Notes to the Unaudited Consolidated Financial Statements
1. Nature of Operations
Radioio previously filed reports with the SEC under the name ioWorldMedia, Incorporated (“ioWorldMedia”). ioWorldMedia was incorporated as a Florida corporation in January 1995 under the name “PowerCerv Corporation” (“PowerCerv”). In January 2006, PowerCerv changed its corporate name to ioWorldMedia. On October 29, 2013, ioWorldMedia entered into an Agreement and Plan of Merger with Radioio, a Nevada corporation and wholly-owned subsidiary of ioWorldMedia, which provided for the merger of ioWorldMedia with and into Radioio, with Radioio continuing as the surviving corporation (the “Merger”). The transaction constituted an exchange of shares necessary for legal purposes; however, the transaction lacks substance for accounting purposes since ownership interests did not change. Accordingly, the transaction has been accounted for based on existing carrying amounts. All share and per share amounts have been restated to retroactively reflect this transaction. The Merger became effective on December 11, 2013. The Merger was effectively a change in the corporation’s domicile state and the existing common stockholders of ioWorldMedia received 1 share of Radioio common stock for every 100 shares of ioWorldMedia common stock held and the existing preferred stockholders received .4950495 of a share of Radioio common stock for each share of ioWorldMedia preferred stock held. Radioio accounted for this transaction as an increase to additional paid-in capital and common stock and a reduction of convertible preferred stock in the amount of $5,772,304.
The Company operates an Internet media platform that provides streamed music to targeted audiences. The Company broadcasts 140 streaming channels, and offers internet radio services and popular genres of music ranging from high-brow classical to acid rock and live talk radio, through its subsidiaries. The Company also provides a full-service background music and messaging ecosystem for large franchise businesses and other vertical markets, such as retail, hospitality and health and wellness. Direct to consumer Internet content distribution includes subscription-based talk radio and Internet radio services with extensive genres of customized music, including classical, new age and country.
2. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern. However, the Company has incurred significant recurring operating losses, negative cash flows from operations, has a working capital deficiency of approximately $1,320,000, and an accumulated deficit of approximately $69,119,000 as of March 31, 2014. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon management’s ability to generate profitable operations in the future and obtain the necessary financing to meet obligations and pay liabilities arising from business operations when they come due. If the Company does not generate profitable operations or obtain the necessary financing, the Company may not have enough operating funds to continue to operate as a going concern. Securing additional sources of financing to enable the Company to continue the development and commercialization of proprietary technologies will be difficult and there is no assurance of the Company’s ability to secure such financing. A failure to generate profitable operations or obtain additional financing could prevent the Company from making expenditures that are needed to pay current obligations, allow the hiring of additional personnel and continue development of its products, services and technologies. The Company continues to actively seek additional capital through private placements of equity and debt.
Management believes it has access to sufficient funds to continue current operations through September 30, 2014. If additional financing is not obtained, the Company will not be able to execute its business plan and will need to curtail certain of its operations. The Company may be able to mitigate these factors through the generation of revenue from increased sales and slowing its payments to vendors.
3. Summary of Significant Accounting Policies
The unaudited consolidated financial statements include the accounts of Radioio and its wholly-owned subsidiaries, Radioio.com, LLC, Search Play, LLC, io4business, LLC, and Radioio Live, LLC. All significant intercompany transactions and accounts have been eliminated in consolidation.
Use of Estimates
The preparation of unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities at the date of the unaudited consolidated financial statements, as well as their related disclosures. Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounts Receivable
Accounts receivable consists of trade receivables recorded at the original invoice amount, less an estimated allowance for uncollectible accounts and discounts. Trade credit is generally extended on a short-term basis; thus, trade receivables do not bear interest. Trade receivables are periodically evaluated for collectability based on past credit history with customers and their current financial condition. Changes in the estimated collectability of trade receivables are recorded in the results of operations for the period in which the estimate is revised. Trade receivables that are deemed uncollectible are offset against the allowance for uncollectible accounts. The Company generally does not require collateral for trade receivables. No allowance for doubtful accounts was recorded as of March 31, 2014 and December 31, 2013.
Inventory
Inventory consists of finished goods, comprised of radio players, and is stated at the lower of cost or market determined by the average cost method. Inventory items designated as obsolete or slow moving are reduced to net realizable value.
