UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~June 30,~~December 31, 2022

☐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: ~~000-55591~~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)

700 N. Central Ave., Suite ~~430~~,430, Glendale, CA 91203
(Address of principal executive offices) (Zip Code)

(~~818~~213) ~~823-4801~~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: ~~None~~

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. [X] 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). [X] 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.☐~~Yes~~ ☒No

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

As of ~~August 10, 2022,~~February 6, 2023, the registrant had ~~153,539,596~~56,381,209 shares of common stock issued and outstanding.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1Financial Statements.

LOOP MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30,		September 30,		December 31,		September 30,
	2022		2021		2022		2022
ASSETS	(UNAUDITED)				(UNAUDITED)
Current assets
Cash	$	709,725	$	4,162,548	$	7,753,644	$	14,071,914
Accounts receivable, net		11,601,025		1,571,226		15,474,223		12,590,970
Inventory		12,554		223,048
Prepaid expenses and other current assets		1,136,401		1,645,037		1,232,830		1,496,566
Prepaid income tax		19,648		17,806
License content assets - current		420,789		850,263
Deferred offering costs		540,108		—		68,832		—
Content assets - current						1,863,697		745,633
Total current assets		14,440,250		8,469,928		26,393,226		28,905,083
Non-current assets
Deposits		63,879		34,289		63,889		63,889
License content assets - non current		36,797		365,360
Content assets - non current						1,634,847		678,659
Property and equipment, net		884,492		38,936		2,372,546		1,633,169
Operating lease right-of-use assets		118,375		237,094		33,917		76,696
Intangible assets, net		618,444		702,778		562,222		590,333
Goodwill		1,970,321		1,970,321
Total non-current assets		3,692,308		3,348,778		4,667,421		3,042,746
Total assets	$	18,132,558	$	11,818,706	$	31,060,647	$	31,947,829
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	3,739,527	$	1,147,585	$	6,372,516	$	7,453,801
Accrued liabilities		5,707,627		434,858		3,289,498		5,620,873
Accrued royalties		3,316,708		633,463		8,419,287		4,559,088
Payable on acquisition		250,125		250,125		—		250,125
License content liabilities - current		50,250		985,000		1,429,109		1,092,819
Note payable - current		—		25,714
Deferred Income		144,079		191,331		143,139		140,764
Convertible debt related party - current, net		2,075,692		530,226
Convertible debt – current, net		602,581		—
Lease liability - current		119,178		167,101		30,425		75,529
Non-revolving line of credit						1,652,031		—
Total current liabilities		16,005,767		4,365,403		21,336,005		19,192,999
Non-current liabilities
Convertible debt – related party, less current portion, net		—		2,458,194
Convertible debt, less current portion, net		142,714		404,319
Note payable – non-current		—		460,924
Derivative liability		893,925		1,058,633
Non-revolving line of credit						—		1,494,469
Non-revolving line of credit, related party		2,203,064		—		2,873,160		2,575,753
Non-revolving line of credit		1,316,246		—
Lease liability		—		75,530
Revolving line of credit						4,666,022		3,030,516
Total non-current liabilities		4,555,949		4,457,600		7,539,182		7,100,738
Total liabilities		20,561,716		8,823,003		28,875,187		26,293,737

Stockholders’ equity (deficit)
Series B Convertible Preferred stock, $0.0001 par value, 3,333,334 shares authorized, 0 and 200,000 shares issued and outstanding as of June 30, 2022 and September 30, 2021, respectively. Liquidation preference of $1.50 per share before any payment to Series A Preferred or Common stock		—		20
Common Stock, $0.0001 par value, 316,666,667 shares authorized,153,539,596 and 127,316,716 shares issued and outstanding as of June 30, 2022 and September 30, 2021, respectively		15,352		13,345
Commitments and contingencies (Note 9)						—		—

Stockholders’ equity
Common Stock, $0.0001 par value, 105,555,556 shares authorized, 56,381,209 and 56,381,209 shares issued and outstanding as of December 31, 2022, and September 30, 2022, respectively						5,638		5,638
Additional paid in capital		79,319,016		69,824,754		103,761,125		101,970,318
Accumulated deficit		(81,763,526)		(66,842,416)		(101,581,303)		(96,321,864)
Total stockholders' equity (deficit)		(2,429,158)		2,995,703
Total liabilities and stockholders' equity (deficit)	$	18,132,558	$	11,818,706
Total stockholders' equity						2,185,460		5,654,092
Total liabilities and stockholders' equity					$	31,060,647	$	31,947,829

See the accompanying notes to the consolidated financial statements

Table of Contents

LOOP MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three months ended June 30,				Nine months ended June 30,				Three months ended December 31,
	2022		2021		2022		2021			2022	2021

Revenue	$	10,804,083	$	1,160,793	$	18,679,956	$	2,660,004	$	14,825,831	$	2,996,034
Cost of revenue		7,018,283		763,359		11,978,477		1,949,979		9,139,800		1,444,977
Gross profit		3,785,800		397,434		6,701,479		710,025		5,686,031		1,551,057

Operating expenses
Selling, general and administrative		7,553,431		4,269,169		19,354,942		15,211,751
Impairment of goodwill and intangibles		—		—		—		2,390,799
Sales, general and administrative										7,958,134		4,360,683
Stock-based compensation										1,790,807		1,516,594
Depreciation and amortization										187,716		32,403
Total operating expenses		7,553,431		4,269,169		19,354,942		17,602,550		9,936,657		5,909,680

Loss from operations		(3,767,631)		(3,871,735)		(12,653,463)		(16,892,525)		(4,250,626)		(4,358,623)

Other income (expense)
Interest income		—		—		200		8,653		—		200
Interest expense		(978,435)		(632,094)		(1,976,941)		(1,443,917)		(1,007,583)		(504,117)
Income from equity investment		—		—		—		1,551
Loss on extinguishment of debt		(944,614)		—		(944,614)		(15,000)
Gain on extinguishment of debt, net		—		579,486		490,051		593,386
Gain (Loss) on extinguishment of debt, net										—		490,051
Change in fair value of derivatives		18,395		—		164,708		—		—		98,745
Total other income (expense)		(1,904,654)		(52,608)		(2,266,596)		(855,327)		(1,007,583)		84,879
Loss before income taxes		(5,672,285)		(3,924,343)		(14,920,059)		(17,747,852)
Income tax (expense)/benefit		—		—		(1,051)		(99,830)		(1,230)		(251)
Net loss	$	(5,672,285)	$	(3,924,343)	$	(14,921,110)	$	(17,847,682)	$	(5,259,439)	$	(4,273,995)

Basic and diluted net loss per common share	$	(0.04)	$	(0.03)	$	(0.11)	$	(0.15)		(0.09)	$	(0.10)

Weighted average number of basic and diluted common shares outstanding		153,517,932		124,965,541		141,183,276		120,474,850		56,381,209		44,490,047

See the accompanying notes to the consolidated financial statements

Table of Contents

LOOP MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JUNE~~DECEMBER 30, 2022, and 2021

(UNAUDITED)


													Preferred Stock Series B			Common Stock			Additional Paid		Accumulated
													Shares	Amount		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


	Preferred Stock Series B			Common Stock			Additional Paid		Accumulated				Preferred Stock Series B			Common Stock			Additional Paid		Accumulated
	Shares	Amount		Shares	Amount		in Capital		Deficit		Total		Shares	Amount		Shares	Amount		in Capital		Deficit		Total
Balances, September 30, 2021	200,000	$	20	133,470,018	$	13,345	$	69,824,754	$	(66,842,416)	$	2,995,703	200,000	$	20	44,490,003	$	4,449	$	69,824,754	$	(66,842,416)	$	2,986,807
Stock-based compensation	—		—	—		—		1,549,406		—		1,549,406	—		—	—		—		1,549,406		—		1,549,406
Net loss	—		—	—		—		—		(4,273,995)		(4,273,995)	—		—	—		—		—		(4,273,995)		(4,273,995)
Balances, December 31, 2021	200,000	$	20	133,470,018	$	13,345	$	71,374,160	$	(71,116,411)	$	271,114	200,000	$	20	44,490,003	$	4,449	$	71,374,160	$	(71,116,411)	$	262,218

Stock-based compensation	—		—	—		—		1,116,318		—		1,116,318
Warrants issued to consultants	—		—	—		—		56,788		—		56,788
Payment in kind interest stock issuance	—		—	37,136		4		88,496		—		88,500
Conversion of series B convertible stock to common stock	(200,000)		(20)	20,000,000		2,000		(1,980)		—		—
Net loss	—		—	—		—		—		(4,974,830)		(4,974,830)
Balances, March 31, 2022	—	$	—	153,507,154	$	15,349	$	72,633,782	$	(76,091,241)	$	(3,442,110)

Stock-based compensation	—		—	—		—		1,282,548		—		1,282,548
Warrants issued in conjunction with debt	—		—	—		—		3,036,970		—		3,036,970
Beneficial conversion feature of convertible debenture	—		—	—		—		2,079,993		—		2,079,993
Warrants issued to consultants	—		—	—		—		197,226		—		197,226
Payment in kind interest stock issuance	—		—	32,319		3		88,497		—		88,500
Net loss	—		—	—		—		—		(5,672,285)		(5,672,285)
Balances, June 30, 2022	—	$	—	153,539,473	$	15,352	$	79,319,016	$	(81,763,526)	$	(2,429,158)

Preferred Stock B

Preferred Stock A

Common Stock

Common stock
Additional Paid

Accumulated

Shares

Amount

Shares

Amount

Shares

Amount

subscriptions

in Capital

Deficit

Total
Balances, September 30, 2020


200,000

$
20

30,667

$
3

114,320,911

$
11,432

$
135,144

$
36,669,899

$
(35,867,920)

$
948,578
Shares issued for cash

—

—

—

—

757,333

75

—

899,925

—

900,000
Cash received for common stock subscribed

—

—

—

—

—

—

330,000

—

—

330,000
Issuance of common stock subscribed

—

—

—

—

(53,333)

(5)

20,000

(19,995)

—

—
Shares issued in connection with reverse merger

—

—

—

—

—

—

—

(1)

—

(1)
Shares issued for asset purchase

—

—

—

—

1,369,863

137

—

2,671,096

��
—

2,671,233
Beneficial conversion feature of convertible debt

—

—

—

—

—

—

—

750,000

—

750,000
Stock-based compensation

—

—

—

—

—

—

—

134,253

—

134,253
Warrants issued to consultant

—

—

—

—

—

—

—

492,000

—

492,000
Shares issued for debt settlement

—

—

—

—

97,891

10

—

194,793

—

194,803
Shares issued for license content assets

—

—

—

—

1,180,880

118

—

2,065,878

—

2,065,996
Shares issued for investment in unconsolidated entity

—

—

—

—

454,463

46

—

863,434

—

863,480
Net loss

—

—

—

—

—

—

—

—

(5,676,224)

(5,676,224)
Balances, December 31, 2020

$
200,000

$
20

30,667

$
3

118,128,008

$
11,813

$
485,144

$
44,721,282

$
(41,544,144)

$
3,674,118

��

Issuance of common stock subscribed

—

—

—

—

497,429

49

(485,144)

485,095

—

—
Conversion of convertible debenture

—

—

—

—

1,003,618

100

—

376,256

—

376,356
Shares issued for cash

—

—

—

—

1,564,000

156

—

1,954,844

—

1,955,000
Stock-based compensation

—

—

—

—

—

—

—

5,419,800

—

5,419,800
Warrants issued in conjunction with debenture

—

—

—

—

—

—

—

43,654

—

43,654
Beneficial conversion feature of convertible debt

—

—

—

—

—

—

—

306,346

—

306,346
Net loss

—

—

—

—

—

—

—

—

(8,247,115)

(8,247,115)

~~Table of Contents~~

BALANCES, March 31, 2021

$
200,000

$
20

30,667

$
3

121,193,055

$
12,118
$
$
—

$
53,307,277

$
(49,791,259)

$
3,528,159

Conversion of series A convertible stock to common stock

—

—

(30,667)

(3)

3,066,700

307

—

(304)

—

—
Payment in kind interest stock issuance

—

—

—

—

14,475

3

—

41,976

—

41,979
Shares issued for consulting fees

—

—

—

—

79,051

8

—

199,992

—

200,000
Shares issued for acquisition

—

—

—

—

2,003,435

200

—

5,689,555

—

5,689,755
Shares issued for cash

—

—

—

—

960,000

96

—

1,199,904

—

1,200,000
Stock-based compensation

—

—

—

—

—

—

—

1,482,746

—

1,482,746
Warrants issued in conjunction with debenture

—

—

—

—

—

—

—

144,291

—

144,291
Beneficial conversion feature of convertible debt

—

—

—

—

—

—

—

1,705,709

—

1,705,709
Warrants issued for severance

—

—

—

—

—

—

—

82,000

—

82,000
Net loss

—

—

—

—

—

—

—

—

(3,924,343)

(3,924,343)
BALANCES, June 30, 2021

$
200,000

$
20

—

$
—

127,316,716

$
12,732
$
$
—

$
63,853,146

$
(53,715,602)

$
10,150,296

See the accompanying notes to the consolidated financial statements

Table of Contents

LOOP MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine months ended June 30,


2022

2021
CASH FLOWS FROM OPERATING ACTIVITIES




Net loss

$
(14,921,110)

$
(17,847,682)
Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of debt discount

1,532,792

954,080
Depreciation and amortization expense

195,666

1,452,799
Amortization of license content assets

933,036

402,676
Amortization of right-of-use assets

118,719

107,248
Bad debt expense

20,000

208,791
Gain on extinguishment of debt

(490,051)

(579,486)
Loss on early extinguishment of convertible debt

944,614

—
Change in fair value of derivative

(164,708)

—
Warrants issued for consulting services

254,014

—
Warrants issued for severance

—

82,000
Stock-based compensation

3,948,272

7,528,800
Payment in kind for interest stock issuance

177,000

—
Gain on settlement of obligations

—

(13,900)
Loss on settlement of obligations

—

15,000
Equity method investment income

—

(1,551)
Impairment of intangible assets

—

2,390,799
Change in operating assets and liabilities:

    Accounts receivable

(10,049,799)

(131,732)
    Prepaid income tax

(1,842)

99,905
    Inventory

210,494

11,979
    Prepaid expenses

(741,364)

(231,450)
    Deposit

(29,590)

227,000
    Accounts payable

2,558,353

(175,305)
    Accrued expenses

5,269,758

—
    Accrued royalties

2,683,245

—
    License content liability

(1,109,750)

(1,451,000)
    Operating lease liabilities

(123,453)

(107,558)
    Deferred income

(47,252)

18,552
NET CASH USED IN OPERATING ACTIVITIES

(8,832,956)

(7,040,035)

CASH FLOWS FROM INVESTING ACTIVITIES




Acquisition of fixed assets, net of cash acquired

—

(750,000)
Cash paid for acquisition of EON Media Group, net of cash acquired

—

(749,937)
Purchase of property and equipment

(956,889)

2,752
Collection of note receivable

—

1,477
NET CASH USED IN INVESTING ACTIVITIES

(956,889)

(1,495,708)

CASH FLOWS FROM FINANCING ACTIVITIES




Proceeds from issuance of common stock from prior year

1,250,000

4,385,000
Proceeds from PPP loan

—

486,637
Proceeds from issuance of preferred stock

—

1,000,000
Proceeds from issuance of convertible debt

2,079,993

2,950,000
Proceeds from non-revolving line of credit

6,222,986

—
Repayment of convertible debt

(2,715,865)

(36,078)
Repayment of stockholder loans

—

(292,336)
Shares issued for cash

—

(1,000,000)
Share issuance costs

—

(80,134)
Reverse merger costs

—

80,134
Deferred offering costs

(500,092)

—
NET CASH PROVIDED BY FINANCING ACTIVITIES

6,337,022

7,493,223

Change in cash and cash equivalents

(3,452,823)

(1,042,520)
Cash, beginning of period

4,162,548

1,971,923
Cash, end of period

$
709,725

$
929,403

SUPPLEMENTAL DISCLOSURES OF CASH FLOW STATEMENTS




Cash paid for interest

$
153,009

$
105,627
Cash paid for income taxes

$
1,051

$
—

~~Table of Contents~~

SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND FINANCING ACTIVITIES

Common Stock issued to acquire intangible assets

$
—

$
2,671,233
Conversion of convertible debenture to common stock

$
—

$
376,356
Common Stock issued for equity investment in unconsolidated entity

$
—

$
863,480
Common Stock issued for acquisition

$
—

$
5,689,755
Early extinguishment of convertible debt

$
944,614

$
—
Payment in kind common stock payment

$
177,000

$
41,979
Warrants issued in conjunction with debt

$
3,036,970

$
—
Warrants issued as debt discount on convertible debenture

$
—

$
187,945
Beneficial conversion feature recorded as discounted debt

$
2,079,993

$
2,762,055
Prepaid common stock paid to consultant

$
—

$
200,000
Conversion of Preferred Class A stock to common stock

$
—

$
307
Unpaid deferred offering costs

$
40,017

$
—
Shares issued for common stock subscribed

$
—

$
485,144
Accrued interest rolled into convertible note

$
—

$
81,824
Common Stock issued for content license assets

$
—

$
2,260,799
Preferred shares issued for debt settlement

$
—

$
1,006,584


	Three months ended December 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(5,259,439)	$	(4,273,995)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		661,335		358,248
Depreciation and amortization expense		187,716		32,403
Amortization of content assets		682,167		311,055
Amortization of right-of-use assets		42,779		38,555
Bad debt expense		—		20,000
Gain on extinguishment of debt, net		—		(490,051)
Change in fair value of derivative		—		(98,745)
Stock-based compensation		1,790,807		1,549,406
Change in operating assets and liabilities:
Accounts receivable		(2,883,253)		(1,373,259)
Prepaid income tax		—		(1,842)
Inventory		12,091		108,325
Prepaid expenses		251,644		(70,555)
Deposit		—		(29,590)
Accounts payable		(1,375,043)		317,686
Accrued liabilities		(2,331,374)		713,534
Accrued royalties		3,860,199		44,193
Licensed content liability		(2,420,129)		(581,000)
Operating lease liabilities		(45,104)		(39,349)
Deferred income		2,375		(12,782)
NET CASH USED IN OPERATING ACTIVITIES		(6,823,229)		(3,477,763)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(618,032)		—
NET CASH USED IN INVESTING ACTIVITIES		(618,032)		—

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock		—		1,250,000
Proceeds from non-revolving line of credit, net of repayments		1,429,441		—
Debt issuance costs		(301)		—
Deferred offering costs		(56,024)		—
Payment of acquisition related consideration		(250,125)		—
Repayment of stockholder loans		—		(272,687)
NET CASH PROVIDED BY FINANCING ACTIVITIES		1,122,991		977,313

Change in cash and cash equivalents		(6,318,270)		(2,500,450)
Cash, beginning of period		14,071,914		4,162,548
Cash, end of period	$	7,753,644	$	1,662,098

SUPPLEMENTAL DISCLOSURES OF CASH FLOW STATEMENTS
Cash paid for interest	$	508,118	$	43,130
Cash paid for income taxes	$	1,230	$	251
SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND FINANCING ACTIVITIES
Unpaid deferred offering costs	$	12,808	$	—
Unpaid additions to property and equipment	$	280,950	$	—
Investment in licensed content and internally developed content	$	2,756,420	$	—

See the accompanying notes to the consolidated financial statements

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LOOP MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE 30,~~DECEMBER 31, 2022

(UNAUDITED)

NOTE 1 – BUSINESS

Loop Media, Inc. is, a Nevada ~~corporation. We were incorporated under~~corporation, (collectively, “Loop Media,” the ~~laws of the State of Nevada on May 11, 2015.~~

~~We are~~“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 out-of-home (“OOH”) dining, hospitality, retail, convenience stores and other locations and venues to enable them to inform, entertain and engage their customers. Our technology provides third-party advertisers with a targeted marketing and promotional tool for their products and services and, in certain instances, allows us to measure the number of potential viewers of such advertising and promotional materials. We also allow our OOH ~~customers~~clients to access our service without advertisements by paying a monthly subscription fee. ~~In addition to providing services to OOH venue operators, we currently provide our services direct to consumers (“D2C”) in their homes on connected TVs (“CTVs”) and on their mobile devices.~~

We offer ~~self-curated~~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, which is predominantly licensed or acquired from third parties, including action sports clips, drone and atmospheric footage, trivia, news headlines, lifestyle channels and kid-friendly videos, as well as movie, television and video game trailers, ~~kid-friendly videos, viral videos, drone footage, news headlines, and lifestyle and atmospheric channels.~~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 ~~(“O~~(the “O&O ~~Network”~~Platform”) of Loop Media-designed “small-box” streaming Android media players (“Loop Players”) and legacy ScreenPlay computers and (ii) through screens on digital ~~networks~~platforms owned and operated by third parties ~~(“Partner Network”,~~(each a “Partner Platform” and collectively, the “Partner Platforms,” and together with the O&O ~~Network,~~Platform, the “Loop ~~Network”~~Platform”). ~~We moved to an advertising-based model and ramped up distribution of Loop Players for our O&O Network starting in early 2021.~~ As of ~~June 30,~~December 31, 2022, we had ~~12,584 quarterly active units (“QAUs”).~~26,903 QAUs (described below) operating on our O&O Platform. We launched our Partner ~~Network~~Platforms business beginning in ~~early~~ May 2022 with one partner on approximately ~~5,000~~17,000 of the partner’s screens, and ~~we rolled out~~are in the process of finalizing an additional approximately 13,500 screens in a second Partner Platform for a total of approximately 30,500 screens across our Partner Platforms in the near term. We expect to begin earning revenue on these additional screens in our second fiscal quarter ending March 31, 2023. Our legacy subscription-based business complements these newer businesses.

