Welcome!

News Feed Item

Abacast Proposes Business Combination With AllDigital Holdings, Inc.

Proposed Combination Believed to Offer the Most Value for Both Abacast and AllDigital Holdings Shareholders

VANCOUVER, WA -- (Marketwired) -- 01/12/14 -- The following is a transcript of a letter sent from the Abacast Board of Directors to the AllDigital Holdings, Inc. Board of Directors:

Dear Members of the Board:

I am writing on behalf of the Board of Directors of Abacast, Inc. ("Abacast") to propose a business combination of Abacast and AllDigital Holdings, Inc. ("AllDigital"). We believe that a combination with Abacast will position the combined company for greater long-term success as a part of a more comprehensive digital media platform, resulting in greater value and services to your customers. We also believe it will provide a much more realistic path to maximize value for your shareholders versus AllDigital continuing to operate on a standalone basis in light of your status and trajectory today.

Abacast Update

As at least some members of the Board are already well aware, Abacast offers a cloud-based software platform and services to monetize digital media. Our platform now provides an end-to-end monetization ecosystem, enabling a marketplace of advertising inventory and advertising dollars between and among advertisers, broadcasters, advertising networks, and agencies (the "Clarity Marketplace"). 2013 marked a number of important milestones for Abacast as we began to realize accelerated growth in the Clarity Marketplace, completed the transition from and disposal of certain legacy assets and operations, and truly began to focus our efforts on our platform and core audio monetization business.

Key metrics and other information directly relevant to our business in 2013 are as follows: 25%+ total revenue growth; 200+ customers; 90%+ recurring revenue; 70%+ gross margin; cash flow breakeven; Clarity Marketplace in year 2013 (i.e., 1Q13-4Q13) filled ad impression and gross ad revenue growth 320%+ and 270%+, respectively (all amounts currently estimated and subject to audit as applicable). In light of the initial success of the Clarity Marketplace in 2013 (i.e., yearend traffic levels) and our growing base of recurring business, we are forecasting organic growth of approximately 50% in 2014. We also recently completed the transition to a Board of Directors comprised of a majority of outside Directors.

The primary reason Abacast is interested in a business combination with AllDigital is because of our plan to expand our existing monetization platform to include video, leveraging the capabilities and services offered by AllDigital Cloud. Accustream Media estimates that the online video advertising market represented $10.4 billion in 2013, with spending expected to grow to $16.8 billion by 2015. Our monetization platform was architected to support the expansion into video, however, such expansion involves development requirements around certain video workflow capabilities that we believe are available in AllDigital Cloud. In addition, we are receiving a growing number of inquiries from our existing customers for video workflow, streaming, and mobile application capabilities, each a part of your core business, and further confirming the value proposition of a business combination with AllDigital.

AllDigital Today

While Abacast is extremely interested in a business combination with AllDigital, we must emphasize that time is of the essence. We are increasingly concerned about recent developments and an overall continued lack of market penetration and business progress at AllDigital. A few examples according to your public filings, LinkedIn, and other publicly available information include:

  • 15% revenue growth from 2011-2012.
  • Over the past 24 months, 80% of your revenue remains concentrated with 3-4 customers.
  • Your gross margin has remained at 40% since 2011.
  • Recent departures of multiple personnel, including your COO & CFO and CTO.
  • There has been no announcement about a replacement for your CTO for almost two months.
  • Who owns and is actively working the day-to-day development of your AllDigital Cloud platform?
  • Recent claims of breach, damages, reserved rights, etc. from the failed Broadcast Internat'l merger.
  • AllDigital's Board remains comprised of only one outside Director and three executive insiders.

We believe that these recent developments and overall continued lack of market penetration and business progress are damaging to the interests of AllDigital's shareholders. We strongly believe that these trends will likely freeze your stockholders out of any possibility of realizing AllDigital's long term potential. AllDigital's future is far from certain as a standalone company, and it is unlikely to be sustainable without an immediate business combination such as we are proposing with Abacast, or significant and immediate investment.

Our Proposal

Under our proposal, AllDigital would acquire all of the outstanding shares of Abacast in a reverse merger such that AllDigital would own 38% and Abacast would own 62% of the common stock of the combined company, excluding options and warrants. Per share consideration, exchange ratios, option pools, etc. will be determined early in the due diligence process.

