IRVINE, Calif., July 2, 2013 (GLOBE NEWSWIRE) -- 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.
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