Loop Media (US:LPTV)2024-02-06 22:43Financial Performance - Revenue for the three months ended December 31, 2023, was $10,171,256, a decrease of $4,654,575, or 31%, from $14,825,831 for the same period in 2022, primarily due to a lack of political ad placements and a slowdown in digital advertising spend[194]. - Total revenue for the three months ended December 31, 2023, was $10,171,256, a decrease of 31% compared to $14,825,831 for the same period in 2022[269]. - Advertising revenue accounted for 92% of total revenue in Q4 2023, down from 94% in Q4 2022, with advertising revenue reported at $9,394,764[271]. - Legacy and other revenue for Q4 2023 was $776,492, a decrease from $866,326 in Q4 2022[269]. - For the three months ended December 31, 2023, the GAAP net loss was $5,285,402, compared to a net loss of $5,259,439 for the same period in 2022[221]. - Adjusted EBITDA for the same period was $(1,482,189), an improvement from $(1,589,936) in the prior year, reflecting a decrease in stock-based compensation and non-recurring expenses[221]. Revenue Sources - Revenue is primarily generated from ad sales, recognized when digital advertising impressions are filled, while subscription service revenue is recognized over the service term[177]. - The company’s customer base includes OOH locations and advertisers, with revenue derived from both advertising inventory sales and subscription fees[154][156]. Active Users and Growth - As of December 31, 2023, the company had approximately 77,000 active Loop Players and Partner Screens, including 33,783 quarterly active Loop Players (QAUs), a 26% increase from 26,903 QAUs in Q4 2022, but a 9% decrease from 37,021 QAUs in Q3 2023[154][171]. - The company has seen a significant increase in Partner Screens, with approximately 43,000 Partner Screens as of December 31, 2023, a 153% increase from 17,000 in Q4 2022[154][171]. - The company has focused on a targeted distribution model, pivoting to specific advertising markets and desirable out-of-home locations, which is expected to enhance QAUs growth[172]. - The company experienced a decrease in QAUs due to natural attrition and technical issues, with some Loop Players not returning to active status after downtime in September 2023[172]. Cost and Expenses - Cost of revenue for the three months ended December 31, 2023, was $6,546,717, a decrease of $2,593,083, or 28%, from $9,139,800 for the same period in 2022, driven by decreased revenue offset by revenue mix and incremental licensing costs[198]. - Gross profit margin for the three months ended December 31, 2023, was $3,624,539, a decrease of $2,061,492, or 36%, from $5,686,031 for the same period in 2022, with a margin percentage of approximately 35.6% compared to 38.4% in the prior year[199]. - Total operating expenses for the three months ended December 31, 2023, were $7,881,077, a decrease of $2,055,580, or 21%, from $9,936,657 for the same period in 2022[202]. - Sales, General and Administrative Expenses for the three months ended December 31, 2023, were $6,170,977, a decrease of $1,787,157, or 22%, from $7,958,134 for the same period in 2022[202]. - Payroll costs for the three months ended December 31, 2023, were $2,119,178, a decrease of $1,368,571, or 39%, from $3,487,749 for the same period in 2022[204]. - Stock-based compensation for the three months ended December 31, 2023, was $1,328,225, a decrease of $462,582, or 26%, from $1,790,807 for the same period in 2022[207]. - The company completed a plan to reduce overall SG&A costs by approximately 20% during fiscal year 2023, including labor and various other operating costs[208]. - The company is focusing on improving margins by changing the mix of premium content on its O&O Platform and has negotiated new content licenses to lower costs and create new channels[200]. Cash Flow and Financing - Cash balance as of December 31, 2023, was $3,811,159, down 51% from $7,753,644 at the end of December 2022[229]. - Net cash used in operating activities decreased by 78% to $1,526,995 for the three months ended December 31, 2023, from $6,823,229 in the same period of 2022[226]. - Net cash used in investing activities was $394,401, a decrease of 36% from $618,032 in the prior year, primarily due to reduced purchases of property and equipment[227]. - Net cash provided by financing activities increased by 137% to $2,663,859, up from $1,122,991 in the same period of 2022, mainly due to proceeds from warrant exercises and a revolving line of credit[228]. - The company has an accumulated deficit of $133,570,945 as of December 31, 2023[230]. - A new Revolving Line of Credit Agreement was established with Excel Family Partners for up to $2,500,000, effective December 14, 2023[233]. - The GemCap Revolving Line of Credit Agreement allows for borrowing up to $6,000,000, with a maturity date of July 29, 2024[236]. - The company anticipates continuing to incur net losses for the foreseeable future while exploring alternative revenue sources and reducing operating expenses[223]. - As of December 31, 2023, the balance of the GemCap Revolving Line of Credit was $5,494,323, an increase from $3,757,074 as of September 30, 2023, with interest expense of $375,630 for the three months ended December 31, 2023[240]. - The RAT Non-Revolving Line of Credit had a balance of $1,770,795 as of December 31, 2023, down from $2,300,899 as of September 30, 2023, with interest expense of $136,976 for the three months ended December 31, 2023[245]. - The May 2023 Secured Line of Credit had a principal balance of $837,333 as of December 31, 2023, significantly reduced from $3,214,769 as of September 30, 2023, with interest expense of $180,480 for the three months ended December 31, 2023[249]. - The company issued warrants for an aggregate of up to 209,522 shares at an exercise price of $5.25 per share in connection with the RAT Non-Revolving Line of Credit Agreement[241]. - The maturity date of the RAT Non-Revolving Line of Credit was extended to August 13, 2024, with a payment of $374,000 made on November 13, 2023, including accrued interest and principal[242]. - As of December 31, 2023, a total principal amount of $800,000 remained on the May 2023 Secured Line of Credit, with outstanding warrants for a total of 83,142 warrant shares[247]. - The company agreed to amend existing warrants to reduce the exercise price to $0.80 per share, resulting in net proceeds of $983,851 from the exercise of 1,850,874 shares as of December 31, 2023[254]. - The company refinanced the Excel $2.2M Line of Credit, resulting in no principal or interest remaining under that agreement as of December 31, 2023[252]. - The interest rate for the RAT Non-Revolving Line of Credit and the May 2023 Secured Line of Credit is fixed at 12% per year[246]. - The company plans to apply one-third of the net proceeds from future capital raises to pay down the outstanding principal under the RAT Non-Revolving Line of Credit[242]. Regulatory and Compliance - The company expects to continue to incur significant legal and financial expenditures to meet regulatory requirements as a NYSE American listed public company[261]. - The company plans to opportunistically seek access to additional capital to license or acquire products, services, or companies to expand operations[259]. - The company does not expect to experience positive cash flows from operations in the near future due to ongoing investments in its Loop Players and Partner Platform business[261]. - The company has filed a Prospectus Supplement to decrease the amount of Common Stock available for sale under the ATM Sales Agreement to $18,200,000[256]. Accounting Standards - FASB issued ASU 2023-09 to enhance transparency in income tax disclosures, effective for annual periods beginning October 1, 2025[284]. - ASU 2023-09 will significantly change the income tax footnote in the consolidated financial statements[284]. - FASB adopted ASU 2016-13 for measuring expected credit losses, effective for fiscal years beginning after December 15, 2022[285]. - The company adopted ASU 2016-13 as of October 1, 2023, with no material impact on financial statements as of December 31, 2023[285].