8-K: LiveOne Enters $25 Million At-the-Market Sales Agreement with Roth Capital Partners

LiveOne has entered into a sales agreement with Roth Capital Partners to potentially sell up to $25 million of its common stock through an at-the-market offering.

Summary

• LiveOne, Inc. has established an at-the-market (ATM) offering program by entering into a sales agreement with Roth Capital Partners, LLC.
• Under this agreement, LiveOne may sell up to $25 million of its common stock from time to time.
• The company intends to use the net proceeds from this offering for working capital, general corporate purposes, potential acquisitions, and strengthening its balance sheet.
• LiveOne's management does not intend to sell shares under this agreement at a price lower than $5.00 per share.
• Roth Capital Partners will act as the sales agent and will receive a commission of 3% of the gross sales price for any shares sold.
• LiveOne will also reimburse Roth Capital for fees and expenses up to $50,000 related to the agreement, plus ongoing legal counsel disbursements.
• The shares will be sold under LiveOne's existing shelf registration statement on Form S-3.
• The sales will be made through transactions deemed to be at-the-market offerings under Rule 415 of the Securities Act.
• The agreement includes customary indemnification and contribution rights for Roth Capital Partners.
• The agreement can be terminated by either party with notice, or by Roth Capital under certain circumstances, such as a material adverse change in LiveOne's business or financial condition.

Sentiment

Score: 6

Explanation: The document is neutral to slightly positive. While it outlines a capital raise, which can be dilutive, it also provides the company with financial flexibility. The terms are standard for this type of agreement.

Positives

• The agreement provides LiveOne with a flexible way to raise capital.
• The company has access to up to $25 million in funding for various corporate purposes.
• The at-the-market structure allows for sales to be made over time, potentially minimizing market impact.
• The company has the ability to strengthen its balance sheet.

Negatives

• The company will incur a 3% commission on all shares sold.
• There is a potential for dilution of existing shareholders' equity.
• The company is subject to market conditions and may not be able to sell all shares at the desired price.
• The company will incur up to $50,000 in fees and expenses related to the agreement.

Risks

• The company may not be able to sell all $25 million of shares.
• The share price could be negatively impacted by the issuance of new shares.
• Market conditions could make it difficult to sell shares at the desired price.
• The company's financial condition could deteriorate, making it difficult to sell shares.
• The agreement can be terminated by Roth Capital under certain circumstances, potentially limiting access to capital.

Future Outlook

The company intends to use the net proceeds from the sale of shares for working capital and other general corporate purposes, which may include future acquisitions of businesses and content and strengthening its balance sheet.

Management Comments

• The Companys management does not currently intend to sell shares under the Sales Agreement at a price lower than $5.00 per share.

Industry Context

At-the-market offerings are a common method for publicly traded companies to raise capital, providing flexibility and potentially minimizing market impact compared to traditional underwritten offerings. This agreement allows LiveOne to access capital as needed, which is particularly useful for companies in growth phases or those looking to make strategic acquisitions.

Comparison to Industry Standards

• The 3% commission rate is within the typical range for at-the-market offerings.
• The $50,000 reimbursement cap for fees and expenses is also standard for these types of agreements.
• The use of a shelf registration statement is a common practice for companies that frequently access the capital markets.
• The flexibility to sell shares at the company's discretion is a key feature of ATM programs, which is consistent with industry standards.
• Other companies such as AMC Entertainment and Gogo Inc. have used similar ATM programs to raise capital.

Stakeholder Impact

• Shareholders may experience dilution of their ownership.
• The company may have more capital to invest in growth initiatives.
• Employees may benefit from a stronger financial position of the company.
• Customers may benefit from improved products and services due to increased investment.
• Creditors may view the company as a lower credit risk due to the increased capital.

Next Steps

• LiveOne may begin selling shares of common stock through Roth Capital Partners.
• The company will file a prospectus supplement with the SEC.
• Roth Capital Partners will act as the sales agent for the offering.
• The company will monitor market conditions and determine the timing and amount of shares to sell.

Key Dates

Keywords

at-the-market offering, sales agreement, common stock, Roth Capital Partners, capital raise, working capital, dilution, shelf registration, LIVX