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Robert Sillerman's digital media business is guilty of a "public information failure" by failing to file a quarterly report, new SEC filings reveal
By Jon Chapple on 02 Jun 2017
Function(x), the rapidly expanding online news business led by ex-SFX Entertainment CEO Robert FX Sillerman, has been threatened with delisting from the Nasdaq for the non-filing of financial information.
Function(x) has yet to submit a form 10-Q – a quarterly financial report which must be filed with the Securities and Exchange Commission (SEC) by all public companies in the US – for the latest quarter, and will be delisted unless it “requests a hearing before the Nasdaq hearings panel”, the New York stock exchange announced today.
The company contacted Nasdaq yesterday to request a hearing, which automatically delays its delisting for a period of 15 days.
A separate form, 8-K – which notifies shareholders of any significant events that may affect their investment – reveals Function(x) will ask Nasdaq for an extended delay from delisting while it gets its affairs in order, although it notes “there can be no assurance that the stay will be extended or that the panel will ultimately grant the company’s request for continued listing on Nasdaq”.
The late filing of Function(x)’s quarterly accounts, reveals the 8-K, constitutes a “public information failure”.
“The company does not anticipate it will be able to pay the note on the due date and therefore will be in default”
This means the company will be obliged to pay one of its creditors – the holder of US$3 million promissory note, issued following its recent acquisition of Rant, Inc. – “an amount in cash equal to one percent (1%) of the greater of the product of (A) the aggregate number of shares of common stock which the holder is entitled to convert pursuant to the [promissory] note and (B) the closing bid price of the common stock on the trading day immediately preceding the public information failure”. (That was, according to the document, 24 May, when its share price stood at $0.66 – it’s now around $0.62.)
Payment is due on “on the earlier of the last day of the month in which the public information failure occurred and the third business day after the failure is cured” – by our calculations, 31 May. According to the form, Function(x) “does not anticipate it will be able to pay the note on the due date” and “therefore will be in default under the note on the date that is five business days following the due date”.
Sillerman’s previous venture, EDM promotion conglomerate SFX Entertainment, collapsed under a mountain of debt last February, since being revived under new management as LiveStyle Inc.
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