Loop Media Converts Debt After Posting Loss

This article has been revised from the original version.

Amid a challenging year in the advertising and media markets, Glendale-based Loop Media Inc. recently converted $4.4 million of short-term debt and accrued interest and extended $2.3 million of a credit line due last month into a longer-term debt facility.

In total, the transaction removes $6.7 million of indebtedness from Loop Media’s balance sheet, which the company says makes up a majority of its short-term debt.

The decision came after Loop posted a loss in its third-quarter earnings on Aug. 8. Since its move from the over-the-counter markets onto the New York Stock Exchange in September of last year, Loop Media shares have lost 92% of their value.

With its fiscal year beginning this month, Loop Media’s founder and chief executive, Jon Niermann, framed this transaction as an opportunity to show strength.

“Time horizon wasn’t great for us, advertising revenue wasn’t great for us,” Niermann said. “So fortunately, in terms of financing, we had some debt on the books that came from an inside investor.”

The chairman of Loop Media, Bruce Cassidy, agreed to convert debt owed to himself and business affiliates into equity at the company’s annual budget meeting in early September.

On top of the debt restructuring, Loop Media says it has implemented steep cost-control measures throughout the company. Senior management has voluntarily reduced their salaries, and management bonuses for this fiscal year will not be paid. 

Loop Media’s revenue has fallen nearly by half this year compared to last year’s earnings. Its latest third-quarter results, which included financial data for the three-month period ending in June, reported $5.7 million in revenue, down significantly from the $12.2 million reported in last year’s fourth quarter.

Loop Media entered the already-packed streaming market with a particular niche: content licensed for business venues. The company provides restaurants, stores and even airport venues with its physical television plugin, much like a Roku Inc. stick, which contains hundreds of content channels.

Loop Media has penned deals with major music labels and even TikTok Inc. to curate music video and content channels. The one catch: businesses don’t have to pay for the hardware or the on-demand access.

Advertising is Loop’s sole source of income at the moment, accounting for the steep cut in its financial health. Amid market headwinds, ad budgets were slashed last year, but September ad revenue growth forecasts from Magna, the ad-buying arm of the media giant Interpublic Group of Companies Inc., reported signs of life following four straight quarters of slower growth rates. The firm expects digital formats to recover as overall ad revenue in the U.S. climbs 5%. 

According to Niermann, tapping into digital advertising’s momentum requires Loop Media to invest in its own promotion.

“We really suffer from the fact that we’re undiscovered and we’re undercovered in the financial markets,” Niermann said.