false --09-30 Q3 0001643988 http://fasb.org/us-gaap/2024#PrimeRateMember http://fasb.org/us-gaap/2024#PrimeRateMember P2Y P3Y P3Y P5Y P3Y P2Y P2Y http://fasb.org/us-gaap/2024#PrimeRateMember http://fasb.org/us-gaap/2024#PrimeRateMember P1Y P3Y P1Y P3Y P1Y P2Y P4Y 0001643988 2023-10-01 2024-06-30 0001643988 2024-08-06 0001643988 2024-06-30 0001643988 2023-09-30 0001643988 us-gaap:RelatedPartyMember 2024-06-30 0001643988 us-gaap:RelatedPartyMember 2023-09-30 0001643988 us-gaap:NonrelatedPartyMember 2024-06-30 0001643988 us-gaap:NonrelatedPartyMember 2023-09-30 0001643988 2024-04-01 2024-06-30 0001643988 2023-04-01 2023-06-30 0001643988 2022-10-01 2023-06-30 0001643988 LPTV:AdvertisingAndLegacyAndOtherRevenueMember 2024-04-01 2024-06-30 0001643988 LPTV:AdvertisingAndLegacyAndOtherRevenueMember 2023-04-01 2023-06-30 0001643988 LPTV:AdvertisingAndLegacyAndOtherRevenueMember 2023-10-01 2024-06-30 0001643988 LPTV:AdvertisingAndLegacyAndOtherRevenueMember 2022-10-01 2023-06-30 0001643988 LPTV:DepreciationAmortizationMember 2024-04-01 2024-06-30 0001643988 LPTV:DepreciationAmortizationMember 2023-04-01 2023-06-30 0001643988 LPTV:DepreciationAmortizationMember 2023-10-01 2024-06-30 0001643988 LPTV:DepreciationAmortizationMember 2022-10-01 2023-06-30 0001643988 us-gaap:CommonStockMember 2023-09-30 0001643988 us-gaap:AdditionalPaidInCapitalMember 2023-09-30 0001643988 us-gaap:RetainedEarningsMember 2023-09-30 0001643988 us-gaap:CommonStockMember 2023-12-31 0001643988 us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0001643988 us-gaap:RetainedEarningsMember 2023-12-31 0001643988 2023-12-31 0001643988 us-gaap:CommonStockMember 2024-03-31 0001643988 us-gaap:AdditionalPaidInCapitalMember 2024-03-31 0001643988 us-gaap:RetainedEarningsMember 2024-03-31 0001643988 2024-03-31 0001643988 us-gaap:CommonStockMember 2022-09-30 0001643988 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001643988 us-gaap:RetainedEarningsMember 2022-09-30 0001643988 2022-09-30 0001643988 us-gaap:CommonStockMember 2022-12-31 0001643988 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001643988 us-gaap:RetainedEarningsMember 2022-12-31 0001643988 2022-12-31 0001643988 us-gaap:CommonStockMember 2023-03-31 0001643988 us-gaap:AdditionalPaidInCapitalMember 2023-03-31 0001643988 us-gaap:RetainedEarningsMember 2023-03-31 0001643988 2023-03-31 0001643988 us-gaap:CommonStockMember 2023-10-01 2023-12-31 0001643988 us-gaap:AdditionalPaidInCapitalMember 2023-10-01 2023-12-31 0001643988 us-gaap:RetainedEarningsMember 2023-10-01 2023-12-31 0001643988 2023-10-01 2023-12-31 0001643988 us-gaap:CommonStockMember 2024-01-01 2024-03-31 0001643988 us-gaap:AdditionalPaidInCapitalMember 2024-01-01 2024-03-31 0001643988 us-gaap:RetainedEarningsMember 2024-01-01 2024-03-31 0001643988 2024-01-01 2024-03-31 0001643988 us-gaap:CommonStockMember 2024-04-01 2024-06-30 0001643988 us-gaap:AdditionalPaidInCapitalMember 2024-04-01 2024-06-30 0001643988 us-gaap:RetainedEarningsMember 2024-04-01 2024-06-30 0001643988 us-gaap:CommonStockMember 2022-10-01 2022-12-31 0001643988 us-gaap:AdditionalPaidInCapitalMember 2022-10-01 2022-12-31 0001643988 us-gaap:RetainedEarningsMember 2022-10-01 2022-12-31 0001643988 2022-10-01 2022-12-31 0001643988 us-gaap:CommonStockMember 2023-01-01 2023-03-31 0001643988 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-03-31 0001643988 us-gaap:RetainedEarningsMember 2023-01-01 2023-03-31 0001643988 2023-01-01 2023-03-31 0001643988 us-gaap:CommonStockMember 2023-04-01 2023-06-30 0001643988 us-gaap:AdditionalPaidInCapitalMember 2023-04-01 2023-06-30 0001643988 us-gaap:RetainedEarningsMember 2023-04-01 2023-06-30 0001643988 us-gaap:CommonStockMember 2024-06-30 0001643988 us-gaap:AdditionalPaidInCapitalMember 2024-06-30 0001643988 us-gaap:RetainedEarningsMember 2024-06-30 0001643988 us-gaap:CommonStockMember 2023-06-30 0001643988 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0001643988 us-gaap:RetainedEarningsMember 2023-06-30 0001643988 2023-06-30 0001643988 LPTV:LoopPlatformMember 2024-06-30 0001643988 LPTV:OAndOPlatformMember 2024-06-30 0001643988 LPTV:OAndOPlatformMember 2024-01-01 2024-03-31 0001643988 LPTV:PartnerPlatformMember 2024-03-31 0001643988 LPTV:PartnerPlatformMember 2024-01-01 2024-03-31 0001643988 srt:MaximumMember LPTV:ATMSalesAgreementMember us-gaap:CommonStockMember 2023-05-12 2023-05-12 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember 2022-07-29 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember srt:MinimumMember 2022-10-27 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember srt:MaximumMember 2022-10-27 0001643988 2022-09-07 2022-09-07 0001643988 srt:MinimumMember LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember 2022-09-07 2022-09-07 0001643988 srt:MaximumMember LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember 2022-09-07 2022-09-07 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember 2022-07-29 2022-07-29 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember LPTV:EagleInvestmentGroupLlcMember 2022-07-29 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember LPTV:SubordinatedLendersMember 2022-07-29 0001643988 LPTV:RevolvingLineOfCreditAgreementMember LPTV:GemCapSolutionsLLCMember 2024-06-30 0001643988 LPTV:InstitutionalPurchaseAgreementMember LPTV:RegisteredOfferingMember 2024-05-31 2024-05-31 0001643988 LPTV:InstitutionalPurchaseAgreementMember LPTV:RegisteredOfferingMember 2024-05-31 0001643988 LPTV:InstitutionalPurchaseAgreementMember LPTV:RegisteredPrefundedWarrantsMember 2024-05-31 0001643988 LPTV:InstitutionalPurchaseAgreementMember LPTV:RegisteredPrefundedWarrantsMember 2024-05-31 2024-05-31 0001643988 LPTV:PrivatePlacementPurchaseAgreementMember LPTV:PrivatePrefundedWarrantsMember 2024-05-31 0001643988 LPTV:PrivatePlacementPurchaseAgreementMember LPTV:PrivatePrefundedWarrantsMember 2024-05-31 2024-05-31 0001643988 LPTV:PlacementAgencyAgreementMember LPTV:RegisteredPrefundedWarrantsMember 2024-05-31 0001643988 LPTV:PlacementAgencyAgreementMember LPTV:RegisteredPrefundedWarrantsMember 2024-05-31 2024-05-31 0001643988 LPTV:PlacementAgencyAgreementMember LPTV:PlacementAgentWarrantsMember 2024-05-31 0001643988 LPTV:PlacementAgencyAgreementMember LPTV:PlacementAgentWarrantsMember 2024-05-31 2024-05-31 0001643988 LPTV:CustomerOneMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-10-01 2024-06-30 0001643988 LPTV:CustomerTwoMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-10-01 2024-06-30 0001643988 LPTV:CustomerOneMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2022-10-01 2023-06-30 0001643988 LPTV:CustomerTwoMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2022-10-01 2023-06-30 0001643988 us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember LPTV:TwoCustomerMember 2023-10-01 2024-06-30 0001643988 us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember LPTV:CustomerOneMember 2023-10-01 2024-06-30 0001643988 us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember LPTV:CustomerTwoMember 2023-10-01 2024-06-30 0001643988 us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember LPTV:OneCustomerMember 2022-10-01 2023-06-30 0001643988 srt:MinimumMember 2024-06-30 0001643988 srt:MaximumMember 2024-06-30 0001643988 LPTV:DirectProgrammaticAndLocalAdvertisingIncludingSponsorshipsMember us-gaap:SalesRevenueNetMember us-gaap:RevenueFromRightsConcentrationRiskMember 2024-04-01 2024-06-30 0001643988 LPTV:DirectProgrammaticAndLocalAdvertisingIncludingSponsorshipsMember us-gaap:SalesRevenueNetMember us-gaap:RevenueFromRightsConcentrationRiskMember 2023-04-01 2023-06-30 0001643988 LPTV:DirectProgrammaticAndLocalAdvertisingIncludingSponsorshipsMember us-gaap:SalesRevenueNetMember us-gaap:RevenueFromRightsConcentrationRiskMember 2023-10-01 2024-06-30 0001643988 LPTV:DirectProgrammaticAndLocalAdvertisingIncludingSponsorshipsMember us-gaap:SalesRevenueNetMember us-gaap:RevenueFromRightsConcentrationRiskMember 2022-10-01 2023-06-30 0001643988 LPTV:LegacyAndOtherBusinessRevenueMember us-gaap:SalesRevenueNetMember us-gaap:RevenueFromRightsConcentrationRiskMember 2024-04-01 2024-06-30 0001643988 LPTV:LegacyAndOtherBusinessRevenueMember us-gaap:SalesRevenueNetMember us-gaap:RevenueFromRightsConcentrationRiskMember 2023-04-01 2023-06-30 0001643988 LPTV:LegacyAndOtherBusinessRevenueMember us-gaap:SalesRevenueNetMember us-gaap:RevenueFromRightsConcentrationRiskMember 2023-10-01 2024-06-30 0001643988 LPTV:LegacyAndOtherBusinessRevenueMember us-gaap:SalesRevenueNetMember us-gaap:RevenueFromRightsConcentrationRiskMember 2022-10-01 2023-06-30 0001643988 LPTV:WarrantRepriceLetterAgreementsMember 2023-12-14 0001643988 LPTV:WarrantRepriceLetterAgreementsMember 2023-12-14 2023-12-14 0001643988 LPTV:InstitutionalPurchaseAgreementMember 2024-05-31 0001643988 LPTV:PrivatePlacementPurchaseAgreementMember 2024-05-31 0001643988 LPTV:LoopPlayersMember 2024-06-30 0001643988 us-gaap:EquipmentMember srt:MinimumMember 2024-06-30 0001643988 us-gaap:EquipmentMember srt:MaximumMember 2024-06-30 0001643988 us-gaap:SoftwareDevelopmentMember 2024-06-30 0001643988 us-gaap:AdvertisingMember 2024-04-01 2024-06-30 0001643988 us-gaap:AdvertisingMember 2023-04-01 2023-06-30 0001643988 us-gaap:AdvertisingMember 2023-10-01 2024-06-30 0001643988 us-gaap:AdvertisingMember 2022-10-01 2023-06-30 0001643988 LPTV:LegacyAndOtherBusinessRevenueMember 2024-04-01 2024-06-30 0001643988 LPTV:LegacyAndOtherBusinessRevenueMember 2023-04-01 2023-06-30 0001643988 LPTV:LegacyAndOtherBusinessRevenueMember 2023-10-01 2024-06-30 0001643988 LPTV:LegacyAndOtherBusinessRevenueMember 2022-10-01 2023-06-30 0001643988 us-gaap:OptionMember 2023-10-01 2024-06-30 0001643988 us-gaap:OptionMember 2022-10-01 2023-09-30 0001643988 us-gaap:WarrantMember 2023-10-01 2024-06-30 0001643988 us-gaap:WarrantMember 2022-10-01 2023-09-30 0001643988 us-gaap:RestrictedStockMember 2023-10-01 2024-06-30 0001643988 us-gaap:RestrictedStockMember 2022-10-01 2023-09-30 0001643988 us-gaap:SeriesAPreferredStockMember 2023-10-01 2024-06-30 0001643988 us-gaap:SeriesAPreferredStockMember 2022-10-01 2023-09-30 0001643988 us-gaap:SeriesBPreferredStockMember 2023-10-01 2024-06-30 0001643988 us-gaap:SeriesBPreferredStockMember 2022-10-01 2023-09-30 0001643988 LPTV:ConvertibleDebenturesMember 2023-10-01 2024-06-30 0001643988 LPTV:ConvertibleDebenturesMember 2022-10-01 2023-09-30 0001643988 2022-10-01 2023-09-30 0001643988 srt:MinimumMember us-gaap:IntellectualPropertyMember 2024-06-30 0001643988 srt:MaximumMember us-gaap:IntellectualPropertyMember 2024-06-30 0001643988 LPTV:InternallyDevelopedContentAssetsMember 2024-06-30 0001643988 srt:MinimumMember LPTV:LicenseContentAssetMember 2024-06-30 0001643988 srt:MaximumMember LPTV:LicenseContentAssetMember 2024-06-30 0001643988 LPTV:LicenseContentAssetMember 2024-04-01 2024-06-30 0001643988 LPTV:LicenseContentAssetMember 2023-04-01 2023-06-30 0001643988 LPTV:LicenseContentAssetMember 2023-10-01 2024-06-30 0001643988 LPTV:LicenseContentAssetMember 2022-10-01 2023-06-30 0001643988 LPTV:InternallyDevelopedContentAssetsMember 2024-04-01 2024-06-30 0001643988 LPTV:InternallyDevelopedContentAssetsMember 2023-04-01 2023-06-30 0001643988 LPTV:InternallyDevelopedContentAssetsMember 2023-10-01 2024-06-30 0001643988 LPTV:InternallyDevelopedContentAssetsMember 2022-10-01 2023-06-30 0001643988 LPTV:LicenseContentAssetMember 2024-06-30 0001643988 LPTV:LoopPlayersMember 2023-09-30 0001643988 us-gaap:EquipmentMember 2024-06-30 0001643988 us-gaap:EquipmentMember 2023-09-30 0001643988 us-gaap:SoftwareDevelopmentMember 2023-09-30 0001643988 us-gaap:CustomerRelationshipsMember 2024-06-30 0001643988 us-gaap:CustomerRelationshipsMember 2023-09-30 0001643988 us-gaap:CustomerRelationshipsMember 2023-10-01 2024-06-30 0001643988 LPTV:ContentLibraryMember 2024-06-30 0001643988 LPTV:ContentLibraryMember 2023-09-30 0001643988 LPTV:ContentLibraryMember 2023-10-01 2024-06-30 0001643988 LPTV:RevolvingLinesOfCreditDecemberFourteenTwentyTwentyThreeMember us-gaap:RelatedPartyMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMarchTwentyEightTwentyTwentyFourMember us-gaap:RelatedPartyMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember us-gaap:NonrelatedPartyMember 