We define an “active unit” as (i) an ad-supported Loop Player (or DOOH location using our ad- supported service through our “Loop for Business” application or using an DOOH venue-owned computer screening our content) that is online, used on our O&O Platform, playing content, and has checked into the Loop analytics system at least once in the 90-day period 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 ~~remaining 12,000~~number of such active units during such period. We do not count towards our QAUs any Loop Players or screens ~~in that network as of mid-May 2022, remaining at approximately that level as of early-August 2022. Our legacy businesses, including~~used on our ~~content subscription-based business and our CTV business, complement these newer businesses.~~Partner Platform.

~~Going concern~~Liquidity and management’s ~~plans~~plan

AsIn accordance with Accounting Standards Update, or ASU, No. 2014-15, Presentation of ~~June 30, 2022, we had cash of $709,725 and an accumulated deficit of ($81,763,526). During~~Financial Statements – Going Concern (Subtopic 205-40), our management evaluates whether there are conditions or events, considered in the ~~nine months ended June 30, 2022, we used net cash in operating activities of $(8,832,956). We have incurred net losses since inception. These conditions~~aggregate, that raise substantial doubt about our ability to continue as a going concern within one year ~~from~~after the ~~issuance~~ date ~~of these consolidated financial statements.~~

Our primary source of operating funds since inception has been cash proceeds from 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 unaudited~~that the consolidated financial statements are issued.

Although it is difficult to predict our liquidity requirements, as of December 31, 2022, based upon our current operating plan, we believe that we will have ~~been prepared on a going concern basis, which contemplates~~sufficient cash to meet our projected operating requirements for at least the ~~realization~~next twelve months following the issuance of ~~assets and~~ the ~~satisfaction of liabilities in the normal course of business. These unaudited~~first quarter consolidated financial statements ~~do not include any adjustments relating to~~based on the ~~recovery~~balance of cash and the recorded assets or classification of the 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 management’s further implementation of our ongoing and strategic plans, which include continuing to raise funds through equity and/or debt raises. If we are unable to raise adequate funds, certain aspects of the ongoing and strategic plans may require modification. Management is in the process of identifying sources of capital via strategic partnerships, debt refinancing and equity investments through one or more private placements.projected cash flows from operations.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Statements

The following (a) condensed consolidated balance sheet as of September 30, ~~2021,~~2022, which has been derived from our audited financial statements, and (b) our unaudited condensed consolidated interim financial statements for the ~~nine~~three months ended ~~June 30,~~December 31, 2022, 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~~three months ended ~~June 30,~~December 31, 2022, are not necessarily indicative of results that may be expected for the year ending September 30, ~~2022.~~2023.

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, ~~2021,~~2022, included in our Annual Report on Form ~~10-KT~~10-K filed with the Securities and Exchange Commission ("SEC") on ~~January 21,~~December 20, 2022.

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 ~~the fair value of other equity~~awards, income taxes and ~~debt instruments, fair value of intangible assets and recoverability of license content assets.~~

~~Business combinations~~

~~We account for business acquisitions under Accounting Standards Codification (“ASC”) 805,~~ ~~Business Combinations.~~ The total purchase consideration for an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities assumed on the acquisition date. Costs that are directly attributable to the acquisition are expensed as incurred. Identifiable assets (including intangible assets), liabilities assumed (including contingent liabilities) and noncontrolling interests in an acquisition are measured initially at their fair values on the acquisition date. We recognize goodwill if the fair value of the total purchase consideration and any noncontrolling interest is in excess of the net fair value of the identifiable assets and the liabilities assumed. The results of operations of the acquired business are included in the consolidated financial statements beginning on the acquisition date.going concern.

Segment reporting

We report as 1one reportable segment because we do not have more than 1one operating segment. Our business activities, revenues and expenses are evaluated by management as 1one 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

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uninsured or in amounts that exceed the FDIC insurance limits. We have not experienced any ~~losses~~loses on such accounts. On ~~June 30,~~December 31, 2022, and September 30, ~~2021,~~2022, we had 0no cash equivalents.

As of ~~June 30,~~December 31, 2022, and September 30, ~~2021,~~2022, approximately ~~$459,725~~$7,253,644 and ~~$3,655,716~~$13,821,914 of cash exceeded the FDIC insurance limits, respectively.

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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,~~December 31, 2022, and September 30, ~~2021,~~2022, we had recorded an allowance for doubtful accounts of ~~$445,946~~$604,920 and ~~$426,813,~~$646,013, respectively.

Concentration of credit risk

During the ~~nine-months~~three-months ended ~~June 30,~~December 31, 2022, we had 3three customers which each individually comprised greater than 10% of net revenue. These customers represented ~~25%~~16%, ~~20%,~~15% and 11% respectively. ~~NaN~~No other customer accounted for more than 10% of net revenue during the periods presented.

As of ~~June 30,~~December 31, 2022, 3three customers accounted for a total of ~~52%~~39% of our accounts receivable balance or ~~24%~~14%, ~~18%~~14%, and ~~10%~~11%, respectively. ~~NaN~~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.

~~Our concentration~~Inventory

Inventories are valued at the lower of ~~credit risk was not significant as~~cost or net realizable value. We purchase inventory from a vendor and all inventory purchased is deemed finished goods. Cost is determined using the first-in-first-out basis for finished goods. Net realizable value is determined on the basis of ~~June 30,~~anticipated sales proceeds less the estimated selling expenses. Management compares the cost of inventories with the net realizable value and an allowance is made to write down inventories to net realizable value, if lower. As of December 31, 2022, and September 30, ~~2021.~~2022, we had recorded no valuation allowance.

~~License Content Asset~~Prepaid expenses

~~On January 1, 2020, we adopted~~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 ~~guidance in ASU 2019-02,~~ ~~Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements~~balance sheet as a prepaid expense. When the asset is eventually consumed, it is charged to ~~Accounting for Costs of Films and License Agreements for Program Materials, on a prospective basis.~~ expense.

Content Assets

We capitalize the fixed content fees and ~~our~~ 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

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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.

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. ~~The~~Our capitalization policy ~~for the company~~ 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:

~~Equipment 3-5 years~~

~~Software 3 years~~

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Equipment		3-5 years
Software		3 years

~~Goodwill and other intangible assets~~

Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Goodwill and other intangible assets determined to have an indefinite useful life are not amortized but are subject to impairment tests. We conduct our annual impairment tests or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. We conducted the annual impairment test on September 30, 2021.

When evaluating goodwill and indefinite-lived intangible assets for impairment, we may first perform an assessment of qualitative factors to determine if the fair value of the reporting unit or the intangible asset is more-likely-than-not greater than the carrying amount. Significant factors considered in this assessment include, but are not limited to, macro-economic conditions, market and industry conditions, cost considerations, the competitive environment, overall financial performance, and results of past impairment tests. If, based on a review of the qualitative factors, we determine it is more-likely-than-not that the fair value is greater than the carrying value, we may bypass a quantitative test for impairment.

In performing the quantitative test for impairment of goodwill, we compare the fair value of each reporting unit with it carrying amount, including goodwill, in order to identify a potential impairment. Measurement of the fair value of a reporting unit is based on a fair value measure using the sum of the discounted estimated future cash flows. Estimates of forecasted cash flows involve measurement uncertainty, and it is therefore possible that reductions in the carrying value of goodwill may be required in the future because of changes in management’s future cash flow estimates. When the fair value of a reporting unit is less than its carrying amount, goodwill of the reporting unit is considered to be impaired. Effective January 1, 2020, we adopted the guidance in Accounting Standards Update (“ASU”) 2017-04, ~~Simplifying the Test for Goodwill Impairment~~~~, which measures impairment amount as the excess of a reporting unit’s carrying amount over its fair value as determined by the quantitative test.~~

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 12twelve 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.

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●

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 ~~are~~is one or more unobservable inputs which are significant to the fair value measurement.

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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.

~~The following table summarizes~~On September 26, 2022, our convertible debentures converted to common stock as part of our public offering, uplist to the NYSE stock exchange, and 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 ~~measurements~~measurement of the Derivative Liability balance as of ~~June 30, 2022:~~December 31, 2022.

Quoted Prices in

Significant

Active Markets

Significant Other

Unobservable

For Identical Items

Observable Inputs

Inputs

(Level 1)

(Level 2)

(Level 3)

Total
Derivative liabilities

—

—

893,925

893,925
Total
$
—

$
—

$
893,925

$
893,925

~~The following table summarizes fair value measurements of the Derivative Liability as of September 30, 2021:~~

Quoted Prices in

Significant

Active Markets

Significant Other

Unobservable

For Identical Items

Observable Inputs

Inputs

(Level 1)

(Level 2)

(Level 3)

Total
Derivative liabilities

—

—

1,058,633

1,058,633
Total
$
—

$
—

$
1,058,633

$
1,058,633

~~The following table summarizes changes in fair value measurements of the Derivative Liability during the nine months ended June 30, 2022:~~

Balance as of September 30, 2021

$
1,058,633
Derivative liability issued with convertible debentures

—
Change in fair value

(164,708)
Balance as of June 30, 2022

$
893,925

The following table summarizes changes in fair value measurements of the Derivative Liability during the three months ended ~~June 30, 2022:~~December 31, 2021:

Balance as of March 31, 2022

$
912,320
Change in fair value

(18,395)
Balance as of June 30, 2022

$
893,925

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~~The following table summarizes the unobservable inputs used in the valuation of the derivatives during the nine months ended June 30, 2022:~~



~~Expected term~~	~~0.42 - 2 years~~

~~Discount rate~~	~~7.12% - 15.00%~~

~~Volatility~~	~~75% - 110.0%~~

~~Convertible debt and derivative treatment~~

When we issue debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: a) one or more underlyings, typically the price of our common stock; b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; c) no initial net investment, which typically excludes the amount borrowed; and d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuer’s own equity. The scope exception applies if the contract is both a) indexed to its own stock, and b) classified in shareholders’ equity in its statement of financial position.

If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using the Monte Carlo Method upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt.

~~Convertible debt and beneficial conversion features~~

If the conversion feature is not treated as a derivative, we assess whether it is a beneficial conversion feature (“BCF”). A BCF exists if the conversion price of the convertible debt instrument is less than the stock price on the commitment date. This typically occurs when the conversion price is less than the fair value of the stock on the date the instrument was issued. The value of a BCF is equal to the intrinsic value of the feature, the difference between the conversion price and the common stock into which it is convertible and is recorded as additional paid in capital and as a debt discount in the consolidated balance sheets. We amortize the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statements of operations.

~~If the conversion feature does not qualify for either the derivative treatment or as a BCF, the convertible debt is treated as traditional debt.~~




Balance as of September 30, 2021	$	1,058,633
Change in fair value		(98,745)
Balance as of December 31, 2021	$	959,888

Advertising costs

We expense all advertising costs as incurred. Advertising and marketing costs for the ~~nine~~three months ended ~~June 30,~~December 31, 2022, and 2021, were ~~$4,232,734~~$2,968,140 and ~~$776,086,~~$1,129,527, 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

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specified by the ~~customer,~~client, revenue is deferred until all acceptance criteria have been met. Revenues are recognized under Topic 606 in a manner that reasonably reflects the delivery of our products and services to ~~customers~~clients in return for expected consideration and includes the following elements:

●

executed contracts with our customers that ~~it believes~~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.

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Performance obligations and significant judgments

Our revenue ~~streams~~ can be categorized into two revenue streams with the following performance obligations and recognition patterns:

Advertising revenue

Advertising revenue accounts for 94% of our revenue and includes revenue from direct and programmatic 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). 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, 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 inventory provided to advertisers through the use of an advertising demand partner or agency whose fees or commission is calculated based on a stated percentage of gross advertising spending, our revenues are reported net of agency fees and commissions.

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

Legacy and other business revenue accounts for the remaining 6% 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.

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.

~~Revenue share arrangements, where platform providers distribute our licensed content and providers pay us a portion of the usage-based advertising revenues.~~

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

We record commission expense associated with subscription revenue. Commissions are included in operating expenses. We have elected the practical expedient that allows us to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less.

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Cost of revenue

Cost of revenue 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.

Deferred income

We bill subscription services in advance of when the service period is performed. The deferred income recorded at ~~June 30,~~December 31, 2022, and September 30, ~~2021~~2022, represents our accounting for the timing difference between when the subscription fees are received and when the performance obligation is satisfied.

~~Table~~ For the three months ended December 31, 2022, and 2021, revenue of ~~Contents~~$191,331 and $140,764, respectively, was recognized from the deferred revenue balance at the beginning of each period.

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,~~December 31, 2022, and September 30, ~~2021,~~2022, respectively, because their inclusion would have been anti-dilutive.

June 30,

September 30,

2022

2021
Options to purchase common stock

18,966,306

17,833,356
Warrants to purchase common stock

17,930,025

15,464,700
Series A preferred stock

—

—
Series B preferred stock

—

20,000,000
Convertible debentures

4,942,491

5,815,323
Total common stock equivalents

41,838,822

59,113,379


	December 31,	September 30,
	2022	2022
Options to purchase common stock	8,171,786	8,174,583
Warrants to purchase common stock	5,300,033	5,300,033
Restricted Stock Units (RSUs)	890,000	890,000
Series A preferred stock	—	—
Series B preferred stock	—	—
Convertible debentures	—	—
Total common stock equivalents	14,361,819	14,364,616

~~Share-based~~Shipping and handling costs

A shipping and handling fee is charged to customers and recorded as revenue at the time of sale. The associated cost of shipping and handling is recorded as a cost of revenue at the time of service.

Income taxes

We account for income taxes in accordance with ASC Topic 740, Income Taxes. 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.

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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.

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.

Stock-based compensation

~~Share-based~~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 ~~share-based~~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. The measurement date is the earlier of (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

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. Previously reported accounts payable and accrued liabilities have now been disaggregated into accounts payable, accrued liabilities, and accrued royalty.~~Recent~~Further, stock-based compensation and depreciation and amortization expenses have now been segregated from sales, general and administrative expenses and separately reported within operating expenses.

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.

Recent 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.

1513

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~~NOTE 3 – INVENTORY~~

~~Our finished goods inventory consisted of the following on June 30, 2022, and September 30, 2021:~~

June 30,

September 30,

2022

2021
Computers

$
7,830

$
6,881
Hasp keys

4,724

3,581
Loop player

—

212,586
Total inventory

$
12,554

$
223,048

~~NOTE 4 – LICENSE CONTENT ASSETS~~

~~License Content Assets~~

To stream video content to the users, we generally secure intellectual property rights to such content by obtaining licenses from, and paying royalties or other consideration to, rights holders or their agents. The licensing arrangements can be for a fixed fee, variable fee, or combination of both. The licensing arrangements specify the period when the content is available for streaming. The license content assets are two years in duration and include prepayments to distributors for customer subscription revenues, per play usage fees, and ad supported fees.

~~As of June 30, 2022, license content assets were $420,789 recorded as License content asset, net – current and $36,797 recorded as License content asset, net – noncurrent.~~

We recorded amortization expense of $933,036 and $783,567 for the nine months ended June 30, 2022, and 2021, respectively, in cost of revenue, in the consolidated statements of operations, related to capitalized license content assets. The amortization expense for the next two years for capitalized license content assets as of June 30, is $436,346 in 2022, and $21,240 in 2023.

~~License Content Liabilities~~

On June 30, 2022, we had $50,250 of obligations comprised of $50,250 in License content liability – current and $0 in License content liability – noncurrent on the Consolidated Balance Sheets. Payments for content liabilities for the nine months ended June 30, 2022, were $853,500. The expected timing of payments for these content obligations is $19,000 payable in fiscal year 2022, and $31,250 payable in fiscal year 2023. Certain contracts provide for recoupment of payments on minimum obligations during the term of the contracts.

~~NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS~~

~~As of June 30, 2022, and September 30, 2021, the balance of goodwill was $1,970,321 and $1,970,321, respectively.~~

~~Table of Contents~~

~~Our other intangible assets, each definite lived assets, consisted of the following as of June 30, 2022, and September 30, 2021:~~

June 30,

September 30,


Useful life

2022

2021
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

(591,556)

(507,222)
Total

(591,556)

(507,222)
Total intangible assets, net

$
618,444

$
702,778

~~Amortization expense charged to operations amounted to $84,333 and $727,715, respectively, for the nine months ended June 30, 2022, and the nine months ended June 30, 2021.~~

Annual amortization expense for the next five years and thereafter is estimated to be $56,222 (remaining in 2022), $112,444, $112,444, $112,444, $112,444, and $112,444, respectively. The weighted average life of the intangible assets subject to amortization is 5.5 years on June 30, 2022.

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. 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 years.

As of December 31, 2022, content assets were $1,863,697 recorded as Content asset, net – current and $1,634,847 recorded as Content asset, net – noncurrent, of which $313,180 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:



	Three months ended December 31,
	2022		2021
Licensed Content Assets	$	669,678	$	311,055
Internally-Developed Assets		12,489		—
Total	$	682,167	$	311,055

Our content license contracts are typically two years. The amortization expense for the next two years for capitalized content assets as of December 31, 2022:


	Remaining in Fiscal Year 2023		Fiscal Year 2024		Fiscal Year 2025
Licensed Content Assets	$	1,401,028	$	1,686,050	$	98,285
Internally-Developed Assets		52,801		70,401		—
Total	$	1,453,829	$	1,756,451	$	98,285

License Content Liabilities

On December 31, 2022, we had $2,605,535 of obligations comprised of $1,429,109 in License content liability – current and $1,179,426 in accounts payable on the Consolidated Balance Sheets. Payments for content liabilities for the three months ended December 30, 2022, were $1,092,819. The expected timing of payments for these content obligations is $2,608,535 payable in fiscal year 2023.

NOTE 4. PROPERTY AND EQUIPMENT

Our property and equipment, net consisted of the following as of December 31, 2022, and September 30, 2022:

Table of Contents


	December 31,		September 30,
	2022		2022
Equipment	$	2,820,389	$	1,962,743
Software		445,393		404,058
		3,265,782		2,366,801
Less: accumulated depreciation		(893,236)		(733,632)
Total property and equipment, net	$	2,372,546	$	1,633,169

For the three months ended December 30, 2022, and 2021, depreciation expense, calculated using straight line method, charged to operations amounted to $159,605 and $4,292, respectively.

NOTE 5. INTANGIBLE ASSETS

Our intangible assets, each definite lived assets, consisted of the following as of December 31, 2022, and September 30, 2022:


		December 31,		September 30,
	Useful life	2022		2022
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			(647,778)		(619,667)
Total			(647,778)		(619,667)
Total intangible assets, net		$	562,222	$	590,333

Amortization expense charged to operations amounted to $28,111 and $32,403, respectively, for the three months ended December 31, 2022, and 2021.

Annual amortization expense for the next five years and thereafter is estimated to be $84,333 (remaining in fiscal year 2023), $112,444, $112,444, $112,444, $112,444, and $28,113, respectively. The weighted average life of the intangible assets subject to amortization is 5 years on December 31, 2022.

NOTE 6 – OPERATING LEASES

Operating leases

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


	June 30,		September 30,		December 31,		September 30,
	2022		2021		2022		2022
Short term portion	$	119,178	$	167,101	$	30,425	$	75,529
Long term portion		—		75,530		—		—
Total lease liability	$	119,178	$	242,631	$	30,425	$	75,529

Maturity analysis under these lease agreements are as follows:

2022 (remaining months)

$
46,414
2023

84,175
Total undiscounted cash flows

130,589
Less: 10% Present value discount

(11,411)
Lease liability

$
119,178

Nine months ended June 30,

2022

2021
Operating lease expense

$
133,332

$
137,530
Short-term lease expense

6,600

7,000
Total lease expense

$
139,932

$
144,530

~~Operating lease expense is included in selling, general and administration expenses in the consolidated statement of operations.~~

1715

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2023	$	33,806
Total undiscounted cash flows		33,806
Less: 10% Present value discount		(3,381)
Lease liability	$	30,425


	Three months ended December 31,
	2022		2021
Operating lease expense	$	44,444	$	44,444
Short-term lease expense		2,400		2,100
Total lease expense	$	46,844	$	46,544

Operating lease expense is included in sales, general and administration expenses in the consolidated statement of operations.

For the ~~nine~~three months ended ~~June~~December 30, 2022, cash payments against lease liabilities totaled ~~$138,066,~~$40,346, and accretion on lease liability of ~~$14,613.~~$1,665.

