8-K: Collective Audience to Divest BeOp and DSL Digital to NYIAX in Strategic Stock-for-Equity Transaction

Collective Audience, Inc. has entered into an Equity Purchase Agreement to sell its wholly-owned subsidiary BeOp and majority-owned subsidiary DSL Digital to NYIAX, Inc. in exchange for NYIAX common stock, which will represent 49% of NYIAX on a fully-diluted basis post-closing.

Summary

• Collective Audience, Inc. (CAUD) has signed an Equity Purchase Agreement to sell 100% of The Odyssey S.A.S. (dba BeOp, a French company) and 100% of the equity interests in DSL Digital LLC (a Utah limited liability company) to NYIAX, Inc. (Parent) and its wholly-owned subsidiary NYIAX Marketing and Advertising Solutions, Inc. (Purchaser).
• CAUD currently owns 100% of BeOp and 51% of DSL, with Gregg Greenberg owning the remaining 49% of DSL.
• Upon closing, BeOp and DSL will become wholly-owned businesses of NYIAX.
• The total consideration for the acquisition will be shares of NYIAX common stock (Consideration Shares), which will collectively represent 49% of NYIAX's common stock on a fully-diluted basis as of three business days prior to closing.
• CAUD is set to receive 71.63% of the Consideration Shares, equating to 35.1% of NYIAX's common stock on a fully-diluted basis after giving effect to the issuance.
• Gregg Greenberg will receive 18.37% of the Consideration Shares, representing 9% of NYIAX's common stock on a fully-diluted basis after giving effect to the issuance.
• The remaining 10% of the Consideration Shares (4.9% of NYIAX's fully-diluted common stock) will be held in escrow by the Transfer Agent for indemnification claims against the Seller Parties.
• The Consideration Shares will be issued as restricted securities and are subject to lock-up agreements restricting transfer for a specified period.
• CAUD will have the right to appoint three (3) members to NYIAX's board of directors, which will be set at seven (7) members post-closing.
• The transaction is subject to customary closing conditions, including the approval of CAUD's stockholders.
• The Purchase Agreement includes non-competition, non-solicitation, and confidentiality covenants for the Seller Parties for a period of three years following closing, covering the United States, Europe, and other relevant territories.
• The Board of Directors of Collective Audience, Inc. has unanimously approved the proposed transactions.
• The closing of the transaction is targeted to occur by July 31, 2025, subject to certain extensions.

Sentiment

Score: 7

Explanation: The sentiment is generally positive as it announces a strategic acquisition unanimously approved by the seller's board, indicating a clear path forward for the divestiture of assets and a significant equity stake in the acquiring company. However, the stock-based consideration and standard closing risks temper the sentiment from being extremely positive.

Positives

• Collective Audience, Inc. (CAUD) is divesting its BeOp and DSL Digital assets, which could allow for strategic focus or streamlining of operations.
• CAUD will receive a significant equity stake in NYIAX (35.1% on a fully-diluted basis), providing potential for future value appreciation in the combined entity.
• CAUD gains substantial influence in NYIAX's corporate governance with the right to appoint three out of seven board members.
• The transaction is unanimously approved by CAUD's Board of Directors, indicating strong internal alignment and confidence in the deal.
• Gregg Greenberg, a key individual in DSL, will receive NYIAX stock and enter into consulting and earnout agreements, which may help ensure continuity and alignment post-acquisition.

Negatives

• The consideration for the acquisition is entirely in NYIAX common stock, exposing CAUD and Gregg Greenberg to the future performance and stock price volatility of NYIAX.
• A 10% portion of the Consideration Shares is subject to a holdback for indemnification claims, potentially reducing the immediate value realized by the Seller Parties.
• The Consideration Shares are restricted securities and subject to lock-up agreements, limiting the Seller Parties' ability to liquidate their investment for a specified period.
• Seller Parties are bound by non-competition, non-solicitation, and confidentiality covenants for three years post-closing, which may restrict their future business activities in the digital media and advertising sector.
• The exact number of Consideration Shares to be issued is not fixed until closing, introducing some uncertainty regarding the final equity stake.

Risks

• The transaction's completion is subject to customary closing conditions, including the approval of CAUD's stockholders, the accuracy of representations and warranties, performance of covenants, and receipt of required consents and approvals. Failure to satisfy these conditions could prevent the closing.
• There are uncertainties regarding the timing of the consummation of the transaction and the ability of each party to complete it.
• The Purchase Agreement may be terminated under certain circumstances, including uncured breaches, the occurrence of a material adverse effect, or if the closing does not occur by July 31, 2025 (subject to extensions).
• Costs related to the transaction could impact the financial health of the involved parties.
• Legal proceedings may be instituted against CAUD, NYIAX, or their respective directors or officers related to the Purchase Agreement or the transactions contemplated thereby.
• Actual results may differ materially from forward-looking statements due to various important factors, including the impact of extraordinary external events.
• The value of the Consideration Shares is subject to general economic or political conditions, and conditions generally affecting the industries in which NYIAX operates, which could disproportionately affect the Purchaser Business.