Unbilled Receivables
Unbilled receivables represent estimates of advertising revenue not yet billed.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance are expensed as incurred while betterments and improvements are capitalized. When the assets are sold or retired, their cost and related accumulated depreciation are removed from the accounts with the resulting gain or loss reflected in the consolidated statements of operations.
The Company provides for depreciation and amortization over the following estimated useful lives:
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Years
|
|
|
Computer equipment
|
|
|
3-5
|
|
|
Office equipment
|
|
|
3
|
|
|
Furniture and fixtures
|
|
|
7
|
|
Long-Lived Assets
The Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the respective carrying amounts. There were no impairment charges recorded for the three months ended March 31, 2014 and 2013.
Prepaid Consulting
The Company recognizes contracts paid in advance of the service period as prepaid consulting. The Company amortizes the prepaid contracts as service is provided by the consultants.
Revenue Recognition
The Company’s revenue is principally derived from subscription fees, advertising services, and radio player equipment sales.
The Company recognizes revenue when: (1) persuasive evidence exists of an arrangement with the customer reflecting the terms and conditions under which products or services will be provided; (2) delivery has occurred or services have been provided; (3) the fee is fixed or determinable; and (4) collection is reasonably assured. For all revenue transactions, the Company considers a signed agreement, a binding insertion order or other similar documentation to be persuasive evidence of an arrangement.
Subscription Revenue.
The Company generates subscription services revenue from premium listener subscription plans, both for businesses and individuals. The Company offers a number of subscription plans on a monthly and annual basis. Revenue from subscribers is recognized on a monthly pro-rata basis over the life of the subscription.
Advertising Revenue.
The Company generates advertising revenue primarily from display, audio and video advertising. The Company generates the majority of its advertising revenue through broadcasting advertisements and the delivery of advertising impressions sold on a cost per thousand, or CPM, basis. In determining whether an arrangement exists, the Company ensures that a binding arrangement, such as an insertion order or a fully executed customer-specific agreement, is in place. The Company recognizes this revenue over the term of the contracted advertising period.
Radio Player Revenue.
Revenue from radio player sales is recognized when title and risk of loss have transferred to the customer. Title transfers upon shipment of product.
Deferred Revenue.
Deferred revenue consists of amounts billed or cash received from customers in advance of the delivery or completion of the services or in instances when revenue recognition criteria have not been met.
Revenue recognized from customers associated with the Subway franchise approximated 38% and 46% of revenues for the three months ended March 31, 2014 and 2013, respectively.
Advertising Costs
The Company expenses advertising costs as incurred. Advertising costs approximated $21,500 for the three months ended March 31, 2014, as compared to approximately $2,100 for the three months ended March 31, 2013.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under this method, deferred taxes are recognized for the expected future tax consequences of temporary differences between the book carrying amounts and tax basis of the Company’s assets and liabilities. Historically, deferred tax assets have been attributable to Federal loss carry-forwards.
The Company accounts for income taxes under Accounting Standard Codification (“ASC”) 740, “Income Taxes” (“ASC 740”). ASC 740 requires that the Company recognize a current tax liability or asset for current taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary differences and carry-forwards to the extent they are realizable. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event the Company was to determine that it would be able to realize the deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, deferred tax assets are reduced by a valuation allowance, when in the Company’s opinion, it is more likely than not that some portion or all of the deferred tax asset will not be realized.
The Company has not filed its federal and state corporate tax returns since 2003.
The Company has not received any notices for any payments resulting from this matter.
Loss Per Common Share
Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. As of both March 31, 2014 and 2013, the Company had no potentially dilutive instruments outstanding.
Equity-Based Compensation
The Company accounts for equity-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). All equity-based payments to employees are issuances of stock that are recognized in the statement of operations based on their fair values at the date of issuance. That cost will be recognized over the period during which an employee is required to provide services in exchange for the award (performance period). There was no equity-based compensation for employees recorded during the three months ended March 31, 2014 and 2013.
The Company accounts for equity-based payments to non-employees in accordance with ASC 718 and Topic 505-50, “Equity-Based Payments to Non-Employees.” All equity-based payments to non-employees are issuances of common stock that are recognized in the statements of operations over the performance period at its then-current fair value as of each financial reporting date. Equity-based consulting relating to the common stock issued to non-employees during the three months ended March 31, 2014 totaled $15,685. There was no equity-based compensation for non-employees during the three months ended March 31, 2013.