For the ~~nine~~three months ended ~~June 30,~~December 31, 2021, cash payments against lease liabilities totaled ~~$134,207,~~$35,289, accretion on lease liability of ~~$26,084.~~$5,889.

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


Weighted-average remaining lease term	~~0.73~~0.41 years
Weighted-average discount rate	10	%

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following as of ~~June 30,~~December 31, 2022, and September 30, 2021:


	June 30,		September 30,		December 31,		September 30,
	2022		2021		2022		2022
Accounts payable	$	3,739,527	$	1,147,585	$	6,372,516	$	7,453,801

Performance bonuses						1,711,563		2,970,000
Insurance liabilities						332,360		602,970
Professional fees						95,674		505,169
Commissions						101,304		425,321
Interest payable		190,515		106,631		180,411		348,150
Payroll liabilities		20,250		20,250
Marketing						384,417		344,309
Other accrued liabilities		5,496,862		307,977		483,769		424,954
Accrued liabilities		5,707,627		434,858		3,289,498		5,620,873

Accrued royalties		3,316,708		633,463		8,419,287		4,559,088

Total accounts payable and accrued expenses	$	12,763,862	$	2,215,906	$	18,081,301	$	17,633,762

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~~NOTE 8 – CONVERTIBLE DEBENTURES PAYABLE~~

Convertible debentures as of June 30, 2022:

Unpaid

Contractual

Net Carrying Value

Principal

Interest Rates

Contractual

Warrants
Related party convertible debentures:

Current

Long Term

Balance

Cash
PIK

Maturity Date

issued
$3,000,000 convertible debenture amended October 23, 2020
(1)
$
—

$
—

$
—

—
—

—

—
$750,000 convertible debenture, December 1, 2020
(2)

673,753

—

750,000

4%
6%

12/1/2022

68,182
$800,000 convertible debenture, April 1, 2021
(2)

705,041

—

800,000

4%
6%

12/1/2022

72,727
$400,000 convertible debenture, May 1, 2021
(2)

349,730

—

400,000

4%
6%

12/1/2022

36,364
$400,000 convertible debenture, June 2, 2021
(2)

347,168

—

400,000

4%
6%

12/1/2022

36,364
Total related party convertible debentures, net

$
2,075,692

$
—

$
2,350,000

Convertible debentures:

$350,000 convertible debenture, January 12, 2021
(2)
$
311,993

$
—

$
350,000

4%
6%

12/1/2022

87,500
$250,000 convertible debenture, May 21, 2021
(2)

218,122

—

250,000

4%
6%

12/1/2022

22,727
$2,079,993 convertible debenture, May 9, 2022
(5)

72,466

142,714

2,079,993

10%
—

12/1/2023

—
Total convertible debentures, net

$
602,581

$
142,714

$
2,679,993

Convertible debentures as of September 30, 2021:

Unpaid

Contractual

Net Carrying Value

Principal

Interest Rates

Contractual

Warrants
Related party convertible debentures:

Current

Long Term

Balance

Cash
PIK

Maturity Date

issued
$3,000,000 convertible debenture amended October 23, 2020
(1)
$
530,226

$
876,256

$
2,715,582

10%
—

12/1/2023

3,550,709
$750,000 convertible debenture, December 1, 2020
(2)

—

536,508

750,000

4%
6%

12/1/2022

68,182
$800,000 convertible debenture, April 1, 2021
(2)

—

534,114

800,000

4%
6%

12/1/2022

72,727
$400,000 convertible debenture, May 1, 2021
(2)

—

259,246

400,000

4%
6%

12/1/2022

36,364
$400,000 convertible debenture, June 2, 2021
(2)

—

252,070

400,000

4%
6%

12/1/2022

36,364
Total related party convertible debentures, net

$
530,226

$
2,458,194

$
5,065,582

Convertible debentures:

$350,000 convertible debenture, January 12, 2021
(3)
$
—

$
243,578

$
350,000

4%
6%

12/1/2022

87,500
$250,000 convertible debenture, May 21, 2021
(4)

—

160,741

250,000

4%
6%

12/1/2022

22,727
Total convertible debentures, net

$
—

$
404,319

$
600,000

1) Unsecured convertible debentures (at $0.60 per common share) issued to related parties, amended October 23, 2020, interest at 10% per annum beginning November 1, 2020, monthly payments of unpaid interest accrued at 12.5% per annum will be paid in arrears through March 31, 2021, beginning April 1, 2021, we began paying equal monthly installments of principal and interest at 10% per annum through December 1, 2023. The debentures are convertible at any time prior to the maturity in whole or in parts into our common shares at a price of $0.60 per common share. We issued 3,550,709 common share purchase warrants, with each warrant

~~Table of Contents~~

exercisable at $0.86 for a period of 10 years. The beneficial conversion feature totaled $612,313 and was recorded as a debt discount. We also recorded the allocated fair value of the warrants, $2,387,687 as additional debt discount. On May 9, 2022, we completed a transfer of these convertible debentures in the aggregate principal amount of $2,068,399 by prepaying the principal and interest owed on such debentures in full under the terms of the debentures and issuing new substantially identical unsecured convertible debentures in the aggregate principal amount of $2,079,993 to a related party.

(2) On December 1, 2020, we offered, in a private placement, the aggregate offering amount of up to $3,000,000 of Senior Secured Promissory Debentures, with a minimum subscription amount of $250,000 and common stock warrants with an aggregate exercise price of $750,000 and aggregate exercisable warrant shares of 272,727 shares.

We treated the conversion feature as a derivative instrument. At the option of the Senior Secured Promissory Note holders, the notes are convertible at the earlier of a change of control event, a Qualified IPO, both of which are defined in the Promissory Note Agreement or the maturity date of December 1, 2022. If the conversion takes place at the maturity date, the note will be converted in whole or in parts (which cannot be less than 50% of the amount due under the note) into an amount of shares equal to the amount due divided by the average of the VWAP of common stock during each trading day during the thirty trading day period ending one trading day prior to the maturity date. If the conversion takes place at the change of control date, the note will be converted into an amount of shares equal to the amount due divided by the average of the VWAP of common stock during each trading day during the ten trading day period ending one trading day prior to the change of control effective date. In the event of a Qualified IPO, but subject to the closing of such Qualified IPO, the amount due shall convert in full on the closing date of such Qualified IPO into a number of shares equal to the amount due on such closing date divided by the applicable IPO conversion price, as defined in the Promissory Note Agreement.

The Senior Secured Promissory Debentures under the offering accrue cash interest at 4% per annum and payment in kind (PIK) interest at 6% payable in our common stock, determined on a 360-day basis. Cash interest is payable in advance for the period from the issue date to November 30, 2021, and then is payable six months in arrears on June 1, 2022, then six months in arrears on December 1, 2022. The accrued PIK interest is payable in shares of common stock in an amount equal to the amount of PIK Interest accrued as of such date, divided by the volume weighted average price (VWAP) of common stock during each trading day during the ten-trading day period ending one trading day prior to the PIK Interest Payment due dates of June 1, 2021, December 1, 2021, June 1, 2022, and December 1, 2022. The proceeds received upon issuing the Senior Secured Promissory Debentures were first allocated to the fair value of the embedded features with the remainder to the debt host instrument.

●

~~$750,000 December 1, 2020 debenture the fair value of the conversion feature of $339,216 and the allocated fair value of the warrants of $26,770 were recorded as debenture discount.~~

●

~~$350,000 January 12, 2021 debenture the fair value of the conversion feature of $139,751 and the allocated fair value of the warrants of $31,282 were recorded as debenture discount.~~

●

~~$800,000 April 1, 2021 debenture the fair value of the conversion feature of $319,431 and the allocated fair value of the warrants of $60,406 were recorded as debenture discount.~~

●

~~$400,000 May 1, 2021 debenture the fair value of the conversion feature of $159,715 and the allocated fair value of the warrants of $31,309 were recorded as debenture discount.~~

●

~~$250,000 May 21, 2021 debenture the fair value of the conversion feature of $99,822 and the allocated fair value of the warrants of $14,940 were recorded as debenture discount.~~

●

~~$400,000 June 2, 2021 debenture the fair value of the conversion feature of $159,715 and the allocated fair value of the warrants of $30,481 were recorded as debenture discount.~~

~~Table of Contents~~

(3) Convertible debentures (at $0.60 per common share) issued to a former officer, interest at 10% per annum, amended as of October 22, 2020, provides those monthly payments of $7,939 including principal and interest are to be made beginning December 1, 2020 through its maturity date of December 1, 2023; secured by 5,000,000 shares of our common stock which are owned by the Chief Executive Officer. The debenture is convertible at any time prior to December 1, 2023, in whole or in parts into our common stock at a price of $0.60 per common share. As the effective conversion rate based on the principal $287,000 was $0.60 per share which was less than our stock price on the date of issuance, a beneficial conversion feature was present at the issuance date. The beneficial conversion feature totaled $30,996 and was recorded as a debt discount. For the nine months ended September 30, 2021, principal payments totaled $29,939. On July 2, 2021, $216,105 total debenture and $1,800 of unpaid accrued interest was converted into 363,176 shares of common stock and we recognized a gain on debt extinguishment of $15,006 on debenture discount.

(4) Secured convertible debenture (primary interest in all of our assets), interest at 11% per annum, accrued monthly and the outstanding principal and unpaid accrued interest was due January 8, 2021. $326,143 total debenture and $50,213 of unpaid accrued interest was converted into 1,003,618 shares of common stock on January 8, 2021. The lender received 1,003,618 shares of common stock from this conversion and we recognized no gain or loss.

~~(5)~~On May 9, 2022, we completed a transfer of certain of our outstanding unsecured convertible debentures in the aggregate principal amount of $2,068,399 (the “Old Debentures”) by prepaying the principal and interest owed on such debentures in full under the terms of the debentures and issuing new substantially identical unsecured convertible debentures in the aggregate principal amount of $2,079,993 (the “New Debentures”) to a related party (the “Transfer”). The New Debentures, like the Old Debentures, mature on December 1, 2023, require monthly installments of principal and interest at 10% per annum and are convertible at any time prior to the maturity in whole or in part into our common shares at a price of $0.60 per common share. We had previously sought, but did not receive, certain concessions from the holders of the Old Debentures related to ongoing monthly principal and interest payments and the conversion of the Old Debentures into shares of our common stock in connection with any significant public equity capital raise by us. In connection with the issuance of the New Debentures, the holder thereof (the “Transferee”) has agreed to a cessation of principal and interest payments on the New Debentures until December 1, 2022, at which time accrued interest would be paid in a lump sum in cash and monthly principal and interest payments would resume. The Transferee has further agreed to convert the New Debentures into shares of our common stock upon any significant public equity capital raise by us.

~~The following table presents the interest expense related to the contractual interest coupon and the amortization of debt discounts on the convertible debentures:~~

Nine months ended June 30,

2022

2021
Interest expense
$
385,086

$
488,248
Amortization of debt discounts

1,199,498

954,081
Total
$
1,584,584

$
1,442,329

~~Table of Contents~~

For the three months remaining 2022

$
—
2023

4,795,763
2024

234,230
Convertible debentures payable, related and non-related party

5,029,993
Less: Debt discount on convertible debentures payable

(2,209,006)
Total convertible debentures payable, related and non-related party, net

$
2,820,987

~~Table of Contents~~

NOTE 98 – DEBT

Non-Revolving Lines of Credit as of June 30, 2022:

Unpaid

Contractual

Net Carrying Value

Principal

Interest Rates

Contractual

Warrants
Related party non-revolving line of credit:

Current

Long Term

Balance

Cash

Maturity Date

issued
$4,022,986 non-revolving line of credit, April 25, 2022
(1)
$
—

$
2,203,064

$
4,022,986

12%

10/25/2023

1,149,425
Total related party non-revolving line of credit, net

$
—

$
2,203,064

$
4,022,986

Non-revolving line of credit:

$2,200,000 non-revolving line of credit, May 13, 2022
(2)
$
—

1,316,246

2,200,000

12%

11/13/2023

628,575
Total non-revolving line of credit, net

$
—

$
1,316,246

$
2,200,000

Non-Revolving Lines of Credit as of September 30, 2021:

Unpaid

Contractual

Net Carrying Value

Principal

Interest Rates

Contractual

Warrants
Related party non-revolving line of credit:

Current

Long Term

Balance

Cash

Maturity Date

issued
$4,022,986 non-revolving line of credit, April 25, 2022
(1)
$
—

$
—

$
—

—

—

—
Total related party non-revolving line of credit, net

$
—

$
—

$
—

Non-revolving line of credit:

$2,200,000 non-revolving line of credit, May 13, 2022
(2)
$
—

—

—

—

—

—
Total non-revolving line of credit, net

$
—

$
—

$
—

(1) On February 23, 2022, we entered into a Non-Revolving Line of Credit Loan Agreement (the “Prior Loan Agreement”), with Excel Family Partners, LLLP (“Excel”), an entity managed by Bruce Cassidy, a member of the Company’s board of directors, for aggregate loans of up to $1.5 million, which was amended on April 13, 2022, to increase the aggregate amount to $2.0 million (the “$2m Loan”).

On April 25, 2022, we entered into a Non-Revolving Line of Credit Loan Agreement (the “Loan Agreement”) with Excel for an aggregate principal amount of $4,022,986 (the “Loan”). The Loan matures ~~eighteen~~ ~~(18) months from the date of the Loan Agreement and accrues interest, payable semi-annually in arrears, at a fixed rate of interest equal to 12 (12) percent per year.~~

On April 25, 2022, we used $2.022 million of the proceeds of the Loan to prepay all of the remaining outstanding principal and interest of the $2m Loan and the Prior Loan Agreement was terminated in connection with such prepayment.

In connection with the Loan, on April 25, 2022, we issued a warrant for an aggregate of up to 1,149,425 shares of our common stock. The warrant has an exercise price of $1.75 per share, expires on April 25, 2025 and shall be exercisable at any time prior to the expiration date.


Lines of Credit as of December 31, 2022:
						Unpaid		Contractual
		Net Carrying Value				Principal		Interest Rates	Contractual	Warrants
Related party lines of credit:		Current		Long Term		Balance		Cash	Maturity Date	issued
$4,022,986 non-revolving line of credit, amended December 12, 2022	(1)	$	—	$	2,873,160	$	4,022,986	12%	4/25/2024	383,141
Total related party lines of credit, net		$	—	$	2,873,160	$	4,022,986

Lines of credit:
$2,200,000 non-revolving line of credit, May 13, 2022	(2)	$	1,652,031	$	—	$	2,200,000	12%	11/13/2023	314,286
$6,000,000 revolving line of credit, July 29, 2022			—		4,666,022		5,973,001	Greater of 4% or Prime	7/29/2024	—
Total lines of credit, net		$	1,652,031	$	4,666,022	$	8,173,001


Lines of Credit as of September 30, 2022:
						Unpaid		Contractual
		Net Carrying Value				Principal		Interest Rates	Contractual	Warrants
Related party lines of credit:		Current		Long Term		Balance		Cash	Maturity Date	issued
$4,022,986 non-revolving line of credit, April 25, 2022	(1)	$	—	$	2,575,753	$	4,022,986	12%	10/25/2023	383,141
Total related party lines of credit, net		$	—	$	2,575,753	$	4,022,986

Lines of credit:
$2,200,000 non-revolving line of credit, May 13, 2022	(2)	$	—	$	1,494,469	$	2,200,000	12%	11/13/2023	314,286
$6,000,000 revolving line of credit, July 29, 2022			—		3,030,516		4,543,560	Greater of 4% or Prime	7/29/2024	—
Total lines of credit, net		$	—	$	4,524,985	$	6,743,560

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


	Three months ended December 31,
		2022		2021
Interest expense	$	340,379	$	—
Amortization of debt discounts		661,335		—
Total	$	1,001,714	$	—


For the fiscal years ended September 30,
2023	$	—
2024		12,195,987
2025		—
2026		—
2027		—
Lines of credit, related and non related party		12,195,987
Less: Debt discount on lines of credit payable		(3,004,774)
Total Lines of credit payable, related and non related party, net	$	9,191,213

Non-Revolving Lines of Credit

On February 23, 2022, we entered into a Non-Revolving Line of Credit Loan Agreement (the “Prior Excel Loan Agreement”) with Excel Family Partnership, LLLP (“Excel”), an entity managed by Bruce Cassidy, a member of our Board of Directors, for aggregate principal amount of $1,500,000, which was amended on April 13, 2022, to increase the aggregate principal amount to $2,000,000 (the “$2m Loan”). Effective as of April 25, 2022, we entered into a Non-Revolving Line of Credit Loan Agreement with Excel (the “Excel Non-Revolving Loan Agreement”) for an aggregate principal amount of $4,022,986 (the “Excel Non-Revolving Loan”). The Excel Non-Revolving Loan matures eighteen (18) months from the date of the Excel Non-Revolving Loan Agreement and accrues interest, payable semi-annually in arrears, at a fixed rate of interest equal to twelve (12) percent per year. On April 25, 2022, we used $2,000,000 of the proceeds of the Excel Non-Revolving Loan to prepay all of the remaining outstanding principal and interest of the $2m Loan and the Prior Excel Loan Agreement was terminated in connection with such prepayment. Under the Excel Non-Revolving Loan Agreement, we granted to the lender 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.~~thereof (which was subsequently subordinated in connection with our Revolving Loan Agreement (as defined below)). In connection with the Excel Non-Revolving Loan, on April 25, 2022, we issued a warrant for an aggregate of up to 383,141 shares of our common stock. The warrant has an exercise price of $5.25 per share, expires on April 25, 2025, and shall be exercisable at any time prior to the expiration date. Effective as of December 14, 2022, we entered into a Non-Revolving Line of Credit Agreement Amendment and a Non-Revolving line of Credit Promissory Note Amendment with Excel to extend the maturity date from eighteen (18) months to twenty-four (24) months from the date of the Excel Non-Revolving Loan.

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The Excel Non-Revolving Loan had a balance, including accrued interest, amounting to $4,111,492 and $4,226,181 as of December 31, 2022, and September 30, 2022, respectively. We incurred interest expense for the Excel Non-Revolving Loan in the amount of $419,438 and $0 for the three months ended December 31, 2022, and 2021.

~~(2) On~~Effective as of May 13, 2022, we entered into a Non-Revolving Line of Credit Loan Agreement (the “RAT Non-Revolving Loan Agreement”) with several institutions and individuals and RAT Investment Holdings, LP, as administrator of the loan (the “Loan Administrator”) for an aggregate principal amount of ~~$2.2 million~~$2,200,000 (the “RAT Non-Revolving Loan”). The RAT Non-Revolving Loan matures eighteen (18) months from the effective date of the RAT Non-Revolving Loan Agreement and accrues interest, payable semi-annually in arrears, at a fixed rate of interest equal to 12twelve (12) percent per year.

Under the RAT Non-Revolving Loan Agreement, we granted to the lenders under the RAT Non-Revolving Loan Agreement 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 Excel Non-Revolving Loan Agreement (which was subsequently subordinated in connection with our Revolving Loan Agreement). In connection with the RAT Non-Revolving Loan Agreement, on May 13, 2022, we issued a warrant (each a “Warrant” and collectively, the “Warrants”) to each lender under the RAT Non-Revolving Loan Agreement for an aggregate of up to ~~628,575~~209,522 shares of our common stock (the “Warrant Shares”). Each Warrant has an exercise price of ~~$1.75~~$5.25 per share, expires on May 13, 2025, and shall be exercisable at any time prior to the expiration ~~date~~date.

The ~~following table presents~~warrants were accounted for as equity awards. We allocated the ~~interest expense related~~debt and warrant on a relative fair value basis to the ~~contractual interest coupon and the amortization of debt discounts on~~proceedsreceived for the non-revolving lines of ~~credit:~~

Nine months ended June 30,

2022

2021
Interest expense
$
117,224

$
—
Amortization of debt discounts

333,294

—
Total
$
450,518

$
—

For the three months remaining 2022

$
—
2023

—
2024

6,222,986
Non-revolving lines of credit payable, related and non-related party

6,222,986
Less: Debt discount on non-revolving lines of credit payable

(2,703,676)
Total non-revolving lines of credit payable, related and non-related party, net

$
3,519,310

credit. We further allocated the fair value of $2,975,261 of the warrants at inception as a debt discount and recorded the straight-line amortization of debt discount as interest expense.

The RAT Non-Revolving Loan had a balance, including accrued interest, amounting to $2,235,441 and $2,301,260 as of December 31, 2022, and September 30, 2022, respectively. We incurred interest expense for the RAT Non-Revolving Loan in the amount of $224,105 and $0 for the three months ended December 31, 2022, and 2021.

