STOCK OPTIONS, RESTRICTED STOCK UNITS (RSUs) AND WARRANTS

9 Months Ended

Jun. 30, 2023

Share-based Payment Arrangement, Additional Disclosure [Abstract]

STOCK OPTIONS, RESTRICTED STOCK UNITS (RSUs) AND WARRANTS

NOTE 12 – STOCK OPTIONS, RESTRICTED STOCK UNITS (RSUs) 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, 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, 2023:

		Weighted		Weighted Average
		Average		Remaining	Aggregate
	Options	Exercise Price		Contractual Term	Intrinsic Value
Outstanding at September 30, 2022	8,174,563	$	3.78	7.42	$	9,188,491
Grants	502,431		4.35	10.00		—
Exercised	(22,462)		1.71	—		—
Expired	—		—	—		—
Forfeited	(98,972)		5.81	—		—
Outstanding at June 30, 2023	8,555,560	$	3.90	7.41		656,612
Exercisable at June 30, 2023	6,772,308		3.53	7.08		671,885

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 $2.39 as of June 30, 2023, and $8.13 as of June 30, 2022, which would have been received by the option holders had those option holders exercised their options as of that date.

The following table presents information related to stock options as of June 30, 2023:

Options outstanding
			Weighted	Options
			average	exercisable
	Exercise	Number of	remaining life	number of
	price	options	in years	options
$	2.58	382,790	3.28	382,790
	1.98	1,472,892	5.34	1,472,891
	2.67	833,333	6.96	833,333
	3.30	2,586,725	7.37	2,140,227
	1.71	77,538	7.67	99,999
	8.52	83,333	7.83	83,333
	8.25	200,000	7.85	138,888
	7.05	16,667	8.06	10,647
	7.20	16,667	8.08	10,647
	7.50	16,667	8.09	16,666
	6.90	278,727	8.27	200,607
	7.05	25,000	8.33	10,417
	8.25	108,591	8.82	—
	7.74	45,000	8.88	—
	7.05	8,333	9.04	—
	7.86	6,667	9.18	—
	4.95	1,922,990	9.24	1,232,935
	6.23	433,640	9.52	138,928
	5.24	40,000	9.83	—
		8,555,560		6,772,308

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, 2023, we issued 502,431 options valued at $2,009,567. As of June 30, 2023, the total compensation cost related to nonvested awards not yet recognized is $5,304,806 and the weighted average period over which expense is expected to be recognized in months is 24.8.

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

	June 30, 2023
Weighted average fair value of options granted	$	6.15
Expected life		5.72 years
Risk-free interest rate		3.90	%
Expected volatility		52.15	%
Expected dividends yield		—	%
Forfeiture rate		—	%

The stock-based compensation expense related to option grants was $5,319,045 and $3,948,272, for the nine months ended June 30, 2023, and 2022, respectively.

Restricted Stock Units

On September 18, 2022, the Compensation Committee of our Board of Directors approved Restricted Stock Unit (“RSU”) awards to certain officers and key employees pursuant to the terms of the Loop Media, Inc. Amended and Restated 2020 Equity Incentive Compensation Plan (the “2020 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 $5.00 per share, and twenty-five percent (25%) of the RSUs vest on the one-year anniversary of the grant date and the remainder in equal quarterly installments over the following three-year period.

On January 3, 2023, the Compensation Committee of our Board of Directors approved RSU awards as compensation to members of our Board of Directors pursuant to the 2020 Plan.

On January 3, 2023, we granted an aggregate of 212,004 RSUs which vest over time subject to continued service. Each RSU was valued at $6.23 per share. Twenty-five percent (25%) of 130,464 RSUs vest on the one-year anniversary of the grant date and the remainder in equal quarterly installments over the following three-year period. One hundred percent (100%) of 81,540 RSUs vest on the day after the end of the fiscal year in which the grant was made.  

The following table summarizes the RSU activity for the nine months ended June 30, 2023:

		Weighted		Weighted Average
		Average		Remaining	Aggregate
	RSUs	Fair Value		Contractual Term	Intrinsic Value
Outstanding at September 30, 2022	890,000	$	5.00	3.04	$	2,127,100
Grants	212,004		6.23	2.87		506,690
Exercised	—		—	—		—
Expired	—		—	—		—
Forfeited	—		—	—		—
Outstanding at June 30, 2023	1,102,004	$	5.24	—	$	2,633,790
Exercisable at June 30, 2023	—	$	—	—	$	—

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on our stock price of $2.39 as of June 30, 2023, and $8.13 as of June 30, 2022. which would have been received by the RSU holders as of that date.

The following table presents information related to RSUs as of June 30, 2023:

RSUs outstanding
				Weighted Average
Grant Date		Number of		Remaining	Number of
Fair Value		RSUs		Life in Years	RSUs Vested
$	5.00		890,000	3.23		—
$	6.23		130,464	3.51		—
$	6.23		81,540	0.25		—
			1,102,004			—

The stock-based compensation expense related to RSU grants was $1,263,635 and $0, for the nine months ended June 30, 2023, and 2022, respectively.

As of June 30, 2023, the total compensation cost related to nonvested RSU awards not yet recognized was $4,479,793 and the weighted average period over which expense is expected to be recognized in months was 37.9.

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	6.28		2.58	100,000	6.28
	2.57	666,666	3.44		2.57	666,666	3.44
	2.25	888,888	6.70		2.25	888,888	6.70
	8.25	107,952	1.42		8.25	107,952	1.42
	8.40	16,666	5.82		8.40	16,666	5.82
	8.25	2,191,149	1.25		8.25	2,191,149	1.25
	7.05	62,438	3.71		7.05	—	—
	5.25	383,141	1.82		5.25	383,141	1.82
	5.25	209,522	1.87		5.25	209,522	1.87
	9.00	66,666	1.88		9.00	—	—
	7.95	100,000	1.96		7.95	—	—
	5.25	296,329	2.08		5.25	296,329	2.08
	6.00	192,000	4.24		6.00	192,000	4.24
	6.00	18,616	4.25		6.00	18,616	4.25
	4.33	83,142	2.86		4.33	83,142	2.86

The following table summarizes the warrant activity for the nine months ended June 30, 2023:

		Weighted
		average
		exercise
	Number of	price per
	shares	share
Outstanding at September 30, 2022	5,300,033	$	5.82
Issued	83,142		4.33
Exercised	—		—
Expired	—		—
Outstanding at June 30, 2023	5,383,175	$	5.80

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

During the nine months ended June 30, 2023, we issued 83,142 warrants in conjunction with lines of credit. We recorded consulting expense of $232,789 as a result of current period vesting of previously issued warrants to various companies for consulting services.

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

	June 30, 2023
Weighted average fair value of warrants granted	$	4.33
Expected life		3.00	years
Risk-free interest rate		3.90	%
Expected volatility		50.61	%
Expected dividends yield		—	%
Forfeiture rate		—	%