Viggle Going Back To The Money Well

Viggle, the debt-strapped second screen app specialist that awards users for TV “check-ins,” filed an S-1 Friday showing that it wants to raise up to $58 million via an IPO that will recapitalize the company.

Under a proposed 1-for-80 reverse stock split, Viggle said it intends to trade shares on the Nasdaq “as soon as practicable” under the same “VGGL” ticker it trades under today on the Pink Sheets. Viggle recently was trading over-the-counter at 50 cents per share, or $40 per share after the effect of the proposed split. As of Friday afternoon, Viggle shares were trading at 63 cents each Friday, down 3.06% for the day.

Landenburg Thalmann & Co. Inc. is the offering’s lone, named underwriter.

Viggle’s proposed offer comes amid an anticipated consolidation of the TV-focused second screen market. GetGlue, a competitor that was poised to merge with Viggle in 2012, was acquired by i.TV last year. 

Viggle’s filing illustrates a company that has had trouble getting off the financial ropes.

According to the S-1, Viggle’s current 12-month business plan will require $21 million to cover fixed expenses and capital needs, including employee payroll, marketing funds, server capacity, R&D, and office space.

“As of the filing of this prospectus, we have no availability to draw on our credit line to fund our operations,” Viggle noted, but said it believes that revenue are poised to rise during the next year thanks to growing in-app advertising. The filing also included a report from Viggle’s independent registered public accounting firm that “expresses substantial doubt about our ability to continue as a going concern.”

On the financial front, Viggle’s revenues are indeed growing, but they’ve been coupled with crippling debt.

For the three months ended September 30, 2013, Viggle brought in revenues of $4.33 million, up from $2.05 million in the year-ago quarter. During those respective periods, Viggle also took on net losses of $24.28 million and $19.46 million, according to the filing.

For the fiscal year ended June 30, it posted a net loss of $91.4 million revenues of $13.9 million. As of September 30, 2013, it had $1.79 million in cash and cash equivalents of $1.79 million, total assets of $16.06 million, and total liabilities of $36.26 million. It ended 2013 with $30 million of outstanding debt.

Viggle executive chairman and CEO Robert F.X. Sillerman owns 87.6% of Viggle’s common stock, and 80.2% of the total voting power of the company’s shares. Others with stakes include DAG Venture Management III, Adage Capital Management, Accel IX L.P. and Frazier Technology Ventures.

Viggle, which launched in January 2012, reported in the filing that it had 3.31 million registered users as of September, a number that includes 474,796 considered “active” because they logged into the Viggle app at least once during a month. As of that time, members had checked into 316.27 million TV programs and spent an average of about 67 minutes of active time (meaning they earned a point or redeemed a point) with the app per session. Under its program, Viggle awards points in various ways, including 1 point for every minute a user is checked-in, through bonus points (for Viggle-promoted shows), “live engagement points” for playing in-app games, and advertising points (ad revenue shared with users in the form of points).

Among recent news, DirecTV renewed its exclusive marketing deal with Viggle last October. That agreement also includes a tighter integration in which DirecTV will include Viggle ad inventory with its sales packages, with Lexus as the first advertiser to jump on board. Last month, Viggle inked a $30 million deal for Wetpaint, a company focused on entertainment and celebrity news.