Revolving Loan Agreement

Effective as of July 29, 2022, we entered into a Loan and Security Agreement (the “Revolving Loan 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, evidenced by a Revolving Loan Secured Promissory Note, also effective as of July 29, 2022 (the “Revolving Loan”). Shortly after the effective date of the Revolving Loan, the Initial Lender assigned the Revolving Loan Agreement, and the loan documents related thereto, to GemCap Solutions, LLC (the “Senior Lender”). Availability for borrowing under the Revolving Loan Agreement 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 Revolving Loan Agreement, subject to its sole discretion. Effective as of October 27, 2022, we entered into Amendment Number 1 to the Revolving Loan Agreement with the Senior Lender to increase the principal sum available from $4,000,000 to $6,000,000. As of December 31, 2022, we had borrowed $5,973,001 under the Revolving Loan. The Revolving Loan matures on 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%). Under the Revolving Loan 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 (the “Subordinated Lenders”) delivered subordination agreements (the “Subordination Agreements”)

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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 Subordination Agreements. In connection with the delivery of the 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 warrant has an exercise price of $5.25 per share, expires on July 29, 2025 (the “Expiration Date”), and shall be exercisable at any time prior to the Expiration Date. One warrant for 191,570 warrant shares was issued to Eagle Investment Group, LLC, an entity managed by Bruce Cassidy, a member of our Board of Directors, as directed by its affiliate, Excel Family Partners, LLLP, 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 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 such Subordinated Lenders on January 25, 2023.

The warrants were accounted for as equity awards. We allocated the debt and warrant on a relative fair value basis to theproceedsreceived for the revolving loan agreement. We further allocated the fair value of the $1,347,719 of the warrants at inception as a debt discount and recorded the straight-line amortization of debt discount as interest expense.

The Revolving Loan had a balance, including accrued interest, amounting to $6,029,465 and $4,587,255 as of December 31, 2022, and September 30, 2022, respectively. We incurred interest expense for the Revolving Loan in the amount of $358,171 and $0 for the three months ended December 31, 2022, and 2021.

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NOTE 109 – COMMITMENTS AND CONTINGENCIES

We may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are 0no such loss contingencies that are included in the financial statements as of ~~June 30,~~December 31, 2022.

NOTE 1110 – RELATED PARTY TRANSACTIONS

Related parties are natural persons or other entities that have the ability, directly or indirectly, to control another party or exercise significant influence over the party making financial and operating decisions. Related parties include other parties that are subject to common control or that are subject to common significant influences.

We borrowed funds for business operations from a certain stockholder and board member through convertible debenture agreements and have remaining balances, including accrued interest amounting to $2,480,350 and $2,448,871Revolving Loan Agreement

Effective as of June 30, 2022, and September 30, 2021, respectively. We incurred interest expense, including amortization of debt discount for these convertible debentures in the amounts of $666,515 and $267,416 for the nine months ended June 30, 2022, and 2021, respectively. See Note 8 for Convertible Debentures discussion.

We borrowed funds for business operations from a certain stockholder and board member through non-revolving lines of credit agreements and have remaining balances, including accrued interest amounting to $4,105,492 and $0 as of June 30, 2022, and September 30, 2021, respectively. We incurred interest expense, including amortization of debt discount for these non-revolving lines of credit in the amounts of $331,548 and $0 for the nine months ended June 30, 2022, and 2021, respectively. See Note 9 Debt discussion.

~~On February 23,~~July 29, 2022, we entered into ~~a Non-Revolving Line of Credit~~the Revolving Loan Agreement. In connection with the loan under the Revolving Loan Agreement, ~~(the “Prior Loan Agreement”),~~the Subordinated Lenders delivered Subordination Agreements to the Senior Lender. In connection with ~~Excel Family Partners, LLLP (“Excel”),~~the delivery of the 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 warrant has an exercise price of $5.25 per share, expires on July 29, 2025. One warrant for 191,570 warrant shares was issued to Eagle Investment Group, LLC, an entity managed by Bruce Cassidy, a member of our ~~board~~Board of ~~directors,~~Directors, as directed by its affiliate, Excel Family Partners, LLLP, one of the Subordinated Lenders.

Excel Non-Revolving Loan Agreement

On February 23, 2022, we entered into the Prior Excel Loan Agreement with Excel, an entity managed by Bruce Cassidy, a member of our Board of Directors, for ~~aggregate loans~~the $2m Loan (aggregate principal amount of ~~up to $1.5 million,~~$1,500,000, which was amended on April 13, 2022, to increase the aggregate principal amount to ~~$2.0 million (the “$2m Loan”).~~

$2,000,000. Effective as of April 25, 2022, we entered into athe Excel Non-Revolving ~~Line of Credit~~ Loan Agreement ~~with~~for the Excel ~~for~~Non-Revolving Loan (aggregate principal amount of ~~up to $4,022,986, evidenced by a~~$4,022,986). The Excel Non-Revolving ~~Line of Credit Promissory Note, also effective as of April 25, 2022. The~~ Loan matures eighteen (18) months from the date of the Excel Non-Revolving Loan Agreement and accrues interest, payable semi-annually in arrears, at a fixed rate of interest equal to 12twelve (12) percent per year. On April 25, 2022, we used $2,000,000 of the proceeds of the Excel Non-Revolving Loan to prepay all of the remaining outstanding principal and interest of the $2m Loan and the Prior Loan Agreement was terminated in connection with such prepayment. Under the Excel Non-Revolving Loan Agreement, we granted to the lender 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 was subsequently subordinated in connection with the Revolving Loan Agreement). In connection with the Excel Non-Revolving Loan, on April 25, 2022, we issued a ~~Warrant~~warrant for an aggregate of up to ~~1,149,425~~383,141 shares of our common stock. The ~~Warrant~~warrant has an exercise price of ~~$1.75~~$5.25 per share, expires on April 25, 2025, and shall be exercisable at any time prior to the ~~Expiration Date.~~

~~On May 9,~~expiration date. Effective as of December 14, 2022, we ~~completed~~entered into a ~~transfer~~Non-Revolving Line of ~~certain~~Credit Agreement Amendment and a Non-Revolving line of ~~our outstanding unsecured convertible debentures~~Credit Promissory Note Amendment with Excel to extend the maturity date from eighteen (18) months to twenty-four (24) months from the date of the Excel Non-Revolving Loan.

The Excel Non-Revolving Loan had a balance, including accrued interest, amounting to $4,111,492 and $4,226,181 as of December 31, 2022, and September 30, 2022, respectively. We incurred interest expense for the Excel Non-Revolving Loan in the ~~aggregate principal~~ amount of ~~$2,068,399 (the “Old Debentures”)~~$419,438 and $0 for the three months ended December 31, 2022, and 2021.

500 Limited

For the three months ended December 31, 2022, and 2021, we paid 500 Limited $116,200 and $103,200, respectively, for programming services provided to Loop. 500 Limited is an entity controlled by ~~prepaying the principal~~Liam McCallum, our Chief Product and interest owed on such debentures in full under the terms of the debentures and issuing new substantially identical unsecured convertible debentures in the aggregate principal amount of $2,079,993(the “New Debentures”) to a related party (the “Transfer”). The New Debentures, like the Old Debentures, mature on December 1, 2023, require monthly installments of principal and interest at 10% per annum and are convertible at any time prior to the maturity in whole or in part into our common shares at a price of $0.60 per common share. We had previously sought, but did not receive, certain concessions from the holders of the Old Debentures related to ongoing monthly principal and interest payments and the conversion of the Old Debentures into shares of our common stock in connection with any significant public equity capital raise by us. In connection with the issuance of the New Debentures, the holder thereof (the “Transferee”) has agreed to a cessation of principal and interest payments on the New Debentures until December 1, 2022, at which time accrued interest would be paid in a lump sum in cash and monthly principal and interest payments would resume. The Transferee has further agreed to convert the New Debentures into shares of our common stock upon any significant public equity capital raise by us.Technology Officer.

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NOTE 1211 –STOCKHOLDERS’ EQUITY (DEFICIT)

Convertible Preferred Stock

Of the 16,666,667 shares of preferred stock authorized, we had designated (i) 3,333,334 shares of preferred stock as Series A Convertible Preferred Stock (the “Series A Preferred Stock”) and (ii) 3,333,334 shares of preferred stock as Series B Convertible Preferred Stock (the “Series B Preferred Stock.” As of ~~June 30,~~December 31, 2022, and 2021, we had 0 and ~~30,667~~0 shares of Series A Preferred Stock issued and outstanding, respectively. As of ~~June 30,~~December 31, 2022, and 2021, we had 0 and 200,000 shares of Series B Preferred Stock issued and outstanding, respectively.

As of December 31, 2022, there were (i) no shares of Series A Preferred Stock issued and outstanding, and (ii) no shares of Series B Preferred Stock issued and outstanding. As of December 30, 2022, and September 30, 2022, we had 0 and 200,000 shares of Series A convertible preferred stock issued and outstanding, respectively. Each share of Series A Preferred Stock has a liquidation preference of $1.50 per share, is entitled to 100 votes per share, and is convertible at any time at the discretion of the holder thereof into 100 shares of common stock. Each share of Series B Preferred Stock has a liquidation preference of $1.50 per share, is entitled to 100 votes per share and is convertible at any time at the discretion of the holder thereof into 100 shares of common stock. We evaluated the features of the Convertible Preferred Stock under ASC 480 and classified them as permanent equity because the Convertible Preferred stock is not mandatorily or contingently redeemable at the stockholder’s option and the liquidation preference that exists does not fall within the guidance of SEC Accounting Series Release No. 268 – Presentation in Financial Statements of “Redeemable Preferred Stocks” (“ASR 268”).

Change in Number of Authorized and Outstanding Shares

On September 21, 2022, a 1 for 3 reverse stock split of our common stock became effective. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively adjusted for the effects of the reverse split for all periods presented.

Common stock

Our authorized capital stock consists of ~~316,666,667~~105,555,556 shares of common stock, $0.0001 par value per share, and ~~16,666,667~~3,333,334 shares of preferred stock, $0.0001 par value per share. As of ~~June 30,~~December 31, 2022, and 2021, there were ~~153,539,596~~56,381,209 and ~~127,316,746,~~44,490,006, respectively, shares of common stock issued and outstanding.

~~Nine~~Three months ended ~~June 30,~~December 31, 2022

During the nine months ended June 30, 2022, we issued 69,455 shares of common stock with a value of $177,000 as payment in kind for accrued interest due on certain convertible notes. Of this amount, 55,329 shares of common stock at a value of $141,000 was issued to a board member.

~~During the nine months ended June 30, 2022, we issued 20,000,000 shares of common stock to a board member upon conversion of 200,000 shares of Series B Preferred Stock.~~

~~Nine months ended June 30, 2021~~

~~During the nine months ended June 30, 2021, we issued 1,369,863 shares of our common stock with a value of $2,671,233 for the purchase of certain intangible assets.~~

~~During the nine months ended June 30, 2021, we issued 97,891 shares of our common stock with a value of $194,803 as a debt settlement.~~

~~During the nine months ended June 30, 2021, we issued 1,180,880 shares of our common stock, valued at $2,065,996 capitalized as license content assets.~~

~~During the nine months ended June 30, 2021, we issued 2,457,898 shares of our common stock with a value of $6,553,235 for the purchase of 100% ownership in EON.~~

~~During the nine months ended June 30, 2021, we issued an aggregate of 3,228,000 shares of our common stock for gross cash proceeds of $4,034,935. We recorded no offering costs.~~

~~During the nine months ended June 30, 2021, we issued 497,429 shares of our common stock in satisfaction of a common stock subscription of $485,144.~~

~~During the nine months ended June 30, 2021, we converted a convertible note plus accrued interest in the amount of $376,356 into 1,003,618 shares of our common stock.~~

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~~During the nine months ended June 30, 2021, we issued 3,066,700 shares of our common stock in connection with the conversion of series A convertible preferred stock.~~

~~During the nine months ended June 30, 2021, we issued 79,051 shares of our common stock for consulting services valued at $200,000.~~

See Note 1312 – Stock Options and Warrants for stock compensation discussion.

Three months ended December 31, 2021

See Note 12 – Stock Options and Warrants for stock compensation discussion.

NOTE 1312 – STOCK OPTIONS AND WARRANTS

Options

Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from using our historical stock prices. We account for the expected life of options based on the contractual life of options for non-employees. For employees, ~~our accounts~~we account for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.

~~The following table summarizes the stock option activity for the nine months ended June 30, 2022:~~

Weighted

    Weighted Average

Average

Remaining

Aggregate


Options

Exercise Price

Contractual Term

Intrinsic Value
Outstanding at September 30, 2021

17,833,356

$
1.04

8.30

$
25,478,339
Grants

1,471,200

2.46

9.49

4,527,654
Exercised

—

—

—

—
Expired

—

—

—

—
Forfeited

(338,251)

(2.13)

—

—
Outstanding at June 30, 2022

18,966,305

$
1.13

7.68

$
30,005,993
Exercisable at June 30, 2022

13,652,168

$
0.99

7.32

$
23,582,392

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than our stock price of $2.71 as of June 30, 2022, and $2.60 as of June 30, 2021, which would have been received by the option holders had those option holders exercised their options as of that date.

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~~The following table presents information related to stock options on June 30, 2022:~~

Options outstanding

Weighted

Options

average

exercisable

Exercise

Number of

remaining life

number of

price

options

in years

options
$
0.86

1,148,371

4.17

1,148,371

0.66

4,663,935

6.34

4,663,935

0.89

2,500,000

7.96

2,008,000

1.10

7,882,799

8.37

4,607,142

0.57

300,000

8.67

300,000

2.84

250,000

8.83

250,000

2.75

600,000

8.85

216,667

2.35

125,000

9.22

15,278

2.40

50,000

9.08

—

2.50

50,000

9.09

50,000

2.30

836,200

9.27

392,775

2.75

425,000

9.82

—

2.58

135,000

9.88

—

18,966,305

13,652,168

~~Stock-based compensation~~

We recognize compensation expense for all stock options granted using the fair value-based method of accounting. During the nine months ended June 30, 2022, we issued 1,471,200 options valued at $2.46 per option. As of June 30, 2022, the total compensation cost related to nonvested awards not yet recognized is $9,525,576 and the weighted average period over which expense is expected to be recognized in months is 24.5.

~~We calculated the fair value of options issued using the Black-Scholes option pricing model, with the following assumptions:~~

June 30, 2022

Weighted average fair value of options granted

$
1.13

Expected life

5.00 -10.00 years

Risk-free interest rate

0.01 - 2.93
%
Expected volatility

55.80 - 73.00
%
Expected dividends yield

0
%
Forfeiture rate

0
%

~~The stock-based compensation expense related to option grants was $3,948,272 and $7,036,800, for the nine months ended June 30, 2022, and 2021, respectively.~~

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~~Warrants~~

The following table summarizes the ~~changes in warrants outstanding and the related prices~~stock option activity for the ~~shares of our common stock:~~three months ended December 31, 2022:


Warrants outstanding				Warrants exercisable
			Weighted				Weighted
			average				average		Weighted		Weighted Average
			remaining	Weighted			remaining		Average		Remaining	Aggregate
			contractual	average			contractual	Options	Exercise Price		Contractual Term	Intrinsic Value
		Number	life	exercise		Number	life
Exercise prices		outstanding	(years)	price		exercisable	(years)
$	0.86	3,850,709	4.87		0.86	3,850,709	4.87
	0.38	2,000,000	4.44		0.38	2,000,000	4.44
	0.75	2,666,667	7.70		0.75	2,666,667	7.70
	2.75	323,864	0.42		2.75	323,864	0.42
	2.80	50,000	8.82		2.80	50,000	8.82
	2.75	6,573,460	2.25		2.75	6,573,460	2.25
	2.35	187,324	4.71		2.35	62,733	4.71
	1.75	1,149,425	2.82		1.75	1,149,425	2.82
	1.75	628,575	2.87		1.75	628,575	2.87
	3.00	200,000	2.88		3.00	110,000	2.88
	2.65	300,000	2.96		2.65	—	2.96
Outstanding at September 30, 2022								8,174,563	$	3.78	8.05	$	9,188,491
Grants								—		—	—		—
Exercised								—		—	—		—
Expired								—		—	—		—
Forfeited								(2,777)		3.30	—		—
Outstanding at December 31, 2022								8,171,786	$	3.78	7.80	$	24,082,385
Exercisable at December 31, 2022								6,162,812	$	3.44	7.49	$	19,989,899

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise price less than our stock price of $6.62 as of December 31, 2022, and $6.75 as of December 31, 2021, which would have been received by the option holders had those option holders exercised their options as of that date.

The following table ~~summarizes the warrant activity for the nine months ended June 30,~~presents information related to stock options as of December 31, 2022:


Options outstanding				Options outstanding
						Weighted	Options
						average	exercisable
				Exercise	Number of	remaining life	number of
				price	options	in years	options
$				2.58	382,790	3.66	382,790
				1.98	1,472,892	5.84	1,472,891
		Weighted		2.67	833,333	7.46	753,333
		average		3.30	2,621,053	7.87	1,838,504
		exercise		1.71	100,000	8.17	99,999
	Number of	price per		8.52	83,333	8.33	83,333
	shares	share		8.25	200,000	8.34	105,556
Outstanding at September 30, 2021	15,464,700	$	1.63
Issued	2,465,324		2.01
Exercised	—		—
Expired	—		—
Outstanding at June 30, 2022	17,930,024	$	1.68
				7.05	16,667	8.56	7,870
				7.20	16,667	8.57	7,870
				7.50	16,667	8.59	16,666
				6.90	278,727	8.76	169,357
				7.05	25,000	8.82	7,292
				8.25	141,667	9.31	—
				7.74	45,000	9.37	—
				7.05	8,333	9.53	—
				7.86	6,667	9.67	—
				4.95	1,922,990	9.73	1,217,351
					8,171,786		6,162,812

Stock-based compensation

We ~~record~~recognize compensation expense for all ~~warrants~~stock options granted using the fair value-based method of accounting.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, ~~we issued 687,324 warrants to various companies for consulting services and recorded consulting expense~~no stock options were granted. As of ~~$254,013.~~

~~During the nine months ended June 30,~~December 31, 2022, ~~we issued 1,778,000 warrants in conjunction with non-revolving lines of credit.~~

During the nine months ended June 30, 2021, we issued 213,637 warrants in conjunction with the issue of senior secured convertible debentures, of which 213,637 warrants were issued to a related party, in the total ~~amount of $2,350,000~~compensation cost related to nonvested awards not yet recognized is $8,851,714 and ~~recorded~~ the ~~allocated fair values of the warrants of $175,859 as additional debt discounts.~~weighted average period over which expense is expected to be recognized in months is 24.1.

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~~We calculated~~The stock-based compensation expense related to option grants was $1,382,000 and $1,549,406, for the ~~fair value~~three months ended December 31, 2022, and 2021, respectively.

Restricted Stock Units

On September 18, 2022, the Compensation Committee of ~~warrants issued using~~our Board of Directors approved Restricted Stock Unit (“RSU”) awards to certain officers and key employees pursuant to the ~~Black-Scholes option pricing model, with~~terms of the ~~following assumptions:~~Loop Media, Inc. Amended and Restated 2020 Equity Incentive Compensation Plan. On September 22, 2022, we granted an aggregate of 890,000 RSUs which vest over time subject to continued service. Each RSU was valued at the public offering price during our initial public offering of $5 per share, vesting 25% upon one year from the grant date and the remainder in equal quarterly installments over three (3) years.

June 30, 2022

Weighted average fair value of warrants granted

$
0.74

Expected life

1.75 - 10 years

Risk-free interest rate

0.15 - 3.35
%
Expected volatility

57.30 - 73.00
%
Expected dividends yield

—
%
Forfeiture rate

—
%

As of December 31, 2022, the total compensation cost related to nonvested RSU awards not yet recognized was $4,079,167 and the weighted average period over which expense is expected to be recognized in months was 44.0.

Warrants

The following table summarizes the changes in warrants outstanding and the related prices for the shares of our common stock:


Warrants outstanding				Warrants exercisable
			Weighted				Weighted
			average				average
			remaining	Weighted			remaining
			contractual	average			contractual
		Number	life	exercise		Number	life
Exercise prices		outstanding	(years)	price		exercisable	(years)
$	2.58	100,000	6.78		2.58	100,000	6.78
	2.57	666,666	3.93		2.57	666,666	3.93
	2.25	888,888	7.20		2.25	888,888	7.20
	8.25	107,952	1.92		8.25	107,952	1.92
	8.40	16,666	6.32		8.40	16,666	6.32
	8.25	2,191,149	1.75		8.25	2,191,149	1.75
	7.05	62,438	4.21		7.05	39,884	4.21
	5.25	383,141	2.32		5.25	383,141	2.32
	5.25	209,522	2.37		5.25	209,522	2.37
	9.00	66,666	2.38		9.00	66,666	2.38
	7.95	100,000	2.46		7.95	16,667	2
	5.25	296,329	2.58		5.25	296,329	2.58
	6.00	192,000	4.74		6.00	192,000	4.74
	6.00	18,616	4.75		6.00	18,616	4.75

The following table summarizes the warrant activity for the three months ended December 31, 2022:


		Weighted
		average
		exercise
	Number of	price per
	shares	share
Outstanding at September 30, 2022	5,300,033	$	5.82
Issued	—		—
Exercised	—		—
Expired	—		—
Outstanding at December 31, 2022	5,300,033	$

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We record all warrants granted using the fair value-based method of accounting.

