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Darien Dash knows how to keep up with the burgeoning world of the Internet. The 28-year-old entrepreneur recently catapulted his company, DME (Digital Mafia Entertainment) Interactive Holdings Inc. (OTC:BB: DGMF), into the stock exchange arena, making it one of the first publicly traded African American Internet companies.
On June 22, DME announced its transformation from a five-year-old privately held Internet services concern into a publicly traded company on the Nasdaq. Englewood Cliffs, New Jersey-based DME provides network design, e-commerce, maintenance and advertising for clients such as HBO Home Video, the New York Knicks, Lugz and MSBET.
Dash started DME in 1994 when he realized that large cable companies were not committed to bringing digital services to urban communities. While working as vice president of sales for Digital Music Xpress, which provided CD-quality music via a regular cable box, Dash was repeatedly turned down when he tried to bring the service to the inner cities. “Cable companies didn’t want to underwrite the costs of the hardware because they didn’t believe in the profit potential,” says Dash.
Shortly thereafter he left the company and formed DME with a mission to expand the hardware and software infrastructure in minority communities. While a laudable goal, getting inner cities wired was not the quickest way to revenues. To pay the bills, DME began consulting with companies on how best to leverage mutimedia and Internet technology. “Our Web development business allowed us to have the cash flow to pay employees and develop relationships with major corporations,” says Dash.
DME grossed $250,000 in 1998 and topped $1 million in revenues last year. As a result of his company’s Internet savvy and Dash’s commitmment to the inner cities, he was tapped to be on the board of directors of Heaven, a New York City-based nonprofit organiztion that goes into schools and trains students in Internet use and development. Being on the Heaven board helped Dash make important business connections, since it includes technology heavyweights such as Ted Leonsis, president of America Online’s Interactive Properties Group. However, Dash needed something more than connections and a few accounts to grow the business and continue the mission. He needed cash-or so he thought.
For Dash, going public was more a necessity than an option. “I spoke to angel investors, venture capital firms and institutional investors. Either they wanted too much equity or too much control of the business,” says Dash, who funded the company with the proceeds from Roc-A-Blok Records a joint venture deal with Columbia Records. After hearing of Dash’s dilemma, Chris Kinsley, president of the Manhattan-based investment firm Mason Hill & Co. Inc., suggested Dash raise capital by taking the company public through a reverse merger.
A reverse merger differs from the traditional initial public offering (IPO) in that the company that is interested in going public acquires the assets of an existing public company. “Reverse mergers are much quicker and more economical than the IPO route, which can cost over $100,000 in accounting costs alone,” says Kinsley, whose firm was the lead underwriter
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