Future Outlook

The document primarily outlines the terms of the definitive acquisition agreement. Forward-looking statements are limited to the potential closing of the transaction and any future consideration that might be received. It highlights general risks that could cause actual results to differ, such as the impact of extraordinary external events, the satisfaction of closing conditions (including stockholder approval), uncertainties regarding timing, potential termination events, and transaction-related costs. No specific financial guidance or projections for the combined entity are provided.

Management Comments

• "The Board of Directors of the Company (the Board) has unanimously approved the proposed transactions set forth in the Purchase Agreement."
• Peter Bordes, in his capacity as Seller Representative, acknowledges and the Seller Parties waive his "inherent conflict of interest" as a continuing employee of CAUD and the Acquired Companies.

Industry Context

This acquisition represents a strategic consolidation within the digital media, advertising, and cloud-based technology services industry. NYIAX, as the acquirer, is expanding its operational footprint and service capabilities by integrating BeOp's French operations and DSL Digital's U.S. presence. This move is indicative of ongoing efforts within the sector to achieve scale, enhance technological offerings, and broaden market reach in a highly competitive and evolving digital landscape.

Management Changes

Corporate Governance

Legal Proceedings

• The document notes a risk of "any legal proceedings that may be instituted against the Company, NYIAX or any of their respective directors or officers related to the Purchase Agreement or the transactions contemplated thereby."
• It is stated that there is no Action pending or, to the knowledge of the Seller Parties, threatened, against any Seller Party or Acquired Company that challenges or seeks to enjoin, alter, prevent or delay the Agreement or any of the transactions contemplated thereby.

Related Party Transactions

• Except as set forth on Section 3.41 of the Seller Disclosure Schedules (not provided in the document), none of the Seller Parties nor the Acquired Companies are party to any contracts or other business relationships with any related party other than normal employment arrangements and employee benefit plans.
• No Seller Party is owed or owes any amount from or to any related parties of such Seller Party (excluding employee compensation and other ordinary incidents of employment).

Stakeholder Impact

• **Shareholders of Collective Audience (CAUD):** Will exchange their indirect interest in BeOp and DSL for shares in NYIAX, becoming shareholders of the combined entity. Their approval is a condition for the transaction.
• **Shareholders of NYIAX:** Will experience dilution due to the issuance of new shares to CAUD and Gregg Greenberg, but will gain the acquired businesses, potentially enhancing NYIAX's market position and capabilities.
• **Employees of BeOp and DSL Digital:** Will become employees of NYIAX, subject to existing employment agreements and potential new consulting/earnout agreements for key personnel like Gregg Greenberg, aiming for continuity.
• **Management of Collective Audience:** Peter Bordes, CEO of CAUD, will serve as the Seller Representative and CAUD will appoint three directors to the NYIAX board, maintaining influence in the combined entity.
• **Customers and Suppliers of BeOp and DSL Digital:** The transaction aims to ensure continuity of business operations, with covenants to maintain relationships and avoid disruption.

Next Steps

• CAUD intends to file a proxy statement and other materials with the SEC to obtain stockholder approval for the transaction.
• CAUD will hold a stockholder meeting to solicit the necessary stockholder approval as promptly as practicable.
• CAUD will deliver unaudited financial statements for Q1 2025 to Purchaser and Parent immediately upon becoming available.
• Within five (5) business days following the Closing Date, CAUD shall file an amendment to its certificate of incorporation to change its name to one not similar to 'Collective Audience' or 'CAUD'.
• Within forty-eight (48) hours after the Closing, the stockholders of Parent (excluding the Seller Parties for such vote) shall appoint four (4) directors to the NYIAX board, and CAUD shall appoint three (3) directors.
• Within fifteen (15) days after the Closing Date, the NYIAX board of directors shall designate an acting chairperson from among its then-serving members.

Key Dates

Recommendation

Keywords

Collective Audience, NYIAX, BeOp, DSL Digital, Acquisition, Equity Purchase Agreement, Stock Deal, Digital Media, Advertising Solutions, Corporate Governance, SEC Filing, Form 8-K, Stockholder Approval, Restricted Securities, Lock-up Agreement, Indemnification, Board of Directors