During the three months ended December 31, 2022, no warrants were issued. We recorded consulting expense of $130,682 as a result of current period vesting of previously issued warrants to various companies for consulting services.

NOTE 1413 – INCOME TAXES

We calculate our interim income tax provision in accordance with ASC Topic 270, Interim Reporting and ASC Topic 740, Accounting for Income Taxes. At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary year to date earnings. In addition, the tax effects of unusual or infrequently occurring items including changes in judgment about valuation allowances and effects of changes in enacted tax laws are recognized discretely in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating (loss) income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current fiscal year. The accounting estimates used to compute income tax expense may change as new events occur or additional information is obtained.

For the ~~nine~~three months ended ~~June 30,~~December 31, 2022, we recorded an income tax provision of ~~$1,051 related to state and local taxes.~~$1,230. For the ~~nine~~three months ended ~~June 30,~~December 31, 2021, we recorded an income tax provision of ~~$99,830 primarily~~$251 related to ~~a true-up of prepaid taxes from 2019.~~state and local taxes. The effective rate for both the ~~nine~~three months ended ~~June 30,~~December 31, 2022, and ~~June 30,~~ 2021, differ from the U.S. federal statutory rate of 21% as no income tax benefit was recorded for current year operating losses as we maintain a full valuation allowance on our deferred tax assets.

For the three months ended June 30, 2022, we recorded an income tax provision of $0 related to state and local taxes. For the three months ended June 30, 2021, we recorded an income tax provision of $0 related to state and local taxes. The effective rate for both the three months ended June 30, 2022, and June 30, 2021, differ from the U.S. federal statutory rate of 21% as no income tax benefit was recorded for current year operating losses as we maintain a full valuation allowance on our deferred tax assets.

NOTE 1514 – SUBSEQUENT EVENTS

~~Loan Agreement~~Significant Agreements

~~Effective as~~We have recently renewed and updated the last of ~~July 29, 2022, we entered into a Loan~~our three limited, non-exclusive licenses to digitally distribute certain music videos and ~~Security Agreement (the “Loan Agreement”) with Industrial Funding Group, Inc. (the “Initial Lender”) for a revolving loan credit facility for the principal sum of up~~related materials to four million dollars ($4.0 million), and through the exercise of an accordion feature, a total sum of up to ten million dollars ($10 million) (the “Loan”), evidenced by a Revolving Loan Secured Promissory Note (the “Note”), also effective as of July 29, 2022. As of August 2, 2022, we borrowed approximately two million dollars ($2.0 million) under the Loan, and the Initial Lender assigned the Loan Agreement, and the loan documents related thereto, to GemCap Solutions, LLC (the “Senior Lender”).

~~The Loan matures~~ ~~twenty-four~~ (24) months from the date of the Loan Agreement and accrues interest on the unpaid principal balance of advances, payable monthly in arrears, beginning on September 7, 2022, at an annual rate equal to the greater of (I) the sum of (i) the “Prime Rate” as reportedour OOH clients 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%).~~

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In addition, the Loan Agreement has restrictive covenants, including covenants preventing us from effecting a change of control, disposing of our assets outside of the ordinary course of business, incurring additional debt (subject to certain exceptions), changing our business as currently conducted, paying dividendsUnited States owned or ~~settling claims involving the collateral under the Loan Agreement.~~

Under the Loan 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 delivered subordination agreements (the “Subordination Agreements”) to the Senior Lender (each lender, a “Subordinated Lender” and together, the “Subordinated Lenders”).

~~In connection with the delivery of the Subordination Agreements~~controlled by the ~~Subordinated Lenders, on July 29, 2022, we issued warrants (each a “Warrant”~~major record labels; Universal Music Group, Sony Music Entertainment, and ~~collectively,~~Warner Music Group (collectively, the ~~“Warrants”~~“Music Labels”) to each Subordinated Lender on identical terms for an aggregate of up to 888,997 shares of our common stock (the “Warrant Shares”). Each Warrant has an exercise price of $1.75 per share, expires on July 29, 2025 (the “Expiration Date”), and shall be exercisable at any time prior to the Expiration Date. One Warrant for 574,712 Warrant Shares was issued to Eagle Investment Group, LLC, an entity managed by Bruce Cassidy, a member of our board of directors, as directed by its affiliate, Excel Family Partners, LLLP (“Excel”), one of the Subordinated Lenders. The Subordinated Lenders receiving Warrants for the remaining 314,285 Warrant Shares also will receive a cash payment of $22,000 six months from the date of the Subordination Agreements, representing one percent (1.00%) of the outstanding principal amount of the loan.have now done so with all three Music Labels.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

STATEMENT ON FORWARD-LOOKING INFORMATION

This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our financial statements which have been prepared in conformity with accounting principles generally accepted in the United States of America. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

The following discussion and analysis provides information which our management believes to be relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read together with our financial statements and the notes to the financial statements, which are included in this report.

Overview

We are 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 out-of-home (“OOH”) dining, hospitality, retail, convenience stores and other locations and venues to enable them to inform, entertain and engage their customers. ~~Our~~In addition, our technology provides third-party advertisers with a targeted marketing and promotional tool for their products and services and, in certain instances, allows us to measure the number of potential viewers of such advertising and promotional materials. We also allow OOH ~~customers~~clients to access our service without advertisements by paying a monthly subscription fee. ~~In addition to providing services to OOH venue operators, we currently provide our services direct to consumers (“D2C”) in their homes on connected TVs (“CTVs”) and on their mobile devices.~~

We offer ~~self-curated~~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, which is predominantly licensed or acquired from third parties, including action sports clips, drone and atmospheric footage, trivia, news headlines, lifestyle channels and kid-friendly videos, as well as movie, television and video game trailers, ~~kid-friendly videos, viral videos, drone footage, news headlines, and lifestyle and atmospheric channels.~~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 ~~(“O~~(the “O&O ~~Network”~~Platform”) of Loop Media-designed “small-box” streaming Android media players (“Loop Players”) and legacy ScreenPlay computers and (ii) through screens on digital networks owned and operated by third parties ~~(“Partner Network”,~~(each a “Partner Platform” and collectively the “Partner Platforms,” and together with the O&O ~~Network,~~Platform, the “Loop ~~Network”~~Platform”). ~~We moved to an advertising-based model and ramped up distribution of Loop Players for our O&O Network starting in early 2021.~~ As of ~~June 30,~~December 31, 2022, we had ~~12,584 quarterly active units (“QAUs”).~~26,903 QAUs operating on our O&O Platform. See ~~below “Key~~“— Key Performance Indicators.” We launched our Partner ~~Network~~Platforms business beginning in ~~early~~ May 2022 with one partner on approximately ~~5,000~~17,000 of the partner’s screens and ~~we rolled out to~~are in the ~~remaining 12,000~~process of finalizing an additional approximately 13,500 screens in ~~that network as~~a second Partner Platform, for a total of ~~mid-May 2022, remaining at~~ approximately ~~that level as of early-August 2022. Our legacy businesses, including~~30,500 screens across our ~~content subscription-based business and~~Partner Platforms in the near term. We expect to begin earning revenue on these additional screens in our ~~CTV business, complement these newer businesses.~~second fiscal quarter ending March 31, 2023.

Key Performance Indicators

We review our quarterly active units (“QAUs”) and average revenue per unit player (“ARPU”), among other key performance indicators, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

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Quarterly Active Units

~~Beginning October 1, 2021, we began to pre-activate almost all of~~ We do not count towards our QAUs any Loop Players prior to delivery to customers, in response to feedback from customers and in order to further streamline the installation process and simplify the use of the Loop Players in DOOH locations. Pre-activated Loop Players are ordered by third-party DOOH locations and represent potential revenue for us when the Loop Players are installed in the DOOH locations. As a result of these operational changes, for any period following September 30, 2021, we will include inor screens used on our definition of “active unit” any Loop Player that has been pre-activated and shipped by us to a DOOH location customer for a period of 90 days post shipment, regardless of whether such customer utilizes the Loop Player in their DOOH location. After the 90-day period, these Loop Players will drop out of the QAU definition, unless they are otherwise online, playing content, and checked into the Loop analytics system at least once in any subsequent 90-day period. Prior to October 1, 2021, if a Loop Player was not activated by the DOOH location operator it would not be counted as an active unit.

Accordingly, our QAUs for periods subsequent to September 30, 2021, will not be strictly comparable to our September 30, 2021, or prior period, QAUs. Increases or decreases in our QAU may not correspond with increases or decreases in our revenue, and QAU may be calculated in a manner different than any similar key performance indicator used by other companies.

~~The growth in QAUs is almost entirely the result of an increase in our ad-supported Loop Players.~~Partner Platform.

For the quarter ended ~~June 30,~~December 31, 2022, QAU was ~~12,584,~~26,903, compared to 18,240 for the quarter ended September 30, 2022, a 47% increase. The growth in QAUs was almost entirely the result of growth in our ad-supported Loop Players. This growth was impacted by our increased focus, and the provision of additional resources, to our affiliate program, increased Loop Player requests by certain of our affiliate partners and the introduction of an automated system for our client success team to identify Loop Players that have gone offline to enable us to reengage with the relevant customers and reactivate their Loop Players. QAU was 12,584 for the quarter ended June 30, 2022, 10,530 for the quarter ended March 31, 2022, ~~a 20% increase.~~

~~For the quarter ended March 31, 2022, QAU was 10,530, compared to~~and 8,156 for the quarter ended December 31, ~~2021, a 29% increase.~~

~~For the quarter ended December 31, 2021, QAU was 8,156, compared to 5,791 for the quarter ended September 30, 2021, a 41% increase.~~2021.

Average Revenue Per Unit

We define a “unit player” as (i) an ad-supported Loop Player (or a DOOH location using our ~~ad-supported~~ad- supported service through our “Loop for Business” application or using a DOOH location-owned computer screening our content) that is online, used on our O&O Platform, playing content and has checked into the Loop analytics system at least once in the 90-day period or (ii) a DOOH location customer using our paid subscription service on our O&O Platform at any time during the 90-day period. A unit player that is supported by our advertising-based revenue model is an ad-supported unit player and a unit player that is supported by a subscription-based revenue model is a subscription unit player. We calculate advertising ARPU (“(“AD ARPU”) by dividing quarterly revenues from our DOOH ad-supported service on our O&O Platform for the period by QAUs for our ad-supported unit ~~players.~~ players on our O&O Platform. We calculate subscription ARPU (“SUB ARPU”) by dividing quarterly revenues from our DOOH ~~subscription supported~~subscription-supported service on our O&O Platform for the period by QAUs for our ~~subscription supported~~subscription-supported unit~~players.~~ players on our O&O Platform. We do not include in our unit players count, AD ARPU or SUB ARPU any Loop Players or screens used on our Partner Platform.

Our AD ARPU fluctuates based on a number of factors, including the length of time in a quarter that aunitplayerisactivatedandoperating,the~~costperthousandadvertisements(“CPMs”)~~ CPMs weareabletoachieve for our advertising impressions, and the ~~ratio of~~ advertising ~~impressions that are filled with advertisements to the number of~~ ~~overall~~ ~~advertising impressions (“~~fill ~~rate”)~~rates that we are able to achieve. Our SUB ARPU fluctuates based on a number of factors, including the timing of the start of a customer subscription for a ~~subscription supported~~subscription-supported unit player, the number of ad-supported unit players we have, and the price ~~customers~~ clients pay for those subscriptions. An increase in the number of unit players over the

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course of a quarterly period may have the effect of decreasing quarterly ARPU, particularly if such players are added towards theend of the quarterly period. Increases or decreases in ARPU may not correspond with increases or decreases in our revenue, and ARPU may be calculated in a manner different than any similar key performance indicator used by other companies.

~~The growth in~~ For the quarter ended December 31, 2022, AD ARPU was $324, compared to $356 for the quarter ended September 30, 2022, a 9% decrease primarily resulting from ~~our efforts to optimize our~~significantly lower CPMs and ~~increase~~decreased fill ~~rates.~~

~~For~~rates beginning mid-way through the period November 2022, which offset strong CPMs and fill rates early in the period leading up to the U.S. elections, which had a positive impact on AD ARPU during the quarter. AD ARPU was $526 for the quarter ended June 30, 2022,~~AD ARPU~~ ~~was $526, compared to~~ $435 for the quarter ended March 31, 2022, ~~a 21% increase.~~

~~For the quarter ended March 31, 2022, AD ARPU was $435, compared to~~and $236 for the quarter ended December 31, ~~2021,~~2021.

For the quarter ended December 31, 2022, SUB ARPU was $323, compared to $387 for the quarter ended September 30, 2022, a ~~84.3% increase.~~

~~For~~17% decrease. SUB ARPU was $235 for the quarter ended June 30, 2022,~~SUB ARPU~~ ~~was $235, compared to~~ $429 for the quarter ended March 31, 2022, ~~a (45.2)% decrease.~~

~~For the quarter ended March 31, 2022, SUB ARP was $429, compared to~~and $410 for the quarter ended December 31, ~~2021, a 4.6% increase.~~2021.

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Components of Results of Operations

Revenue

~~Critical Accounting Policies~~The majority of our revenue is generated from ad sales, which is recognized at the time the digital advertising impressions are filled and ~~Use of Estimates~~

~~License Content Assets~~

~~On January 1, 2020, we adopted~~ the ~~guidance~~advertisements are played. Revenue generated from content subscription services in ~~ASU 2019-02,~~ Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials~~, on a prospective basis. We capitalize~~customized formats is recognized over the ~~fixed content fees and our corresponding liability when the license period begins, the cost~~term of the service. The revenue generated from hardware for ongoing subscription content delivery is ~~known, and~~recognized at 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 expenses 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 termspoint of the ~~arrangement.~~

hardware delivery.

~~Revenue~~

Revenue generated from content and streaming services, including content encoding and hosting, are recognized over the term of the service based on bandwidth usage. The revenue generated from content subscription services in customized formats is recognized over the term of the service. The revenue generated from hardware for ongoing subscription content delivery is recognized at the point of the hardware delivery.

Cost of Revenue

Cost of revenue consists of expenses related to licensing, content delivery and ~~customer~~technology support. Significant expenses include ~~employee compensation~~royalties and ~~related costs for support team members, including salaries, benefits, and stock-based compensation,~~license fees paid to content providers as well as ~~hardware costs, certain data center~~network infrastructure and ~~facility costs.~~server hosting.

Total Operating Expenses

Operating expenses ~~support~~are attributable to the general overhead related to all the products and services that we provide to our ~~customers~~clients and, as a result, they are presented in an aggregate total. Our operating expenses include sales, general and administrative expenses and goodwill impairment.

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Sales, General and Administrative Expenses

Sales and marketing expenses consist primarily of employee compensation and related costs associated with our sales and marketing staff, including salaries, benefits, bonuses and commissions as well as costs relating to our marketing and business development. We intend to continue to invest resources in our sales and marketing initiatives to drive growth and extend our market position.

General and administrative expenses consist of employee compensation and related costs for executive, finance, legal, human resources, recruiting, and employee-related information technology and administrative personnel, including salaries, benefits, and bonuses, ~~and~~as well as depreciation, facilities, recruiting and other corporate services.

Other Income/Expense

~~Goodwill Impairment~~Interest Expense

Goodwill impairment occurs when the carrying amount of a goodwill asset is greater than its fair value. The amount of the impairment is the difference between the two figures. Goodwill is recorded as part of a corporate acquisition, representing the excess of the price paid over the value of the underlying assets and liabilities of the acquiree.

~~Interest expense~~

Interest expense consists of interest expense on our outstanding indebtedness and amortization of debt issuance costs.

Income Taxes

~~Income taxes~~

We account for income taxes in accordance with ASC Topic 740, Income Taxes. 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.

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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.

Consolidated Results of Operations

The following tables set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results:



	Three months ended December 31,
	2022			2021	$ variance		% variance
Revenue	$	14,825,831	$	2,996,034	$	11,829,797	395	%
Cost of revenue		9,139,800		1,444,977		7,694,823	533	%
Gross profit margin		5,686,031		1,551,057		4,134,974	267	%
Total operating expenses		9,936,657		5,909,680		4,026,977	68	%
Loss from operations		(4,250,626)		(4,358,623)		107,997	(2)	%

Other income (expense):
Interest income		—		200		(200)	(100)	%
Interest expense		(1,007,583)		(504,117)		(503,466)	100	%
Gain (Loss) on extinguishment of debt, net		—		490,051		(490,051)	(100)
Change in fair value of derivatives		—		98,745		(98,745)	(100)	%
Total other income (expense)		(1,007,583)		84,879		(1,092,462)	(1,287)	%

Provision for income taxes		(1,230)		(251)		(979)	390	%
Net loss	$	(5,259,439)	$	(4,273,995)	$	(985,444)	23	%

Revenue

Our revenue for the three months ended December 31, 2022, was $14,825,831, an increase of $11,829,797, or 395%, from $2,996,034 for the three months ended December 31, 2021. This increase was primarily driven by significantly more Loop Players deployed into the market, as well as the benefit from our Partner Platform business that was launched in May 2022.

We are not immune to the challenges presented by the broader macro environment. We are seeing headwinds in overall digital ad spend that started to emerge in the second half of quarter ended December 31, 2022, that has continued into calendar 2023. During the quarter we also benefitted from unusually strong seasonal advertising related to the political election cycle in November, which contributed to our outperformance and offset the challenging second half of our fiscal Q1.

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~~Results of Operations~~

~~For the three months ended June 30, 2022, compared to the three months ended June 30, 2021~~

Three months ended June 30,

2022

2021

$ variance

% variance

Revenue

$
10,804,083

$
1,160,793

$
9,643,290

831
%
Cost of revenue

7,018,283

763,359

6,254,924

819
%
Gross profit

3,785,800

397,434

3,388,366

853
%
Total operating expenses

7,553,431

4,269,169

3,284,262

77
%
Loss from operations

(3,767,631)

(3,871,735)

104,104

(3)
%

Interest income

—

—

—

N/A
%
Interest expense

(978,435)

(632,094)

(346,341)

55
%
Income from equity investment

—

—

—

N/A
%
Gain/(Loss) on extinguishment of debt, net

(944,614)

579,486

(1,524,100)

(263)
%
Change in fair value of derivatives

18,395

—

18,395

N/A
%
Total other income (expense)

(1,904,654)

(52,608)

(1,852,046)

3,520
%

Provision for income taxes

—

—

—

N/A
%
Net loss

$
(5,672,285)

$
(3,924,343)

$
(1,747,942)

45
%

~~Revenue~~

Our revenue increased for the three months ended June 30, 2022, from the three months ended June 30, 2021, by $9,643,290, or 831%, primarily due to an increased DOOH player count and increased revenue per player. ~~Subscription revenue also increased due to more active units from additional DOOH locations.~~

Our total revenue for the three months ended June 30, 2022, consists of total revenue contributions of 50% from our ad-based revenue distributed on our proprietary Loop Players in our O&O Network business, 43% from our new Partner Network business, and 7% from our legacy and other business (primarily our CTV and subscription-based businesses). Revenue associated with our Partner Network business began in early May 2022.

Cost of ~~revenue~~Revenue

Cost of revenue increased for the three months ended June 30, 2022, from the same period in 2021 by $6,254,924 or 819%, primarily as a result of increased usage of royalty content stemming from the increase in advertising revenue.

Our cost of revenue for the three months ended ~~June 30,~~December 31, 2022, ~~consists~~was $9,139,800, an increase of ~~contributions to cost of revenue of 39%~~$7,694,823, or 533%, from ~~our ad-based revenue distributed on our proprietary Loop Players in our O&O Network business, 52% from the Partner Network business and 9% from our legacy and other business.~~

~~Gross Margin~~

~~Gross margin increased~~$1,444,977 for the three months ended ~~June 30, 2022, from the same period~~December 31, 2021. This increase in ~~2021 by $3,388,366 or 853%,~~cost of revenue was primarily due to increased ~~sales~~royalties and ~~a change~~license fees associated with higher business activities and revenue share arrangements with the Music Labels and content providers. In addition, our network infrastructure and server hosting costs rose primarily due to the expansion of our business and customers using our service.

Gross Profit Margin

Our gross profit margin for the three months ended December 31, 2022, was $5,686,031, an increase of $4,134,974, or 267%, from $1,551,057 for the three months ended December 31, 2021. This increase in ~~estimates as we have improved our procedures over the estimation process.~~gross profit margin was primarily due to increased revenue.

Our gross profit margin as a percentage of total revenue ~~is approximately 35%~~ for the ~~quarter ending June 30, 2022.~~ three months ended December 31, 2022, was approximately 38.4% compared to 51.8% for the three months ended December 31, 2021. The percentage decrease was primarily driven by revenue mix as the year-ago period did not include the launch of our Partner Platform business, which carries lower gross margin but higher operating margin.

The relative contributions to total revenue of our O&O ~~Network~~Platform and Partner ~~Network~~Platforms businesses will impact our gross profit margin as a percentage of total revenue in future periods, as each of those businesses have different cost of revenue components with a lower gross profit margin in our Partner ~~Network~~Platforms business.