2024-06-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember us-gaap:NonrelatedPartyMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember us-gaap:NonrelatedPartyMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember us-gaap:RelatedPartyMember 2023-09-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember us-gaap:NonrelatedPartyMember 2023-09-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember us-gaap:NonrelatedPartyMember 2023-09-30 0001643988 LPTV:RevolvingLinesOfCreditMayTenTwentyTwentyThreeMember us-gaap:NonrelatedPartyMember 2023-09-30 0001643988 LPTV:RevolvingLinesOfCreditDecemberFourteenTwentyTwentyThreeMember LPTV:RelatedPartiesMember 2024-06-30 0001643988 LPTV:RevolvingLinesOfCreditDecemberFourteenTwentyTwentyThreeMember LPTV:RelatedPartiesMember 2023-10-01 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMarchTwentyEightTwentyTwentyFourMember LPTV:RelatedPartiesMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMarchTwentyEightTwentyTwentyFourMember LPTV:RelatedPartiesMember 2023-10-01 2024-06-30 0001643988 LPTV:RelatedPartiesMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember LPTV:NonRelatedPartiesMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember LPTV:NonRelatedPartiesMember 2023-10-01 2024-06-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember LPTV:NonRelatedPartiesMember 2024-06-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember LPTV:NonRelatedPartiesMember 2023-10-01 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:NonRelatedPartiesMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:NonRelatedPartiesMember 2023-10-01 2024-06-30 0001643988 LPTV:NonRelatedPartiesMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:RelatedPartiesMember 2023-09-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:RelatedPartiesMember 2022-10-01 2023-09-30 0001643988 LPTV:RelatedPartiesMember 2023-09-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember LPTV:NonRelatedPartiesMember 2023-09-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember LPTV:NonRelatedPartiesMember 2022-10-01 2023-09-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember LPTV:NonRelatedPartiesMember 2023-09-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember LPTV:NonRelatedPartiesMember 2022-10-01 2023-09-30 0001643988 LPTV:RevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:NonRelatedPartiesMember 2023-09-30 0001643988 LPTV:RevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:NonRelatedPartiesMember 2022-10-01 2023-09-30 0001643988 LPTV:NonRelatedPartiesMember 2023-09-30 0001643988 us-gaap:ConvertibleDebtMember 2024-04-01 2024-06-30 0001643988 us-gaap:ConvertibleDebtMember 2023-04-01 2023-06-30 0001643988 us-gaap:ConvertibleDebtMember 2023-10-01 2024-06-30 0001643988 us-gaap:ConvertibleDebtMember 2022-10-01 2023-06-30 0001643988 LPTV:ExcelRevolvingLineOfCreditMember 2023-12-14 0001643988 srt:MaximumMember LPTV:ExcelRevolvingLineOfCreditMember 2023-12-14 2023-12-14 0001643988 LPTV:ExcelRevolvingLineOfCreditMember srt:MaximumMember 2023-12-14 0001643988 LPTV:ExcelRevolvingLineOfCreditMember 2023-12-14 2023-12-14 0001643988 LPTV:ExcelRevolvingLineOfCreditMember 2024-06-30 0001643988 LPTV:ExcelRevolvingLineOfCreditMember 2023-09-30 0001643988 LPTV:ExcelRevolvingLineOfCreditMember 2024-04-01 2024-06-30 0001643988 LPTV:ExcelRevolvingLineOfCreditMember 2023-04-01 2023-06-30 0001643988 LPTV:ExcelRevolvingLineOfCreditMember 2023-10-01 2024-06-30 0001643988 LPTV:ExcelRevolvingLineOfCreditMember 2022-10-01 2023-06-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember 2024-06-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember 2023-09-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember 2024-04-01 2024-06-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember 2023-04-01 2023-06-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember 2023-10-01 2024-06-30 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember 2022-10-01 2023-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember 2022-05-13 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember 2022-05-13 2022-05-13 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember srt:MinimumMember 2023-11-13 2023-11-13 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember srt:MinimumMember LPTV:LoanAgreementAmendment1Member 2023-11-13 2023-11-13 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember 2023-11-13 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember 2023-11-13 2023-11-13 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirteenTwentyTwentyTwoMember 2023-12-13 2023-12-13 0001643988 LPTV:NonRevolvingLineOfCreditLoanMayThirteenTwentyTwentyTwoAmendmentTwoMember 2024-04-18 2024-04-18 0001643988 LPTV:NonRevolvingLineOfCreditLoanMayThirteenTwentyTwentyTwoAmendmentTwoMember 2024-04-18 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirtyFirstTwentyTwentyFourMember 2024-05-31 0001643988 srt:MaximumMember 2024-05-31 0001643988 srt:MinimumMember 2024-05-31 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirtyFirstTwentyTwentyFourMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirtyFirstTwentyTwentyFourMember 2023-09-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirtyFirstTwentyTwentyFourMember 2024-04-01 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirtyFirstTwentyTwentyFourMember 2023-04-01 2023-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirtyFirstTwentyTwentyFourMember 2023-10-01 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayThirtyFirstTwentyTwentyFourMember 2022-10-01 2023-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember 2023-05-10 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember 2023-05-10 2023-05-10 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:ExcelFamilyPartnersLllpMember 2023-05-10 0001643988 LPTV:ExcelRevolvingLineOfCreditMember LPTV:ExcelFamilyPartnersLllpMember 2023-05-31 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember 2023-09-12 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember 2023-12-14 2023-12-14 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember 2023-12-14 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:ExcelMayTwentyTwentyThreeSecuredLineOfCreditNoteConversionAgreementMember 2023-12-14 2023-12-14 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:ExcelMayTwentyTwentyThreeSecuredLineOfCreditNoteConversionAgreementMember 2023-12-14 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:ExcelFamilyPartnersLllpMember 2023-12-14 2023-12-14 0001643988 us-gaap:LineOfCreditMember 2023-12-31 2023-12-31 0001643988 2023-12-31 2023-12-31 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember 2023-12-31 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember srt:MaximumMember 2023-12-31 2023-12-31 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:ExcelFamilyPartnersLllpMember 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:ExcelFamilyPartnersLllpMember 2023-09-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:ExcelFamilyPartnersLllpMember 2024-04-01 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:ExcelFamilyPartnersLllpMember 2023-04-01 2023-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:ExcelFamilyPartnersLllpMember 2023-10-01 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMayTenTwentyTwentyThreeMember LPTV:ExcelFamilyPartnersLllpMember 2022-10-01 2023-06-30 0001643988 LPTV:NonRevolvingLineOfCreditMayThirtyFirstTwentyTwentyThreeMember LPTV:ExcelFamilyPartnersLllpMember 2024-03-28 0001643988 LPTV:NonRevolvingLineOfCreditMayThirtyFirstTwentyTwentyThreeMember 2024-03-28 2024-03-28 0001643988 LPTV:ExcelFamilyPartnersLllpMember LPTV:ExcelWaiverAgreementMember 2023-12-14 2023-12-14 0001643988 LPTV:NonRevolvingLineOfCreditMay312023Member 2024-06-30 0001643988 LPTV:NonRevolvingLineOfCreditMay312023Member 2023-09-30 0001643988 LPTV:NonRevolvingLinesOfCreditMay102023Member 2024-04-01 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMay102023Member 2023-04-01 2023-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMay102023Member 2023-10-01 2024-06-30 0001643988 LPTV:NonRevolvingLinesOfCreditMay102023Member 2022-10-01 2023-06-30 0001643988 LPTV:FiveHundredLimitedMember 2023-10-01 2024-06-30 0001643988 LPTV:FiveHundredLimitedMember 2022-10-01 2023-06-30 0001643988 LPTV:SecuredLineOfCreditAgreementMember 2024-05-31 0001643988 LPTV:SecuredLineOfCreditAgreementMember 2024-05-31 2024-05-31 0001643988 2023-08-15 0001643988 2022-09-21 2022-09-21 0001643988 us-gaap:CommonStockMember 2023-10-01 2024-06-30 0001643988 srt:DirectorMember us-gaap:LineOfCreditMember 2023-10-01 2024-06-30 0001643988 LPTV:ATMSalesAgreementMember us-gaap:CommonStockMember 2023-05-12 2023-05-12 0001643988 LPTV:ATMSalesAgreementMember us-gaap:CommonStockMember 2022-10-01 2023-06-30 0001643988 LPTV:ATMSalesAgreementMember 2022-10-01 2023-06-30 0001643988 us-gaap:CommonStockMember 2022-10-01 2023-06-30 0001643988 us-gaap:EmployeeStockMember 2024-06-30 0001643988 us-gaap:EmployeeStockMember 2023-06-30 0001643988 us-gaap:EmployeeStockMember 2023-10-01 2024-06-30 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2022-09-22 2022-09-22 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2022-09-22 0001643988 us-gaap:RestrictedStockUnitsRSUMember us-gaap:ShareBasedCompensationAwardTrancheOneMember 2022-09-22 2022-09-22 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2023-01-03 2023-01-03 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2023-01-03 0001643988 us-gaap:RestrictedStockUnitsRSUMember us-gaap:ShareBasedCompensationAwardTrancheOneMember 2023-01-03 2023-01-03 0001643988 us-gaap:RestrictedStockUnitsRSUMember us-gaap:ShareBasedCompensationAwardTrancheTwoMember 2023-01-03 2023-01-03 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2023-07-01 2023-07-01 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2023-07-01 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2024-01-01 2024-01-01 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2024-01-01 0001643988 LPTV:RestrictedStockUnitsRsuOneMember 2024-03-15 2024-03-15 0001643988 LPTV:RestrictedStockUnitsRsuOneMember us-gaap:ShareBasedCompensationAwardTrancheOneMember 2024-03-15 2024-03-15 0001643988 LPTV:RestrictedStockUnitsRsuOneMember 2024-03-15 0001643988 LPTV:RestrictedStockUnitsRsuTwoMember 2024-03-15 2024-03-15 0001643988 LPTV:RestrictedStockUnitsRsuTwoMember us-gaap:ShareBasedCompensationAwardTrancheOneMember 2024-03-15 2024-03-15 0001643988 LPTV:RestrictedStockUnitsRsuTwoMember 2024-03-15 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2024-04-01 2024-04-01 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2024-04-01 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2024-06-30 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2023-06-30 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2023-10-01 2024-06-30 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2022-10-01 2023-06-30 0001643988 us-gaap:LineOfCreditMember 2023-10-01 2024-06-30 0001643988 LPTV:ExistingWarrantMember 2023-12-14 0001643988 LPTV:ExistingWarrantMember LPTV:BruceCassidyMember 2023-12-14 0001643988 LPTV:DenisePenzMember LPTV:ExistingWarrantMember 2023-12-14 0001643988 LPTV:ExistingWarrantMember LPTV:BruceCassidyAndDenisePenzMember 2023-12-14 2023-12-14 0001643988 LPTV:ExistingWarrantMember 2024-06-30 0001643988 LPTV:RATWarrantMember 2024-05-31 0001643988 LPTV:RATWarrantMember srt:MinimumMember 2024-05-31 0001643988 LPTV:RATWarrantMember srt:MaximumMember 2024-05-31 0001643988 LPTV:RegisteredDirectOfferingMember 2024-06-30 0001643988 us-gaap:PrivatePlacementMember 2024-06-30 0001643988 us-gaap:StockOptionMember 2024-06-30 0001643988 us-gaap:StockOptionMember 2023-10-01 2024-06-30 0001643988 us-gaap:RestrictedStockUnitsRSUMember 2023-09-30 0001643988 us-gaap:WarrantMember 2024-06-30 0001643988 us-gaap:WarrantMember 2023-10-01 2024-06-30 0001643988 us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2024-07-16 0001643988 LPTV:RevolvingLinesOfCreditJulyTwentyNineTwentyTwentyTwoMember LPTV:LoanAndSecurityAgreementMember 2022-07-29 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure LPTV:Integer

