LOOP MEDIA, INC. : Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Unregistered Sale of Equity Securities, Financial Statements and Exhibits (Form 8 -K)

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Section 1.01 Entering into a Material Definitive Agreement


Loan Agreement


Effective from July 29, 2022, Loop Media, Inc. (the “Company”) has entered into a loan and guarantee agreement (the “loan agreement”) with Industrial Finance Group, Inc. (the “Original Lender”) for a revolving credit facility for the principal amount of up to four million dollars ($4.0 million), and by performing an accordion function, a total sum of up to ten million dollars ($10 million) (the “loan”), evidenced by a promissory note secured by a revolving loan (the “note”), also effective as of July 29, 2022. From August 2, 2022the Company has borrowed approximately two million dollars ($2.0 million) under the Loan, and the Original Lender has assigned the Loan Agreement and related Loan Documents to GemCap Solutions, LLC (the “Primary Lender”).

The loan matures twenty-four (24) months from the date of the loan contract and bears interest on the unpaid balance of the principal of the advances, payable monthly in arrears, starting on September 7, 2022at an annual rate equal to the greater of (I) the sum of (i) the “Prime Rate” as reported in the “Money Rates” column of The Wall Street Journal, adjusted as such Prime Rate changes, plus (ii) zero percent (0.00%) and (II) four percent (4.00%).

Under the Loan Agreement, the Company has granted to the Principal Lender a first ranking security interest in all present and future property and assets of the Company, including proceeds and proceeds thereof. In connection with the Loan, the Company’s existing secured lenders have entered into subordination agreements (the “Subordination Agreements”) with the Principal Lender (each lender, a “Subordinate Lender” and collectively, the “Subordinate Lenders”).

As part of the delivery of the Subordination Agreements by the Subordinated Lenders, the July 29, 2022, the Company has issued warrants (each a “Warrant” and collectively, the “Warrants”) to each subordinated lender on identical terms for an aggregate of 888,998 common shares of the Company (the “Shares warrants”). Each warrant has an exercise price of $1.75 per share, expires on July 29, 2025 (the “Expiration Date”) and may be exercised at any time prior to the Expiration Date. A warrant for 574,712 warrant shares was issued for Eagle Investment Group, LLCan entity managed by Bruce Cassidymember of the Board of Directors of the Company, as directed by its affiliated company, Excel Family Partners, LLLP (“Excel”), one of the subordinated lenders. Subordinated lenders receiving warrants for the remaining 314,285 warrant shares will also receive a cash payment of $22,000 six months from the date of the subordination agreements, representing one percent (1.00%) of the outstanding principal amount of the loan.

The descriptions of the Loan Agreement, the Bond, the Subordination Agreements and the Warrants are given in their entirety by reference to the full texts of the Loan Agreement, the Bond, the Form of Subordination and Form of Subscription, which are incorporated by reference herein. Copies of the Loan Agreement, Note, Form of Subordination Agreement and Form of Warrant are included herein as Schedules 10.1, 10.2, 10.3 and 4.1, respectively.

Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant

The information in Section 1.01 relating to the Loan Agreement is incorporated by reference into this Section 2.03.

Item 3.02 Unrecorded Sales of Equity securities

The information in Section 1.01 regarding Warrants is incorporated by reference into this Section 3.02. The issue of the Warrants has not been registered under the Securities Act of 1933, as amended (the “Securities Act”). The warrants were issued pursuant to a private placement exempt from the registration requirements of securities law, pursuant to the exemptions set forth in section 4(a)(2) of the securities law movables.

Item 9.01 Financial statements and supporting documents.




(d) Exhibits.



Exhibit
Number      Description
  4.1         Form of Warrant (previously filed on May 19, 2022, as Exhibit 4.1
            of the Company's Current Report on Form 8-K).

  10.1        Loan and Security Agreement, dated July 29, 2022, by and between
            the Company and the Initial Lender.

  10.2        Revolving Loan Secured Promissory Note, dated July 29, 2022,
            executed by the Company for the benefit of the Initial Lender.

  10.3        Form of Subordination Agreement, dated July 29, 2022.

104         Cover Page Interactive Data File (embedded within the Inline XBRL
            document).

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