Total Operating Expenses

Our operating expenses for the three months ended December 31, 2022, were $9,936,657, an increase of $4,026,977, or 68%, from $5,909,680 for the three months ended December 31, 2021. This increase in operating expenses was primarily due to an increase in sales, general and administrative expenses, as follows:

Sales, General and Administrative Expenses

Our Sales, General and Administrative Expenses for the three months ended December 31, 2022, were $7,958,135, an increase of $3,699,954, or 82%, from $4,360,684 for the three months ended December 31, 2021. This increase in sales, general and administrative expenses was primarily due to greater marketing, customer acquisition and retention spend, as well as higher public company costs related to our public offering and up-listing to the NYSE American. More specifically:

●	Our payroll costs for the three months ended December 31, 2022, were $3,197,117, an increase of$1,338,628 or 73% from $1,840,489 for the three months ended December 31, 2021, primarily due to increased headcount and increased commissions commensurate with an increase in sales.

●

Our marketing costs for the three months ended December 31, 2022, were $2,968,140, an increase of $1,838,612 or 163% from $1,129,527 for the three months ended December 31, 2021, primarily due to increased advertising spend to increase the market for our Loop Players, the introduction of a rewards program for our customers and securing affiliate partnerships aimed at the distribution and activation of Loop Players.

●

Our stock compensation (non-cash) for the three months ended December 31, 2022, was $1,790,807, an increase of $274,213 or 18% from $1,516,594 for the three months ended December 31, 2021, primarily due to the granting of stock option awards and RSUs to existing and new employees since December 31, 2021, which resulted in additional expenses for the three months ended December 31, 2022.

●	Our professional fees for the three months ended December 31, 2022, were $452,992, a decrease of $12,856 or 3% from $465,849 for the three months ended December 31, 2021.

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As a percentage of revenue, Sales, General and Administrative Expenses were reduced significantly as we continued to improve our operating leverage.

Total ~~operating~~Other Income (Expense)

Our other expenses

~~Operating expenses increased~~ for the three months ended ~~June 30,~~December 31, 2022, were $1,007,583, an increase of $1,092,462 or 1,287% from ~~the same period in 2021~~ ~~by $3,284,262 or 77%, primarily as a result of increased corporate expenses due to increased revenue.~~

~~Total~~$84,879 other income ~~(expenses)~~

~~Other income and expenses increased~~ for the three months ended ~~June 30, 2022, from the same period in 2021 by $1,852,046 or 3,520% primarily due to an~~December 31, 2021. This increase in ~~interest expense and a loss of gain on extinguishment of debt, net.~~

~~For the nine months ended June 30, 2022, compared to the nine months ended June 30, 2021~~

Nine months ended June 30,


2022


2021


$ variance

% variance

Revenue

$
18,679,956

$
2,660,004

$
16,019,952

602
%
Cost of revenue

11,978,477

1,949,979

10,028,498

514
%
Gross profit

6,701,479

710,025

5,991,454

844
%
Total operating expenses

19,354,942

17,602,550

1,752,392

10
%
Loss from operations

(12,653,463)

(16,892,525)

4,239,062

(25)
%

Other income (expense):









Interest income

200

8,653

(8,453)

(98)
%
Interest expense

(1,976,941)

(1,443,917)

(533,024)

37
%
Income from equity investment

—

1,551

(1,551)

(100)
%
Change in fair value of derivatives

164,708

—

164,708

N/A
%
Gain/(Loss) on extinguishment of debt, net

(454,563)

578,386

(1,032,949)

(179)
%
Total other income (expense)

(2,266,596)

(855,327)

(1,411,269)

165
%

Provision for income taxes

(1,051)

(99,830)

98,779

(99)
%
Net loss

$
(14,921,110)

$
(17,847,682)

$
2,926,572

(16)
%

~~Revenue~~

Our revenue increased for the nine months ended June 30, 2022, from the same period in 2021 by $16,019,952, or 602%, primarily due to an increased DOOH player count and increased revenue per player. Subscription revenue also increased due to more active users from additional DOOH locations.

~~Cost of revenue~~

Cost of revenue increased for the nine months ended June 30, 2022, from the same period in 2021 by $10,028,498, or 514%, primarily a result of increased usage of royalty content stemming from the increase in advertising revenue.

~~Gross Margin~~

~~Gross margin increased for the nine months ended June 30, 2022, from the same period in 2021 by $5,991,454 or 844%,~~other expenses was primarily due to increased ~~sales and a change in our revenue mix.~~

~~Total operating expenses~~

~~Operating expenses increased for the nine months ended June 30, 2022, from the same period 2021 by $1,752,392 or 10%, primarily as a result of increased corporate expenses due to increased revenue.~~

~~Table of Contents~~

~~Total other income (expenses)~~

~~Other income and expenses increased for the nine months ended June 30, 2022, from the same period in 2021 by $1,411,269, or 165% primarily due to an increase in~~ interest expense from rising interest rates and ~~a loss of gain on extinguishment of debt, net.~~ increased borrowing.

Non-GAAP EBITDA

We believe that the presentation of EBITDA, ~~and Adjusted EBITDA,~~a financial ~~measures~~measure that ~~are~~is not part of U.S. Generally Accepted Accounting Principles, or ~~U.S.GAAP,~~U.S. GAAP, provides investors with additional information about our financial results. EBITDA ~~and Adjusted EBITDA are~~is an important supplemental ~~measures~~measure used by our ~~board~~Board of ~~directors~~Directors and management to evaluate our operating performance from period-to-period on a consistent basis and as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations.

We define EBITDA as earnings before interest expense (income), income tax (expense)/benefit, depreciation and amortization.

We define Adjusted EBITDA as earnings before interest expense (income), income tax (expense)/benefit, depreciation and amortization, adjusted for stock-based compensation and other non-recurring income and expenses, if any.

EBITDA is not measured in accordance with, or an alternative to, measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP measure is not based on any comprehensive set of accounting rules or principles. As a non-GAAP measure, EBITDA has limitations in that it does not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. In particular:

●

EBITDA does not reflect the amounts we paid in interest expense on our outstanding debt;

●

EBITDA does not reflect the amounts we received in interest income on our investments;

●

EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision;

●

EBITDA does not include depreciation expense from fixed assets; and

●

EBITDA does not include amortization expense.

Because of these limitations, you should consider EBITDA alongside other financial performance measures including net income (loss) and our financial results presented in accordance with U.S. GAAP.

The following table provides a reconciliation of net loss to EBITDA for each of the periods indicated:


	Three months ended June 30,				Nine months ended June 30,				Three months ended December 31,
	2022		2021		2022		2021		2022		2021
GAAP net loss	$	(5,672,285)	$	(3,924,343)	$	(14,921,110)	$	(17,847,682)	$	(5,259,439)	$	(4,273,995)
Adjustments to reconcile to Adjusted EBITDA:
Adjustments to reconcile to EBITDA:
Interest expense		978,435		632,094		1,976,941		1,443,917		1,007,583		504,117
Interest income		—		—		(200)		(8,653)		—		(200)
Depreciation and Amortization expense*		406,687		685,489		1,128,702		1,855,475
Depreciation and amortization expense*										869,883		343,458
Income Tax expense/(benefit)		—		—		1,051		99,830		1,230		251

EBITDA	$	(4,287,163)	$	(2,606,760)	$	(11,814,616)	$	(14,457,113)	$	(3,380,743)	$	(3,426,369)

*Includes amortization of content ~~license~~ assets.

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Non-GAAP Adjusted EBITDA

We believe that the presentation of Adjusted EBITDA, a financial measure that is not part of U.S. Generally Accepted Accounting Principles, or U.S. GAAP, provides investors with additional information about our financial results. Adjusted EBITDA is an important supplemental measure used by our Board of Directors and management to evaluate our operating performance from period-to-period on a consistent basis and as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations.

Adjusted EBITDA is not measured in accordance with, or an alternative to, measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP measure is not based on any comprehensive set of accounting rules or principles. As a non-GAAP measure, Adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. In particular:

●

Adjusted EBITDA does not reflect the amounts we paid in interest expense on our outstanding debt;

●

Adjusted EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision;

●

Adjusted EBITDA does not include depreciation expense from fixed assets;

●

Adjusted EBITDA does not include amortization expense;

●

Adjusted EBITDA does not include the impact of stock-based compensation;

●

Adjusted EBITDA does not include the impact of the ~~impairment of intangible assets;~~

●

~~Adjusted EBITDA does not include the impact of the~~ gain on extinguishment of debt;

●

Adjusted EBITDA does not include the impact of the ~~loss on settlement of obligation; and~~

●

~~Adjusted EBITDA does not include the impact of the~~ change in fair valueofderivative.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures including net income (loss) and our financial results presented in accordance with U.S. GAAP.

The following table provides a reconciliation of net loss to Adjusted EBITDA for each of the periods indicated:


	Three months ended June 30,				Nine months ended June 30,				Three months ended December 31,
	2022		2021		2022		2021		2022		2021
GAAP net loss	$	(5,672,285)	$	(3,924,343)	$	(14,921,110)	$	(17,847,682)	$	(5,259,439)	$	(4,273,995)
Adjustments to reconcile to Adjusted EBITDA:
Interest expense		978,435		632,094		1,976,941		1,443,917		1,007,583		504,117
Interest income		—		—		(200)		(8,653)		—		(200)
Depreciation and Amortization expense *		406,687		685,489		1,128,702		1,855,475
Depreciation and amortization expense *										869,883		343,458
Income tax expense (benefit)		—		—		1,051		99,830		1,230		251
Stock-based compensation		1,282,548		1,482,746		3,948,272		7,036,799
Impairment of intangible assets		—		—		—		(2,390,799)
Stock-based compensation**										1,790,807		1,516,594
Gain (loss) on extinguishment of debt, net		944,614		(579,486)		454,563		(578,386)		—		(490,051)
Change in fair value of derivative		(18,395)		—		(164,708)		—		—		(98,745)
Adjusted EBITDA	$	(2,078,396)	$	(1,703,500)	$	(7,576,489)	$	(10,389,499)	$	(1,589,936)	$	(2,498,571)

*Includes amortization of content ~~license~~ assets.

** Includes options, restricted stock units (“RSUs”) and warrants.

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Liquidity and Capital Resources

As of ~~June 30,~~December 31, 2022, we had cash of approximately ~~$709,725.~~$7,753,644. The following table provides a summary of our net cash flows from operating, investing, and financing activities.



	Nine months ended June 30,				Three months ended December 31,
	2022		2021		2022		2021
Net cash used in operating activities	$	(8,832,956)	$	(7,040,035)	$	(6,823,229)	$	(3,477,763)
Net cash used in investing activities		(956,889)		(1,495,708)		(618,032)		—
Net cash provided by (used in) financing activities		6,337,022		7,493,223		1,122,991		977,313
Change in cash		(3,452,823)		(1,042,520)		(6,318,270)		(2,500,450)

Cash, beginning of period		4,162,548		1,971,923		14,071,914		4,162,548
Cash, end of period	$	709,725	$	929,403	$	7,753,644	$	1,662,098

~~We have historically sought~~Cash Flows for the Three Months Ended December 31, 2022, and continue to seek financing from private sources to implement our business plans. To satisfy our financial commitments, we have historically relied on private party financing, but that has inherent risks2021

Net Cash Flow Used in ~~terms of availability and adequacy of funding.~~Operating Activities

For the next twelve months, we anticipate that we will need to supplement our cash from revenues with additional cash raised from equity investment or debt transactions to ensure that we will have adequate cash to support our minimum operating cash requirements and thus to continue as a going concern.

There can be no guarantee or assurance that we can raise adequate capital from outside sources. If we are unable to raise funds when required or on acceptable terms, we may have to significantly reduce, or discontinue our operations.

~~Net~~Our net cash used in operating activities

~~Net~~ during the three months ended December 31, 2022, was $6,823,229, an increase of $3,345,466, or 96%, from $3,477,763 for the three months ended December 31, 2021. This increase in net cash ~~flows~~ used in ~~operating activities for~~ the ~~nine~~three months ended ~~June 30,~~December 31, 2022, ~~were $8,832,956~~was primarily due to the net loss of ~~$(14,921,110) offset by amortization of debt discount of $1,532,792, depreciation~~$5,259,439 and amortization of $195,666, amortization of license content assets of $933,036, amortization of right-of-use assets of $118,719, stock-based compensation expense of $3,948,272, write off of bad debt $20,000, gain on extinguishment of debt of $(490,051), loss on early extinguishment of convertible debt of $944,614, change in fair value of derivatives of $(164,708), warrants issued for consulting services of $254,014, payment in kind for interest stock issuance of $177,000 anda net decrease in operating assets and liabilities of ~~$(1,381,200).~~$4,928,594, offset by stock-based compensation expense of $1,790,807, amortization of content assets of $682,167, amortization of debt discount of $661,335, depreciation and amortization expense of $187,716 and amortization of right-of-use assets of $42,779.

~~Net~~Our net cash ~~flows~~ used in operating activities for the ~~nine~~three months ended ~~June 30,~~December 31, 2021, ~~were $(7,040,035)~~was $3,477,763 primarily due to the net loss of $(17,847,682) offset by amortization of debt discount of $954,080, depreciation and amortization expense of $1,452,799, amortization of license content assets of $402,676, amortization of right-of-use assets of $107,248, stock-based compensation expense of $7,528,800, warrants issued for severance of $82,000, write off of bad debt expense $208,791, gain on extinguishment of debt of $(579,486), impairment of intangible assets of $2,390,799, loss on settlement of obligations of $15,000, gain on settlement of obligations of $(13,900), equity method investment income of $(1,551) and$4,273,995, a net decrease in operating assets and liabilities of ~~$(1,739,609).~~$924,639, a gain on extinguishment of debt of $490,051 and a change in fair value of derivatives of $98,745, offset by stock-based compensation expense of $1,549,406, amortization of debt discount of $358,248, amortization of content assets of $311,055, amortization of right-of-use assets of $38,555, depreciation and amortization of $32,403 and a write-off for bad debt expense of $20,000.

Net Cash Flow Used in Investing Activities

Our net cash used in investing activities

~~Net cash flows used in investing activities for~~ during the ~~nine~~three months ended ~~June 30,~~December 31, 2022, ~~related~~was $618,032, primarily due to the purchase of property and equipment of ~~$(956,889).~~$618,032 compared to $0 for the three months ended December 31, 2021.

Net Cash Flow Provided by Financing Activities

Our net cash provided by financing activities during the three months ended December 31, 2022, was $1,122,991, an increase of $145,678 or 15% from $977,313 for the three months ended December 31, 2021, primarily due to net proceeds from non-revolving line of credit of $1,429,441, offset by the repayment on loans of $250,125, deferred offering costs of $56,024 and debt issuance costs of $301.

~~Net cash flows used in investing activities for the nine months ended June 30, 2021, were $(1,495,708) for acquisition of fixed assets,~~Our net ~~of cash acquired of $(750,000), cash paid for acquisition of EON Media Group, net of cash acquired of $(749,937), purchase of equipment of $2,752 and collection of note receivable of $1,477.~~

~~Table of Contents~~

~~Net cash flow from financing activities~~

~~Net~~ cash provided by financing activities for the ~~nine~~three months ended ~~June 30, 2022,~~December 31, 2021, was ~~$6,337,022~~primarily due to receipt of proceeds ~~of $1,250,000~~ from the issuance of common stock ~~proceeds~~ of ~~$6,222,986 from a non-revolving lines of credit, proceeds of $2,079,993 from convertible debt,~~$1,250,000, offset by ~~$(2,715,865)~~the repayment of ~~convertible debt and $(500,092)~~a stockholder’s loan of ~~deferred offering costs.~~ $272,687.

Net cash provided by financing activities for the nine months ended June 30, 2021, was $7,493,223 primarily due to cash proceeds of $4,385,000 from issuance of common stock, cash proceeds of $486,637 from PPP loan, cash proceeds of $1,000,000 from issuance of preferred stock, cash proceeds of $2,950,000 from issuance of convertible debt, offset by principal payment of $(36,078) for convertible debt, repayment of $(292,336) for stockholder loans, $(1,000,000) for shares issued for cash, $(80,134) for share issuance costs and $80,134 for reverse merger costs.

As a result of the above activities, we recorded a net decrease in cash of ~~$(3,452,823)~~$6,318,270 for the ~~nine~~three months ended ~~June 30,~~December 31, 2022. We reported a cash balance of ~~$709,725 at June 30,~~$7,753,644 as of December 31, 2022.

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Future Capital Requirements

We have generated limited revenue, and as of ~~June 30,~~December 31, 2022, our cash totaled ~~$709,725~~$7,753,644, and we had an accumulated deficit of ~~($81,763,526).~~$101,581,303. We believe that our existing cash will enable us to fund our operations for at least twelve months from the date of this Report. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we expect. We anticipate that we will continue to incur net losses for the foreseeable ~~future. However,~~future; however, changing circumstances may cause us to expend cash significantly faster than we currently anticipate, and we may need to spend more cash than currently expected because of circumstances beyond our control.

Historically, our principal sources of cash have included proceeds from the issuance of common stock, preferred stock and ~~preferred equity~~warrants and proceeds from the issuance of debt. Our principal uses of cash have included cash used in operations, payments for license rights and payments relating to purchases of property and equipment. We expect that the principal uses of cash in the future will be for continuing operations, and general working capital requirements. We expect that as our operations continue to grow, we will need to raise additional capital to sustain operations and growth.

Non-Revolving Lines of Credit

On February 23, 2022, we entered into a Non-Revolving Line of Credit Loan Agreement (the “Prior Excel Loan Agreement”) with Excel Family Partnership, LLLP (“Excel”), an entity managed by Bruce Cassidy, a member of our ~~board~~Board of ~~directors,~~Directors, for aggregate principal amount of ~~$1.5 million,~~$1,500,000, which was amended on April 13, 2022, to increase the aggregate principal amount to ~~$2.0 million~~$2,000,000 (the “$2m Loan”). Effective as of April 25, 2022, we entered into a Non-Revolving Line of Credit Loan Agreement ~~(the “Loan Agreement”)~~ with Excel (the “Excel Non-Revolving Loan Agreement”) for an aggregate principal amount of $4,022,986 (the ~~“Loan”~~“Excel Non-Revolving Loan”). The Excel Non-Revolving Loan matures eighteen (18) months from the date of the Excel Non-Revolving Loan Agreement and accrues interest, payable semi-annually in arrears, at a fixed rate of interest equal to twelve (12) percent per year. On April 25, 2022, we used ~~$2.022 million~~$2,000,000 of the proceeds of the Excel Non-Revolving Loan to prepay all of the remaining outstanding principal and interest of the $2m Loan and the Prior Excel Loan Agreement was terminated in connection with such prepayment. Under the Excel Non-Revolving Loan Agreement, we granted to the lender 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.~~thereof (which was subsequently subordinated in connection with our Revolving Loan Agreement (as defined below). In connection with the Excel Non-Revolving Loan, on April 25, 2022, we issued a warrant for an aggregate of up to ~~1,149,425~~383,141 shares of our common stock. The warrant has an exercise price of ~~$1.75~~$5.25 per share, expires on April 25, 2025, and isshall be exercisable at any time prior to the expiration date. Effective as of December 14, 2022, we entered into a Non-Revolving Line of Credit Agreement Amendment and a Non-Revolving line of Credit Promissory Note Amendment with Excel to extend the maturity date from eighteen (18) months to twenty-four (24) months from the date of the Excel Non-Revolving Loan.

Effective as of May 13, 2022, we entered into a Non-Revolving Line of Credit Loan Agreement (the “RAT Non-Revolving Loan Agreement”) with several institutions and individuals and RAT Investment Holdings, LP, as administrator of the loan (the “Loan Administrator”) for an aggregate principal amount of ~~$2.2 million~~$2,200,000 (the “RAT Non-Revolving Loan”). The RAT Non-Revolving Loan matures eighteen (18) months from the effective date of the RAT Non-Revolving Loan Agreement and accrues interest, payable semi-annually in arrears, at a fixed rate of interest equal to twelve (12) percent per year. Under the RAT Non-Revolving Loan Agreement, we granted to the lenders under the RAT Non-Revolving Loan Agreement 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 Excel Non-Revolving Loan Agreement (which was subsequently subordinated in connection with ~~Excel.~~our Revolving Loan Agreement). In connection with the RAT Non-Revolving Loan Agreement, on May 13, 2022, we issued a warrant (each a “Warrant” and collectively, the “Warrants”) to each lender under the RAT Non-Revolving Loan Agreement for an aggregate of up to ~~628,575~~209,522 shares of our common ~~stock.~~stock (the “Warrant Shares”). Each Warrant has an exercise price of ~~$1.75~~$5.25 per share, expires on May 13, 2025, and shall be exercisable at any time prior to the expiration date.