Recently Issued Accounting Standards
In May 2014, the FASB issued an update to ASC 606, “Revenue from Contracts with Customers,” that will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expedited consideration received in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company has not determined the potential effects on the consolidated financial statements.
4. Property and Equipment
Property and equipment consisted of the following at:
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March 31,
2014
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|
|
December 31,
2013
|
|
|
|
|
|
|
|
|
|
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Computer equipment
|
|
$
|
479,973
|
|
|
$
|
481,150
|
|
|
Office equipment
|
|
|
1,137
|
|
|
|
1,137
|
|
|
|
|
|
481,110
|
|
|
|
482,287
|
|
|
Less: accumulated depreciation
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|
|
(425,008
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)
|
|
|
(420,162
|
)
|
|
|
|
$
|
56,102
|
|
|
$
|
62,125
|
|
For the three months ended March 31, 2014 and 2013, depreciation expense approximated $6,000 and $6,100, respectively.
5. Deferred Revenue
Deferred revenue is comprised of amounts invoiced or cash received in advance of delivery of services. Subscriptions are recognized as pro-rata over the subscription period, which is generally twelve months.
Deferred revenue consisted of the following for the:
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Three Months Ended
March 31, 2014
(Unaudited)
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|
|
Three Months Ended
March 31, 2013
(Unaudited)
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|
|
Beginning balance
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|
|
|
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$
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294,176
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|
|
|
|
|
$
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386,374
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|
|
Invoiced during the period
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|
|
|
|
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174,156
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|
|
|
|
|
|
277,903
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|
|
Deferred revenue recognized from prior period
|
|
$
|
(180,239
|
)
|
|
|
|
|
|
$
|
(90,220
|
)
|
|
|
|
|
|
Deferred revenue recognized from current period
|
|
|
(71,204
|
)
|
|
|
|
|
|
|
(257,389
|
)
|
|
|
|
|
|
Total revenue recognized current period
|
|
|
|
|
|
|
(251,443
|
)
|
|
|
|
|
|
|
(347,609
|
)
|
|
Ending balance
|
|
|
|
|
|
$
|
216,889
|
|
|
|
|
|
|
$
|
316,668
|
|
6. Other Liability
At various dates during the years ended December 31, 2010 and 2009, the Company received advances aggregating $400,000 from an outside entity. During the year ended December 31, 2011, the Company and the entity agreed to settle this liability through the issuance of 60,000 shares of the Company’s common stock, which would have required the Company to value the liability at the fair value of the common stock with any gains or losses recorded in the statements of operations. These shares have not yet been issued. The Company has elected to record the liability at the greater of the fair value of the common stock or $400,000. At both March 31, 2014 and December 31, 2013, the Company has recorded a liability in the amount of $400,000.
7. Income Taxes
At March 31, 2014 and December 31, 2013, the Company had federal and state net operating losses of approximately $32,100,000 and $31,700,000, respectively. The federal and state operating losses begin to expire in 2015.
Utilization of the net operating loss carry-forwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and similar state provisions. The Company has not performed a detailed analysis to determine whether an ownership change under Section 382 of the Internal Revenue Code has occurred. The effect of an ownership change would be the imposition of an annual limitation on the use of net operating loss carry-forwards attributable to the periods before the change.
The Company is delinquent in filing its federal and state income tax returns beginning with the 2004 taxable year. The Company has not received any notices for any payments resulting from this matter.
8. Stockholders’ Equity
On March 11, 2014, Zanett Opportunity Fund, Ltd. (“Zanett”) purchased 384,615 shares of Radioio common stock for an aggregate purchase price of $250,000, or $.65 per share. Radioio will use the proceeds from this sale of common stock for working capital and other operational purposes. McAdoo Capital, Inc. is the investment manager of Zanett. Zachary McAdoo, the Chairman, President, Chief Executive Officer and Chief Financial Officer of the Company, is the President of McAdoo Capital, Inc.
On March 11, 2014, Radioio issued an aggregate of 20,161 shares of common stock to five service providers as consideration for services rendered, which totaled $12,500 and is recorded as a component of equity-based consulting expense (See Note 3).
