SHAREHOLDER’S UPDATE —JULY 21, 2022
In keeping with the intent of Digital Brand Media & Marketing Group, Inc. (“The Company” and “DBMM”), and its trading company, Digital Clarity (“DC”) to keep shareholders, long-term investors, and supporters, up to date with company news, DBMM today provides an update following previous updates, is transparent, open and factual.
Dealing with business conditions head-on, Reggie James, the Founder and Managing Director of DC and the Chief Operating Officer of DBMM said, “Though numbers in this quarter are not where we would have liked, we have clearly stated in the 3Q2022 MD&A, that we are taking a one step at a time approach, incremental and positive. However slow, but steady to return to normal business, and grow the business as intended when DC was initially acquired.
James added, “equally we need normal trading as well, so the company will then receive Growth Capital Infusion as discussed to deliver a scalable and explosive growth plan. The long-term investors have been supporting timely SEC reporting, but require the removal of the CE in order to embark on the planned growth plan, which is a pragmatic business model.”
He concluded, “That said, we are confident that the company continues to move in the right direction, even with this continuing challenge, as described in our June 14, 2022 Update. Very promising new business is being developed and that continues.
At this point following the 19th filing on July 14, 2022, the Company filed its Super 10-K, cured its delayed filings, and has filed on a timely basis.
It is factual to mention here that Digital Clarity was acquired by DBMM as a cash-flow positive business with a great reputation and industry network, winning industry awards. As stated in the MD&As for many years, the operating business is cash flow positive, but the costs of maintaining a public company far exceed the profit in those early days. That was expected. That is the digital business model, though many digital companies do not have any operating revenues while they build the business. What was not expected was a reaudit required through no fault of DBMM, with consequences from the mitigating circumstances which followed.
Evidence is actual results. Even in the Super 10-K for 2015-2016-2017 , the Gross Profit was $177,787 in 2015, $142,973 in 2016, $175,341 in 2017, but the strain started to show in Gross Profit dropping to $107,953 in 2018, $32,870 in 2019, $27,292 in 2020 and $4,043 in 2021, the latter the most recent impact of the lockdown during the pandemic.
The next filing will be the 10-K for 2022 due November 30, 2022, which will illustrate the step-by-step results and return to normalcy. It should be noted that despite the most difficult external circumstances, DC has been profitable as an operating business. Quite remarkable, albeit small numbers, but supportive of the value proposition of the acquisition in the first instance.
DBMM has been described by its long-term shareholders as having “grit,” and the Company has shared that descriptor with its shareholders and with the SEC in Court Papers as it has met the challenges. That grit continues with the support of long-term investors, returning to normal business, and the expectation of returning to normal trading once the CE is removed from OTC Markets. The Management is intending to grow the business significantly with a business model designed for post-pandemic and post-mitigating circumstances.
Additionally, the Company continues its debt modification efforts to positively reduce aged convertible debentures, accrued interest, and derivative liabilities as evidenced in 3Q financial statements. To reiterate, as stated in audited filings, DBMM has not issued any convertible debentures since 2015 and coincidently resolved via Board Resolution to not use the CD funding vehicle in the future.
Since the Dismissal of the Administrative Proceedings on November 12, 2019, the Company awaits the Final Order to return to business without distractions and was disappointed in the third extension to September 6, 2022. It appears the scheduling docket is very backed up as the Commission endeavors to reach a full complement of five (5) Commissioners.
Moving forward separately, the 15c-211 is still working its way through FINRA and we are very pleased with that effort in order to return to normal trading.
Lastly, the company continues to be baffled by the administrative blocks that continue to be imposed on it and in turn, stifle its commercial ability to accept trading from US retail shareholders as well as discuss implementing long-term capital investment opportunities from numerous interested parties, who like its loyal shareholders continue to be vexed by decisions that are beyond its control. Given the timely adherence, following Judge Foelak’s Dismissal, question how protracted delays can be construed as protecting shareholders. The Company is addressing its options, but is awaiting the 211 clearance following its incremental step-by-step approach,
The Company wishes to once again thank all shareholders and supporters. The future is bright and patience has been required, but the Company has evidenced its promise and its worth, one step at a time.
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.