LIBERATED SYNDICATION INC. (OTCMKTS:LSYN) Files An 8-K Other Events
Item 8.01 Other Events.
Compliance with Financial Covenants in Loan Agreement
In its Form 10-Q for the quarter ended September 30, 2020, the Company disclosed that it had not been in compliance with certain financial covenants in the Loan Agreement, dated as of December 27, 2017 (the “Loan Agreement”), among the Company and its subsidiaries, Webmayhem, Inc. and Pair Networks Inc., and First Commonwealth Bank. As of November 24, 2020, the Company is in compliance with the financial covenants in the Loan Agreement.
Securities Fraud Litigation
On November 25, 2020, Liberated Syndication Inc. (the “Company”), as plaintiff, on its own behalf and derivatively on behalf of its former parent company, FAB Universal Corporation (“FAB”), filed a complaint (the “Action”) in a Federal District Court (the “Court”) against Hongcheng Zhang; JunHao International Investment Limited; BoHaiHong International Investment Limited; TengDa International Investment Limited, Beijing Jingjcai Wuxian Cultural Communications Co., Ltd; and other parties named therein, including former employees and associates of Fab Jincai Group (collectively, the “Defendants”). The Company has recently discovered that certain of the Defendants obtained shares of common stock of FAB (formerly known as Wizzard Software Corporation) through fraudulent activities that began in 2012. Due to their ownership of FAB common stock, upon the distribution of the Company from FAB, these Defendants became significant stockholders of the Company. Certain of the Defendants, who are domiciled in China, have been convicted of crimes in China related to their activities, including those with FAB. The Company’s Action alleges that the Defendants and certain companies owned by them (the “BVI Entities”) have committed, against the Company and derivatively on behalf of FAB, among other things, securities fraud under Colorado law, fraudulent concealment or nondisclosure of material information, and fraudulent representations. The Company seeks, on its own behalf and derivatively on behalf of FAB, among other things, (i) injunctive relief barring the Defendants and the BVI Entities from voting their stockholdings in the Company or acquiring any additional beneficial ownership of the Company, (ii) a declaration that any claim to the Company’s common stock or proceeds from it by the Defendants and BVI Entities is null and void, and (iii) the imposition of a constructive trust with respect to the Company’s common stock held by the Defendants and the BVI Entities for the benefit of the Company or FAB.
About LIBERATED SYNDICATION INC. (OTCMKTS:LSYN)
Liberated Syndication Inc. is a podcast service provider offering hosting and distribution tools. The Company offers basic plans, as well as advanced plans that include storage, advanced statistics and podcast applications. Its hosting plans include unlimited downloads, media hosting-audio and video, own Webpage for the show, an iTunes compatible rich site summary (RSS) feed for the podcast, HTML5 video and audio player, single click multiple destination publishing with OnPublish and Network Application Listing. Its advanced hosting plans also include custom mobile application offering, advanced statistics package and MyLibsyn subscription management service. Its LibsynPRO service is an enterprise solution for professional media producers and corporate customers. The Libsyn4 product offering is a podcast hosting and distribution service, which includes storage, bandwidth, RSS creation, distribution and statistics tracking.
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