Wireless Ronin Has Tentative Deal To Merge With Unnamed Marketing Technology Firm
May 16, 2014 by Dave Haynes
Wireless Ronin has a non-binding letter of intent in place to merge with an unnamed private company – called a “marketing technology integrator” – and is also making moves to do another private, since the executive is now conceding the digital signage software and services is almost out of money.
In SEC filings this week. the company has stated:
On April 18, 2014, the Company engaged Merriman Capital, Inc. to help us explore strategic alternatives for the Company, specifically including combination transactions (e.g., mergers, consolidations, share exchanges, etc.). In this regard, on May 5, 2014, we entered into a non-binding letter of intent with a private company in our industry and have begun our due-diligence examination of that company. The private company has similarly begun its own due-diligence examination of our Company.
The letter of intent contains no binding provisions that are material to us, and presently contemplates a combination transaction in which shareholders of the private company would obtain a majority of the Company’s stock through the issuance of newly issued public common stock. In the event we enter into a binding commitment, or a more definitive status emerges from the due-diligence phase, we will provide updated disclosure.
The Company has also engaged a registered broker-dealer to assist the Company in connection with a planned private placement under Section 4(2) of the Securities Act of 1933, as amended. The securities proposed to be offered in this financing will not be registered under the Securities Act of 1933, as amended, and will be eligible for re-offer or re-sale in the United States absent subsequent registration or the availability of an exemption from such registration requirements.
President and CEO Scott Koller told analysts/investors on a conference call:
We are confident that this potential business combination will create an industry-leading benchmark that is highly differentiated with a comprehensive portfolio of products, services and talents. We believe this transaction would accelerate our ability to achieve top line revenue growth and sustain quarter-over-quarter profitability.
The letter of intent contains no binding provisions that are material to us and presently contemplates a combination transaction, in which shareholders of the private company would obtain a majority of Ronin stock due to the issuance of newly issued public common stock. We will provide an update in the event we enter into a binding commitment or a more definitive status and mergers from our due-diligence process.
Koller conceded it was likely investors will see their shares further diluted by the deal, but it was for the greater good of finally getting profitable. He said the company looking at the deal does much greater than $10 million in revenue and that a blended firm could cause Ronin revenue to soar.
News of the deal comes on the immediate heels this week of the company announcing its Q1 financials. Revenue was down 10% from a year ago (not good) but up 2% from last quarter. Non-GAAP operating loss in Q1 ’14 totaled $794,000, or a loss of $0.12 per share.
Ronin’s CFO confirmed the piggy bank is pretty much empty and the private placement process is seen as a a way to get enough cash to either bridge the firm through to break-even or to the “business combination transaction.” He also says “we’re fine with cash or will be fine with cash in the near-terms.”
The recent deal with Broadcast International is still going through the process and is not yet completed.
Wireless Ronin has an accumulated deficit of roughly $100 million.
Marketing Technology Integrator is a broad term that could be applied all kinds of ways, but the most obvious suspect would be privately-held Delphi Display Systems, which a year ago did a $2M+ licensing agreement with Ronin.
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