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 the average standard deviation method based on the average volatility of a selected peer group of similar companies. We account for the expected life of options based on the contractual 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 a blended interest rate based on the federal interest rate on the grant/measurement date and the expected life of options.

The following table summarizes the stock option activity for the six months ended March 31, 2025:

 SCHEDULE OF STOCK OPTION ACTIVITY 

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 $0.04 as of March 31, 2025, and $0.37 as of March 31, 2024, which would have been received by the option holders had those option holders exercised their options as of that date.

We recognize compensation expense for all stock options granted using the fair value-based method of accounting. During the six months ended March 31, 2025, no options were issued.

The stock-based compensation expense related to option grants was $611,293 and $1,658,417, for the six months ended March 31, 2025, and 2024, respectively.

As of March 31, 2025, the total compensation cost related to nonvested awards not yet recognized is $728,387 and the weighted average period over which expense is expected to be recognized in months is 17.7.

We calculate the fair value of options using the Black-Scholes option pricing model, however, no options were granted for the six months ended March 31, 2025.

 Repricing of Certain Employee Stock Options

As previously disclosed, our common stock was delisted from the NYSE American on August 8, 2024, and began trading on the OTC Pink Current operated on the OTC Markets system effective on August 9, 2024. As an incentive to retain employees, on September 30, 2024, the Board of Directors approved the reduction of the exercise price of stock options (the “Stock Option Repricing”) previously granted under the Plan that are held by certain current non-executive employees to $0.0511 per share, which was the closing price of our common stock on September 27, 2024, as reported on the OTC Pink.

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 25% of the RSUs vest on the 1one-year anniversary of the grant date and the remainder in equal quarterly installments over the following 3three-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. 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 3three-year period. All of 81,540 RSUs vest on the day after the end of the fiscal year in which the grant was made.

On July 1, 2023, we granted an aggregate of 54,393 RSUs which fully vested on the grant date. Each RSU was valued at $2.39 per share.

On January 1, 2024, we granted an aggregate of 140,000 RSUs which vest in equal semi-annual installments over a 2two-year term, beginning on the six-month anniversary of the grant date until all RSUs are fully vested. Each RSU was valued at $1.00 per share.

On March 15, 2024, we granted an aggregate of 3,065,000 RSUs which vest over a 2two-year period with 50% vesting on the one-year anniversary of the grant date and the remainder at 12.5% on a quarterly basis thereafter until all RSUs are fully vested. Each RSU was valued at $0.50 per share.

On March 15, 2024, we granted 600,000 RSUs, which vest over a 4four-year period, with 25% of the shares subject to the RSUs vesting on the one-year anniversary of the grant date and the remaining shares vesting equally on a quarterly basis beginning three months after the one-year anniversary until all RSUs are fully vested. Each RSU was valued at $0.50 per share.

On April 1, 2024, we granted 75,000 RSUs, which vest over a year and four months period, with 50% of the shares subject to the RSUs vesting on the one-year anniversary of the grant date and the remaining shares vesting equally on a quarterly basis beginning three months after the one-year anniversary until all RSUs are fully vested. Each RSU was valued at $0.32 per share.

On September 30, 2024, we granted 40,000 RSUs, which vest in equal quarterly installments over a one-year term, beginning on the three-month anniversary of the grant date until all RSUs are fully vested. Each RSU was valued at $0.05 per share.

On March 15, 2025, we granted 200,000 RSUs, which vest over an eighteen (18) month period. 50,000 vest immediately on the grant date; 75,000 vest on the nine (9) month anniversary of the grant date; and the remaining 75,000 vest on the eighteen (18) month anniversary of the grant date. Each RSU was valued at $0.04 per share.

On March 15, 2025, we granted 40,000 RSUs, which vest over a one (1) year period. 50% will vest immediately on the grant date and the remaining shares vesting equally on a quarterly basis thereafter until all RSUs are fully vested. Each RSU was valued at $0.04 per share.

The following table summarizes the RSU activity for the six months ended March 31, 2025:

 SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY 

The aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on our stock price of $0.04 as of March 31, 2025, and $0.37 as of March 31, 2024, which would have been received by the RSU holders as of that date.

The stock-based compensation expense related to RSU grants was $1,064,727 and $702,979, for the six months ended March 31, 2025, and 2024, respectively.

As of March 31, 2025, the total compensation cost related to nonvested RSU awards not yet recognized was $2,188,367 and the weighted average period over which expense is expected to be recognized in months was 18.3.

Warrants

The following table summarizes the warrant activity for the six months ended March 31, 2025:

 SCHEDULE OF WARRANT ACTIVITY 

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

During the six months ended March 31, 2025, no warrants were issued in conjunction with lines of credit. When warrants are issued, we allocate the fair value of the warrants at inception as deferred costs. Once we draw down funds on the revolving line of credit, we re-allocate the fair value of the warrants as debt discount and record the straight-line amortization ratably over the life of the debt as interest expense.

During the six months ended March 31, 2025, we recorded consulting expense of $69,195 as a result of current period vesting of previously issued warrants to various companies for consulting services.

We calculate the fair value of warrants using the Black-Scholes option pricing model, however, no warrants were granted for the six months ended March 31, 2025.

Repricing and Exercise of Certain Existing Warrants

On December 14, 2023, we agreed to offer to amend certain existing warrants exercisable for an aggregate of up to 4,055,240 shares of our common stock (each such warrant an “Existing Warrant”) to reduce the respective exercise prices thereof to $0.80 per share (such new price being referred to as the “Amended Warrant Exercise Price”), which was the closing price per share of our common stock as quoted on the NYSE American on December 13, 2023, on the condition that the holder of each Existing Warrant would commit to exercise the Existing Warrant within a certain period of time, paying the aggregate Amended Warrant Exercise Price of each respective Existing Warrant in cash to us (the “Warrant Repricing”). As of December 14, 2023, Existing Warrants exercisable for an aggregate of up to 786,482 shares of our common stock were held by Excel and Eagle Investment Group, LLC, entities managed by Bruce Cassidy, Sr., Executive Chairman of our Board of Directors and our majority stockholder, and Existing Warrants exercisable for an aggregate of up to 443,332 shares of our common stock were held by Denise Penz, a member of our Board of Directors. In connection with the Warrant Repricing, each of Mr. Cassidy and Ms. Penz exercised their Existing Warrants, resulting in net proceeds to us of $983,851.

As of March 31, 2025, holders of Existing Warrants (including those held by Mr. Cassidy and Ms. Penz) had exercised warrants for 1,850,874 shares for an aggregate exercise price of $1,480,699. No other Existing Warrants have been repriced or exercised under the Warrant Repricing.

RAT Warrant Repricing

On May 31, 2024, we entered into a Non-Revolving Line of Credit Waiver and Consent Agreement (the “Waiver and Consent”), with the Loan Administrator, effective as of and contingent upon the closing of the Offerings, waiving certain provisions of the RAT Non-Revolving Line of Credit Agreement Amendment #1, pursuant to which the RAT Lenders agreed to irrevocably waive their rights to receive one-third (1/3) of the net proceeds of any non-affiliate capital raise, including the Offerings, and consent to us not paying any of such proceeds to the RAT Lenders. In consideration for entering into the Waiver and Consent, we agreed to reduce the exercise price of the RAT Loan Warrants and the Subordination Agreement Warrants held by the RAT Lenders to purchase an aggregate of 314,281 shares of common stock from $1.00 to $0.24. See “Note 11 – The Registered Offering and the Concurrent Private Placement Offering” above.