A financial catch-22 has cost Libsyn $147,000 and that number could grow by the month. The company has alerted investors that because it has been unable to file several financial reports with the Securities and Exchange Commission, including quarterly revenue reports so far this year, it missed an Aug. 16 deadline to submit paperwork related to its recent $25 million private stock sale.
Libsyn already has the money. It announced in June that it had closed on the sale to a group that includes both existing investors and newcomers. The private placement was led by Camac Partners, which was a pre-existing shareholder, and new shareholder Hudson Executive Capital, in addition to several other new and existing investors.
As part of its agreement with the investors, Libsyn said it would file a stock registration statement covering all the securities by Aug. 16 and do all it could to make the registration effective by Dec. 15. The deal says that Libsyn will pay a penalty equal to one percent of the purchase of shares per month that the registration statement has not been filed. That means it will be on the hook to return more money to the investors until it files the paperwork with the SEC.
Some shareholders are giving Libsyn a break, however. The company says that includes Camac, which is affiliated with Eric Shahinian, a member of the company’s board of directors, and Bradley Tirpak, also a board member, are not asking for their share of the penalty. But there is no way to assure they will continue to waive the penalties.
“The company is working toward completing and filing the Outstanding Exchange Act Reports and filing the registration statement as soon as possible,” Libsyn said in a filing with the SEC on Tuesday. But it added it does not expect that will occur before Dec. 1.
Even as Libsyn has not provided quarterly revenue reports, the company has offered a peek into the gains it has seen in the first half of 2021. In a presentation to investors, Libsyn says it had $12.1 million in revenue during 2021, a 44% increase from the $8.4 million it had in 2019. And so far in 2021, it says the number of active advertisers has grown from 268 during the first quarter to 284 in the second quarter.
The recent $30 million acquisition of the podcast rep firm AdvertiseCast is likely to grow those numbers. AdvertiseCast sells inventory for more than 1,500 podcasts and it is expected to expand its list to include more of the 75,000 podcastshosted by Libsyn.