LPTV.Loop Media, INC
DEF 14A: Loop Media Seeks Stockholder Approval for Increased Share Authorization at Upcoming Annual Meeting
Sentiment:
Proxy Statement
Loop Media is asking stockholders to approve an amendment to its Restated Articles of Incorporation to increase the number of authorized common stock shares to 225,000,000 at the Annual Meeting of Stockholders to be held on September 19, 2024.
Capital raiseThe company is seeking approval to increase the number of authorized shares of common stock, which could be used for future capital raising activities.On June 10, 2024, Loop Media issued and sold to Excel in a private placement a pre-funded warrant to purchase up to 4,347,826 shares of our common stock at a price of $0.2308 per underlying share, which is immediately exercisable at an exercise price of $0.0001 per share.
Summary
- Loop Media, Inc. is holding its Annual Meeting of Stockholders on September 19, 2024, virtually.
- Stockholders will vote on several proposals, including the election of five directors, ratification of Marcum LLP as the independent accounting firm, and an amendment to increase the authorized shares of common stock to 225,000,000.
- The Board recommends voting 'FOR' all director nominees, ratifying the accounting firm, approving the share increase, and approving the adjournment of the meeting if necessary to secure enough votes for the share increase.
- The Board also recommends voting 'FOR' the executive compensation proposal and for holding an advisory vote on executive compensation every 'ONE YEAR'.
- The record date for determining stockholders eligible to vote is August 20, 2024.
- The company is soliciting proxies on behalf of the Board of Directors and will bear the associated expenses.
Sentiment
Score: 6
Explanation: The document is neutral in tone, providing factual information about the upcoming annual meeting and proposals. The recent executive turnover and related party transactions raise some concerns, but the company is taking steps to reduce costs and maintain corporate governance.
Positives
- The Board is actively engaged in corporate governance, with established committees for audit, compensation, and nominating/corporate governance.
- The company has a Code of Business Conduct and Ethics in place.
- The company is taking steps to reduce SG&A costs, including salary reductions for senior management.
Negatives
- The company has experienced turnover in key executive positions, with the CEO, Chief Product and Technical Officer, and Chief Revenue Officer all stepping down recently, although remaining as advisors.
- The company had to restate a Form 4 for Jon M. Niermann and Pioneer Productions, LLC, on October 6, 2023, covering a transaction that required a Form 4 filing due on October 21, 2022.
- Annas Linens, Inc., where Neil Watanabe served as EVP and Chief Financial Officer, filed a petition under Chapter 11 of the U.S. Bankruptcy Code on June 13, 2015.
Risks
- Future issuances of common stock could dilute earnings per share and voting rights of current stockholders.
- The additional authorized shares could be used to deter a potential takeover, which may not be beneficial to all stockholders.
- The company's ability to borrow under the GemCap Revolving Line of Credit is dependent upon its assets in certain eligible accounts and measures of revenue, subject to reduction for reserves that the Senior Lender may require in its discretion.
Future Outlook
The Board believes it would be prudent and advisable to have the additional shares available to provide additional flexibility for the potential use of shares of common stock for business and financial purposes in the future.
Management Comments
- Our Board believes that the election of the director nominees identified herein, the ratification of the appointment of Marcum LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2024, , the amendment to our Articles of Incorporation to increase the number of shares of common stock authorized for issuance thereunder, and the adjournment of the Annual Meeting in the event of insufficient proxies at the Annual Meeting to approve Proposal 3, are each advisable and in the best interests of the Company and its stockholders and recommends that you vote FOR each of these proposals.
- Our Board believes that the compensation of our named executive officers for the fiscal year ended September 30, 2023, as described in this Proxy Statement, was appropriate and recommends that you vote FOR the resolution to approve such compensation.
- Our Board believes that an annual vote on conducting an advisory vote on named executive officer compensation is advisable and in the best interests of the Company and its stockholders and recommends that you vote for ONE YEAR for this proposal.
Industry Context
The request for increased share authorization is a common practice for publicly traded companies to provide flexibility for future capital raising, acquisitions, and equity-based compensation.
Comparison to Industry Standards
- The director compensation policy, including cash fees and equity grants, appears to be within the range of compensation provided by similarly sized companies.
- The engagement of Marcum LLP as the independent auditor is a standard practice for publicly traded companies to ensure financial statement integrity.