Given AllDigital's status today based on publicly available information and that your stock is highly illiquid, we believe our proposal represents a significant premium relative to AllDigital's intrinsic value and will receive the support of a majority of AllDigital's independent shareholders. By whatever financial measure you use -- EBITDA, free cash flow, or operating cash flow, this proposal represents a compelling value realization event for all of AllDigital's shareholders. It also represents a significant premium to where AllDigital would likely trade on a standalone basis if there was liquidity in your stock.

Our proposal is subject to the negotiation of a definitive merger agreement and our having the opportunity to conduct certain confirmatory due diligence, including diligence calls to AllDigital's few customers that represent 80% of your revenue. It is also subject to Abacast receiving management control of the combined company, the negotiation of severance payouts to certain executive officers, the execution of releases from liability in light of multiple SEC filings alleging breaches, damages, reserved rights, etc. associated with the failed Broadcast International merger. In addition, because AllDigital would be acquiring the outstanding stock of Abacast, we would provide AllDigital the opportunity to conduct appropriate limited due diligence with respect to Abacast.

The closing of the proposed transaction is conditioned on the availability of equity financing for go forward operating capital for the combined company.

Moving Forward

We are prepared to deliver a draft merger agreement to you, meet with you, and begin discussions immediately, given time is of the essence. Due to AllDigital's status today and the value represented by our proposal, we expect you to engage in a full and immediate review of our proposal, and believe it is appropriate to receive a response on or before January 17th, 2014. Depending on the nature and timing of your response, Abacast reserves the right to call a special meeting of the AllDigital shareholders, and pursue any other steps necessary to ensure that your shareholders are provided with the opportunity to realize the value inherent in our proposal. In the interim, we would strongly caution you against adopting any precautionary measures to try to control the outcome of what's best for AllDigital's shareholders.

In light of the significance of this proposal to you, AllDigital's shareholders, and Abacast's shareholders, as well as the potential for selective disclosure, our intention is to publicly release the text of this letter immediately.

We believe this proposal represents a unique opportunity to create significant value for your shareholders, enhance your value proposition and service offering to customers, and benefit your employees. We hope that you share our enthusiasm and look forward to hearing from you on or before January 17th, 2014.

Sincerely,

Rob Green
Chief Executive Officer

Forward-Looking Statements
This letter contains forward-looking statements, which include any predictions, projections or other statements about future events based on past events, current expectations, and assumptions that are subject to risks and uncertainties. The potential risks and uncertainties include, among others, that the expected financial and other benefits from the transaction may not be realized, including because of: our inability to close the transaction, including expressly Abacast potentially revoking or modifying its proposal based on the required due diligence referenced herein; the response to the proposed acquisition by the customers, employees, and partners of AllDigital's or Abacast's business; the extent to which we achieve anticipated operating efficiencies and cost savings, and anticipated video monetization targets; our ability to penetrate the advertising video monetization business; audited results differing materially from estimates referenced herein; the inability to achieve the referenced and other material agreement terms referenced herein; unanticipated restructuring expenses; any restrictions or limitations imposed by regulatory authorities; the impact on Abacast and AllDigital management and organizational changes resulting from the proposed business combination; the ability to retain key AllDigital personnel; our effectiveness in integrating AllDigital with Abacast's business; risks related to AllDigital's business described in their filings with the Securities and Exchange Commission ("SEC"), including their Forms 10-K and 10-Q; and our ability to realize our broader strategic and operating objectives. Actual results may differ materially from the forward-looking statements because of these and other risk and uncertainties of our business.