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2024

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from              to             

 

Commission File Number: 001-41508

 

LOOP MEDIA, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   47-3975872
(State or other jurisdiction of incorporation)   (IRS Employer Identification Number)
 
2600 West Olive Avenue, Suite 5470, Burbank, CA 91505
(Address of principal executive offices) (Zip Code)
 
(213) 436-2100
(Registrant’s telephone number, including area code)
 

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common stock, $0.0001 par value per share   LPTV   The NYSE American, LLC

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer Smaller reporting company
Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes No

 

As of August 6, 2024, the registrant had 80,825,910 shares of common stock issued and outstanding.

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I — FINANCIAL INFORMATION 2
   
Item 1. Financial Statements. 2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 33
Item 3. Quantitative and Qualitative Disclosure About Market Risk. 60
Item 4. Controls and Procedures. 60
     
PART II — OTHER INFORMATION 61
     
Item 1. Legal Proceedings. 61
Item 1A. Risk Factors. 61
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 61
Item 3. Defaults Upon Senior Securities. 61
Item 4. Mine Safety Disclosures. 61
Item 5. Other Information. 61
Item 6. Exhibits. 62
Signatures 63

 

1
 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

LOOP MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30, 2024   September 30, 2023 
   (UNAUDITED)     
ASSETS          
Current assets          
Cash  $1,546,088   $3,068,696 
Accounts receivable, net   3,541,592    6,211,815 
Prepaid expenses and other current assets   443,045    987,605 
Content assets, current   997,508    2,218,894 
Total current assets   6,528,233    12,487,010 
           
Deposits   9,954    12,054 
Content assets, non-current   211,661    448,726 
Deferred costs, non-current   503,123    744,408 
Property and equipment, net   2,507,776    2,711,558 
Right-of-use assets   189,650     
Intangible assets, net   393,556    477,889 
Total non-current assets   3,815,720    4,394,635 
Total assets  $10,343,953   $16,881,645 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities          
Accounts payable  $5,501,995   $4,978,920 
Accrued liabilities   1,866,161    3,546,338 
Accrued royalties and revenue share   7,829,892    4,930,329 
Equipment financing liability, current   131,348    

 
License content liability, current   708,567    489,157 
Deferred income   26,278     
Lease liability, current   67,689     
Revolving line of credit, current   2,175,456    2,985,298 
Non-revolving line of credit - related party, current   1,000,000     
Non-revolving line of credit, current   1,329,750    2,124,720 
Total current liabilities   20,637,136    19,054,762 
           
License content liability, non-current   129,000    208,000 
Equipment financing liability, non-current   229,846     
Lease liability, non-current   121,961     
Non-revolving line of credit       475,523 
Non-revolving line of credit, related party       1,959,693 
Revolving line of credit, related party   1,679,226     
Total non-current liabilities   2,160,033    2,643,216 
Total liabilities   22,797,169    21,697,978 
           
Stockholders’ equity (deficit)          
Common Stock, $0.0001 par value, 150,000,000 shares authorized, 79,048,736 and 65,620,151 shares issued and outstanding as of June 30, 2024, and September 30, 2023, respectively   7,904    6,562 
Additional paid in capital   134,132,075    123,462,648 
Accumulated deficit   (146,593,195)   (128,285,543)
Total stockholders’ equity (deficit)   (12,453,216)   (4,816,333)
Total liabilities and stockholders’ equity (deficit)  $10,343,953   $16,881,645 

 

See the accompanying notes to the consolidated financial statements

 

2
 

 

LOOP MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

   2024   2023   2024   2023 
   Three months ended June 30,   Nine months ended June 30, 
   2024   2023   2024   2023 
Revenue  $4,350,570   $5,734,976   $18,524,289   $25,954,038 
Cost of revenue                    
Cost of revenue - Advertising and Legacy and other revenue   2,641,779    3,132,568    11,214,512    14,767,807 
Cost of revenue - depreciation and amortization   798,434    779,165    2,356,717    2,091,876 
Total cost of revenue   3,440,213    3,911,733    13,571,229    16,859,683 
Gross profit   910,357    1,823,243    4,953,060    9,094,355 
                     
Operating expenses                    
Sales, general and administrative   4,116,186    6,284,514    16,022,857    22,011,961 
Stock-based compensation   931,571    2,592,369    3,371,933    6,858,983 
Depreciation and amortization   422,882    295,008    1,217,955    717,733 
Restructuring costs   220,053    146,672    220,053    146,672 
Total operating expenses   5,690,692    9,318,563    20,832,798    29,735,349 
                     
Loss from Operations   (4,780,335)   (7,495,320)   (15,879,738)   (20,640,994)
                     
Other income (expense)                    
Interest expense   (670,981)   (962,718)   (2,402,444)   (2,889,745)
Loss on extinguishment of debt           (25,424)    
Employee retention credits       648,543        648,543 
Other expense   34    (65,643)   289    (68,267)
Total Other income (expense)   (670,947)   (379,818)   (2,427,579)   (2,309,469)
Loss before income taxes  $(5,451,282)  $(7,875,138)  $(18,307,317)  $(22,950,463)
Income tax expense   (335)   (394)   (335)   (1,624)
Net loss  $(5,451,617)  $(7,875,532)  $(18,307,652)  $(22,952,087)
                     
Basic and diluted net loss per common share (Note 2)  $(0.07)  $(0.14)  $(0.26)  $(0.41)
                     
Weighted average number of common shares outstanding   75,146,980    56,604,812    70,966,475    56,455,743 

 

See the accompanying notes to the consolidated financial statements

 

3
 

 

