Engage awards executive chair $400,000 bonus, waives debt, amid Ukraine plans

ASX-listed ad-tech platform Engage:BDR has waived $400,000 from a loan extended to its executive chair as the company faces a tough financial position.

Engage:BDR executive chairman Ted Dhanik recently purchased a $2m Bugatti Veyron. Picture: Instagram

Engage:BDR, an ASX-listed advertising technology small-cap, waived a $400,000 debt owed to it by its executive chairman – despite its dire financial position.

The company’s annual report – which showed it had $4.1m in its bank account – disclosed Ted Dhanik was awarded a $400,000 bonus offset against part of his loans. This was to compensate “the executives for significantly reduced payroll in 2011 and 2013” and was on top of Mr Dhanik’s $399,586 salary.

The company’s accounts show Mr Dhanik owed Engage another $1.3m and that his brother Andy Dhanik also owed $109,974.

Engage extended loans to directors and key management personnel in 2019. They were intended to come due in August 2020 but were extended to August 2021.

The report notes an additional extension is “to be approved at the upcoming shareholders meeting”.

The company’s auditors William Buck queried Engage on the loans, noting they “considered this to be a key audit matter due to the significance of the balance and the nature of the transaction, being with related parties”.

The accounts also note Engage will hand out 100 million shares valued at $US125,000 to Ouazzani Parties as part of a legal settlement over “several separate legal issues including a breach of contract and independent of the original Tiveo acquisition agreement”.

The Australian last month reported the company had three- quarters of funding remaining, in large part derived from factored income, with $1.9m in cash drawn in borrowings.

Mr Dhanik recently purchased a $2m Bugatti Veyron which, he told the Richie Rides podcast he uses to travel around West Hollywood. Mr Richie noted it “takes a lot of hard work to get to the Bugatti level”. “These cars are symbolic to a level basically … It’s a level in life it’s like a video game,” Mr Dhanik told the podcast.

Mr Dhanik has also been sighted travelling with Ukrainian partner and America’s Got Talent quarterfinalist and contortionist dancer Marina Mazepa.

Mr Dhanik had set Engage’s sights on Ukraine, with plans to slash costs and hire staff in the country at “a fraction (10-20 per cent of the current cost” of its wages bill.

However, the company was then forced to scramble to relocate much of its Ukrainian workforce as the Russian invasion smashes the country.

Most of the team have been moved to Poland or western Ukraine. Engage will retain its adcel operations in Russia and Belarus, where it has 13 staff.

Mr Dhanik said Engage was “legally able to retain these staff members under these sanctions” noting the business would continue to pay them in cryptocurrency, dodging controls on transactions to or from Russia. However, employee and contractor costs are down, at just $2.9m from $4.5m in 2020.

Revenue is down 26 per cent from 2020 to $11.4m, with tech issues at a “large client” blocking all advertising in the gaming category. Despite the interruption to its Ukrainian pivot, Engage is soon set to transform into ColorTV, with the name change to be voted on at its annual meeting.

Shareholders will also vote on a 25:1 share consolidation in a bid to put the price of the business at one “investment parties would feel more comfortable with”.

The plan to shrink the shareholdings comes after years of dilutions and sell-offs that have seen shares crash to just .001c each.

This is in addition to plans to issue another 362 million shares at .001c to settle outstanding debts.

Mr Dhanik, the former vice president of “fun” at MySpace, declined to respond to The Australian’s questions. “You’re a superhero for trying to bring down a $3m market cap company. Effort well spent,” he said.

Originally published as Engage awards executive chair $400,000 bonus, waives debt, amid Ukraine plans