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Saturday, October 1, 2022

Digerati Technologies Inc (OTCMKTS: DTGI) Heating Up as Co Signs Agreement with Minority Equality Opportunities Acquisition Inc. to List on Nasdaq

Digerati Technologies Inc (OTCMKTS: DTGI) is up big after the Company announced its signing of a definitive business combination agreement with Minority Equality Opportunities Acquisition Inc. (NASDAQ: MEOA) (“MEOA”), which is the first Minority led special purpose acquisition company to list on NASDAQ with the mission of executing a business combination with a minority owned, led or founded business. Maxim Group LLC acted as financial advisor and Lucosky Brookman LLP acted as legal counsel to Digerati in connection with the transaction. Combined company to have an initial equity value of approximately $228 million translating into an enterprise value of approximately $145 million, assuming no redemptions by MEOA stockholders. 

DTGI has seen significant growth reporting record revenues; In June DTGI announced today financial results for the three months ended April 30, 2022, the Company’s third quarter for its Fiscal Year 2022. Revenue for the three months ended April 30, 2022 was $8.163 million, an increase of $4.412 million or 118% compared to $3.751 million for the three months ended April 30, 2022. The increase in revenue is primarily attributed to the increase in total customers between periods due to the acquisitions of Skynet Telecom in December 2021 and NextLevel Internet in February 2022. Total number of customers increased from 2,612 for the three months ended April 30, 2021, to 3,963 customers for the three months ended April 30, 2022. Gross profit for the three months ended April 30, 2022 was $5.002 million, resulting in a gross margin of 61.3%, compared to $2.225 million and 59.3% for the three months ended April 30, 2021.  

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Digerati Technologies Inc (OTCMKTS: DTGI) is a provider of cloud services specializing in UCaaS (Unified Communications as a Service) solutions for the business market. Through its operating subsidiaries NextLevel Internet (NextLevelinternet.com), T3 Communications (T3com.com), Nexogy (Nexogy.com), and SkyNet Telecom (Skynettelecom.net), the Company is meeting the global needs of small businesses seeking simple, flexible, reliable, and cost-effective communication and network solutions including, cloud PBX, cloud telephony, cloud WAN, cloud call center, cloud mobile, and the delivery of digital oxygen on its broadband network. The Company has developed a robust integration platform to fuel mergers and acquisitions in a highly fragmented market as it delivers business solutions on its carrier-grade network and Only in the Cloud™. 

In June DTGI announced today financial results for the three months ended April 30, 2022, the Company’s third quarter for its Fiscal Year 2022. Revenue for the three months ended April 30, 2022 was $8.163 million, an increase of $4.412 million or 118% compared to $3.751 million for the three months ended April 30, 2022. The increase in revenue is primarily attributed to the increase in total customers between periods due to the acquisitions of Skynet Telecom in December 2021 and NextLevel Internet in February 2022. Our total number of customers increased from 2,612 for the three months ended April 30, 2021, to 3,963 customers for the three months ended April 30, 2022. Gross profit for the three months ended April 30, 2022 was $5.002 million, resulting in a gross margin of 61.3%, compared to $2.225 million and 59.3% for the three months ended April 30, 2021. 

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DTGI

On September 6 DTGI announced its signing of a definitive business combination agreement with Minority Equality Opportunities Acquisition Inc. (NASDAQ: MEOA) (“MEOA”), which is the first Minority led special purpose acquisition company to list on NASDAQ with the mission of executing a business combination with a minority owned, led or founded business. Maxim Group LLC acted as financial advisor and Lucosky Brookman LLP acted as legal counsel to Digerati in connection with the transaction 

Highlights of the transaction include: 

  • Transaction to result in Digerati becoming a listed company on NASDAQ and delisting from OTC Markets. 
  • Combined company to have an initial equity value of approximately $228 million translating into an enterprise value of approximately $145 million, assuming no redemptions by MEOA stockholders. 
  • MEOA currently has approximately $129.9 million cash in trust as of September 2, 2022.  
  • New capital and being a NASDAQ listed company is expected to provide Digerati with flexibility for additional strategic and accretive acquisitions in the UCaaS sector. 
  • The current Digerati management team will continue to operate the business. 
  • The current Digerati Board of Directors will remain with one additional director to be appointed by the Company and Shawn D. Rochester, CEO of MEOA, joining the Company’s Board of Directors at the closing of the transaction. 
  • All existing Digerati shareholders will receive 100% of their equity in the pro forma company. 

The combined company is expected to have a total pro forma equity value of approximately $228 million translating into an enterprise value of approximately $145 million, with the proposed business combination to provide access to capital of up to approximately $121 million from the cash held in trust by MEOA, assuming no redemptions from MEOA stockholders. All references to available cash from the trust account and retained transaction proceeds are subject to any redemptions by the public stockholders of MEOA and payment of transaction fees and expenses. As part of the transaction, all Digerati shares owned by Digerati’s existing equity holders will be converted to common stock of the pro forma company. The transaction, which has been approved by the Boards of Directors of both of Digerati and MEOA, is expected to close in the fourth quarter of CY 2022.  

Arthur L. Smith, Chief Executive Officer of Digerati, stated, “This business combination that results in a NASDAQ listing for our Company positions us for continued growth in a rapidly expanding and highly-fragmented market. We believe being a NASDAQ listed company, along with our financial partnership with Post Road Group, will facilitate acceleration of our M&A strategy in a market with a healthy pipeline of acquisition candidates. This transaction will also contribute to organic growth as we continue providing small to medium-sized businesses with robust solutions and superior customer service tailored for this market segment. We believe this is an ideal transaction for current Digerati shareholders since it avoids a reverse stock split that is customary under a re-IPO event associated with an uplist to NASDAQ or NYSE.” 

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Currently trading at a $15 million market valuation DTGI is up big after the Company announced its signing of a definitive business combination agreement with Minority Equality Opportunities Acquisition Inc. (NASDAQ: MEOA) (“MEOA”), which is the first Minority led special purpose acquisition company to list on NASDAQ with the mission of executing a business combination with a minority owned, led or founded business. Maxim Group LLC acted as financial advisor and Lucosky Brookman LLP acted as legal counsel to Digerati in connection with the transaction. Combined company to have an initial equity value of approximately $228 million translating into an enterprise value of approximately $145 million, assuming no redemptions by MEOA stockholders. We first reported on DTGI when the stock was in the $0.04’s. We will be updating on DTGI when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with DTGI.

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Disclosure: we hold no position in DTGI either long or short and we have not been compensated for this article.

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