equals growth.
- Income Tax loss carry forward at $4.4million. This metric will serve DBMM well after it reaches a certain TBD plateau of growth and crosses over to profitability.
- DBMM’s brand, Digital Clarity, has been the recipient of numerous industry awards. Over the years, Digital Clarity has demonstrated a competitive advantage as acknowledged by the industry. With capital infusion on a continuing basis, DC’s positioning as a leader will expand. The environment is extremely welcoming. “By the end of 2018, 51.2% of the world’s population–3.9 billion people –will be online. Mobile connections have skyrocketed too, with 96% of world’s population now within reach of a cell network.” (DailyMail.com cited in ‘The Week’ December 23-28,2019)
- DBMM is fully compliant with SEC reporting requirements. The Company refers to the progress made in the SEC Administrative Proceeding, now as a collaborative approach between DBMM and the SEC following the SCOTUS Remand and the existing record which included DBMM evidence provided under a Protective Order. (10K18, Item 3, pg 6 and Note 11, p. 35)
Reiterating earlier statements, please ignore the “White Noise” by certain non-shareholders who have their own agenda. They disseminate deliberate disinformation and are called out by “real” shareholders who are supporters of the Company’s business model and way forward.
Suffice to say, DBMM has done everything it said it was going to do, and looks forward to finally effecting its Business Plan of growth with committed capital and a pipeline of new clients. All has been documented and audited. The naysayers should concentrate on understanding Corporate Finance and Oversight regulations from the PCAOB and the SEC before making irresponsible remarks or prognostications which never take place. Ignorance is not an excuse for ‘fake,’ uncorroborated pronouncements.
DBMM is in a good place with a competitive advantage, supported by (new) significant client flow and capital. The Company Management expects 2019 to be very positive.
SAFE HARBOR PROVISIONS
The foregoing contains certain predictive statements that relate to future events or future business and financial performance. Such statements can only be predictions, and the actual events or results may differ from those discussed due to, among other things, those risks described in DBMM’s reports filed with the SEC. Opinions expressed herein are subject to change without notice. This document is published solely for information purposes, and is not to be construed as an offer to sell or the solicitation of an offer to buy any securities in any state. Past performance does not guarantee future performance. Additional information is available upon request.