LOOP MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE NINE MONTHS ENDED June 30, 2024, and 2023

(UNAUDITED)

 

   Shares   Amount   in Capital   Deficit   Total 
   Common Stock   Additional Paid   Accumulated     
   Shares   Amount   in Capital   Deficit   Total 
Balances, September 30, 2023   65,620,151   $6,562   $123,462,648   $(128,285,543)  $(4,816,333)
Stock-based compensation           1,328,225        1,328,225 
Warrants issued for debt           1,003,269        1,003,269 
Shares issued for consulting fees   311,889    31    124,101        124,132 
Shares issued for debt conversion   3,037,895    304    2,455,437        2,455,741 
Shares issued for capital raise costs   30,405    3    22,497        22,500 
Shares issued upon warrant exercises   1,850,874    185    1,480,514        1,480,699 
Net loss               (5,285,402)   (5,285,402)
Balances, December 31, 2023   70,851,214   $7,085  

$

129,876,691  

$

(133,570,945)  $(3,687,169)
Stock-based compensation           1,112,137        1,112,137 
Warrants issued for debt           214,978        214,978 
Shares issued for vested RSUs   292,117    29    (56,045)       

(56,016

)
Shares issued for capital raise costs   30,405    3    22,497        22,500 
Net loss               (7,570,633)   (7,570,633)
Balances, March 31, 2024   71,173,736   $7,117  

$

131,170,258   $(141,141,578)  $(9,964,203)
Stock-based compensation           931,571        931,571 
Pre-funded warrants issued for cash           1,269,877        1,269,877 
Shares issued for cash   7,875,000    787    1,180,463        1,181,250 
Shares issuance cost           (420,094)   

    (420,094) 
Net loss               (5,451,617)   (5,451,617)
Balances, June 30, 2024   79,048,736   $7,904  

$

134,132,075  

$

(146,593,195)  $(12,453,216)

 

   Common Stock   Additional Paid   Accumulated     
   Shares   Amount   in Capital   Deficit   Total 
Balances, September 30, 2022   56,381,209   $5,638   $101,970,318   $(96,321,864)  $5,654,092 
Stock-based compensation           1,790,807        1,790,807 
Net loss               (5,259,439)   (5,259,439)
Balances, December 31, 2022   56,381,209   $5,638  

$

103,761,125   $(101,581,303)  $2,185,460 
Stock-based compensation           2,475,807        2,475,807 
Short swing profit recovery           1,201        1,201 
Issuance costs from uplist of stock           (86,330)       (86,330)
Net loss               (9,817,117)   (9,817,117)
Balances, March 31, 2023   56,381,209   $5,638   $106,151,803   $(111,398,420)  $(5,240,979)
Stock-based compensation           2,547,799        2,547,799 
Warrants issued for consulting fees           44,569        44,569 
Warrants issued in conjunction with debt           136,103        136,103 
Shares issued for cash under ATM, net   2,779,997    278    8,224,782        8,225,060 
Shares issued upon option exercises   22,462    2    38,408        38,410 
Net loss               (7,875,532)   (7,875,532)
Balances, June 30, 2023   59,183,668   $5,918   $117,143,464   $(119,273,952)  $(2,124,570)

 

See the accompanying notes to the consolidated financial statements

 

4
 

 

LOOP MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   2024   2023 
   Nine months ended June 30, 
   2024   2023 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(18,307,652)  $(22,952,087)
Adjustments to reconcile net loss to net cash used in operating activities:          
Amortization of debt discount   1,635,218    1,842,003 
Depreciation and amortization expense, PPE   1,037,319    700,097 
Amortization of deferred costs, ATM   

180,635

    

17,636

 
Amortization of content assets   2,356,717    2,091,876 
Amortization of right-of-use assets   26,274   76,696 
Bad debt expense   284,065     
Loss on extinguishment of debt converted to equity   25,424     
Stock-based compensation   3,371,933    6,858,983 
Stock option exercise       38,410 
Shares issued for consulting fees   124,135     
Change in operating assets and liabilities:          
 Accounts receivable   2,386,158    7,090,558 
 Inventory   7,400    4,397 
 Prepaid expenses   537,162    78,632 
 Deposit   2,100    (147)
 Accounts payable   

830,107

    (2,605,012)
 Accrued liabilities   (1,571,597)   (2,899,246)
 Accrued royalties and revenue share   2,899,563    (748,226)
 License content liability   (1,135,673)   (4,132,894)
 Operating lease liabilities   

(26,274

)   (75,529)
 Equipment financing liability   361,194     
 Deferred income   26,278    (140,764)
NET CASH USED IN OPERATING ACTIVITIES   (4,949,514)    (14,754,617)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of property and equipment   (754,543)   (1,483,498)
NET CASH USED IN INVESTING ACTIVITIES   (754,543)   (1,483,498)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from issuance of common stock, registered direct offering   1,181,250     
Proceeds from issuance of pre-funded warrants   1,269,877     
Proceeds from issuance of common stock, ATM       8,318,110 
Proceeds from exercise of warrants   

1,480,699

    

 
Proceeds from lines of credit   24,294,104    37,974,347 
Repayments on lines of credit   (23,705,000)   (36,262,546)
Value of shares withheld for taxes   (56,016)    
Common stock issuance costs for uplist       (179,380)
Deferred costs   136,629   (646,840)
Shares issuance costs   

(420,094

)    
Payment of acquisition related consideration       (250,125)
Debt issuance costs   

    (402,278)
Short swing profit recovery       1,201 
NET CASH PROVIDED BY FINANCING ACTIVITIES   4,181,449    8,552,489 
           
Change in cash and cash equivalents   (1,522,608)   (7,685,626)
Cash, beginning of period   3,068,696    14,071,914 
Cash, end of period  $1,546,088   $6,386,288 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW STATEMENTS          
Cash paid for interest  $641,227   $945,939 
Cash paid for income taxes  $   $1,624 
SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND FINANCING ACTIVITIES          
Shares issued for debt conversion  $2,455,741   $ 
Deferred costs for warrants issued for debt  $1,003,269   $136,103 
Unpaid additions to licensed content and internally-developed content  $174,004   $

 
Unpaid deferred costs  $76,122   $157,731 
Unpaid additions to property and equipment  $314,357   $412,256 
Leased assets obtained in exchange for new operating lease liabilities  $

215,924

    

 

 

See the accompanying notes to the consolidated financial statements

 

5
 

 

LOOP MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

(UNAUDITED)

 

NOTE 1 – BUSINESS

 

Loop Media, Inc., a Nevada corporation, (collectively, “Loop Media,” the “Company,” “we,” “us” or “our”) is a multichannel digital video platform media company that uses marketing technology, or “MarTech,” to generate our revenue and offer our services. Our technology and vast library of videos and licensed content enable us to curate and distribute short-form videos to connected televisions (“CTV”) in out-of-home (“OOH”) dining, hospitality and retail establishments, convenience stores and other locations and venues to enable them to inform, entertain and engage their customers. Our technology also provides businesses the ability to promote and advertise their products via digital signage and provides third-party advertisers with a targeted marketing and promotional tool for their products and services. We also allow our business clients to access our service without advertisements by paying a monthly subscription fee. In the second and third quarters of fiscal year 2024, we have continued to work toward the expansion of our subscription offerings, including toward the introduction of a two-tier music video service offering, which will include a “primary tier” consisting of fewer than ten music video channels provided under a free ad-based service, and a “premium tier” of the full library of curated music video channels provided under a subscription service. We also recently announced a non-music subscription offering that includes a number of live channels ranging from live sports events to news and culture offerings.

 

We offer hand-curated music video content licensed from major and independent record labels, including Universal Music Group (“Universal”), Sony Music Entertainment (“Sony”), and Warner Music Group (“Warner” and collectively with Universal and Sony, the “Music Labels”), as well as non-music video content. Our non-music video content is predominantly licensed or acquired from third parties, including action sports clips, drone and nature footage, trivia, news headlines, lifestyle channels and kid-friendly videos, as well as movie, television and video game trailers, amongst other content. We distribute our content and advertising inventory to digital screens located in OOH locations primarily through (i) our owned and operated platform (the “O&O Platform”) of Loop Media-designed “small-box” streaming Android media players (“Loop Players”) and legacy ScreenPlay (as defined below) computers and (ii) through screens (“Partner Screens”) on digital platforms owned and operated by third parties (each a “Partner Platform” and collectively, the “Partner Platforms,” and together with the O&O Platform, the “Loop Platform”).

 

As of June 30, 2024, we had approximately 81,000 active Loop Players and Partner Screens across the Loop Platform, which include 30,486 quarterly active Loop Players, or QAUs (as defined below) across our O&O Platform, a decrease of 2,172 over the quarter ended March 31, 2024, and approximately 51,000 Partner Screens across our Partner Platforms, an increase of approximately 1,000 Partner Screens over the quarter ended March 31, 2024.

 

We define an “active unit” as (i) an ad-supported Loop Player or digital out-of-home (“DOOH”) location using our ad- supported service through our “Loop for Business” application or using a DOOH venue-owned computer screening our content, that is online, used on our O&O Platform, playing content and has checked into the Loop Media analytics system at least once in the 90-day period ending on the date of measurement, or (ii) a DOOH location customer using our subscription service on our O&O Platform at any time during the 90-day period. We use “QAU” to refer to the number of such active units during such period. We do not count towards our QAUs any Loop Players or screens used on our Partner Platform.

 

Liquidity and management’s plan

 

As shown in the accompanying consolidated financial statements, we have incurred recurring losses resulting in an accumulated deficit. We anticipate further losses in the foreseeable future. We also had negative cash flows used in operations. These factors raise substantial doubt about our ability to continue as a going concern. Our primary source of operating funds since inception has been cash proceeds from the sale of our common stock, par value $0.0001 per share (the “Common Stock”) and debt and equity financing transactions. Our ability to continue as a going concern is dependent upon our ability to generate sufficient revenue and our ability to raise additional funds by way of our debt and equity financing efforts.

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. These unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary if we are unable to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to supplement our cash from revenues with additional cash raised from equity investment or debt transactions while maintaining reduced spending levels. As previously disclosed, we have continued to explore potential strategic alternatives to maximize shareholder value and to evaluate potential financing opportunities.

 

6
 

 

Shelf Registration ($50 Million ATM)

 

On December 22, 2022, we filed a Shelf Registration Statement on Form S-3 that has been declared effective by the SEC. On May 12, 2023, we entered into an At-the-Market (“ATM”) Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”) pursuant to which we may offer and sell, from time to time through the Agent, shares of our Common Stock, for aggregate gross proceeds of up to $50,000,000.

 

As previously disclosed, effective May 31, 2024, the Company and the Agent terminated the ATM Sales Agreement. We are not subject to any termination penalties related to the termination of the ATM Sales Agreement.

 

During the nine months ended June 30, 2024, we did not raise any funds through sales under the ATM Sales Agreement.

