diff --git a/.vscode/launch.json b/.vscode/launch.json
index b3af0ae..35f8e04 100644
--- a/.vscode/launch.json
+++ b/.vscode/launch.json
@@ -23,6 +23,26 @@
             },
             "justMyCode": true,
             "python": "${command:python.interpreterPath}"
+        },
+        {
+            "name": "Loading Example",
+            "type": "debugpy",
+            "request": "launch",
+            "program": "${workspaceFolder}/examples/loading_overlay.py",
+            "console": "integratedTerminal",
+            "cwd": "${workspaceFolder}/examples",
+            "env": {
+                "ORCH_URL": "https://localhost:9995",
+                "ORCH_SECRET": "orch-secret",
+                "CAPABILITY_NAME": "comfystream",
+                "CAPABILITY_DESCRIPTION": "Flip video upside down using pytrickle",
+                "CAPABILITY_URL": "http://localhost:8000",
+                "CAPABILITY_PRICE_PER_UNIT": "0",
+                "CAPABILITY_PRICE_SCALING": "1",
+                "CAPABILITY_CAPACITY": "1"
+            },
+            "justMyCode": true,
+            "python": "${command:python.interpreterPath}"
         }
     ]
 }
\ No newline at end of file
diff --git a/examples/loading_overlay.py b/examples/loading_overlay.py
new file mode 100644
index 0000000..9a64d87
--- /dev/null
+++ b/examples/loading_overlay.py
@@ -0,0 +1,209 @@
+#!/usr/bin/env python3
+"""
+Loading Overlay Processor using StreamProcessor
+
+This example demonstrates how to create loading overlay frames
+that can be toggled via parameter updates.
+
+When the 'show_loading' parameter is True, video frames will be replaced with
+animated loading overlay frames instead of showing the original video.
+"""
+
+import asyncio
+import logging
+import time
+import torch
+from pytrickle import StreamProcessor
+from pytrickle.frames import VideoFrame
+from pytrickle.frame_skipper import FrameSkipConfig
+import numpy as np
+from pytrickle.video_utils import create_loading_frame
+
+logging.basicConfig(level=logging.INFO)
+logger = logging.getLogger(__name__)
+
+# Global state
+show_loading = False
+loading_message = "Loading..."
+ready = False
+processor = None
+background_tasks = []
+background_task_started = False
+
+# Loading animation state
+frame_counter = 0
+
+async def load_model(**kwargs):
+    """Initialize processor state - called during model loading phase."""
+    global show_loading, ready, processor
+    
+    logger.info(f"load_model called with kwargs: {kwargs}")
+    
+    # Set processor variables from kwargs or use defaults
+    show_loading = kwargs.get('show_loading', False)
+    
+    # Simulate model loading time
+    if kwargs.get('simulate_loading', False):
+        logger.info("Simulating model loading...")
+        await asyncio.sleep(2)  # Simulate loading time
+    
+    # Note: Cannot start background tasks here as event loop isn't running yet
+    # Background task will be started when first frame is processed
+    ready = True
+    logger.info(f"✅ Loading Overlay processor ready (show_loading: {show_loading}, ready: {ready})")
+
+def start_background_task():
+    """Start the background task if not already started."""
+    global background_task_started, background_tasks
+    
+    if not background_task_started and processor:
+        task = asyncio.create_task(send_periodic_status())
+        background_tasks.append(task)
+        background_task_started = True
+        logger.info("Started background status task")
+
+async def send_periodic_status():
+    """Background task that sends periodic status updates."""
+    global processor
+    counter = 0
+    try:
+        while True:
+            await asyncio.sleep(5.0)  # Send status every 5 seconds
+            counter += 1
+            if processor:
+                status_data = {
+                    "type": "status_update",
+                    "counter": counter,
+                    "show_loading": show_loading,
+                    "loading_message": loading_message,
+                    "ready": ready,
+                    "timestamp": time.time()
+                }
+                success = await processor.send_data(str(status_data))
+                if success:
+                    logger.info(f"Sent status update #{counter}")
+                else:
+                    logger.warning(f"Failed to send status update #{counter}, stopping background task")
+                    break  # Exit the loop if sending fails
+    except asyncio.CancelledError:
+        logger.info("Background status task cancelled")
+        raise
+    except Exception as e:
+        logger.error(f"Error in background status task: {e}")
+
+async def on_stream_stop():
+    """Called when stream stops - cleanup background tasks."""
+    global background_tasks, background_task_started
+    logger.info("Stream stopped, cleaning up background tasks")
+    
+    for task in background_tasks:
+        if not task.done():
+            task.cancel()
+            logger.info("Cancelled background task")
+    
+    background_tasks.clear()
+    background_task_started = False  # Reset flag for next stream
+    logger.info("All background tasks cleaned up")
+
+async def process_video(frame: VideoFrame) -> VideoFrame:
+    """Process video frame - show loading overlay if enabled, otherwise passthrough."""
+    global show_loading, ready, frame_counter, loading_message
+    
+    # Start background task on first frame (when event loop is running)
+    start_background_task()
+    
+    # Increment frame counter for animations
+    frame_counter += 1
+    
+    if not show_loading:
+        # Passthrough mode - return original frame
+        return frame
+    
+    # Loading overlay mode - replace frame with loading animation
+    frame_tensor = frame.tensor
+    
+    # Track if we need to add batch dimension back
+    had_batch_dim = False
+    
+    # Handle both 3D and 4D tensors (with batch dimension)
+    if len(frame_tensor.shape) == 4:
+        if frame_tensor.shape[0] == 1:
+            frame_tensor = frame_tensor.squeeze(0)
+            had_batch_dim = True
+        else:
+            logger.error(f"Unexpected batch size: {frame_tensor.shape[0]}")
+            return frame
+    
+    # Get frame dimensions
+    if len(frame_tensor.shape) == 3:
+        if frame_tensor.shape[0] == 3:  # CHW format
+            height, width = frame_tensor.shape[1], frame_tensor.shape[2]
+            was_chw = True
+        else:  # HWC format
+            height, width = frame_tensor.shape[0], frame_tensor.shape[1]
+            was_chw = False
+    else:
+        logger.error(f"Unexpected tensor shape: {frame_tensor.shape}")
+        return frame
+    
+    # Create loading overlay frame using utility
+    loading_frame = create_loading_frame(width, height, loading_message, frame_counter)
+    
+    # Convert to tensor format matching input
+    loading_tensor = torch.from_numpy(loading_frame.astype(np.float32))
+    
+    # Check if input was normalized (0-1) or (0-255)
+    if frame_tensor.max() <= 1.0:
+        loading_tensor = loading_tensor / 255.0
+    
+    # Convert to original tensor format
+    if was_chw:
+        loading_tensor = loading_tensor.permute(2, 0, 1)  # HWC to CHW
+    
+    # Add batch dimension back if needed
+    if had_batch_dim:
+        loading_tensor = loading_tensor.unsqueeze(0)
+    
+    # Move to same device as original tensor
+    loading_tensor = loading_tensor.to(frame.tensor.device)
+    
+    return frame.replace_tensor(loading_tensor)
+
+async def update_params(params: dict):
+    """Update loading overlay parameters."""
+    global show_loading, loading_message
+    
+    if "show_loading" in params:
+        old = show_loading
+        show_loading = bool(params["show_loading"])
+        if old != show_loading:
+            status = "enabled" if show_loading else "disabled"
+            logger.info(f"Loading overlay: {status}")
+    
+    if "loading_message" in params:
+        old = loading_message
+        loading_message = str(params["loading_message"])
+        if old != loading_message:
+            logger.info(f"Loading message: {old} → {loading_message}")
+
+# Create and run StreamProcessor
+if __name__ == "__main__":
+    logger.info("Starting Loading Overlay Processor")
+    logger.info("Parameters you can update:")
+    logger.info("  - show_loading: true/false - Enable/disable loading overlay")
+    logger.info("  - loading_message: string - Custom loading message")
+    logger.info("")
+    logger.info("Example parameter updates:")
+    logger.info('  {"show_loading": true, "loading_message": "Processing video..."}')
+    logger.info('  {"show_loading": false}')
+    
+    processor = StreamProcessor(
+        video_processor=process_video,
+        model_loader=load_model,
+        param_updater=update_params,
+        on_stream_stop=on_stream_stop,
+        name="loading-overlay",
+        port=8001,  # Different port from process_video_example
+        frame_skip_config=FrameSkipConfig(),
+    )
+    processor.run()
\ No newline at end of file
diff --git a/pytrickle/__init__.py b/pytrickle/__init__.py
index e532797..eb059e0 100644
--- a/pytrickle/__init__.py
+++ b/pytrickle/__init__.py
@@ -4,7 +4,7 @@
 Provides functionality to subscribe to and publish video streams with real-time processing.
 """
 
