UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 20, 2019
Digerati Technologies, Inc.
(Exact Name of Registrant as Specified in its Charter)
Nevada
(State or Other Jurisdiction of Incorporation)
| 001-15687 | 74-2849995 | |
| (Commission File Number) |
(IRS Employer Identification No.) |
| 825 W. Bitters, Suite 104, San Antonio, TX | 78216 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(210) 614-7240
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On September 20, 2019, T3 Communications, Inc., (“Buyer”) a Nevada corporation and a majority owned subsidiary of Digerati Technologies, Inc (the “Company”), and Nexogy Acquisition, Inc., a Florida corporation and wholly owned subsidiary of Buyer (“Acquisition Company”), entered into the Agreement and Plan of Merger (the “Merger Agreement”) with Nexogy, Inc., a Florida corporation (“Nexogy”) and provider of cloud based voice and internet services.
Under the Merger Agreement, the Acquisition Company will be merged with and into Nexogy, with Nexogy continuing as the surviving corporation and as a wholly owned subsidiary of Buyer. The Merger Agreement provides, among other things, that on the terms and subject to the conditions set forth therein, the Buyer, by and through the Acquisition Company, will acquire all of the outstanding equity and all of the assets of Nexogy. The business combination of Buyer and Nexogy is intended to bring together two cloud communication providers serving a broad range of customers in various industries including banking, healthcare, financial services, legal, real estate, staffing and government.
The foregoing description of the Merger Agreement and the transaction contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q covering the fiscal quarter ending October 31, 2019.
Item 8.01 Other Events.
On September 24, 2019, the Company issued a press release announcing the signing of the Merger Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press release issued by Digerati Technologies, Inc. dated September 24, 2019. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: September 26, 2019 | Digerati Technologies, Inc. | |
| By: | /s/ Antonio Estrada Jr. | |
| Antonio Estrada Jr., | ||
| Chief Financial Officer | ||
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Exhibit 99.1
Digerati Technologies to Acquire Nexogy, Inc. and Double Annual Revenue to $13 Million
SAN ANTONIO, Texas, Sept. 24, 2019 (GLOBE NEWSWIRE) -- Digerati Technologies, Inc. (OTCQB: DTGI) ("Digerati" or the "Company"), a provider of cloud services specializing in UCaaS (Unified Communications as a Service) solutions for the business market, announced today that it has entered into a definitive agreement to acquire Nexogy, Inc. (“Nexogy”), a leading provider of cloud communication and broadband solutions tailored for businesses.
On a trailing twelve months (TTM) pro forma basis, the combination of T3 and Nexogy generated $12.7 million in annual revenue while the consolidation of telecommunications infrastructure and integration of cloud PBX platforms and back-office systems is expected to produce cost savings and EBITDA improvements. The Company anticipates producing nearly 20% in operational EBITDA with synergies derived from the combined operation. Nexogy’s business model is supported by strong and predictable recurring revenue under long-term contracts and high gross margins of 75%+. Debt financing for the transaction has been committed by an established and traditional lending source and is expected to close in approximately ninety (90) days, subject to FCC regulatory approval.
Based in Miami, Florida, Nexogy is an established provider of UCaaS and managed services, offering a portfolio of cloud-based solutions to the high-growth small to medium-sized business (“SMB”) market. Over the years, the Nexogy team has developed a channel sales program that has proven to be effective and resulted in Nexogy’s recognition as one of the fastest growing technology companies in South Florida and nomination by the Miami Minority Chamber of Commerce as “High Tech Company of the Year 2016.” Nexogy has continuously exceeded meeting the needs of a growing business community, enabling its customers to communicate and compete in the global marketplace through its robust offering of communication solutions backed by cutting-edge technology, superior reliability and unrivaled support.
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The business combination of Digerati’s operating subsidiary, T3 Communications, Inc. (“T3”) and Nexogy brings together two emerging cloud communication providers serving a broad range of customers in various industries including banking, healthcare, financial services, legal, insurance, hotels, real estate, staffing, municipalities, food services, and education. The transaction will result in a cloud communications provider serving over 24,000 business users in Florida and Texas. In addition to positioning the Company for meeting its goal of up-listing to a primary stock exchange, the business combination enhances the Company’s current operational foundation and delivers on other stated strategic initiatives including:
Arthur L. Smith, Chief Executive Officer of Digerati, commented, "The acquisition of Nexogy aligns perfectly with our strategic plan and meets the geographic, financial, and technological criteria of our disciplined M&A strategy. During the due diligence phase, we were most impressed with Nexogy’s team and organic growth driven by its established and well recognized channel sales program, streamlined back-office operation, and culture of customer care. We are excited about the tremendous value these attributes will bring to our combined offerings in the lucrative corridors we serve in Texas and Florida, and I expect the deal to be immediately accretive to earnings and have a positive effect on net equity.”
Felipe Lahrssen, Chief Operating Officer of Nexogy, stated, “We are excited to be part of the cultural and operational foundation of Digerati during this period of growth and consolidation in our industry. Acquiring other profitable, regional cloud communication providers is a winning strategy we embrace with enthusiasm. It also provides a major growth opportunity through new sales channels with an extended service offering for our clients. As organizations continue their transition to a true hosted communication and collaboration solution, we will be best positioned to support them on that journey, with a personal touch."
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Q Advisors, a TMT global investment banking boutique, is acting as the financial advisor to Nexogy.
About Nexogy, Inc.
Nexogy is a leading provider of unified communications as a service (“UCaaS”) and managed services, offering a portfolio of cloud-based solutions to the small to medium-sized business market and serving over 1,500 business accounts and 14,000 users across various industries including Education, Health Care, Financial Services, and Real Estate. Based in Miami, Nexogy is a single-source provider that allows businesses and multi-location organizations to leverage flexible, cloud-based services without the need for high capital expenditures required for legacy systems. The product set include a diverse cloud solution consisting of voice PBX, broadband data, collaboration, and managed services. For more information about Nexogy, please visit www.nexogy.com.
About
Digerati Technologies, Inc.
Digerati Technologies, Inc. (OTCQB: DTGI) is a provider of cloud services specializing in UCaaS (Unified Communications as
a Service) solutions for the business market. Through its subsidiary T3 Communications (www.T3com.com), the Company is meeting
the global needs of businesses seeking simple, flexible, reliable, and cost-effective communication and network solutions, including
cloud PBX, cloud mobile, Internet broadband, SD-WAN, SIP trunking, and customized VoIP services, all delivered on its carrier-grade
network and Only in the Cloud™. For more information about Digerati Technologies, please visit www.digerati-inc.com.
Forward
Looking Statements
The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future
may prove not to have been accurate and are subject to significant risks and uncertainties, including statements related to the
future financial performance of the Company. Although the Company believes that the expectations reflected in the forward-looking
statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove
to be correct. Factors that could cause results to differ include, but are not limited to, successful execution of growth strategies,
product development and acceptance, the impact of competitive services and pricing, general economic conditions, and other risks
and uncertainties described in the Company's periodic filings with the Securities and Exchange Commission.
Investors
IR@digerati-inc.com
The Eversull Group
Jack Eversull jack@eversullgroup.com
(972) 571-1624
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