UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 Entry into a Material Definitive Agreement.
On September 8, 2023 and effective as of August 22, 2023 (the “Closing Date”), LiveOne, Inc. (the “Company”) entered into a new Business Loan Agreement (the “Business Loan Agreement”) with East West Bank (the “Senior Lender”), to convert the Company’s current revolving credit facility with the Senior Lender into an assets backed loan credit facility with the Lender, which shall continue to be collateralized by a first lien on all of the assets of the Company and its subsidiaries (the “ABL Credit Facility”). The Business Loan Agreement provides the Company with borrowing capacity of up to the Borrowing Base (as defined in the Business Loan Agreement). Pursuant to the Business Loan Agreement, the requirement that the Company and its related entities shall at all times maintain a certain minimum deposit with the Senior Lender was reduced from $8,000,000 to $5,000,000.
Borrowings under the ABL Credit Facility are subject to certain covenants as set forth in the Business Loan Agreement and bear interest at a rate equal to the prime rate plus 2.50%, provided, that it shall not be less than 7.00%. The Company may prepay at any time without penalty all or a portion of the amount owed to the Senior Lender. The Business Loan Agreement includes various financial and other covenants with which the Company has to comply in order to maintain borrowing availability, including maintaining required minimum liquidity amount and Borrowing Base capacity.
Other covenants include, but are not limited to, covenants limiting or restricting the Company’s ability to incur indebtedness, incur liens, enter into mergers or consolidations involving debt, dispose of assets, make loans and investments and pay dividends. The Business Loan Agreement also contains customary events of default including, but not limited to, payment defaults, covenant defaults, cross-defaults to other indebtedness, inaccuracy of representations and warranties, bankruptcy and insolvency events, defects in the Senior Lender’s security interest, change in control events and material adverse change. The occurrence of an event of default could result in the acceleration of all obligations of the Company to the Senior Lender with respect to indebtedness, whether under the Business Loan Agreement or otherwise.
In connection with the Business Loan Agreement, the Company’s current Promissory Note, dated as of June 2, 2021, issued to the Senior Lender in the principal amount of $7,000,000 (the “Promissory Note”) continues in effect except as modified by the Business Loan Agreement and the Change in Terms Agreement, dated as of August 22, 2023 (the “Change in Terms Agreement”), entered into by the Company and the Senior Lender in connection with the Business Loan Agreement.
The foregoing description of the Business Loan Agreement and the Change in Terms Agreement does not purport to be complete and is qualified in its entirety by reference to the full texts of the Business Loan Agreement, the Change in Terms Agreement and the Promissory Note which are filed as Exhibits 10.1, 10.2 and 4.1, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
The information set forth in Item 1.01 above is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number |
Description | |
| 4.1 | Promissory Note, dated as of June 2, 2021, issued by the Company to East West Bank (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2021). | |
| 10.1* | Business Loan Agreement, dated as of August 22, 2023, between the Company and East West Bank. | |
| 10.2* | Change in Terms Agreement, dated as of August 22, 2023, between the Company and East West Bank. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LIVEONE, INC. | ||
| Date: September 14, 2023 | By: | /s/ Aaron Sullivan |
| Name: | Aaron Sullivan | |
| Title: | Interim Chief Financial Officer | |
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