Add to Digg Bookmark with del.icio.us Add to Newsvine

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Cloud Expo, Inc. has announced today that Aruna Ravichandran, vice president of DevOps Product and Solutions Marketing at CA Technologies, has been named co-conference chair of DevOps at Cloud Expo 2017. The @DevOpsSummit at Cloud Expo New York will take place on June 6-8, 2017, at the Javits Center in New York City, New York, and @DevOpsSummit at Cloud Expo Silicon Valley will take place Oct. 31-Nov. 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that CollabNet, a global leader in enterprise software development, release automation and DevOps solutions, will be a Bronze Sponsor of SYS-CON's 20th International Cloud Expo®, taking place from June 6-8, 2017, at the Javits Center in New York City, NY. CollabNet offers a broad range of solutions with the mission of helping modern organizations deliver quality software at speed. The company’s latest innovation, the DevOps Lifecycle Manager (DLM), supports Value S...
Join IBM November 2 at 19th Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA, and learn how to go beyond multi-speed it to bring agility to traditional enterprise applications. Technology innovation is the driving force behind modern business and enterprises must respond by increasing the speed and efficiency of software delivery. The challenge is that existing enterprise applications are expensive to develop and difficult to modernize. This often results in what Gartner calls ...
NHK, Japan Broadcasting, will feature the upcoming @ThingsExpo Silicon Valley in a special 'Internet of Things' and smart technology documentary that will be filmed on the expo floor between November 3 to 5, 2015, in Santa Clara. NHK is the sole public TV network in Japan equivalent to the BBC in the UK and the largest in Asia with many award-winning science and technology programs. Japanese TV is producing a documentary about IoT and Smart technology and will be covering @ThingsExpo Silicon Val...
Translating agile methodology into real-world best practices within the modern software factory has driven widespread DevOps adoption, yet much work remains to expand workflows and tooling across the enterprise. As models evolve from pockets of experimentation into wholescale organizational reinvention, practitioners find themselves challenged to incorporate the culture and architecture necessary to support DevOps at scale. In his session at @DevOpsSummit at 20th Cloud Expo, Anand Akela, Senior...
@GonzalezCarmen has been ranked the Number One Influencer and @ThingsExpo has been named the Number One Brand in the “M2M 2016: Top 100 Influencers and Brands” by Analytic. Onalytica analyzed tweets over the last 6 months mentioning the keywords M2M OR “Machine to Machine.” They then identified the top 100 most influential brands and individuals leading the discussion on Twitter.
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
The age of Digital Disruption is evolving into the next era – Digital Cohesion, an age in which applications securely self-assemble and deliver predictive services that continuously adapt to user behavior. Information from devices, sensors and applications around us will drive services seamlessly across mobile and fixed devices/infrastructure. This evolution is happening now in software defined services and secure networking. Four key drivers – Performance, Economics, Interoperability and Trust ...
NHK, Japan Broadcasting, will feature the upcoming @ThingsExpo Silicon Valley in a special 'Internet of Things' and smart technology documentary that will be filmed on the expo floor between November 3 to 5, 2015, in Santa Clara. NHK is the sole public TV network in Japan equivalent to the BBC in the UK and the largest in Asia with many award-winning science and technology programs. Japanese TV is producing a documentary about IoT and Smart technology and will be covering @ThingsExpo Silicon Val...
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...
SYS-CON Events announced today that Twistlock, the leading provider of cloud container security solutions, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Twistlock is the industry's first enterprise security suite for container security. Twistlock's technology addresses risks on the host and within the application of the container, enabling enterprises to consistently enforce security policies, monitor...
Multiple data types are pouring into IoT deployments. Data is coming in small packages as well as enormous files and data streams of many sizes. Widespread use of mobile devices adds to the total. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the tools and environments that are being put to use in IoT deployments, as well as the team skills a modern enterprise IT shop needs to keep things running, get a handle on all this data, and deli...
Automation is enabling enterprises to design, deploy, and manage more complex, hybrid cloud environments. Yet the people who manage these environments must be trained in and understanding these environments better than ever before. A new era of analytics and cognitive computing is adding intelligence, but also more complexity, to these cloud environments. How smart is your cloud? How smart should it be? In this power panel at 20th Cloud Expo, moderated by Conference Chair Roger Strukhoff, pane...
With billions of sensors deployed worldwide, the amount of machine-generated data will soon exceed what our networks can handle. But consumers and businesses will expect seamless experiences and real-time responsiveness. What does this mean for IoT devices and the infrastructure that supports them? More of the data will need to be handled at - or closer to - the devices themselves.
Building a cross-cloud operational model can be a daunting task. Per-cloud silos are not the answer, but neither is a fully generic abstraction plane that strips out capabilities unique to a particular provider. In his session at 20th Cloud Expo, Chris Wolf, VP & Chief Technology Officer, Global Field & Industry at VMware, will discuss how successful organizations approach cloud operations and management, with insights into where operations should be centralized and when it’s best to decentraliz...