- The related party transactions, particularly the loans and warrant repricing with Excel Family Partners, are not uncommon but require careful scrutiny to ensure they are on terms no less favorable than those available to unaffiliated third parties.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Executive Officer | Jon Niermann | Justis Kao (Interim) | March 17, 2024 | Jon Niermann resigned as Chief Executive Officer but remains a member of our Board and management team. |
| Chief Product and Technical Officer | Liam McCallum | N/A | May 31, 2024 | Liam McCallum stepped down as our Chief Product and Technical Officer but remains an advisor to the Company. |
| Chief Revenue Officer | Bob Gruters | N/A | March 17, 2024 | Bob Gruters resigned as Chief Revenue Officer to pursue another business opportunity outside of the Company but remains an advisor to the Company. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Amendment to Articles of Incorporation | Proposal to increase the number of authorized shares of common stock to 225,000,000. | Upon filing with the Secretary of State of Nevada | If approved, this will provide the company with greater flexibility for future capital raising, acquisitions, and equity-based compensation. However, it could also dilute existing stockholders' ownership and be used to deter a potential takeover. |
| Board Cash Compensation Deferral | Effective as of May 3, 2024, our Board agreed to defer all cash compensation due to them for the remainder of fiscal year 2024 until October 1, 2024. | May 3, 2024 | This will help the company's cash flow in the short term. |
Related Party Transactions
- The company has engaged in several transactions with Excel Family Partners, LLLP, an entity managed by Bruce Cassidy, Executive Chairman of the Board, including revolving lines of credit, non-revolving loan agreements, and warrant repricing.
- The company paid 500 Limited, an entity controlled by Liam McCallum, former Chief Product and Technical Officer, for programming services.
Stakeholder Impact
- Approval of the share authorization increase could dilute existing stockholders' ownership but also provide the company with greater financial flexibility.
- Executive compensation decisions impact shareholders, employees, and potential investors.
- Related party transactions require careful scrutiny to ensure fairness to all stakeholders.
Next Steps
- Stockholders should review the proxy statement and vote on the proposals.
- The company will hold its Annual Meeting of Stockholders on September 19, 2024.
- The company will file the Certificate of Amendment with the Secretary of State of the State of Nevada if Proposal 3 is approved.
Key Dates
| Date | Description |
|---|---|
| June 7, 2016 | Loop Media, Inc. Amended and Restated 2016 Equity Incentive Plan (the 2016 Plan), which was adopted by the Board and approved by stockholders. |
| October 4, 2016 | Loop Media, Inc. Amended and Restated 2016 Equity Incentive Plan (the 2016 Plan), which was amended and restated by the Board and approved by stockholders. |
| March 1, 2021 | Effective date of the employment agreement with Jon Niermann, former Chief Executive Officer. |
| April 1, 2021 | Effective date of the employment agreement with Liam McCallum, former Chief Product and Technical Officer. |
| May 3, 2021 | Effective date of the employment letter agreement with Bob Gruters, former Chief Revenue Officer. |
| April 27, 2021 | 2020 Plan, which was ratified by the holders of a majority of our outstanding voting stock pursuant to the Majority Written Consent of Stockholders in Lieu of Annual Meeting. |
| September 2021 | Neil Watanabe appointed as Chief Financial Officer. |
| December 2021 | We established an Audit Committee, the purpose of which is to assist the Board in fulfilling its responsibilities related to our financial accounting, reporting and controls. |
| February 23, 2022 | Loop Media entered into a Non-Revolving Line of Credit Loan Agreement with Excel, an entity managed by Bruce Cassidy, Executive Chairman of our Board, for an aggregate principal amount of $1,500,000. |
| April 13, 2022 | Loop Media amended the Non-Revolving Line of Credit Loan Agreement with Excel to increase the aggregate principal amount to $2,000,000. |
| April 25, 2022 | Loop Media entered into a Non-Revolving Line of Credit Loan Agreement with Excel for an aggregate principal amount of $4,022,986. |
| May 13, 2022 | Secured Non-Revolving Line of Credit Loan Agreement (the RAT Non-Revolving Line of Credit Agreement) entered into with several institutions and individuals (each, a RAT Lender) for an aggregate principal amount of $2,200,000. |
| July 29, 2022 | Loop Media entered into a Loan and Security Agreement with Industrial Funding Group, Inc. (the Initial Lender) for a revolving loan credit facility for the initial principal sum of up to $4,000,000. |
| September 18, 2022 | 2020 Plan, which was further amended and restated by the Board. |
| September 22, 2022 | Retention equity grants under the 2020 Plan consisting of (i) 350,000 restricted stock units (RSUs), based on a value of $1,750,000 and a per share price of $5.00, vesting 25% upon one year from the grant date and the remainder in equal quarterly installments over three years, and (ii) options to purchase 707,070 shares of common stock, at an exercise price of $4.95 per share, vesting 100% on grant date. |
| September 26, 2022 | Closing of the underwritten public offering. |