 

GemCap Revolving Line of Credit

 

Effective as of July 29, 2022, we entered into a Loan and Security Agreement with Industrial Funding Group, Inc. (the “Initial Lender”) for a revolving loan credit facility for the initial principal sum of up to $4,000,000, and through the exercise of an accordion feature, a total sum of up to $10,000,000 (the “GemCap Revolving Line of Credit Agreement”), evidenced by a Revolving Loan Secured Promissory Note (the “Revolving Loan Note”), also effective as of July 29, 2022 (the “GemCap Revolving Line of Credit”). In connection with the GemCap Revolving Line of Credit Agreement and the Revolving Loan Note, we also executed and delivered to the Initial Lender the Loan Agreement Schedule dated as of July 29, 2022 (the “Loan Agreement Schedule”) and other Loan Documents (as defined in the GemCap Revolving Line of Credit Agreement). Shortly after the effective date of the GemCap Revolving Line of Credit Agreement, the Initial Lender assigned the GemCap Revolving Line of Credit Agreement, and the Loan Documents, to GemCap Solutions, LLC (“GemCap” or the “Senior Lender”).

 

Effective as of October 27, 2022, we entered into Amendment Number 1 to the Loan and Security Agreement and to the Revolving Loan Agreement Schedule, and the Amended and Restated Secured Promissory Note (Revolving Loans) with the Senior Lender to increase the principal sum available under the GemCap Revolving Line of Credit Agreement from $4,000,000 to $6,000,000.

 

Effective July 29, 2024, we entered into Amendment Number 2 to the Loan and Security Agreement, the Loan Agreement Schedule, the Revolving Loan Note and to the other Loan Documents to amend certain material terms, including to (i) extend the maturity date of the GemCap Revolving Line of Credit Agreement by one (1) year, from July 29, 2024, to July 29, 2025, and (ii) to make Retail Media TV, Inc., our wholly-owned subsidiary, a co-borrower thereunder.

 

The GemCap Revolving Line of Credit had an original maturity date of July 29, 2024, and began accruing interest on the unpaid principal balance of advances, payable monthly in arrears, on September 7, 2022, at an annual rate equal to the greater of (I) the sum of (i) the “Prime Rate” as reported in the “Money Rates” column of The Wall Street Journal, adjusted as and when such Prime Rate changes, plus (ii) zero percent (0.00%), and (II) four percent (4.00%). Availability for borrowing under the GemCap Revolving Line of Credit is dependent upon our assets in certain eligible accounts and measures of revenue, subject to reduction for reserves that the Senior Lender may require in its discretion, and the accordion feature is a provision whereby we may request that the Senior Lender increase availability under the GemCap Revolving Line of Credit, subject to its sole discretion.

 

Under the GemCap Revolving Line of Credit Agreement, we have granted to the Senior Lender a first-priority security interest in all of our present and future property and assets, including products and proceeds thereof. In connection with the loan, our existing secured lenders, some of whom are the RAT Lenders under our RAT Non-Revolving Line of Credit (each as defined below) (collectively, the “Subordinated Lenders”) delivered subordination agreements (the “GemCap Subordination Agreements”) to the Senior Lender. We are permitted to make regularly scheduled payments, including payments upon maturity, to such subordinated lenders and potentially other payments subject to a measure of cash flow and receiving certain financing activity proceeds, in accordance with the terms of the GemCap Subordination Agreements. In connection with the delivery of the GemCap Subordination Agreements by the Subordinated Lenders, on July 29, 2022, we issued warrants to each Subordinated Lender on identical terms for an aggregate of up to 296,329 shares of our Common Stock (each, a “Subordination Agreement Warrant”). Each Subordination Agreement Warrant has an exercise price of $5.25 per share, expires on July 29, 2025, and is exercisable at any time prior to such date. One warrant for 191,570 warrant shares was issued to Eagle Investment Group, LLC, an entity managed by Bruce Cassidy, Executive Chairman of our Board of Directors (“Mr. Cassidy”), as directed by its affiliate, Excel Family Partners, LLLP (“Excel”), an entity also managed by Mr. Cassidy, one of the Subordinated Lenders. The Subordinated Lenders receiving warrants for the remaining 104,759 warrant shares were also entitled to receive a cash payment of $22,000 six months from the date of the GemCap Subordination Agreements, representing one percent (1.00%) of the outstanding principal amount of the loan held by such Subordinated Lenders. This cash payment was made to those Subordinated Lenders on January 25, 2023.

 

As of June 30, 2024, the GemCap Revolving Line of Credit had a balance, including accrued interest, amounting to $2,279,596. See “Note 8 – Debt.”

 

The Registered Offering and the Concurrent Private Placement Offering

 

On May 31, 2024, we entered into a Securities Purchase Agreement (the “Institutional Purchase Agreement”) with the purchaser named therein (the “Institutional Investor”) and a Securities Purchase Agreement (the “Private Placement Purchase Agreement,” and together with the Institutional Purchase Agreement, the “Purchase Agreements”) with Excel (the “Private Placement Entity,” together with the Institutional Investor, the “Investors”).

 

Pursuant to the Institutional Purchase Agreement, we agreed to sell and issue, in a registered direct offering (the “Registered Offering”) 7,875,000 shares (the “Registered Shares”) of our Common Stock at a purchase price per share of $0.15 and pre-funded warrants (the “Registered Pre-Funded Warrants”) to purchase up to an aggregate of 1,777,174 shares of Common Stock (the “Registered Pre-Funded Warrant Shares”) at a purchase price per Registered Pre-Funded Warrant of $0.1499, for aggregate gross proceeds to the Company of approximately $1.45 million, before deducting placement agent fees and offering expenses payable by the Company.

 

7
 

 

Pursuant to the Private Placement Purchase Agreement, in a concurrent private placement (the “Concurrent Private Placement Offering,” together with the Registered Offering, the “Offerings”), we agreed to sell and issue to the Private Placement Entity pre-funded warrants (the “Private Pre-Funded Warrants”) to purchase up to an aggregate of 4,347,826 shares of Common Stock (the “Private Pre-Funded Warrant Shares”) at a purchase price of $0.2308 per Private Pre-Funded Warrant, for aggregate gross proceeds to the Company of approximately $1.0 million, before deducting offering expenses payable by the Company. The Private Pre-Funded Warrants are immediately exercisable at an exercise price of $0.0001 per share and will expire when the Private Pre-Funded Warrants are fully exercised. The Concurrent Private Placement Offering closed on June 10, 2024.

 

The Purchase Agreements contain customary representations, warranties and agreements of the Company and the Investors and customary indemnification rights and obligations of the parties. Pursuant to the terms of the Institutional Purchase Agreement, we have agreed to certain restrictions, subject to certain exceptions, on the issuance and sale of its Common Stock and securities convertible into shares of Common Stock during the 90-day period following the closing of the Registered Offering. We also agreed not to effect or enter into an agreement to effect any issuance of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock involving a variable rate transaction (as defined in the Institutional Purchase Agreement), subject to certain exceptions, until the six-month anniversary of the closing of the Registered Offering.

 

In addition, until the date that is the eighteen-month anniversary of the closing of the Registered Offering, the Institutional Investor is entitled to a participation right in any subsequent financing (as defined in the Institutional Purchase Agreement ) effected by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, or a combination of units thereof, up to an amount equal to 35% of such subsequent financing on the same terms, conditions and price provided for in the subsequent financing, subject to certain carve-outs as set forth in the Institutional Purchase Agreement.

 

In connection with the Offerings, on May 31, 2024, we also entered into a placement agency agreement (the “Placement Agency Agreement”) with Roth Capital Partners, LLC (the “Placement Agent”). Pursuant to the terms of the Placement Agency Agreement, the Placement Agent agreed to use its reasonable best efforts to arrange for the sale of the Registered Shares, the Registered Pre-Funded Warrants, the Registered Pre-Funded Warrant Shares, the Private Pre-Funded Warrants and the Private Pre-Funded Warrant Shares (the “Securities”). We paid the Placement Agent a cash fee equal to 6.5% of the gross proceeds generated from the Offerings and agreed to reimburse the Placement Agent for certain of its expenses in an amount up to $50,000. The Placement Agent did not receive cash placement agent fees on the sale of the Private Pre-Funded Warrants and the Private Pre-Funded Warrant Shares. The Placement Agency Agreement contains customary representations, warranties and agreements of the Company and the Placement Agent and customary indemnification rights and obligations of the parties.

 

Pursuant to the terms of the Placement Agency Agreement, we issued to the Placement Agent warrants (“Placement Agent Warrants”) to purchase up to 700,000 shares of Common Stock, or 5.0% of the aggregate shares of Common Stock (or Common Stock equivalents) issued in the Offerings, exercisable at a price per share of $0.25399. The Placement Agent Warrants are exercisable commencing six months after the closing date of the Registered Offering and expire May 31, 2029.

 

The Registered Offering closed on June 3, 2024, and on July 1, 2024, the Institutional Investor delivered a Notice of Exercise to us to purchase the Registered Pre-Funded Warrant Shares.

 

The Registered Shares and the Registered Pre-Funded Warrants were offered pursuant to our effective Shelf Registration Statement on Form S-3 (File No. 333-268957), which was previously filed and declared effective by the SEC, the accompanying base prospectus dated January 11, 2023, and a prospectus supplement dated May 31, 2024.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Interim Financial Statements

 

The following (a) condensed consolidated balance sheet as of September 30, 2023, which has been derived from our audited financial statements, and (b) our unaudited condensed consolidated interim financial statements for the nine months ended June 30, 2024, have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the Securities Act of 1933. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended June 30, 2024, are not necessarily indicative of results that may be expected for the year ending September 30, 2024.

 

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended September 30, 2023, included in our Annual Report on Form 10-K filed with the SEC on December 19, 2023.

 

8
 

 

Basis of presentation

 

The consolidated financial statements include our accounts and our wholly-owned subsidiaries, EON Media Group Pte. Ltd. and Retail Media TV, Inc. The unaudited condensed consolidated financial statements are prepared using the accrual basis of accounting in accordance with US GAAP. All inter-company transactions and balances have been eliminated on consolidation.

 

Use of estimates

 

The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include assumptions used in the revenue recognition of performance obligations, allowance for doubtful accounts, fair value of stock-based compensation awards, income taxes and going concern.

 

Segment reporting

 

We report as one reportable segment. Our business activities, revenues and expenses are evaluated by management as one reportable segment.

 

Cash

 

Cash and cash equivalents include all highly liquid monetary instruments with original maturities of three months or less when purchased. These investments are carried at cost, which approximates fair value. Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash deposits. We maintain our cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, our cash and cash equivalent balances may be uninsured or in amounts that exceed the FDIC insurance limits. We have not experienced any losses on such accounts. On June 30, 2024, and September 30, 2023, we had no cash equivalents.

 

As of June 30, 2024, and September 30, 2023, approximately $628,658 and $2,818,696 of cash exceeded the FDIC insurance limits, respectively.

