10-Q: Loop Media Secures $2 Million Revolving Credit Facility Amidst Ongoing Financial Challenges

Loop Media obtains a $2 million revolving credit facility from Capital Foundry Funding, LLC, while navigating recurring losses and exploring strategic alternatives.

Summary

• Loop Media, a multichannel digital video platform, secured a $2 million revolving credit facility from Capital Foundry Funding, LLC on February 3, 2025.
• The company has been incurring recurring losses, resulting in an accumulated deficit, and anticipates further losses in the foreseeable future.
• Loop Media's ability to continue as a going concern depends on generating sufficient revenue and raising additional funds through debt and equity financing.
• The company is exploring potential strategic alternatives to maximize shareholder value and evaluate financing opportunities.
• Revenue for the three months ended December 31, 2024, decreased by 63% to $3.73 million compared to $10.17 million for the same period in 2023, attributed to a slowdown in digital advertising spend and a challenging ad market environment.
• Operating expenses for the three months ended December 31, 2024, decreased by 38% to $4.91 million compared to $7.88 million for the same period in 2023, primarily due to a reduction in sales, general, and administrative expenses.
• The net loss for the three months ended December 31, 2024, was $(4.54) million, compared to $(5.29) million for the same period in 2023.
• As of December 31, 2024, Loop Media had approximately 83,000 active Loop Players and Partner Screens across the Loop Platform, including 23,225 quarterly active Loop Players (QAUs) on the O&O Platform and approximately 60,000 Partner Screens on Partner Platforms.

Sentiment

Score: 3

Explanation: The document presents a concerning financial situation with declining revenue, ongoing losses, and doubts about the company's ability to continue as a going concern. While the new credit facility provides some short-term relief, the overall outlook is negative.

Positives

• Loop Media secured a $2 million revolving credit facility.
• Operating expenses decreased by 38% for the three months ended December 31, 2024.
• The company is exploring potential strategic alternatives to maximize shareholder value.

Negatives

• Loop Media has been incurring recurring losses, resulting in an accumulated deficit.
• Revenue for the three months ended December 31, 2024, decreased by 63%.
• The company anticipates further losses in the foreseeable future.
• There is substantial doubt about the company's ability to continue as a going concern.

Risks

• The company's ability to generate sufficient revenue and raise additional funds is uncertain.
• The company faces a challenging macroeconomic environment and a difficult ad market.
• The company's reliance on debt and equity financing raises concerns about financial stability.
• The company's ability to regain and maintain compliance with listing requirements is uncertain.

Future Outlook

The company anticipates further losses in the foreseeable future and is exploring potential strategic alternatives to maximize shareholder value and evaluate financing opportunities.

Industry Context

The document indicates a challenging environment for digital advertising spend, which is impacting Loop Media's revenue. This suggests broader industry headwinds affecting companies reliant on advertising revenue.

Corporate Governance

Legal Proceedings

• On October 29, 2024, Loop Media and Retail Media TV, Inc., received a notice and reservation of rights letter from GemCap Solutions, LLC under its revolving line of credit facility.
• On November 5, 2024, Loop Media received an acceleration notice from GemCap demanding payment of the full amount outstanding on the Revolving Loan Facility.
• On November 13, 2024, GemCap rescinded its offer to negotiate a forbearance of the Demand and delivered to Loop Media the Lender a Notice of Secured Party Public Sale.
• Also on November 13, 2024, Loop Media filed a lawsuit in the United States District Court for the Western District of Texas San Antonio Division seeking relief against GemCap.
• On November 15, 2024, the US District Court issued an order regarding Loop Media's application for preliminary injunctive relief, granting in part Loop Media's application.
• Following receipt of notice that the US District Court lacked subject matter jurisdiction to hear Loop Media's Federal Court Lawsuit, Loop Media filed a Notice of Voluntary Dismissal in the US District Court and on November 21, 2024, Loop Media refiled its lawsuit and application for temporary and permanent injunctive relief in the District Court for Bexar County, Texas.
• On November 25, 2024, GemCap filed a counterclaim against Loop Media, claiming breach of contract and common law fraud.
• On the same day, Loop Media was granted a hearing in the Bexar County District Court in San Antonio, at which Loop Media's petition for temporary relief was denied.
• Following the Texas State Court Order, Loop Media entered into settlement negotiations with GemCap, and on November 27, 2024, Loop Media reached a payoff arrangement pursuant to which Loop Media agreed to pay to GemCap a total payoff amount of $1,644,613.41.
• On November 27, 2024, Loop Media entered into a Settlement Agreement and Mutual Release with GemCap, effective as of November 27, 2024, pursuant to which, (a) in return for the Payoff Amount, GemCap was required to release all security interests in Loop Media's bank accounts, property and intellectual property and, by notice to all parties who received notice of the public sale of Loop Media's property and by issuance of a press release, cancel the public sale of Loop Media's property, and (b) each of Loop Media and GemCap agree to a full release of all claims and counterclaims related to the GemCap Lawsuit, including the State Court Lawsuit and the GemCap Counterclaim, respectively, and as of the date of this Report, such claims have been dismissed with prejudice.

Related Party Transactions

• For the three months ended December 31, 2024, and 2023, Loop Media paid 500 Limited $ 0 and $ 87,300 , respectively, for programming services provided to Loop Media.
• For the three months ended December 31, 2024, and 2023, Loop Media was a party to multiple debt and equity transactions with Excel, an entity managed by Bruce Cassidy, the Executive Chairman of Loop Media's Board of Directors and Loop Media's majority stockholder.

Stakeholder Impact

• Shareholders: The company's financial challenges and potential strategic alternatives could impact shareholder value.
• Employees: Cost-cutting measures and organizational restructuring may affect employees.
• Customers: The company's ability to provide services and content may be impacted by its financial situation.
• Creditors: The company's ability to repay its debts is uncertain.

Next Steps

• The company will continue to explore potential strategic alternatives to maximize shareholder value.
• The company will evaluate potential financing opportunities.
• The company will focus on increasing the scope and size of the Partner Platforms and exploring alternative revenue generating sources.

Key Dates

Keywords

revolving credit facility, Loop Media, Capital Foundry Funding, financial results, going concern, digital video platform, advertising revenue, operating expenses, net loss, active units, financing, debt, equity