Struggling digital marketing company Viggle Inc. has raised cash through a securities sale.

Viggle, headquartered in New York, is an entertainment marketing and rewards company that developed an app that gives members redeemable rewards points for watching television shows or listening to music. The company also operates Wetpaint, which offers entertainment and celebrity news online, NextGuide, which helps users set reminders for TV shows, and Choose Digital, a digital marketplace that allows companies to incorporate digital content into existing rewards programs.

Sillerman Investment Co. III LLC purchased Viggle securities for $30 million and issued a line of credit promissory note that gives Viggle a $20 million line of credit. Sillerman also agreed to buy shares of Series C Convertible Preferred Stock for $10 million. Part of the promissory note can be used to pay Viggle's term loan agreement with Deutsche Bank Trust Company Americas, according to an Oct. 27 filing with the U.S. Securities and Exchange Commission.

On Oct. 2, Viggle announced that it expanded its relationship with Gracenote, which will allow the company's users to identify and match television programs with mobile devices. The service allows mobile devices to 'listen' to a few seconds of a show to identify a television program, which means users can log their Viggle points.

Despite the company's progress, Viggle's accountant, BDO USA LLP, says there is substantial doubt about the company's ability to continue as a going concern, or without the threat of liquidation. The doubt stems from Viggle's history of recurring losses and deficiencies in working capital.

Viggle says in a Sept. 29 annual report with the SEC that its ability to stay in business depends on continued financial support from stockholders and obtaining additional equity and debt financing. The company's management said it had plans to raise money through equity and debt offerings until the company starts making enough money.

The company has a deficit of about $288,862 as of June 30, 2014. Viggle says revenue has "grown significantly since inception" it hasn't achieved profitability. For the fiscal year ended June 30, the company had about $18 million in revenue, up from last year when it had $13.9 million.

Even as it struggles to achieve profitability, Viggle has made several acquisitions. In June, the company bought Choose Digital, and before that, in 2013, bought Wetpaint. For more on the company, see Viggle Plains to Raise Cash to Fund Operations

For the previous edition of Turnaround Tuesday, see Troubled Intelligent Thermostat Maker Telkonet Gets $2M Loan. For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List. (link)

 

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