 

9
 

 

Accounts receivable

 

Accounts receivable represent amounts due from customers. We assess the collectability of receivables on an ongoing basis. A provision for the impairment of receivables involves significant management judgment and includes the review of individual receivables based on individual customers, current economic trends and analysis of historical bad debts. As of June 30, 2024, and September 30, 2023, we had recorded an allowance for doubtful accounts of $284,065 and $630,629, respectively.

 

Concentration of credit risk

 

During the nine months ended June 30, 2024, we had two customers that each individually comprised greater than 10% of net revenue, representing 22% and 15% respectively. No other customer accounted for more than 10% of net revenue during the periods presented.

 

During the nine months ended June 30, 2023, we had two customers that each individually comprised greater than 10% of net revenue, representing 16% and 14% respectively. No other customer accounted for more than 10% of net revenue during the periods presented.

 

As of June 30, 2024, two customers accounted for a total of 20% of our accounts receivable balance or 10% and 10%, respectively. No other customer accounted for more than 10% of total accounts receivable.

 

As of June 30, 2023, one customer accounted for a total of 15% of our accounts receivable balance. No other customer accounted for more than 10% of total accounts receivable.

 

We grant credit in the normal course of business to our customers. Periodically, we review past due accounts and make decisions about future credit on a customer-by-customer basis. Credit risk is the risk that one party to a financial instrument will cause a loss for the other party by failing to discharge an obligation.

 

Prepaid expenses

 

Expenditures paid in one accounting period which will not be consumed until a future period such as insurance premiums and annual subscription fees are accounted for on the balance sheet as a prepaid expense. When the asset is eventually consumed, it is charged to expense.

 

Content Assets

 

We capitalize the fixed content fees and corresponding liability when the license period begins, the cost of the content is known, and the content is accepted and available for streaming. If the licensing fee is not determinable or reasonably estimable, no asset or liability is recorded, and licensing costs are expensed as incurred. We amortize licensed content assets into cost of revenue, using the straight-line method over the contractual period of availability. The liability is paid in accordance with the contractual terms of the arrangement. Internally-developed content costs are capitalized in the same manner as licensed content costs, when the cost of the content is known and the content is ready and available for streaming. We amortize internally-developed content assets into cost of revenue, using the straight-line method over the estimated period of streaming.

 

Long-lived assets

 

We evaluate the recoverability of long-lived assets, including intangible assets, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner that an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, we recognize an impairment loss only if their carrying amount is not recoverable through the undiscounted cash flows. The impairment loss is based on the difference between the carrying amount and estimated fair value as determined by discounted future cash flows. Our finite long-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from two to nine years.

 

10
 

 

Property and equipment, net

 

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the asset’s estimated useful life. Our capitalization policy is to capitalize property and equipment purchases greater than $3,000, as well as internally-developed software enhancements. Expenditures for maintenance and repairs are expensed as incurred. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in earnings.

 

Loop Players are capitalized as fixed assets and depreciated over the estimated period of use.

 

See below for estimated useful lives:

 

Loop Players  3 years
Equipment  3-5 years
Software  3 years

 

Operating leases

 

We determine if an arrangement is a lease at inception. Operating lease right-of-use assets (“ROU assets”) and short-term and long-term lease liabilities are included on the face of the consolidated balance sheet.

 

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are accounted for as a single lease component. For lease agreements with terms less than twelve months, we have elected the short-term lease measurement and recognition exemption, and we recognize such lease payments on a straight-line basis over the lease term.

 

Fair value measurement

 

We determine the fair value of our assets and liabilities using a hierarchy established by the accounting guidance that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The three levels of valuation hierarchy are defined as follows:

 

  Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
     
  Level 2 inputs to the valuation methodology included quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
     
  Level 3 inputs to the valuation methodology is one or more unobservable inputs which are significant to the fair value measurement.

 

11
 

 

The carrying amount of our financial instruments, including cash, accounts receivable, deposits, short-term portion of notes receivable and notes payable, and current liabilities approximate fair value due to their short-term nature. We do not have financial assets or liabilities that are required under US GAAP to be measured at fair value on a recurring basis. We have not elected to use fair value measurement option for any assets or liabilities for which fair value measurement is not presently required.

 

We record assets and liabilities at fair value on a nonrecurring basis as required by US GAAP. Assets recognized or disclosed at fair value in the condensed consolidated financial statements on a nonrecurring basis include items such as property and equipment, operating lease assets, goodwill, and other intangible assets, which are measured at fair value if determined to be impaired.

 

On September 26, 2022, our convertible debentures converted to Common Stock as part of our public offering and uplist to The NYSE American, LLC (the “NYSE American”), in accordance with the terms of the original debt agreements. As of September 30, 2022, the remaining balance of the Derivative Liability was written off as part of the conversion to equity. Thus, there is no fair value measurement of the Derivative Liability balance as of June 30, 2024.

 

Advertising costs

 

We expense all advertising costs as incurred.

 

Advertising and marketing costs for the three months ended June 30, 2024, and 2023, were $957,727 and $2,743,194, respectively.

 

Advertising and marketing costs for the nine months ended June 30, 2024, and 2023, were $4,883,946 and $8,647,738, respectively.

 

Revenue recognition

 

We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers, when it satisfies a performance obligation by transferring control over a product to a customer. Revenue is measured based on the consideration we expect to receive in exchange for those products. In instances where final acceptance of the product is specified by the client, revenue is deferred until all acceptance criteria have been met. For example, we bill subscription services in advance of when the service is performed and revenue is treated as deferred revenue until the service is performed and/or the performance obligation is satisfied. Revenues are recognized under Topic 606 in a manner that reasonably reflects the delivery of our products and services to clients in return for expected consideration and includes the following elements:

 

  executed contracts with our customers that we believe are legally enforceable;
     
  identification of performance obligations in the respective contract;
     
  determination of the transaction price for each performance obligation in the respective contract;
     
  allocation of the transaction price to each performance obligation; and
     
  recognition of revenue only when we satisfy each performance obligation.

 

Our revenue can be categorized into two revenue streams: Advertising revenue and Legacy and other revenue.

 

12
 

 

The following table disaggregates our revenue by major type for each of the periods indicated:

 

   2024   2023   2024   2023 
   Three months ended June 30,   Nine months ended June 30, 
   2024   2023   2024   2023 
Advertising revenue  $3,997,054   $5,079,922   $16,936,810   $23,687,817 
Legacy and other revenue   353,516    655,054    1,587,479    2,266,221 
Total  $4,350,570   $5,734,976   $18,524,289   $25,954,038 

 

Performance obligations and significant judgments

 

Our performance obligations and recognition patterns for each revenue stream are as follows:

 

Advertising revenue

 

For the three months ended June 30, 2024, and 2023, advertising revenue accounted for 92% and 89%, respectively, of our revenue and includes revenue from direct programmatic and local advertising as well as sponsorships.

 

For the nine months ended June 30, 2024, and 2023, advertising revenue accounted for 91% and 91%, respectively, of our revenue and includes revenue from direct programmatic and local advertising as well as sponsorships.

 

For all advertising revenue sources, we evaluate whether we should be considered the principal (i.e., report revenues on a gross basis) or an agent (i.e., report revenues on a net basis). Our role as principal or agent differs based on our performance obligation for each revenue share arrangement.

 

For both the O&O and Partner Platforms businesses, advertising inventory provided to advertisers through the use of an advertising demand partner or agency, with whose fees or commission is calculated based on a stated percentage of gross advertising spending, we are considered the agent and our revenues are reported net of agency fees and commissions. We are considered the agent because the demand partner or agency controls all aspects of the transaction (pricing risk, inventory risk, obligation for fulfillment) except for the devices used to show the advertisements, therefore we report this advertising revenue net of agency fees and commissions.

 

We are considered the principal in our arrangements with content providers in our O&O Platform business and with our arrangements with our third-party partners in our Partner Platforms business and thus report revenues on a gross basis (net of agency fees and commissions), wherein the amounts billed to our advertising demand partners, advertising agencies, and direct advertisers and sponsors are recorded as revenues, and amounts paid to content providers and third-party partners are recorded as expenses. We are considered the principal because we control the advertising space, are primarily responsible to our advertising demand partners and other parties filling our advertising inventory, have discretion in pricing and advertising fill rates and typically have an inventory risk.

 

For advertising revenue, we recognize revenue at the time the digital advertising impressions are filled and the advertisements are played and, for sponsorship revenue, we generally recognize revenue ratably over the term of the sponsorship arrangement as the sponsored advertisements are played.

 

Legacy and other business revenue

 

For the three months ended June 30, 2024, and 2023, legacy and other business revenue accounted for the remaining 8% and 11%, respectively, of total revenue and includes streaming services, subscription content services, and hardware delivery, as described below.

 

For the nine months ended June 30, 2024, and 2023, legacy and other business revenue accounted for the remaining 9% and 9%, respectively, of total revenue and includes streaming services, subscription content services, and hardware delivery, as described below:

 

  Delivery of streaming services including content encoding and hosting. We recognize revenue over the term of the service based on bandwidth usage. Revenue from streaming services is insignificant.

 

13
 

 

  Delivery of subscription content services in customized formats. We recognize revenue straight-line over the term of the service.

 

  Delivery of hardware for ongoing subscription content delivery through software. We recognize revenue at the point of hardware delivery. Revenue from hardware sales is insignificant.

 

Transaction prices for performance obligations are explicitly outlined in relevant agreements; therefore, we do not believe that significant judgments are required with respect to the determination of the transaction price, including any variable consideration identified.

 

Customer acquisition costs

 

Customer acquisition costs consist of marketing costs and affiliate fees associated with the O&O Platform business. They are included in operating expenses and expensed as incurred.

 

Cost of revenue

 

Cost of revenue for the O&O Platform and legacy businesses represents the amortized cost of ongoing licensing and hosting fees, which is recognized over time based on usage patterns. The depreciation expense associated with the Loop Players is not included in cost of sales.

 

Cost of revenue for the Partner Platform business represents hosting fees, amortized costs of internally-developed content, and the revenue share with third party partners (after deduction of allocated infrastructure costs). The cost of revenue is higher with partners within the Partner Platform versus those within the O&O Platform because we leverage our Partner Platform partners’ network of customers and their screens to deliver content and advertising inventory, rather than using our own Loop Players.

 

Deferred income

 

Deferred income represents our accounting for the timing difference between when fees are received and when the performance obligation is satisfied.

 

Net loss per share

 

We account for net loss per share in accordance with ASC subtopic 260-10, Earnings Per Share (“ASC 260-10”), which requires presentation of basic and diluted earnings per share (“EPS”) on the face of the statement of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS.

 

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of Common Stock outstanding during each period. It excludes the dilutive effects of any potentially issuable common shares.

 

Diluted net loss per share is calculated by including any potentially dilutive share issuances in the denominator.

 

The following securities are excluded from the calculation of weighted average diluted shares at June 30, 2024, and September 30, 2023, respectively, because their inclusion would have been anti-dilutive.