| October 27, 2022 | Loop Media entered into Amendment Number 1 to the Loan and Security Agreement and to the Revolving Loan Agreement Schedule, and the Amended and Restated Secured Promissory Note (Revolving Loans) with the Senior Lender to increase the principal sum available under the GemCap Revolving Line of Credit Agreement from $4,000,000 to $6,000,000. |
| November 2022 | Bruce Cassidy was appointed Chairman of the Board. |
| December 14, 2022 | Loop Media entered into a Non-Revolving Line of Credit Agreement Amendment and a Non-Revolving line of Credit Promissory Note Amendment with Excel to extend the maturity date from eighteen (18) months to twenty-four (24) months from the date of the Excel Non-Revolving Loan Agreement. |
| January 25, 2023 | Cash payment was made to those Subordinated Lenders on January 25, 2023. |
| May 10, 2023 | Loop Media entered into a Secured Non-Revolving Line of Credit Loan Agreement with several individuals and institutional lenders for aggregate loans of up to $4.0 million. |
| May 10, 2023 | Loop Media entered into a Non-Revolving Line of Credit Agreement Amendment No. 2 and a Non-Revolving Line of Credit Promissory Note Amendment No. 2 with Excel to extend the maturity date of the Excel Non-Revolving Loan from twenty-four (24) months to twenty-five (25) months from the date of the Excel Non-Revolving Loan Agreement. |
| May 31, 2023 | Loop Media entered into a Secured Non-Revolving Line of Credit Loan Agreement with Excel for an aggregate principal amount of up to $2,200,000. |
| September 1, 2023 | Effective as of September 1, 2023, the salaries of members of our senior management, including each Named Executive Officer, were reduced as part of our efforts to reduce our overall SG&A costs. |
| September 12, 2023 | Loop Media entered into a Note Conversion Agreement with Excel, pursuant to which Excel agreed to convert the Excel Non-Revolving Line of Credit Amount owed under the Excel Non-Revolving Line of Credit Agreement into 6,005,487 shares of our common stock, par value $0.0001 per share, at a conversion price per share of $0.74. |
| December 14, 2023 | Loop Media entered into a Revolving Line of Credit Loan Agreement with Excel Family Partners, LLLP, an entity managed by Bruce Cassidy, Executive Chairman of our Board for up to a principal sum of $2,500,000. |
| December 14, 2023 | Loop Media agreed to offer to amend certain existing warrants exercisable for an aggregate of up to 4,055,240 shares of our common stock to reduce the respective exercise prices thereof to $0.80 per share. |
| March 17, 2024 | Jon Niermann resigned as Chief Executive Officer and remains a member of our Board and management team. |
| March 17, 2024 | Justis Kao was appointed to serve as our Interim Chief Executive Officer. |
| March 28, 2024 | Loop Media entered into a Secured Non-Revolving Line of Credit Loan Agreement with Excel, an entity managed by Bruce Cassidy, Executive Chairman of our Board, for an aggregate principal amount of up to $1,000,000. |
| May 3, 2024 | Our Board agreed to defer all cash compensation due to them for the remainder of fiscal year 2024 until October 1, 2024. |
| May 31, 2024 | Liam McCallum stepped down as our Chief Product and Technical Officer but remains an advisor to the Company. |
| May 31, 2024 | Loop Media entered into a Waiver and Consent Letter Agreement with Excel, pursuant to which Excel irrevocably agreed to waive its rights under the Excel $1.0M Secured Line of Credit Agreement to receive five hundred thousand dollars ($500,000) of the net proceeds of any non-affiliate capital raise and consented to us not paying any of such proceeds to it, contingent upon the closing of such a non-affiliate capital raise. |
| June 10, 2024 | Loop Media issued and sold to Excel in a private placement a pre-funded warrant to purchase up to 4,347,826 shares of our common stock at a price of $0.2308 per underlying share, which is immediately exercisable at an exercise price of $0.0001 per share. |
| July 29, 2024 | Loop Media entered into Amendment Number 2 to the Loan and Security Agreement, the Loan Agreement Schedule, the Revolving Loan Note and to the other Loan Documents to amend certain material terms, including to (i) extend the maturity date of the GemCap Revolving Line of Credit Agreement by one (1) year, from July 29, 2024, to July 29, 2025, and (ii) to make Retail Media TV, Inc., our wholly-owned subsidiary, a co-borrower thereunder. |
| August 20, 2024 | Record date for determining stockholders eligible to vote at the Annual Meeting. |
| August 22, 2024 | This Proxy Statement is first being made available to stockholders on or about August 22, 2024. |
| September 18, 2024 | Internet and telephone voting facilities are available now and will be available 24 hours a day until 11:59 p.m., Eastern Time, on September 18, 2024. |
| September 19, 2024 | Annual Meeting of Stockholders to be held virtually at 12:00 p.m., Eastern Time. |
| April 24, 2025 | Deadline for stockholders to submit proposals for inclusion in the 2025 proxy statement. |
| May 22, 2025 | Earliest date for stockholders to provide notice of a proposal to be brought before the 2025 Annual Meeting. |
| June 21, 2025 | Latest date for stockholders to provide notice of a proposal to be brought before the 2025 Annual Meeting. |
| July 21, 2025 | Deadline for stockholders to provide notice and information required by Rule 14a-19 if intending to nominate a director and solicit proxies at the 2025 Annual Meeting. |
Keywords
Annual Meeting, Proxy Statement, Board of Directors, Executive Compensation, Director Election, Share Authorization, Corporate Governance, Loop Media
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