TCM|Strategic Comments on its Agreement to Acquire $53.5 Million of Digimarc Corporation Common and Convertible Preferred Equity

Rhea-AI Summary

TCM|Strategic has announced an agreement to acquire $53.5 million in common and convertible preferred equity of Digimarc Corporation (NASDAQ: DMRC). This investment reflects TCM|Strategic's belief that both the Legacy and Growth Businesses within Digimarc are undervalued. The financing aims to accelerate growth in Digimarc's Barcode business and is expected to support the company until it achieves profitability, even under conservative scenarios. TCM|Strategic suggests that future equity market access will aim to reduce rather than increase shares outstanding.

Positive

• Acquisition of $53.5 million in equity supports growth in Digimarc's Barcode business.
• Financing expected to fund Digimarc through to profitability under conservative scenarios.
• Potential for reducing shares outstanding in future equity market accesses.

Negative

• None.

CORAL GABLES, Fla., Sept. 29, 2020 /PRNewswire/ -- TCM|Strategic announced today it has agreed to acquire $53.5 million of common and convertible preferred equity in Digimarc Corporation (NASDAQ: DMRC).  For more details on the transaction, please see today's press release from Digimarc.

TCM|Strategic's decision to make this investment was the result of two conclusions:

• The Legacy Business and the Growth Business are each worth more today than the current enterprise value of the entire company.

• The Growth Business has not only the opportunity but also the high likelihood of being worth significantly more in the future.

For those interested, this deck contains detailed work in support of these points.

This financing provides Digimarc with enough capital to ensure the continued acceleration of growth in the Barcode business.  Furthermore, it should be sufficient to fund the company through profitability, even assuming the most conservative macro and micro scenarios. 

Therefore, we believe that the next time Digimarc accesses the equity market, it will be to reduce – rather than increase – shares outstanding.

As firm believers that no single group has a monopoly on good ideas, we welcome communication with all Digimarc stakeholders as we help guide the company toward the realization of this platform's tremendous value.  We can be reached via email at digimarc@tcmstrategicllc.com.

Disclaimer

This press release contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended), and any statements other than statements of historical fact could be deemed to be forward-looking statements. These forward-looking statements include, among other things, statements regarding the expected consummation of the proposed private placement of common and preferred equity of Digimarc Corporation described herein, the future business and financial performance of Digimarc and the expected benefits of the proposed transaction and other statements identified by words such as "will", "expect", "believe", "anticipate", "estimate", "should", "could", "would", "may", "intend", "plan", "potential", "target", "predict", "project", "aim", "opportunity", "tentative", "positioning", "designed", "create", "seek", "ongoing", "upside", "increase" or "continue" and variations or other similar words, phrases or expressions. These statements are based on TCM|Strategic's current expectations and beliefs, as well as assumptions made by, and information currently available to, TCM|Strategic, many of which are outside of TCM|Strategic's and Digimarc's control.  Actual results and future events may differ materially due to risks and uncertainties, including risks related to the failure of the consummation of the transaction, Digimarc's liquidity and ability to fund operating and capital expenses, risks related to potential delays or failures in development, production and commercialization of Digimarc's products and services, risks related to Digimarc's failure to retain customers, suppliers and/or employees, Digimarc's reliance on third parties, and other risks detailed from time to time in filings Digimarc makes with the Securities and Exchange Commission, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. TCM|Strategic disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise.  This press release does not constitute an offer to buy or solicitation of an offer to sell any securities or a solicitation of any proxy.

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SOURCE TCM|Strategic

FAQ

What is the value of the acquisition by TCM|Strategic of Digimarc Corporation?

TCM|Strategic is acquiring $53.5 million of common and convertible preferred equity in Digimarc Corporation.

What does TCM|Strategic believe about Digimarc's business valuation?

TCM|Strategic believes that both the Legacy Business and the Growth Business of Digimarc are worth more than the current enterprise value.

How will the acquisition affect Digimarc's growth?

The acquisition is expected to accelerate growth in Digimarc's Barcode business and support the company until profitability.

What is the expected future impact of the acquisition on Digimarc's shares?

TCM|Strategic anticipates that the next time Digimarc accesses the equity market, it will aim to reduce shares outstanding.