 

   June 30, 2024   September 30, 2023 
Options to purchase common stock   7,845,881    8,849,305 
Warrants to purchase common stock   6,866,699    5,592,573 
Restricted Stock Units (RSUs)   4,326,259    1,156,397 
Series A preferred stock        
Series B preferred stock        
Convertible debentures        
Total common stock equivalents   19,038,839    15,598,275 

 

On December 14, 2023, we entered into Warrant Reprice Letter Agreements with certain holders to amend the exercise price of existing exercisable warrants to $0.80 per share and to exercise warrants for 1,850,874 shares of our Common Stock for an aggregate exercise price of $1,480,699. The impact of the amendment resulted in a deemed dividend in the amount of $419,939, which was calculated based on the change in fair value.

 

On May 31, 2024, we entered into a Securities Purchase Agreement (the “Institutional Purchase Agreement”) with the purchaser named therein (the “Institutional Investor”) and a Securities Purchase Agreement (the “Private Placement Purchase Agreement,” and together with the Institutional Purchase Agreement, the “Purchase Agreements”) with Excel (the “Private Placement Entity,” together with the Institutional Investor, the “Investors”).

 

14
 

 

Pursuant to the Institutional Purchase Agreement, we agreed to sell and issue, in a registered direct offering (the “Registered Offering”) 7,875,000 shares (the “Registered Shares”) of our Common Stock at a purchase price per share of $0.15 and pre-funded warrants (the “Registered Pre-Funded Warrants”) to purchase up to an aggregate of 1,777,174 shares of Common Stock (the “Registered Pre-Funded Warrant Shares”) at a purchase price per Registered Pre-Funded Warrant of $0.1499, for aggregate gross proceeds to the Company of approximately $1.45 million, before deducting placement agent fees and offering expenses payable by the Company. Beginning with their issuance date, these pre-funded warrants were included in the weighted average number of common shares outstanding in the computation of basic net loss per share as their stated exercise price of $0.0001 was non-substantive and their exercise was virtually assured.

 

Pursuant to the Private Placement Purchase Agreement, in a concurrent private placement (the “Concurrent Private Placement Offering,” together with the Registered Offering, the “Offerings”), we agreed to sell and issue to the Private Placement Entity pre-funded warrants (the “Private Pre-Funded Warrants”) to purchase up to an aggregate of 4,347,826 shares of Common Stock (the “Private Pre-Funded Warrant Shares”) at a purchase price of $0.2308 per Private Pre-Funded Warrant, for aggregate gross proceeds to the Company of approximately $1.0 million, before deducting offering expenses payable by the Company. The Private Pre-Funded Warrants are immediately exercisable at an exercise price of $0.0001 per share and will expire when the Private Pre-Funded Warrants are fully exercised. The Concurrent Private Placement Offering closed on June 10, 2024. Beginning with their issuance date, these pre-funded warrants were included in the weighted average number of common shares outstanding in the computation of basic net loss per share as their stated exercise price of $0.0001 was non-substantive and their exercise was virtually assured.

 

The Purchase Agreements contain customary representations, warranties and agreements of the Company and the Investors and customary indemnification rights and obligations of the parties. Pursuant to the terms of the Institutional Purchase Agreement, we have agreed to certain restrictions, subject to certain exceptions, on the issuance and sale of its Common Stock and securities convertible into shares of Common Stock during the 90-day period following the closing of the Registered Offering. We also agreed not to effect or enter into an agreement to effect any issuance of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock involving a variable rate transaction (as defined in the Institutional Purchase Agreement), subject to certain exceptions, until the six-month anniversary of the closing of the Registered Offering.

 

In addition, until the date that is the eighteen-month anniversary of the closing of the Registered Offering, the Institutional Investor is entitled to a participation right in any subsequent financing (as defined in the Institutional Purchase Agreement ) effected by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, or a combination of units thereof, up to an amount equal to 35% of such subsequent financing on the same terms, conditions and price provided for in the subsequent financing, subject to certain carve-outs as set forth in the Institutional Purchase Agreement.

 

In connection with the Offerings, on May 31, 2024, we also entered into a placement agency agreement (the “Placement Agency Agreement”) with Roth Capital Partners, LLC (the “Placement Agent”). Pursuant to the terms of the Placement Agency Agreement, the Placement Agent agreed to use its reasonable best efforts to arrange for the sale of the Registered Shares, the Registered Pre-Funded Warrants, the Registered Pre-Funded Warrant Shares, the Private Pre-Funded Warrants and the Private Pre-Funded Warrant Shares (the “Securities”). We paid the Placement Agent a cash fee equal to 6.5% of the gross proceeds generated from the Offerings and agreed to reimburse the Placement Agent for certain of its expenses in an amount up to $50,000. The Placement Agent did not receive cash placement agent fees on the sale of the Private Pre-Funded Warrants and the Private Pre-Funded Warrant Shares. The Placement Agency Agreement contains customary representations, warranties and agreements of the Company and the Placement Agent and customary indemnification rights and obligations of the parties.

 

Pursuant to the terms of the Placement Agency Agreement, we issued to the Placement Agent warrants (“Placement Agent Warrants”) to purchase up to 700,000 shares of Common Stock, or 5.0% of the aggregate shares of Common Stock (or Common Stock equivalents) issued in the Offerings, exercisable at a price per share of $0.25399. The Placement Agent Warrants are exercisable commencing six months after the closing date of the Registered Offering and expire May 31, 2029.

 

The Registered Offering closed on June 3, 2024, and on July 1, 2024, the Institutional Investor delivered a Notice of Exercise to us to purchase the Registered Pre-Funded Warrant Shares.

 

The Registered Shares and the Registered Pre-Funded Warrants were offered pursuant to our effective Shelf Registration Statement on Form S-3 (File No. 333-268957), which was previously filed and declared effective by the SEC, the accompanying base prospectus dated January 11, 2023, and a prospectus supplement dated May 31, 2024.

 

For the three and nine months ended June 30, 2024, a reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share of our Common Stock is as follows:

 

    Three months ended June 30,    Nine months ended June 30,  
    2024     2023    2024   2023 
Numerator:                        
Net loss   $ (5,451,617 )   $ (7,875,532 )  $(18,307,652)  $(22,952,087)
Plus: Deemed dividend on warrants               (419,939)    
Net loss attributable to common stockholders   $ (5,451,617 )   $ (7,875,532 )  $(18,749,850)   $(22,952,087)
                           
Denominator:                          
Weighted average number of common shares outstanding     75,146,980       56,604,812     70,966,475    56,455,743 
                           
Basic and diluted net loss per common share     (0.07 )     (0.14 )  $(0.26)  $(0.41)

 

Shipping and handling costs

 

Loop Players are provided free to our customers. Loop Media absorbs any associated costs of shipping and handling and records as an operational expense at the time of service.

 

Income taxes

 

We account for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”). ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. We have no material uncertain tax positions for any of the reporting periods presented.

 

We recognize accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. We have also made a policy election to treat the income tax with respect to global intangible low-tax income as a period expense when incurred.

 

15
 

 

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods therein. The adoption of this standard in the first quarter of 2022 had no impact on our consolidated financial statements.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 will be effective for us in the annual period beginning October 1, 2025, though early adoption is permitted. We are still evaluating the presentational effect that ASU 2023-09 will have on our consolidated financial statements, but we expect considerable changes to our income tax footnote.

 

Stock-based compensation

 

Stock-based compensation issued to employees is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. We measure the fair value of the stock-based compensation issued to non-employees using the stock price observed in the trading market (for stock transactions) or the fair value of the award (for non-stock transactions), which were more reliably determinable measures of fair value than the value of the services being rendered.

 

Deferred financing costs

 

Deferred financing costs represent legal, accounting and other direct costs related to our efforts to raise capital through a public or private sale of our Common Stock. Costs related to the public sale of our Common Stock are deferred until the completion of the applicable offering, at which time such costs are reclassified to additional paid-in-capital as a reduction of the proceeds. Costs related to the private sale of our Common Stock are deferred until the completion of the applicable offering, at which time such costs are amortized over the term of the applicable purchase agreement.

 

Employee retention credits

 

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act was signed into law, providing numerous tax provisions and other stimulus measures, including the Employee Retention Credit (“ERC”): a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. We qualified for the ERC in the third and fourth quarters of 2020 and the first, second and third quarters of 2021. During the nine months ended June 30, 2024, we recorded no aggregate benefit in our condensed combined income statement to reflect the ERC.

 

Reclassifications

 

Certain prior year amounts have been reclassified to conform to current year presentation. These reclassifications have no effect on the previously reported financial position, results of operations, or cash flows.

 

Restructuring costs

 

As previously disclosed, we began taking steps in fiscal year 2023 to increase efficiency and cut costs, while still maintaining our focus on, and dedication to, the continued growth of our business. These cuts and adjustments across several aspects of our business, including reductions in headcount and organizational restructuring, continued in the first three quarters of fiscal year 2024 and continue as of the date of this Report.

 

Recently adopted accounting pronouncements

 

In September 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This guidance also requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. The new guidance is effective for fiscal years beginning after December 15, 2022. We are currently evaluating the impact of this standard on our condensed consolidated financial statements and related disclosures. We adopted this ASU as of October 1, 2023, and there is no material impact to our financial statements as of June 30, 2024.

 

16
 

 

Recent accounting pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, that would enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its chief operating decision maker (“CODM”) uses to assess segment performance and to make decisions about resource allocations. The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more useful financial analyses. Currently, Topic 280 requires that a public entity disclose certain information about its reportable segments. For example, a public entity is required to report a measure of segment profit or loss that the CODM uses to assess segment performance and make decisions about allocating resources. ASC 280 also requires other specified segment items and amounts such as depreciation, amortization and depletion expense to be disclosed under certain circumstances. The amendments in ASU 2023-07 do not change or remove those disclosure requirements. The amendments in ASU 2023-07 also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-07 retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact of this standard on our condensed consolidated financial statements and related disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 will be effective for us in the annual period beginning October 1, 2025, though early adoption is permitted. We are still evaluating the presentational effect that ASU 2023-09 will have on our consolidated financial statements, but we expect considerable changes to our income tax footnote.

 

NOTE 3 – CONTENT ASSETS

 

Content Assets

 

The content we stream to our users is generally acquired by securing the intellectual property rights to the content through licenses from, and paying royalties or other consideration to, rights holders or their agents. The licensing can be for a fixed fee or can be a revenue sharing arrangement. The licensing arrangements specify the period when the content is available for streaming, the territories, the platforms, the fee structure and other standard content licensing terms defining the rights and/or restrictions for how the licensed content can be used by Loop Media. We also develop original content internally, which is capitalized when the content is ready and available for streaming, and generally amortized over a period of two to three years.

 

As of June 30, 2024, content assets were $997,508 recorded as Content asset, net – current and $211,661 recorded as Content asset, net – noncurrent, of which $86,217 was internally-developed content asset, net.