9. Commitments and Contingencies
Litigation
From time to time, the Company may be involved as a defendant in legal actions that arise in the normal course of business. In the opinion of management, the Company has adequate legal defense on all legal actions, and the results of any such proceedings would not materially impact the consolidated financial statements of the Company.
On May 20, 2014, MSBI, Inc., d/b/a Turnkey Media (“Turnkey”), filed a complaint in the United States District Court for the Middle District of Florida against io4business, a wholly-owned subsidiary of Radioio, and other defendants. The complaint alleges unfair competition under the trademark and false advertising provisions of the Lanham Act, conspiracy to violate the Lanham Act, defamation, dissemination of false and misleading advertising to the general public, intentional interference with business relationships, misappropriation of confidential information and breach of contract. Turnkey’s allegations relate to io4business’ relationship with Independent Purchasing Cooperative, Inc., a cooperative comprised of Subway restaurant franchisees. Turnkey seeks a preliminary and permanent injunction, money damages and attorneys’ fees. Radioio does not believe there is any merit to Turnkey’s allegations and will vigorously defend this action.
Consulting Agreements - 2013
In April 2013, the Company entered into an agreement with Digipowers, an entity controlled by the Company’s Chief Operating Officer. Under the terms of this agreement, the Company is obligated to issue shares of common stock based on a prescribed number of new subscribers. At March 31, 2014 and December 31, 2013, the Company was obligated to issue shares of common stock with a value of $21,830 and $18,645, respectively, under this agreement.
On August 28, 2013, the Company entered into a consulting agreement with a third party for consulting services related to advertising operations, technology, finance, strategy and content development. The agreement has a term of three years commencing on September 16, 2013, and can be renewed by the written consent of both parties, or terminated at any time by the consent of both parties. The Company will pay an annual fee of $114,000 payable semi-monthly ($4,750 per payment). As additional consideration, the agreement provided that the Company would issue up to 50,000 shares of its common stock to the consultant upon the effectiveness of an amendment to the Company’s articles of incorporation that increased the authorized shares of common stock to a level sufficient to allow for such issuance. Upon the effectiveness of the Merger, the Company issued 50,000 shares of its common stock valued at $37,482 at the date of issuance to the consultant pursuant to this provision of the agreement. The Company recognized the value of the vested portion of the issuance at its then-current fair value at each reporting date. These shares shall vest as follows: one-third of the shares vests on September 16, 2014; one-third of the shares vests on September 16, 2015; and one-third of the shares vests on September 16, 2016. On May 1, 2014, the consultant became an employee of the Company and, as a result, all of the shares became fully vested at that time. The Company recorded an expense of approximately $23,400 during the period ending June 30, 2014.
On August 31, 2013, the Company entered into a consulting agreement with a third party for consulting services related to advertising operations, technology, finance, strategy and content development. The agreement has a term of three years commencing on August 31, 2013. This agreement can be renewed by the written consent of both parties, or terminated at any time by the consent of both parties. The Company will pay an annual fee of $96,000 payable semi-monthly ($4,000 per payment). As additional consideration, the agreement provided that the Company would issue 100,000 shares of its common stock to the consultant upon the effectiveness of an amendment to the Company’s articles of incorporation that increased the authorized shares of common stock to a level sufficient to allow for such issuance. Upon the effectiveness of the Merger, the Company issued 100,000 shares of its common stock valued at $75,329 at the date of issuance to the consultant pursuant to this provision of the agreement. The Company recognized the value of the vested portion of the issuance at its then-current fair value at each reporting date. These shares shall vest as follows: one-third of the shares vests on August 31, 2014; one-third of the shares vests on August 31, 2015; and one-third of the shares vests on August 31, 2016. On May 1, 2014, the consultant became an employee of the Company and, as a result, all of the shares became fully vested at that time, and the Company recorded an expense of approximately $46,000 during the period ending June 30, 2014.
In connection with the 2013 consulting agreements, the Company recorded expenses that approximated $31,200 during the three months ended March 31, 2014. There was no such expense recorded during the three months ended March 31, 2013 relating to the 2013 consulting agreements.
