LiveXLive Warns It May Run Out Of Cash Even As It Acquires EMD Concert Promoter React
LiveXLive Media, best known for live streaming concerts, has acquired EDM concert and festival promoter React Presents for a reported $2 million in debt.
But the purchase comes at a time when the future of LiveXLive is seriously in question.
The company generated $9.7 million in revenue in Q4 2019 up by 8.2% year-on-year. But a quarterly net loss of $8.8 million and a ‘working capital deficiency’ of $21.9m at the end of 2019. In other words, unless LiveXLive can get new investments of more than $22 million, it will run out of money before the end of the year/.
In the filing, the company highlighted issue:
“While management believes it has sufficient sources of liquidity to fund its operations over the next twelve months, these factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date that these financial statements are filed”
“Management is currently seeking additional funds, primarily through the issuance of equity and/or debt securities for cash to operate the Company’s business.”
$2M For React Presents
CelebrityAccess offered details of the React Presents acquisition:
React Presents promotes more than 250 live music events a year, including its flagship Spring Awakening Festival and over the last decades, has developed a reputation as one of the most recognized EDM promoters in the Midwest.
In 2019, React Presents generated approximately $15.0 million in revenue through ticket sales, sponsorship, merchandising, and other ancillary revenue.
According to LiveXLive, it acquired React Presents for $2 million, funded with a convertible note with a two-year term, 8% interest rate, and conversion price of $4.50 per share.
“This is a transformative moment in the evolution of LiveXLive. We have quickly become a leading livestreaming and original music content platform with a large global audience and more than 820,000 paid subscribers. By acquiring this key asset in the EDM space, we added $15 million in revenues, expanded our audience reach with the addition of more than 250 programs and events, and continued to fill in our flywheel with event ownership and management. We have now increased the number of years that we own events and the hours of live content we’re distributing. Most importantly, we are partnering directly with artists to turn superfans into subscribers, effectively providing brand new revenue streams for managers, bands, and labels by converting ticket sales into subscriptions,” said Robert Ellin, CEO and Chairman of LiveXLive.
“LiveXLive is creating a new music stack combining audio, video, social and live events into one end-to-end experience. This acquisition will create powerful cross-marketing opportunities based on direct access to a new pool of active music fans. Leveraging the built-in synergy of event and festival ownership, we anticipate significant growth in audience, subscribers, and original content offerings through expanded audience reach and tighter artist relationships,” added Ellin.