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The ~~2023 Notes~~

~~We have borrowed funds for business operations from two of our stockholders, Dreamcatcher, LLC and Running Wind, LLC, each of which is~~RAT Non-Revolving Loan had a beneficial holder of more than 5% of our common stock, through convertible debt agreements (the “Convertible Promissory Notes”). Each Convertible Promissory Note was originally issued on December 5, 2018, on identical terms in the principal amount of $1,500,000, and each was amended and restated October 31, 2019, and October 23, 2020. The Convertible Promissory Notes carried interest at 10% per annum beginning on November 1, 2020, with monthly payments of unpaid interest accrued at 12.5% per annum to be paid in arrears through March 31, 2021, and were set to mature on December 1, 2023. Beginning April 1, 2021, we began paying equal monthly installments of principal and interest on the Convertible Promissory Notes at 10% per annum. The Convertible Promissory Notes were convertible at any time prior to the maturity in whole or in part into shares of our common stock at a price of $0.60 per share.

On May 9, 2022, we completed a refinancing of the Convertible Promissory Notes, then having the aggregate principal amount of $2,068,399 by prepaying the principal and interest owed on such Convertible Promissory Notes in full under the terms of the notes and issuing new substantially identical unsecured convertible debentures in the aggregate principal amount of $2,079,993 (the “2023 Notes”) to LM Note Acquisition LLC. Jeremy Boczulak, a beneficial holder of more than 5% of our common stock, has a 75.72 percentage ownership interest in LM Note Acquisition LLC. The 2023 Notes, like the Convertible Promissory Notes, mature on December 1, 2023, require monthly installments of principal and interest at 10% per annum and are convertible at any time prior to the maturity in whole or in part into shares of our common stock at a price of $0.60 per share. We had previously sought, but did not receive, certain concessions from the holders of the Convertible Promissory Notes related to ongoing monthly principal and interest payments and the conversion of the Convertible Promissory Notes into shares of our common stock in connection with any significant public equity capital raise by us. In connection with the issuance of the 2023 Notes, the holder thereof (the “2023 Noteholder”) has agreed to a cessation of principal and interest payments on the 2023 Notes until December 1, 2022, at which time accrued interest would be paid in a lump sum in cash and monthly principal and interest payments would resume. The 2023 Noteholder has further agreed to convert the 2023 Notes into shares of our common stock upon any significant public equity capital raise by us. Accordingly, the 2023 Notes will be converted simultaneously with the closing of the proposed equity offering referenced below into an aggregate of 3,517,942 shares, based on the outstanding principal and interest of $2,110,766 as of July 1, 2022 and the conversion price of $0.60 per share.

~~The Convertible Promissory Notes had aggregate remaining balances,~~balance, including accrued interest, amounting to ~~approximately $0 million~~$2,235,441 and ~~$3.0 million~~$2,301,260 as of ~~June~~December 31, 2022, and September 30, 2022, ~~and 2021,~~ respectively. We incurred interest expense for the ~~Convertible Promissory Notes~~RAT Non-Revolving Loan in the ~~amounts~~amount of ~~approximately $0.1 million~~$224,105 and ~~$0.4 million~~$0 for the ~~nine~~three months ended ~~June 30,~~December 31, 2022, and ~~2021, respectively, and $2.1 million and $0.9 million for the fiscal years ended September 30, 2021, and 2020, respectively.~~2021.

In connection with an amendment to the Convertible Promissory Notes, in November 2019, we also issued warrants to purchase 1,775,354 shares of our common stock to Dreamcatcher, LLC and warrants to purchase 1,775,355 shares of our common stock to Running Wind, LLC, for an aggregate of 3,550,709 shares of our common stock, exercisable at $0.86 per share for a period of 10 years.

~~The 2022 Notes~~

From December 1, 2020, to June 1, 2021, we sold in a private placement, (i) $3,000,000 in aggregate principal amount of Senior Secured Promissory Notes and (ii) warrants to purchase 272,727 shares of our common stock at an exercise price of $2.75 per share. The investors in this private placement included entities controlled by Mr. Cassidy, who is a member of our board of directors. In connection with the offering, the entities controlled by Mr. Cassidy purchased an aggregate of $2,350,000 principal amount of the 2022 Notes and warrants to purchase an aggregate of 213,637 shares of our common stock at $2.75 per share. The warrants have a term of 10 years. The 2022 Notes mature on December 1, 2022. The 2022 Notes accrue interest in two different ways: (A) at the rate of 4% per annum, payable in cash, from the date of issuance of each note as follows: (1) interest from the issue date to November 30, 2021, is payable in advance on the date the note was executed; (2) six months of cash interest is payable in arrears on June 1, 2022; and (3) six months of cash

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interest is payable in arrears on the maturity date; and (B) at the rate of 6% per annum, payable in shares of our common stock in arrears on June 1, 2021, December 1, 2021, June 1, 2022, and the maturity date. As of July 1, 2022, a total of $3,083,264 in principal and interest was outstanding on the 2022 Notes. The 2022 Notes will be converted simultaneously with the closing of our proposed equity offering referenced below into an aggregate of 1,422,168 shares, based on the outstanding principal and interest of $3,083,264 as of July 1, 2022 and an assumed conversion price of $2.168 per share (which is 80% of the last reported sale price of our common stock on the Pink Open Market on July 1, 2022).

Revolving Loan Agreement

Effective as of July 29, 2022, we entered into a Loan and Security Agreement (the ~~“Loan~~“Revolving Loan Agreement”) with Industrial Funding Group, Inc. (the “Initial Lender”) for a revolving loan credit facility for the initial principal sum of up to ~~four million dollars ($4.0 million),~~$4,000,000, and through the exercise of an accordion feature, a total sum of up to ~~ten million dollars ($10 million) (the “Loan”),~~$10,000,000, evidenced by a Revolving Loan Secured Promissory Note, ~~(the “Note”),~~ also effective as of July 29, ~~2022. As~~2022 (the “Revolving Loan”). Shortly after the effective date of ~~August 2, 2022, we borrowed approximately two million dollars ($2.0 million) under~~ the Revolving Loan, ~~and~~ the Initial Lender assigned the Revolving Loan Agreement, and the loan documents related thereto, to GemCap Solutions, LLC (the “Senior Lender”).

~~The~~ Availability for borrowing under the Revolving Loan ~~matures twenty-four (24) months from~~Agreement is dependent upon our assets in certain eligible accounts and measures of revenue, subject to reduction for reserves that the ~~date~~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 Revolving Loan Agreement, subject to its sole discretion. Effective as of October 27, 2022, we entered into Amendment Number 1 to the Loan and Security Agreement and to the Loan Agreement Schedule with the Senior Lender to increase the principal sum available under the Revolving Loan Agreement from $4,000,000 to $6,000,000. As of December 31, 2022, we had borrowed $5,973,001 under the Revolving Loan. The Revolving Loan matures on July 29, 2024, and ~~accrues~~began accruing interest on the unpaid principal balance of advances, payable monthly in arrears, ~~beginning~~ 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%).

Under the Revolving Loan 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,~~loan, our existing secured lenders (the “Subordinated Lenders”) delivered subordination agreements (the “Subordination Agreements”) to the Senior ~~Lender (each lender,~~Lender. We are permitted to make regularly scheduled payments, including payments upon maturity, to such subordinated lenders and potentially other payments subject to a ~~“Subordinated Lender”~~measure of cash flow and ~~together,~~receiving certain financing activity proceeds, in accordance with the ~~“Subordinated Lenders”).~~

terms of the Subordination Agreements. In connection with the delivery of the Subordination Agreements by the Subordinated Lenders, on July 29, 2022, we issued warrants ~~(each a “Warrant” and collectively, the “Warrants”)~~ to each Subordinated Lender on identical terms for an aggregate of up to ~~888,997~~296,329 shares of our common ~~stock (the “Warrant Shares”).~~stock. Each ~~Warrant~~warrant has an exercise price of ~~$1.75~~$5.25 per share, expires on July 29, 2025 (the “Expiration Date”), and shall be exercisable at any time prior to the Expiration Date. One ~~Warrant~~warrant for ~~574,712 Warrant Shares~~191,570 warrant shares was issued to Eagle Investment Group, LLC, an entity managed by Bruce Cassidy, a member of our ~~board~~Board of ~~directors,~~Directors, as directed by its affiliate, Excel Family Partners, LLLP, ~~(“Excel”),~~ one of the Subordinated Lenders. The Subordinated Lenders receiving ~~Warrants~~warrants for the remaining ~~314,285 Warrant Shares~~104,759 warrant shares was also ~~will~~entitled to receive a cash payment of $22,000 six months from the date of the Subordination Agreements, representing one percent (1.00%) of the outstanding principal amount of the ~~loan.~~loan held by such Subordinated Lenders. This cash payment was made to those Subordinated Lenders on January 25, 2023.

Our future use of operating cash and capital requirements will depend on many forward-looking factors, including the following:

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our ability to attract and retain management with experience in digital media including digital video music streaming, and similar emerging technologies;

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our ability to negotiate, finalize and maintain economically feasible agreements with the major and independent music labels, publishers and performance rights organizations;

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our expectations regarding market acceptance of our products in general, and our ability to penetrate digital video music streaming in particular;

~~Proposed Equity Offering filed on S-1~~35

~~On July 21, 2022, we filed a Form S-1 Amended Registration Statement~~Table of Securities under the Securities Act of 1933. We filed the initial Form S-1 Registration Statement on January 28, 2022. We are offering shares of our common stock, which is currently quoted on the Pink Open Market operated by OTC Markets Group Inc. under the symbol “LPTV.” The last reported sale price of our common stock on August 10, 2022, was $2.95 per share.

Currently, there is a very limited market for our common stock. We have applied to list our common stock on the NYSE American LLC (“the NYSE American”) under the symbol “LPTV.” There is no assurance that our listing application will be approved by the NYSE American or, if successful, that an active trading market for our common stock will develop or be sustained. If we are unable to list our common stock on the NYSE American, we will not consummate this offering.

~~We are a “smaller reporting company” under applicable Securities and Exchange Commission rules and are subject to reduced public company reporting requirements.~~Contents

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volatility in digital programmatic advertising spend which can affect our revenues;

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the scope, validity and enforceability of our and third-party intellectual property rights;

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the intensity of competition;

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the effects of the ongoing pandemic caused by the spread of COVID-19 and our business clients ability to service their clients’ in out of home venues that have limited their public capacity;

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changes in the political and regulatory environment and in business and fiscal conditions in the United States and overseas;

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our ability to attract prospective users and to retain existing users;

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our dependence upon third-party licenses for sound recordings and musical compositions;

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our lack of control over the providers of our content and their effect on our access to music and other content;

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our ability to comply with the many complex license agreements to which we are a party;

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our ability to accurately estimate the amounts payable under our license agreements;

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the limitations on our operating flexibility due to the minimum guarantees required under certain of our license agreements;

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our ability to obtain accurate and comprehensive information about music compositions in order to obtain necessary licenses or perform obligations under our existing license agreements;

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potential breaches of our security systems;

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assertions by third parties of infringement or other violations by us of their intellectual property rights;

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our ability to generate sufficient revenue to be profitable or to generate positive cash flow on a sustained basis;

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our ability to accurately estimate our user metrics;

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risks associated with manipulation of stream counts and user accounts and unauthorized access to our services;

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our ability to maintain, protect and enhance our brand;

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risks relating to the acquisition, investment and disposition of companies or technologies;

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dilution resulting from additional share issuances;

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tax-related risks;

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the concentration of voting power among our founders who have and will continue to have substantial control over our business; and

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risks associated with accounting estimates, currency fluctuations and foreign exchange controls.

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~~Going Concern~~We have evaluated and expect to continue to evaluate a wide array of strategic transactions as part of our plan to acquire or license and develop additional products and services to augment our current business operations. Strategic transaction opportunities that we may pursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both. Accordingly, we expect to continue to opportunistically seek access to additional capital to license or acquire additional products, services or companies to expand our operations, or for general corporate purposes. Strategic transactions may require us to raise additional capital through one or more public or private debt or equity financings or could be structured as a collaboration or partnering arrangement. We have no arrangements, agreements, or understandings in place at the present time to enter into any acquisition, licensing or similar strategic business transaction.

~~The accompanying unaudited condensed financial statements have been prepared on a going concern basis. For~~

If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. Any debt financing or additional equity that we raise may contain terms, such as liquidation and other preferences that are not favorable to us or our stockholder.

As of December 31, 2022, our cash totaled $7,753,644. During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, we ~~had~~incurred a net loss of ~~$(14,921,110),~~$5,259,439 and used $6,823,229 of cash in operations. We have incurred significant operating losses in the past and, as of December 31, 2022, we had ~~net cash used in operating activities of $(8,832,956), had working capital of $(1,565,517), and~~ an accumulated deficit of ~~$(81,763,526).~~ ~~These matters raise substantial doubt about~~approximately $101,581,303. We do not expect to experience positive cash flows from operations in the near future as we continue to invest in the distribution of our Loop Players and the expansion of our Partner Platform business. We also expect to incur significant additional legal and financial expenditures in meeting the regulatory requirements of an NYSE-American listed public company.

There is uncertainty regarding our ability to grow our business without additional financing. Our long-term future growth and success are dependent upon our ability to continue asselling our services, generate cash from operating activities and obtain additional financing. We may be unable to continue selling our products and services, generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a ~~going concern~~material adverse effect on our ability to grow our business to a greater extent than we can with our existing financial resources.

Based on our current operating plan, we believe that our existing cash will enable us to fund our operations for ~~a period of one year~~at least the twelve months from the date of this ~~filing.~~ Report. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we expect.

Critical Accounting Policies and Use of Estimates

Use of Estimates and Assumptions

The preparation of the financial statements in conformity with generally accepted accounting principles 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, fair value of stock-based compensation awards and income taxes.

Revenue Recognition

Our ~~ability~~revenue recognition disclosure reflects our updated accounting policies that are affected by this new standard. We applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. As sales are and have been primarily from delivery of streaming services, delivery of subscription content services in customized formats, and delivery of hardware and ongoing content delivery through software and we have no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on our consolidated financial

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statements for the cumulative impact of applying this new standard. Therefore, there was no cumulative effect adjustment required.

We recognize revenue when it satisfies a performance obligation by transferring control over a product to ~~continue~~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 customer, revenue is deferred until all acceptance criteria have been met. 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:

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executed contracts with our clients that we believe are legally enforceable;

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identification of performance obligations in the respective contract;

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determination of the transaction price for each performance obligation in the respective contract;

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allocation the transaction price to each performance obligation; and

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recognition of revenue only when we satisfy each performance obligation.

Performance Obligations and Significant Judgments

Our revenue can be categorized into two revenue streams with the following performance obligations and recognition patterns:

Advertising Revenue

Legacy and Other Business Revenue

Legacy and other business revenue accounts for the remaining 6% 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.

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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 contractual 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.

Stock-Based Compensation

Stock-based compensation awarded to employees is measured at the award date, based on the fair value of the award, and is recognized as an expense over the requisite vesting 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. The measurement date is the earlier of (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

Content Assets

On January 1, 2020, we adopted the guidance in ASU 2019-02, Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials, on a prospective basis. We capitalize the fixed content fees and our 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 expenses 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.

Income Taxes

Under ASC 740, a tax position is recognized as a ~~going concern~~benefit only if it is ~~dependent upon our ability~~“more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to ~~obtain~~occur. The amount recognized is the ~~necessary financing~~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 ~~meet our obligations and repay our liabilities arising from normal business operations~~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 ~~they come due,~~incurred.

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In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, as part of its initiative to ~~fund possible future acquisitions, and to generate profitable operations~~reduce complexity in accounting standards. The amendments in the ~~future. Management plans~~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.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to ~~provide~~reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. The ASU is effective for ~~our capital requirements by continuing to issue additional equity~~interim and ~~debt securities. The outcome~~annual periods beginning after December 15, 2021, with early adoption permitted for periods beginning after December 15, 2020. Adoption of ~~these matters cannot~~the ASU can either be ~~predicted at~~on a modified retrospective or full retrospective basis. We adopted this ~~time~~ASU as of October 1, 2022, and there ~~are~~is no assurances that, if achieved, we will have sufficient funds to execute our business plan or generate positive operating results. The financial statements do not include any adjustments that might result from the outcomematerial impact as of ~~this uncertainty.~~December 31, 2022.

~~Recent Accounting Pronouncements~~

~~We adopted no new recent accounting pronouncements.~~

Item 3.Quantitative and Qualitative Disclosure About Market Risk.

Not required.

Item 4.Controls and Procedures.

~~(i)~~Evaluation of Disclosure Controls and Procedures

~~Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our~~We maintain disclosure controls and procedures as(as defined in ~~Rule~~Rules 13a-15(e) ~~and~~or 15d-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”), as of June 30, 2022. Our disclosure controls and procedures~~Act) that are designed to ~~provide reasonable assurance~~ensure that information ~~we are~~ required to ~~disclose~~be disclosed in the reports that we file or submit under the Exchange Act is ~~accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures, and is~~(1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and ~~forms.~~forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022.Based ~~on this~~upon the evaluation, our Chief Executive Officer and ~~as a result of the material weaknesses described below, our CEO and CFO have~~Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were ~~not~~ effective at the reasonable assurance ~~level as of June 30, 2022. Notwithstanding the material weaknesses that were identified and continued to exist at June 30, 2022, management believes that the financial statements included~~level.

Changes in ~~this report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.~~Internal Controls over Financial Reporting

~~Material Weaknesses and Management’s Remediation Plan~~

A material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard AS 2201, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with US GAAP. The following material weaknessesThere have been no changes in our internal control over financial reporting ~~were identified~~(as defined in Rules 13a-15(f) or 15d-15(f) under the ~~normal course and continued~~Exchange Act) that occurred during the first quarter of fiscal 2023 that have materially affected, or are reasonably likely to ~~exist as of June 30, 2022:~~

~~We failed to maintain an effective control environment due to the following:~~

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~~Our management and governance had insufficient oversight of the design and operating effectiveness of~~materially affect, our ~~disclosure controls and internal controls over financial reporting;~~

We failed to maintain effective controls over the period-end financial reporting process, including controls with respect to preparation and disclosure of provision for income taxes, valuation and presentation of asset acquisition, content assets and liabilities, and investments; and

We failed to maintain effective controls over journal entries, both recurring and nonrecurring, and account reconciliations and did not maintain proper segregation of duties. Journal entries were not always accompanied by sufficient supporting documentation and were not adequately reviewed and approved for validity, completeness and accuracy. In most instances, persons responsible for reviewing journal entries and account reconciliations for validity, completeness and accuracy were also responsible for preparation.

~~Management’s Remediation Initiatives~~

We have concluded that these material weaknesses arose because, as previously a private company, we did not have the necessary business processes, systems, personnel, and related internal controls. During the past two quarters, we have undertaken measures to address these material weaknesses in our internal controls including hiring permanent accounting/finance staff, which has made a significant impact on the timeliness and accuracy of our monthly close schedule, segregation of duties, and analysis and establishment of internal controls over financial reporting.

Our third–party consulting firm that specializes in internal audit work, and more specifically internal controls over financial reporting work, has assisted management and will continue to assist management with our risk assessment of internal control over financial reporting as well as documentation and testing of our internal control structure and evaluation of material weaknesses. Specifically, with the right compliment of accounting and finance team members now in place, our entire control environment is being evaluated for enhancement of our internal controls over financial reporting.

~~In addition to the measures noted above, we have made progress in our remediation plan including the following items:~~

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~~Increased precision and estimates for revenue recognition~~

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~~Improved formalization of procedures and documentation for all journal entries~~

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~~Created work center budgets by account for all of fiscal year 2022~~

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~~Established approval of all invoices by work center Managers~~

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~~Established monthly expense review of P&L and Balance Sheet with accounting team and CFO~~

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~~Selected new ERP System with plans to implement and roll out by October 2022~~

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~~Introduced Lockbox for all check payments received at HQ Office~~

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~~Established an Internal Audit Committee with quarterly meetings to be held to review financials, public reporting filings, policies and procedures, and internal control updates~~

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~~Consolidated tax advisors and consultants to one national firm~~

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~~Issued a policy for Employee Business Travel & Expense (T&E) Reimbursement~~

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~~Restructured our Corporate Card Program to have all recurring/corporate expenses managed through AP and limit the individual cards to T&E only~~

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~~Introduced weekly cash flow forecasting process to manage vendor payments and company cash requirements~~

◾

~~Created a Company Intranet that allows for policies and procedures to be posted and easily accessed by employees~~

During the third quarter of fiscal year 2022, management, with the help of our third-party consulting firm, performed walkthroughs of our key controls, including those that would be necessary to effectively remediate the existing material weaknesses. A walkthrough is performed to gain comfort regarding the design effectiveness of the key controls. Based on our assessment of the walkthrough results, we have determined that our key controls have been designed

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effectively. Further assessments will be made of these controls to ascertain operating effectiveness, after which we will be able to determine if the existing material weaknesses have been remediated.

~~With~~There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) that occurred during the first quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022.Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.There were no other changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a.With oversight from the Audit Committee, management will continue to design and implement remediation measures to address the material weaknesses described above and enhance our internal control over financial reporting. We will strive to ensure that a proper, consistent tone is communicated throughout the organization, which emphasizes the expectation that previously existing deficiencies will be rectified through implementation of processes and controls to ensure strict compliance with accounting principles generally accepted in the United States and regulatory requirements.