Consulting Agreements - 2012
On July 23, 2012, the Company entered into a consulting agreement with a third party for consulting services related to advertising, operations, technology, finance, strategy and content development. The agreement has a term of twenty-four months unless otherwise agreed upon in writing by both parties. As consideration for these services, the Company issued 210,000 shares of its common stock valued at $315,000 at the date of issuance. Upon the effectiveness of the Merger, the Company issued 210,000 shares of common stock to the consultant. The Company recognized the value of the vested portion of the issuance at its then-current fair value at each reporting date. At March 31, 2014 and December 31, 2013, prepaid consulting services relating to this agreement amounted to $14,963 and $78,750, respectively.
On July 31, 2012, the Company entered into a consulting agreement with McAdoo Capital, Inc., an entity controlled by the Company’s Chairman, President, Chief Executive Officer and Chief Financial Officer, for consulting services related to advertising, operations, technology, finance, strategy and content development. The agreement has a term of twenty-four months unless otherwise agreed upon in writing by both parties. As consideration for these services, the consulting agreement provided for the issuance by the Company of 105,000 shares of common stock valued at $157,500 at the date of issuance to McAdoo Capital, Inc. The Company recognized the value of the vested portion of the issuance at its then-current fair value at each reporting date. McAdoo Capital, Inc. assigned its right to receive these shares to Zachary McAdoo, and accordingly, the Company issued 105,000 shares of its common stock to Mr. McAdoo upon the effectiveness of the Merger. During the year ended December 31, 2013, all of the unvested shares vested upon the Company hiring the executive.
In connection with the 2012 consulting agreements, the Company recorded expenses that approximated $24,400 during the three months ended March 31, 2014 and approximately $59,100 during the three months ended March 31, 2013.
During the year ended December 31, 2013, the Company engaged Digipowers, an entity controlled by the Company’s Chief Operating Officer, for consulting services related to technology and marketing on a monthly basis. For the three months ended March 31, 2014, the Company recorded expenses in the amount of approximately $45,000. There were no such expenses recorded during the three months ended March 31, 2013. As of March 31, 2014 and December 31, 2013, the Company owed this vendor approximately $72,600 and $16,000, respectively, which amounts are included as a component of accounts payable and accrued expenses in the unaudited consolidated balance sheets.
Leases
The Company’s principal office is located at 475 Park Avenue South, 4
th
Floor, New York, New York, which it subleases pursuant to a letter agreement dated August 27, 2013. The letter agreement provides that the term of the sublease is on a month-to-month basis until the earlier of the termination of the sublessor’s master lease or the termination of the letter agreement by either party upon thirty (30) days notice. The letter agreement provides for monthly rent payments of $500.
Commencing January 1, 2014, Radioio also leases office space and a recording studio in Tampa, Florida from Bubba Radio Network, Inc. on a month-to-month basis, an affiliate of a former director of the Company. This verbal lease provides for a $2,000 monthly payment. During the year ended December 31, 2013, Radioio leased office space in Tampa, Florida from Renegade Strategies, Inc., an affiliate of Thomas Bean, a director and former officer of the Company. This verbal lease provided for a $5,000 monthly payment from January 1, 2013 to June 30, 2013, which was reduced to $2,500 per month from July 1, 2013 until the termination of the lease on December 31, 2013.
Rent expense under the leases for the three months ended March 31, 2014 and 2013, approximated $7,500 and $15,000, respectively.
10. Subsequent Events
Issuances of Common Stock
On April 16, 2014, Radioio issued an aggregate of 80,000 shares of its common stock to an individual investor for an aggregate purchase price of $52,000, or $0.65 per share. Radioio will use the proceeds from this sale of common stock for working capital and other operational purposes.
On April 17, 2014, Radioio issued an aggregate of 153,846 shares of its common stock to Zanett for an aggregate purchase price of $100,000, or $.65 per share. Radioio will use the proceeds from this sale of common stock for working capital and other operational purposes.
