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DGTW**Quick Plan of Reorganization & Memorandum Breakdown

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stervc Member Level  Saturday, 10/09/21 05:44:12 AM
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DGTW**Quick Plan of Reorganization & Memorandum Breakdown

A blast from the past regarding DGTW with a few minor changes as things are finally starting to come together:

DGTW**Quick Plan of Reorganization & Memorandum Breakdown

The two Court Dockets filed by DGTW on Nov 27, 2020 are huge. They filed their Plan of Reorganization (POR) and their Memorandum Response greatly disputing and proving against the Motion to dismiss or convert 11 to 7 filed by the court appointed Trustee. These filings by DGTW positively prepares them to successfully emerge fairly soon from their Sub Chapter 5 under Chapter 11 Bankruptcy that was filed.

I see no need for anyone to breakdown every word, sentence, or paragraph. I'm going to skip to some things that caught my eye after quickly perusing through the Memorandum and the POR. Please understand that I could be looking at some things wrong, but basically much of it is cut and dry.

Within the Memorandum and the POR

1st - It stood out greatly how vigorously DGTW defended themselves against the court appointed U.S. Trustee to rescind their Subchapter V status and to convert or dismiss the case. They provided much justification to defend their stance. DGTW made it very clear that they are a “small business debtor” that qualified for relief under Subchapter V; that it is not “out of business”; that it has substantial on-going business activity; and more critically that it is able to reorganize effectively.

2nd - Much of the debt from 36 creditors has been converted into equity; 32 creditors had debt converted into common shares already issued into the Outstanding Shares (OS) and 4 creditors will be converted into preferred shares to not have an effect on the OS.
Update courtesy of Willymon: DGTW - "DigitalTown convinced all of its major creditors except for Pomije to convert their debt into equity."

3rd - DGTW developed a new business plan and solicited and obtained commitments for new financing. Two groups agreed to finance DGTW with its new business plan; PowerUp Lending Group Ltd. to fund the short term working capital requirements immediately after Plan confirmation to provide approximately $300,000 and Premier Venture Partners for a $5,000,000 equity line of credit. Important to note, the line of credit for $5 Million is non-dilutive and is a huge show of confidence that the ones putting up that money knows what is coming into DGTW to give them such confidence in their current and future operations. To add, the $5 million line of credit appears to be delivered in the form of shares being purchased from DGTW to fund DGTW. This too is a huge show of confidence that they believe the growth coming into DGTW will justify buying shares of DGTW in these early phases at .01 per share or above to be strongly justified. See below:

I stated that the purchasing of shares for funding will transpire at .01 per share or higher because of the comment that was mentioned within the POR below:

This leads me to think that the ones doing the purchasing of DGTW shares to fund them the $5 Million have accounts that only allow them to buy or hold shares in their account at a price to where the Bid is no lower than .01 per share. This also leads me to think that the ones doing the buying also believe that buying at .01 per share is still buying at a discount and not at a premium based on what they know to be coming into DGTW to justify such a thought. They believe the price will be going much higher to see that $5 Million as an investment.

4th – The current DGTW operations seems like it’s a mix between what TSNP with their SmartWallet solution proposed to provide as a mechanism for instant payments, using Fiat or cryptocurrencies and PNNX with offering a Community Points reward system. Just as a quick history lesson, PNNX had gone from .0031 to .885 per share to settle down in the .25 to .35 per share range. And TSNP (now HMBL) had gone from .0001 to hit $1.93 per share pre-split as it was the most popular stock on IHub at such time. I think there is a chance that there is something just as big that could be coming into DGTW than what currently exists that will either augment or replace its current operations based on what the CEO stated in the Memorandum of working diligently to identify prospective targets of acquisition once the plan is confirmed. I’m still leaning towards something additional that will be major is coming that justifies the reasoning for why they have non-dilutive financing of $5,000,000 and the $300,000 for their short term working capital.

Also important to note was the fact that the judge/court denied the trustee's motion to convert/dismiss, without prejudice:



DGTW**Beautiful thing about its $5,000,000 Financing...

DGTW**Beautiful thing about its $5,000,000 Financing...

The beautiful thing about the $5,000,000 in financing that they have is that...

1. It hasn't started yet since the buying starts at .01 per share.
2. The higher the stock price goes, the less dilutive it is to DGTW.
3. The Financer is willing to purchase $5,000,000 worth of shares.
4. The DGTW shares purchased by the Financer is at 80% of the lowest individual daily VWAP during the Pricing Period (as defined below).


Let me further explain their agreement within their Plan of Reorganization (POR)...

Let's presume that DGTW closed at .05 per share on a Friday. Then on that upcoming Sunday DGTW sends in a Purchase Request to their Financer (Premier Ventures Partners, LLC) to request that they want $1,000,000 of their $5,000,000 of their financing. Then considering that the price stays at a minimum .05 per share for the next 5 consecutive trading days since the range is from the 1st trading day to the 5th trading day, the Financer will send DGTW the $1,000,000 by buying shares from DGTW that will be sent to them through a DWAC transaction and pay 80% of .05 per share which would be paying .04 per share for the $1,000,000 worth of shares. Per within the POR, an S-1 will be filed with the SEC to substantiate the transaction. So, they would send them...

.05 per share x .80 (80%) = .04 per share

$1,000,000 ÷ .04 = 25,000,000 shares

As the price gets higher, from the logic above from their Plan of Reorganization (POR), the financing becomes less dilutive. You can use the Substitution Property to switch in and out share prices higher or lower to get the amount of shares used for funding without using a share price below of .01 per share for the logic that I explained within the post below:

This means that at .01 per share, the most amount of shares used to provide the $5,000,000 in funding will be 80% of .01 which would be 625,000,000 shares. This is as a worst case scenario. I have a feeling that we should be going past .01 per share. At .05 per share in the example above, the most amount of shares used to provide the $5,000,000 in funding will be 80% of .05 which would be 125,000,000 shares. At .10 per share in the example above, the most amount of shares used to provide the $5,000,000 in funding will be 80% of .10 which would be 62,500,000 shares.

This is one of the best financing agreements that I have seen for a stock in my over 30 years of investing. This a beautiful and very fair financing agreement that is awesome for DGTW and us shareholders. They are leading by example. They are showing the market and the world how things are supposed to be done for a stock obtaining financing. I can't say it enough that the CEO strongly hinted that something much bigger is coming and will be revealed after they emerge from bankruptcy. In my opinion, the Financers are willing to be so investor friendly with their financing agreement because they know what is coming and because they will become a substantial shareholder as they fund DGTW. They know that they would be only helping their investment to continue becoming huge with its growth. I believe this is way bigger than what we are seeing right now for them to provide such friendly financing.


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I never give investing advice; only my beliefs for risks in a stock.
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