Loop Media (LPTV) - 2022 Q2 - Quarterly Report

PART I PART I — FINANCIAL INFORMATION This section provides unaudited financial statements, management's discussion, market risk disclosures, and controls and procedures Financial Statements This section presents Loop Media, Inc.'s unaudited condensed consolidated financial statements as of March 31, 2022, highlighting revenue growth, continued net loss, and a "going concern" warning Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2022 | September 30, 2021 | | :--- | :--- | :--- | | Total Assets | $9,727,367 | $11,818,706 | | Cash | $637,998 | $4,162,548 | | Accounts receivable, net | $4,626,858 | $1,571,226 | | Total Liabilities | $13,169,477 | $8,823,003 | | Total current liabilities | $10,176,110 | $4,365,403 | | Convertible debt (current & non-current) | $3,553,106 | $3,392,739 | | Total Stockholders' Equity (Deficit) | ($3,442,110) | $2,995,703 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | Six Months Ended Mar 31, 2022 | Six Months Ended Mar 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $4,879,839 | $794,043 | $7,875,873 | $1,499,211 | | Gross Profit | $1,364,622 | $69,465 | $2,915,679 | $312,591 | | Loss from Operations | ($4,527,209) | ($7,836,819) | ($8,885,832) | ($13,020,790) | | Net Loss | ($4,974,830) | ($8,247,115) | ($9,248,825) | ($13,923,339) | | Basic and Diluted Net Loss per Share | ($0.04) | ($0.07) | ($0.07) | ($0.12) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended Mar 31, 2022 | Six Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($5,598,220) | ($4,350,902) | | Net Cash Used in Investing Activities | $0 | ($745,771) | | Net Cash Provided by Financing Activities | $2,073,670 | $4,226,230 | | Change in Cash | ($3,524,550) | ($870,443) | | Cash, End of Period | $637,998 | $1,101,480 | - The company is a multichannel digital video platform that generates revenue through its marketing technology ("MarTech"), delivering short-form video content to digital out-of-home (DOOH) business locations and direct-to-consumers (D2C) via ad-supported and subscription models[18][19][20] - As of March 31, 2022, the company had cash of $637,998 and an accumulated deficit of $76.1 million, raising substantial doubt about its ability to continue as a going concern, dependent on generating sufficient revenue and raising additional funds[21][22] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant revenue growth driven by increased DOOH players and revenue per player, despite continued net losses and liquidity challenges raising "going concern" doubts Q2 FY2022 vs Q2 FY2021 Performance (Three Months Ended March 31) | Metric | 2022 | 2021 | $ Variance | % Variance | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $4,879,839 | $794,043 | $4,085,796 | 515% | | Gross Profit | $1,364,622 | $69,465 | $1,295,157 | 1,864% | | Net Loss | ($4,974,830) | ($8,247,115) | $3,272,285 | (40)% | First Half FY2022 vs First Half FY2021 Performance (Six Months Ended March 31) | Metric | 2022 | 2021 | $ Variance | % Variance | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $7,875,873 | $1,499,211 | $6,376,662 | 425% | | Gross Profit | $2,915,679 | $312,591 | $2,603,088 | 833% | | Net Loss | ($9,248,825) | ($13,923,339) | $4,674,514 | (34)% | - Quarterly Active Users (QAU) increased by 29% to 10,530 for the quarter ended March 31, 2022, compared to 8,156 for the quarter ended December 31, 2021[142] - The company's ability to continue as a going concern is in doubt due to a net loss of $9.2 million and net cash used in operations of $5.6 million for the six months ended March 31, 2022, with an accumulated deficit of $76.1 million; management plans to raise capital through equity and debt[190] Reconciliation of Net Loss to Adjusted EBITDA (Non-GAAP) | Metric | Three Months Ended Mar 31, 2022 | Six Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | GAAP Net Loss | ($4,974,830) | ($9,248,825) | | Adjusted EBITDA | ($3,343,005) | ($5,673,093) | - Subsequent to the quarter end, on April 25, 2022, the company entered into a new Non-Revolving Line of Credit Loan Agreement for up to $4.02 million to refinance a prior loan and provide additional capital[184][185] Quantitative and Qualitative Disclosure About Market Risk The company states that this disclosure is not required for a smaller reporting company - Disclosure about market risk is not required[192] Controls and Procedures Management concluded that the company's disclosure controls and procedures were ineffective as of March 31, 2022, due to material weaknesses, and has outlined a remediation plan - The CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of March 31, 2022[194] - Material weaknesses identified include: - Insufficient management and governance oversight of internal controls - Ineffective controls over period-end financial reporting, including tax provisions, asset valuation, and investments - Lack of proper segregation of duties and inadequate review and approval of journal entries[197] - Management has initiated a remediation plan, which involves hiring permanent finance staff, engaging a third-party internal audit firm, and implementing enhanced procedures like a new ERP system, monthly budget reviews, and formalizing policies[198][199][201] PART II PART II — OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Legal Proceedings The company reports no current material litigation expected to adversely affect its financial condition or operations - The company is not currently involved in any material litigation[204] Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-KT have been reported - No material changes to risk factors from the last Annual Report on Form 10-KT have been reported[205] Unregistered Sales of Equity Securities and Use of Proceeds During the six months ended March 31, 2022, the company issued 187,324 warrants for consulting services in an unregistered sale of equity securities - The company issued 187,324 warrants for consulting services in an unregistered transaction during the six months ended March 31, 2022[206] Defaults Upon Senior Securities The company reports no material defaults on its senior securities during the reporting period - No material defaults on senior securities were reported[207] Mine Safety Disclosure This item is not applicable to the company's business - Not applicable[208] Other Information On May 9, 2022, the company refinanced approximately $2.08 million in unsecured convertible debentures with a related party, including a temporary cessation of payments and conversion terms - On May 9, 2022, the company refinanced ~$2.08 million in unsecured convertible debentures by issuing new debentures to a related party; the new terms include a temporary halt on payments until December 1, 2022, and an agreement to convert to common stock in the event of a significant equity raise[209] Exhibits This section lists the exhibits filed with the Form 10-Q, including forms of amended warrants, a credit agreement, and officer certifications List of Exhibits | Exhibit No. | Exhibit Description | | :--- | :--- | | 4.1 | Form of Amended Eagle Warrant | | 4.2 | Form of Amended Cassidy Warrant | | 10.1 | Credit Agreement, dated February 23, 2022 | | 31.1 | Certification of Principal Executive Officer (SOX 302) | | 31.2 | Certification of Principal Financial Officer (SOX 302) | | 32.1 | Certification of Chief Executive Officer (SOX 906) | | 32.2 | Certification of Chief Financial Officer (SOX 906) | | 101 & 104 | Inline XBRL Files |