On April 22, 2014, Radioio issued an aggregate of 50,315 shares of Radioio common stock to three service providers as payment in full for certain services rendered by the service providers to Radioio during 2013 and 2014. The aggregate dollar amount owed by Radioio to these service providers was $38,965. This amount included $21,840 owed to Digipowers, Inc., an entity affiliated with Julia Miller, the Chief Operating Officer, Secretary and a director of Radioio. Of the $21,840 owed to Digipowers, Inc., $18,645 related to services performed during the year ended December 31, 2013, and $3,195 related to services perfomed during the three months ended March 31, 2014. Radioio issued 29,120 shares of its common stock to Real eMarketing, Inc., an entity affiliated with Digipowers, Inc., in full satisfaction of its obligation to Digipowers, Inc., which are included in the aggregate total of 50,315 shares issued to all three service providers referenced above. Radioio used the fair value of $.69 to determine the per share price for the shares issued to the two unaffiliated service providers, which was the closing price of its common stock on April 21, 2014, and a price per share of $.75 to determine the per share price for the shares issued to Real eMarketing, Inc., which was the closing price of the common stock on December 31, 2013.
Between May 1, 2014 and June 30, 2014, Radioio issued 269,231 shares of its common stock to Zanett for an aggregate purchase price of $175,000. Radioio will use the proceeds from this sale of common stock for working capital and other operational purposes.
Asset Acquisition
On April 29, 2014, Radioio entered into an asset purchase agreement with Crowdstream, Inc. (“Crowdstream”) pursuant to which Radioio acquired certain assets used in CrowdStream’s mobile application business in exchange for aggregate cash payments of $50,000 and 86,456 shares of Radioio’s common stock, which have a market value of $60,000 based on the average closing price of Radioio’s common stock on the OTC Bulletin Board on the five trading days preceding the date of the agreement. The assets acquired by Radioio include CrowdStream’s mobile applications that allow attendees at live music and other entertainment events to interact with other attendees and with performers, as well as the rights to the name “CrowdStream” and other social media assets. The asset purchase agreement was subsequently amended on June 11, 2014 to reduce the amount of the aggregate cash payments to $42,500.
In connection with this transaction, Radioio entered into a consulting agreement with Brian Bason, a principal of Crowdstream, pursuant to which Mr. Bason will provide business development and software development services to Radioio related to the CrowdStream application. The consulting agreement provides that Radioio will pay Mr. Bason $5,000 per month for such services. The consulting agreement has an initial term of 12 months, which may be renewed upon the written agreement of the parties. The consulting agreement was subsequently amended on June 11, 2014 to provide for the payment of an engagement fee to Mr. Bason in the amount of $7,500, which is payable not later than 180 days after the date of the agreement.
Programming Agreement with The Bubba Radio Network, Inc.
On May 1, 2014, Radioio Live, LLC (“Radioio Live”), a wholly-owned subsidiary of Radioio, entered into a new programming agreement with The Bubba Radio Network, Inc., the operating company of Bubba the Love Sponge Clem, who hosts the syndicated radio talk show, “The Bubba the Love Sponge Show.” During the term of the agreement, Radioio Live has the exclusive right to distribute archived and newly produced Internet-only content of the Bubba Radio Network over the Internet and the non-exclusive right to broadcast live The Bubba the Love Sponge Show, which is syndicated on terrestrial radio (collectively, the “Programming”). Subject to certain parameters set forth in the agreement, the Bubba Radio Network has the sole right to control and determine the content of the Programming, and will provide all personnel, facilities, equipment, tools and supplies necessary to produce the Programming. In addition, Radioio Live has the worldwide, royalty-free right to transmit the Programming on a live or delayed basis or though on-demand or download services, on an unlimited basis. Radioio Live also has the right to edit, create and broadcast derivative works of the Programming, such as “best of” shows. Radioio Live shall pay periodic fees based on subscription and advertising revenue received by it related to the Programming, subject to an annual minimum. The term of the agreement will terminate on December 31, 2016. The agreement provides that the Bubba Radio Network will negotiate exclusively and in good faith with Radioio Live regarding the renewal of the agreement for a 60 day period beginning on the date that is 210 days prior to the last day of the term.
Consulting Agreement
On May 19, 2014, the Company entered into a consulting agreement with a third party for consulting services regarding investor relations. The agreement has a term of six months and can be terminated by either party after three months upon 30 days prior written notice. The Company will pay a monthly fee of $4,000 and issue a warrant for 30,000 shares of common stock for each three month period the agreement is in effect. Each of the warrants will have a five year term and a cashless exercise feature. The initial warrant, issued at the inception of the agreement, may be exercised at a per share price of $0.625. The exercise price of each subsequent warrant will equal the average of the closing price of the common stock for the 20 trading days prior to the issuance of the warrant.