~~(ii)~~~~Changes in Internal Controls over Financial Reporting~~

~~Other than described above, there have not been any changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a).~~

PART II — OTHER INFORMATION

Item 1.Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our

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executive officers, threatened against or affecting us, or our common stock, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors

There have been no material changes to the factors disclosed in Item 1A. Risk Factors in our Annual Report on Form ~~10-KT~~10-K for the year ended September 30, ~~2021, except as set forth below.~~

~~Risks Related to Our Financial Condition~~

We have entered into debt arrangements, including non-revolving and revolving lines of credit secured by all of our assets; indebtedness thereunder could adversely affect our financial position and our ability to raise additional capital and prevent us from fulfilling our obligations.

~~As of July 31, 2022, we owed an aggregate of $11,536,285 in principal and accrued interest on debt arrangements. This debt includes an aggregate of~~ $5,194,029 in principal and accrued interest under the 2022 Notes and 2023 Notes, which will convert into shares of common stock simultaneously with the closing of the proposed offering pursuant to the Registration Statement on Form S-1, as amended (Registration No. 333-262416), $6.2 million under our Non-Revolving Line of Credit Loan Agreements (the “Loan Agreements”) with certain lenders (which will remain outstanding following our proposed offering) and $2.0 million under our Loan and Security Agreement (the “Revolving Loan Agreement”) with a third party lender for a revolving loan credit facility (which will remain outstanding following our proposed offering). The Revolving Loan Agreement provides for an initial eligible extension of credit in the principal sum of up to $4.0 million, and through the exercise of an accordion feature, a total sum of up to $10 million. The Loan Agreements provide for a maturity of the indebtedness borrowed thereunder of 18 months from their respective effective date and interest, payable semi-annually in arrears, at a fixed rate equal to 12% per year. The loan under the Revolving Loan Agreement matures July 29, 2024 and accrues interest on the unpaid principal balance of advances, payable monthly in arrears, beginning 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%). Under the Revolving Loan Agreement, we have granted to the lender (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 Revolving Loan Agreement, our existing secured lenders under the Loan Agreements delivered subordination agreements to the Senior Lender. We also may incur additional indebtedness in the future.

~~Our indebtedness may:~~

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•

~~limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, or other general business purposes in some circumstances;~~

•

require us to use a portion of our cash flow from operations to make debt service payments instead of other purposes, thereby reducing the amount of cash flow available for future working capital, capital expenditures, acquisitions, or other general business purposes;

•

~~increase our vulnerability to the impact of adverse economic, competitive and industry conditions; and~~

•

~~increase our cost of borrowing.~~

In addition, the Revolving Loan Agreement has restrictive covenants, including covenants preventing us from effecting a change of control, disposing of our assets outside of the ordinary course of business, incurring additional debt (subject to certain exceptions), changing our business as currently conducted, paying dividends or settling claims involving the collateral under the Revolving Loan Agreement. These covenants have the potential to prevent us from pursuing beneficial opportunities, or raising additional funds through debt financing. Further, the amount of our indebtedness under our debt arrangements compared to the size of our company, or other factors, may limit our ability to borrow additional funds or take other actions. In addition, we may be unable to repay the indebtedness incurred under our debt arrangements at maturity and, in such situation, may not be able to refinance such debt on favorable terms or at all. Any inability to repay or refinance the indebtedness under our loan agreements at maturity may cause us to be in default, which would allow the holders of such indebtedness to exercise remedies as a secured lender and, in such event, would have a material adverse effect on our business and financial results.

~~Risks Related to Our Business~~

We are dependent on key distributors. The loss of any such key distributor or any delay or interruption in the distribution of our products or services could adversely impact our revenue and operations.

We rely on third-party distributors and affiliates to distribute our Loop Player and promote our services. These third parties may have varying expertise in marketing and selling our products and services and may also sell other devices and services that could result in less focus on our products and services.

If these distributors and affiliates terminate their relationships with us or under-perform, we may be unable to maintain or increase our active Loop Players and our level of revenue. We will also need to engage additional distributors and affiliates to grow our business and expand our OOH client base. These third parties may not commit the necessary resources to market and sell our products and services to the level of our expectations. If current or future distributors and affiliates do not perform adequately, our revenue and operations will be adversely affected.

If there is a delay or interruption in the distribution of our products or services or if these third parties damage our products or mischaracterize our services, it could negatively impact our revenue and operations and may require significant management attention. In addition, any negative impact these third parties may have on our services, could expose us to potential liability, damage our reputation and the reputation of our products, services or brands, or otherwise harm our business.

The market for programmatic advertising in the benefits of our ad-supported service digital out-of-home market is evolving. If this market develops slower or differently than we expect, our business, operating results and financial condition could be adversely affected.

We derive the vast majority of revenue from programmatic advertising directed at the DOOH market. We expect that programmatic advertising will continue to be a major source of our revenue for the foreseeable future. If the market for programmatic advertising in the DOOH market deteriorates or develops more slowly or differently than we expect, it could reduce demand for our platform and our business, growth prospects and financial condition could be adversely affected.

We derive a significant portion of our revenues from advertisements. If we are unable to continue to compete for these advertisements, or if any events occur that negatively impact our relationships with advertising networks, our advertising revenues and operating results would be negatively impacted.

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We generate advertising revenue from the sale of digital video advertising delivered through advertising impressions across the Loop Network. We engage with advertising demand partners and advertising agencies to monetize our inventory of advertising impressions by filling such advertising impressions with advertising from companies seeking to advertise in the DOOH market. We need to maintain good relationships with these advertising demand partners to provide us with a sufficient number of advertisements and to ensure they understand the value of our advertising impressions on our Loop Network. Online advertising is an intensely competitive industry. Many large companies, such as Amazon, Facebook and Google, invest significantly in data analytics to make their websites and platforms more attractive to advertisers. Our advertising revenue is primarily a function of the number of free users and hours of engagement of such free users and our ability to maintain or increase user engagement and satisfaction with our services and enhance returns for our advertising partners. If our relationship with any advertising demand partners terminates for any reason, or if the commercial terms of our relationships are changed or do not continue to be renewed on favorable terms, or if we cannot source high-quality advertisements consistent with our brand or product experience, our business, growth prospects and financial condition could be adversely affected.

~~If our efforts to attract prospective customers and advertisers and to retain existing customers and users of our~~

~~services are not successful, our growth prospects and revenue will be adversely affected.~~

~~Our ability to grow our business, including DOOH, and generate revenue depends on retaining, expanding, and~~

effectively monetizing our customer base, including by increasing the number of OOH venues that have adopted our services and increasing advertising revenue on our DOOH ad-supported service delivered through our Loop Player and our Partner Network and monetizing content across our DOOH business. We must convince prospective DOOH and Partner Network customers of the benefits and value of our services. Our ability to attract new customers, retain existing customers, and convert users of our DOOH subscription service to our DOOH ad-supported service depends in large part on our ability to continue to offer compelling curated content, leading technologies and products like the Loop Player, superior functionality, and an engaging customer experience.

In addition, in order for us to increase our advertising revenue, we also seek to increase the viewing time that our ad-supported DOOH customers spend on our ad-supported service and find new opportunities to deliver advertising to users on the services. The more content customers stream on the ad-supported service, the more advertising inventory we generally are able to sell. Further, growth in our ad-supported user base increases the size and scope of user pools targeted by advertisers, which improves our ability to deliver relevant advertising to those users in a manner that maximizes our advertising customers’ return on investment and that ultimately allows us to better demonstrate the effectiveness of our advertising solutions and justifies a pricing structure that is advantageous for us. If we fail to grow our ad-supported DOOH customer base, the amount of content streamed, and the viewing time spent by our ad-supported DOOH customers, we may be unable to grow ad-supported revenue.

~~In order to increase our ad-supported O&O Network and Partner Network customers, we will need to address a number of challenges, including:~~

●

~~improving our ad-supported service;~~

●

~~providing users with a consistently high-quality and user-friendly experience;~~

●

~~continuing to curate a catalog of content that consumers want to engage with on our services; and~~

●

~~continuing to innovate and keep pace with changes in technology and our competitors.~~

~~Failure to overcome any one of these challenges could have a material adverse effect on our business,~~

~~operating results, and financial condition.~~

Our Partner Network business began in May 2022, and as of the date of this report is composed of only one partner relationship and is currently limited to 17,000 screens. While we are looking to expand this line of business, there can be no assurance that we will be able to grow this business as planned, increase the number of customers we service in this business or maintain our current level of activity with our current partner relationship, particularly in light of our limited operating history in this line of business. If we lose our relationship with the current partner, or such relationship is scaled back significantly, such loss would be material to our results of operations.

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~~If our acquired intangible assets become impaired in the future, we may incur significant impairment charges.~~

At least annually, or whenever events or circumstances arise indicating impairment may exist, we review goodwill for impairment as required by generally accepted accounting principles in the United States (GAAP). In 2020, we recorded an impairment charge of $6.4 million related to the impairment of intangible assets acquired in 2019. Additionally, during the 12 months ended September 30, 2021, we recorded an impairment charge of $11.2 million, a portion of which was related to a $1.4 million write-off of intangible assets related to our acquisition of SPKR, Inc and an intangible asset impairment of $2.6 million and a goodwill impairment of $4.4 million related to our EON Media acquisition.~~As of June 30, 2022, we had remaining goodwill of approximately $2.0 million.~~

In the future, we may need to further reduce the carrying amount of goodwill and incur additional non-cash charges to our results of operations. Such charges could have the effect of reducing goodwill with a corresponding impairment expense and may have a material effect upon our reported results. The additional expense may reduce our reported profitability or increase our reported losses in future periods and could negatively affect the value of our securities, our ability to obtain other sources of capital, and may generally have a negative effect on our future operations.2022.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

~~During the nine months ended June 30, 2022, we issued 687,324 warrants to various companies for consulting services.~~

~~During the nine months ended June 30, 2022, we issued 1,778,000 warrants in conjunction with non-revolving lines of credit.~~Not applicable.

Item 3.Defaults Upon Senior Securities.

There were no material defaults regarding payments of principal and interest that exceeded 5% of our total assets.

Item 4.Mine Safety Disclosure.

Not applicable.

Item 5.Other Information.

~~None.~~Significant Agreements

We have recently renewed and updated the last of our three limited, non-exclusive licenses to digitally distribute certain music videos and related materials to our OOH clients in the United States owned or controlled by the major record labels; Universal Music Group, Sony Music Entertainment, and Warner Music Group (collectively, the “Music Labels”) and have now done so with all three Music Labels.

Item 6. Exhibits


Exhibit No.			Exhibit Description
~~4.1~~
3.1*		~~Form~~Restated Articles of ~~Warrant, dated April 25, 2022 (previously filed on April 29, 2022,~~Incorporation of Loop Media, Inc., as ~~Exhibit 4.1 of the Company's Current Report on Form 8-K).~~amended

~~4.2~~ 10.1		~~Form of Warrant~~Amendment Number 1 to the Loan and Security Agreement and to the Loan Agreement Schedule, dated October 27, 2022, by and between the Company and GemCap Solutions, LLC, as successor and assign to Industrial Funding Group, Inc. (previously filed on ~~May 19,~~November 2, 2022, as Exhibit ~~4.1~~10.1 of the Company’s Current Report on Form 8-K).
~~10.1~~ 10.2		~~First Amendment~~Amended and Restated Secured Promissory Note (Revolving Loans), dated October 27, 2022, executed by the Company for the benefit of GemCap Solutions, LLC, as successor and assign to Industrial Funding Group, Inc. (previously filed on November 2, 2022, as Exhibit 10.2 of the Company’s Current Report on Form 8-K)
10.3		Non-Revolving Line of Credit Loan Agreement Amendment, dated ~~April 13,~~as of December 14, 2022, by and betweentheCompanyandExcelFamily Partners,LLLP (previously filed on December 20, 2022, as Exhibit 10.17 of the Company’s Annual Report on Form 10-K)
10.4		Non-Revolving Line of Credit Promissory Note Amendment, dated as of December 14, 2022, by and between the Company and Excel Family Partners, LLLP (previously filed on ~~April 19,~~December 20, 2022, as Exhibit ~~10.1~~10.17 of the Company’s ~~Current~~Annual Report on Form ~~8-K).~~
~~10.2~~	Non-Revolving Line of Credit Promissory Note, dated April 13, 2022, by and between the Company and Excel Family Partners, LLLP (previously filed on April 19, 2022, as Exhibit 10.2 of the Company’s Current Report on Form 8-K).10-K)

4941

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~~10.3~~	Non-Revolving Line of Credit Loan Agreement, effective as of April 25, 2022, by and between the Company and Excel Family Partners, LLLP (previously filed on April 29, 2022, as Exhibit 10.1 of the Company's Current Report on Form 8-K).
~~10.4~~	Non-Revolving Line of Credit Promissory Note, dated April 25, 2022, by and between the Company and Excel Family Partners, LLLP (previously filed on April 29, 2022, as Exhibit 10.2 of the Company's Current Report on Form 8-K).
~~10.5~~	Non-Revolving Line of Credit Loan Agreement, effective as of May 13, 2022, by and between the Company, RAT Investment Holdings, LLC as the Loan Administrator and the lenders (previously filed on May 19, 2022, as Exhibit 10.1 of the Company's Current Report on Form 8-K)

~~10.6~~	Non-Revolving Line of Credit Promissory Note, dated May 13, 2022, executed by the Company for the benefit of the lenders (previously filed on May 19, 2022, as Exhibit 10.2 of the Company's Current Report on Form 8-K)

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

101.INS		Inline XBRL Instance Document -the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.

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Pursuant to the requirements of the Securities Act of 1934, as amended, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned thereunto duly authorized on ~~August 11, 2022.~~February 7, 2023.


	Loop Media, Inc., a Nevada corporation
	(Registrant)


	By:	/s/ Jon Niermann
		Jon Niermann
		Chief Executive Officer
		(Principal Executive Officer)


	By:	/s/ Neil Watanabe
		Neil Watanabe
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

5143

PART I — FINANCIAL INFORMATION		2

Item 1.	Financial Statements.	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3226
Item 3.	Quantitative and Qualitative Disclosure About Market Risk.	4440
Item 4.	Controls and Procedures.	4440

PART II — OTHER INFORMATION		4640

Item 1.	Legal Proceedings	4640
Item 1A.	Risk Factors	4641
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	4941
Item 3.	Defaults Upon Senior Securities.	4941
Item 4.	Mine Safety Disclosure.	4941
Item 5.	Other Information.	4941
Item 6.	Exhibits	4941
Signatures		5143


		Preferred Stock B			Preferred Stock A			Common Stock			Common stock		Additional Paid		Accumulated
		Shares	Amount		Shares	Amount		Shares	Amount		subscriptions		in Capital		Deficit		Total
Balances, September 30, 2020		200,000	$	20	30,667	$	3	114,320,911	$	11,432	$	135,144	$	36,669,899	$	(35,867,920)	$	948,578
Shares issued for cash		—		—	—		—	757,333		75		—		899,925		—		900,000
Cash received for common stock subscribed		—		—	—		—	—		—		330,000		—		—		330,000
Issuance of common stock subscribed		—		—	—		—	(53,333)		(5)		20,000		(19,995)		—		—
Shares issued in connection with reverse merger		—		—	—		—	—		—		—		(1)		—		(1)
Shares issued for asset purchase		—		—	—		—	1,369,863		137		—		2,671,096	��	—		2,671,233
Beneficial conversion feature of convertible debt		—		—	—		—	—		—		—		750,000		—		750,000
Stock-based compensation		—		—	—		—	—		—		—		134,253		—		134,253
Warrants issued to consultant		—		—	—		—	—		—		—		492,000		—		492,000
Shares issued for debt settlement		—		—	—		—	97,891		10		—		194,793		—		194,803
Shares issued for license content assets		—		—	—		—	1,180,880		118		—		2,065,878		—		2,065,996
Shares issued for investment in unconsolidated entity		—		—	—		—	454,463		46		—		863,434		—		863,480
Net loss		—		—	—		—	—		—		—		—		(5,676,224)		(5,676,224)
Balances, December 31, 2020	$	200,000	$	20	30,667	$	3	118,128,008	$	11,813	$	485,144	$	44,721,282	$	(41,544,144)	$	3,674,118
														��
Issuance of common stock subscribed		—		—	—		—	497,429		49		(485,144)		485,095		—		—
Conversion of convertible debenture		—		—	—		—	1,003,618		100		—		376,256		—		376,356
Shares issued for cash		—		—	—		—	1,564,000		156		—		1,954,844		—		1,955,000
Stock-based compensation		—		—	—		—	—		—		—		5,419,800		—		5,419,800
Warrants issued in conjunction with debenture		—		—	—		—	—		—		—		43,654		—		43,654
Beneficial conversion feature of convertible debt		—		—	—		—	—		—		—		306,346		—		306,346
Net loss		—		—	—		—	—		—		—		—		(8,247,115)		(8,247,115)

BALANCES, March 31, 2021	$	200,000	$	20	30,667	$	3	121,193,055	$	12,118	$	$	—	$	53,307,277	$	(49,791,259)	$	3,528,159

Conversion of series A convertible stock to common stock		—		—	(30,667)		(3)	3,066,700		307			—		(304)		—		—
Payment in kind interest stock issuance		—		—	—		—	14,475		3			—		41,976		—		41,979
Shares issued for consulting fees		—		—	—		—	79,051		8			—		199,992		—		200,000
Shares issued for acquisition		—		—	—		—	2,003,435		200			—		5,689,555		—		5,689,755
Shares issued for cash		—		—	—		—	960,000		96			—		1,199,904		—		1,200,000
Stock-based compensation		—		—	—		—	—		—			—		1,482,746		—		1,482,746
Warrants issued in conjunction with debenture		—		—	—		—	—		—			—		144,291		—		144,291
Beneficial conversion feature of convertible debt		—		—	—		—	—		—			—		1,705,709		—		1,705,709
Warrants issued for severance		—		—	—		—	—		—			—		82,000		—		82,000
Net loss		—		—	—		—	—		—			—		—		(3,924,343)		(3,924,343)
BALANCES, June 30, 2021	$	200,000	$	20	—	$	—	127,316,716	$	12,732	$	$	—	$	63,853,146	$	(53,715,602)	$	10,150,296

SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND FINANCING ACTIVITIES
Common Stock issued to acquire intangible assets	$	—	$	2,671,233
Conversion of convertible debenture to common stock	$	—	$	376,356
Common Stock issued for equity investment in unconsolidated entity	$	—	$	863,480
Common Stock issued for acquisition	$	—	$	5,689,755
Early extinguishment of convertible debt	$	944,614	$	—
Payment in kind common stock payment	$	177,000	$	41,979
Warrants issued in conjunction with debt	$	3,036,970	$	—
Warrants issued as debt discount on convertible debenture	$	—	$	187,945
Beneficial conversion feature recorded as discounted debt	$	2,079,993	$	2,762,055
Prepaid common stock paid to consultant	$	—	$	200,000
Conversion of Preferred Class A stock to common stock	$	—	$	307
Unpaid deferred offering costs	$	40,017	$	—
Shares issued for common stock subscribed	$	—	$	485,144
Accrued interest rolled into convertible note	$	—	$	81,824
Common Stock issued for content license assets	$	—	$	2,260,799
Preferred shares issued for debt settlement	$	—	$	1,006,584


		Quoted Prices in				Significant
		Active Markets		Significant Other		Unobservable
		For Identical Items		Observable Inputs		Inputs
		(Level 1)		(Level 2)		(Level 3)		Total
Derivative liabilities		—		—		893,925		893,925
Total	$	—	$	—	$	893,925	$	893,925


Balance as of September 30, 2021	$	1,058,633
Derivative liability issued with convertible debentures		—
Change in fair value		(164,708)
Balance as of June 30, 2022	$	893,925


Balance as of March 31, 2022	$	912,320
Change in fair value		(18,395)
Balance as of June 30, 2022	$	893,925



2022 (remaining months)	$	46,414
2023		84,175
Total undiscounted cash flows		130,589
Less: 10% Present value discount		(11,411)
Lease liability	$	119,178



For the three months remaining 2022	$	—
2023		4,795,763
2024		234,230
Convertible debentures payable, related and non-related party		5,029,993
Less: Debt discount on convertible debentures payable		(2,209,006)
Total convertible debentures payable, related and non-related party, net	$	2,820,987


	June 30, 2022

Weighted average fair value of options granted	$	1.13
Expected life		5.00 -10.00 years
Risk-free interest rate		0.01 - 2.93	%
Expected volatility		55.80 - 73.00	%
Expected dividends yield		0	%
Forfeiture rate		0	%


	June 30, 2022

Weighted average fair value of warrants granted	$	0.74
Expected life		1.75 - 10 years
Risk-free interest rate		0.15 - 3.35	%
Expected volatility		57.30 - 73.00	%
Expected dividends yield		—	%
Forfeiture rate		—	%