 

We recorded amortization expense in cost of revenue, in the consolidated statements of operations, related to capitalized content assets:

 

   2024   2023   2024   2023 
   Three months ended June 30,   Nine months ended June 30, 
   2024   2023   2024   2023 
Licensed content assets  $780,219   $760,951   $2,302,072   $2,045,794 
Internally-developed assets   18,215    18,215    54,645    46,082 
Total  $798,434   $779,166   $2,356,717   $2,091,876 

 

17
 

 

Our content license contracts are typically two to three years. The amortization expense for the next three years for capitalized content assets as of June 30, 2024:

 

   Remaining in
Fiscal Year 2024
   Fiscal Year 2025   Fiscal Year 2026 
Licensed content assets  $555,088   $470,463   $97,401 
Internally-developed assets   18,215    59,440    8,562 
Total  $573,303   $529,903   $105,963 

 

License Content Liabilities

 

As of June 30, 2024, we had $1,011,571 of obligations comprised of $708,567 in License content liability – current, $129,000 in License content liability - noncurrent and $174,004 in accounts payable on our consolidated balance sheets. Payments for content liabilities for the nine months ended June 30, 2024, were $649,307. The expected timing of payments for these content obligations is $389,071 payable in fiscal year 2024, $345,500 payable in fiscal year 2025 and $110,000 payable in fiscal year 2026.

 

NOTE 4. PROPERTY AND EQUIPMENT

 

Our property and equipment, net consisted of the following as of June 30, 2024, and September 30, 2023:

 

   June 30, 2024   September 30, 2023 
Loop Players  $3,334,030   $2,536,937 
Equipment   712,536    801,301 
Software   895,846    854,966 
Equipment gross   4,942,413    4,193,204 
Less: accumulated depreciation   (2,434,637)   (1,481,646)
Total, equipment net  $2,507,776   $2,711,558 

 

For the three months ended June 30, 2024, and 2023, depreciation expense, calculated using straight line method, charged to operations amounted to $331,191 and $249,256, respectively.

 

For the nine months ended June 30, 2024, and 2023, depreciation expense, calculated using straight line method, charged to operations amounted to $952,986 and $ 615,764, respectively.

 

NOTE 5. INTANGIBLE ASSETS

 

Our intangible assets, each definite lived assets, consisted of the following as of June 30, 2024, and September 30, 2023:

 

   Useful life  June 30, 2024   September 30, 2023 
Customer relationships  nine years  $1,012,000   $1,012,000 
Content library  two years   198,000    198,000 
Total intangible assets, gross      1,210,000    1,210,000 
              
Less: accumulated amortization      (816,444)   (732,111)
Total      (816,444)   (732,111)
Total intangible assets, net     $393,556   $477,889 

 

18
 

 

Amortization expense charged to operations amounted to $28,111 and $28,111, for the three months ended June 30, 2024, and 2023, respectively.

 

Amortization expense charged to operations amounted to $84,333 and $84,333, for the nine months ended June 30, 2024, and 2023, respectively.

 

Annual amortization expense for the next five years and thereafter is estimated to be $28,111 (remaining in fiscal year 2024), $112,444, $112,444, $112,444, and $28,113, respectively. The weighted average life of the intangible assets subject to amortization is 3.5 years as of June 30, 2024.

 

NOTE 6 – OPERATING LEASES

 

Operating leases

 

We have operating leases for office space and office equipment. Many of our leases include one or more options to renew, some of which included options to extend the leases for a long-term period, and some leases included options to terminate the leases within 30 days. In certain of our lease agreements, the rental payments were adjusted periodically to reflect actual charges incurred for capital area maintenance, utilities, inflation and/or changes in other indexes.

 

Our lease liability consisted of the following as of June 30, 2024, and September 30, 2023:

 

   June 30, 2024   September 30, 2023 
Short term portion  $67,689   $      
Long term portion   121,961     
Total lease liability  $189,650   $ 

 

Maturity analysis under these lease agreements are as follows:

 

      
2024  $20,902 
2025   83,607 
2026   83,607 
2027   20,499 
Total undiscounted cash flows   208,615 
Less: 10% Present value discount   (18,965)
Lease liability  $189,650 

 

We recorded lease expense in sales, general and administrative expenses in the consolidated statement of operations:

 

   2024   2023   2024   2023 
   Three months ended June 30,   Nine months ended June 30, 
   2024   2023   2024   2023 
Operating lease expense  $20,902   $17,495   $34,836   $79,434 
Short-term lease expense   2,400    34,828    41,643    69,659 
Total lease expense  $23,302   $52,323   $76,479   $149,093 

 

For the three months ended June 30, 2024, and 2023, cash payments against lease liabilities totalled $20,902 and $18,792 and accretion on lease liability of $5,007 and $309.

 

For the nine months ended June 30, 2024, and 2023, cash payments against lease liabilities totalled $34,836 and $77,929 and accretion on lease liability of $8,563 and $2,737.

 

Weighted-average remaining lease term and discount rate for operating leases are as follows:

 

SCHEDULE OF WEIGHTED-AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

Weighted-average remaining lease term   2.59 years 
Weighted-average discount rate   10%

 

19
 

 

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Accounts payable and accrued expenses consisted of the following as of June 30, 2024, and September 30, 2023:

 

   June 30, 2024   September 30, 2023 
Accounts payable  $5,501,995   $4,978,920 
           
Performance bonuses   300,000    1,262,000 
Interest payable   209,057    175,094 
Professional fees   669,186    449,944 
Marketing   357,123    800,165 
Insurance liabilities   12,166    552,000 
Other accrued liabilities   318,629    307,135 
Accrued Liabilities   1,866,161    3,546,338 
           
Accrued royalties and revenue share   7,829,892    4,930,329 
           
Total accounts payable and accrued expenses  $15,198,048   $13,455,587 

 

NOTE 8 – DEBT

 

Lines of Credit as of June 30, 2024:

 

   Net Carrying Value   Unpaid    Contractual
   Contractual   
Related party lines of credit:  Current   Long Term  

Principal Balance

  

Interest

Rates

   Maturity Date 

Warrants

issued

 
$2,500,000 revolving line of credit, December 14, 2023  $   $1,679,226   $2,500,000    10%  12 months prior written notice   3,125,000 
$1,000,000 non-revolving line of credit, March 28, 2024   1,000,000        1,000,000    12%  9/24/2024    
Total related party non-revolving lines of credit, net  $1,000,000   $1,679,226   $3,500,000              
                             
Lines of credit:                            
$2,200,000 non-revolving line of credit, May 13, 2022  $735,740   $   $770,000    12%  08/13/24   314,286 
$6,000,000 revolving line of credit, July 29, 2022   2,175,456        2,250,018    Greater of Prime + 0, or 4%  07/29/24    
$4,000,000 non-revolving line of credit, May 10, 2023   594,010        800,000    12%  05/10/25   83,142 
Total lines of credit, net  $3,505,206   $   $3,820,018              

 

Lines of Credit as of September 30, 2023:

 

   Net Carrying Value   Unpaid   Contractual   Contractual   
Related party lines of credit:  Current   Long Term  

Principal

Balance

  

Interest

Rates Cash

   Maturity Date 

Warrants

issued

 
$4,000,000 non-revolving line of credit, May 10, 2023  $   $1,959,693   $2,266,733    12%  5/10/2025   209,398 
Total related party lines of credit, net  $   $1,959,693   $2,266,733              
                             
Lines of credit:                            
$2,200,000 non-revolving line of credit, May 13, 2022  $2,124,720   $   $2,200,000    12%  11/13/2023   314,286 
$6,000,000 revolving line of credit, July 29, 2022   2,985,298        3,730,914    Greater of Prime +0, or 4%  7/29/2024    
$4,000,000 revolving line of credit, May 10, 2023       475,523    900,000    12%  5/10/2025   83,142 
Total lines of credit, net  $5,110,018   $475,523   $  6,830,914              

 

20
 

 

The following table presents the interest expense related to the contractual interest coupon and the amortization of debt discounts on the lines of credit:

 

   2024   2023   2024   2023 
   Three months ended June 30,   Nine months ended June 30, 
   2024   2023   2024   2023 
Interest expense  $225,329   $364,604   $738,773   $1,037,499 
Amortization of debt discounts   435,177    597,674    1,635,218    1,842,003 
Total  $660,506   $962,278   $2,373,991   $2,879,502 

 

Maturity analysis under the line of credit agreements for the fiscal years ended September 30,

 

For the fiscal years ended September 30,     
2024  $4,020,018 
2025   3,300,000 
2026    
2027    
2028    
2029    
Lines of credit, related and non-related party   7,320,018 
Less: Debt discount on lines of credit payable   (1,135,586)
Total Lines of credit payable, related and non-related party, net  $6,184,432 

 

Revolving Lines of Credit

 

Excel Revolving Line of Credit

 

Effective as of December 14, 2023, we entered into a Revolving Line of Credit Loan Agreement with Excel Family Partners, LLLP, an entity managed by Bruce Cassidy, Executive Chairman of our Board of Directors, (“Excel” and the “Excel Revolving Line of Credit Agreement”) for up to a principal sum of $2,500,000, under which we may pay down and re-borrow up to the maximum amount of the $2,500,000 limit (the “Excel Revolving Line of Credit”). Our drawdown on the Excel Revolving Line of Credit is limited to no more than twenty-five percent (25%) of the last three full months’ revenue, not to exceed $1,250,000 in any quarter, and not to exceed in aggregate the outstanding debt amount of $2,500,000.The Excel Revolving Line of Credit is a perpetual loan, with a maturity date that is twelve (12) months from the date of formal notice of termination by Excel, and accrues interest, payable semi-annually in arrears, at a fixed rate of interest equal to ten percent (10%) per year. Under the Excel Revolving Line of Credit Agreement, we granted to Excel a security interest in all of our present and future assets and properties, real or personal, tangible or intangible, wherever located, including products and proceeds thereof, which security interest is pari passu with the RAT Non-Revolving Line of Credit Agreement and the May 2023 Secured Line of Credit (each as described below), but is subordinate in rights to GemCap under the GemCap Revolving Line of Credit Agreement (as defined below).

 

Under the terms of the Excel Revolving Line of Credit Agreement, on December 14, 2023, we issued to Excel a warrant to purchase up to an aggregate of 3,125,000 shares of our Common Stock. The warrant has an exercise price of $0.80 per share, which was the closing price of our Common Stock on December 14, 2023, expires on December 14, 2026, and is exercisable at any time prior to such date, to the extent that after giving effect to such exercise, Excel and its affiliates would beneficially own, for purposes of Section 13(d) of the Exchange Act, no more than 29.99% of the outstanding shares of our Common Stock.

 

The Excel Revolving Line of Credit had a balance, including accrued interest, amounting to $2,582,590 and $0 as of June 30, 2024, and September 30, 2023, respectively. We incurred interest expense for the Excel Revolving Line of Credit in the amount of $146,800 and $0 for the three months ended June 30, 2024, and 2023, and $256,084 and $0 for the nine months ended June 30, 2024, and 2023, respectively.