-from typing import Union, Callable, Optional, Coroutine, Any
+from typing import Callable, Optional, Coroutine, Any
 
 # Type alias for error callback functions (async only)
 ErrorCallback = Callable[[str, Optional[Exception]], Coroutine[Any, Any, None]]
@@ -30,6 +30,11 @@
 from .fps_meter import FPSMeter
 from .frame_skipper import FrameSkipConfig
 
+# Video utilities
+from .video_utils import (
+    create_loading_frame,
+)
+
 from . import api
 
 from .version import __version__
@@ -59,5 +64,6 @@
     "FrameProcessor",
     "FPSMeter",
     "FrameSkipConfig",
+    "create_loading_frame",
     "__version__"
 ] 
\ No newline at end of file
diff --git a/pytrickle/video_utils/__init__.py b/pytrickle/video_utils/__init__.py
new file mode 100644
index 0000000..a86fbde
--- /dev/null
+++ b/pytrickle/video_utils/__init__.py
@@ -0,0 +1,12 @@
+"""
+Video utilities for PyTrickle.
+
+This namespace contains utilities and tools for video processing,
+including loading overlays and visual effects.
+"""
+
+from .loading import create_loading_frame
+
+__all__ = [
+    "create_loading_frame",
+]
\ No newline at end of file
diff --git a/pytrickle/video_utils/loading.py b/pytrickle/video_utils/loading.py
new file mode 100644
index 0000000..016aa2f
--- /dev/null
+++ b/pytrickle/video_utils/loading.py
@@ -0,0 +1,92 @@
+"""
+Loading utilities for PyTrickle - Video loading overlay generation.
+
+This module provides utilities for creating loading overlay frames for video processing.
+"""
+
+import math
+import cv2
+import numpy as np
+from typing import Optional
+
+
+def create_loading_frame(
+    width: int, 
+    height: int, 
+    message: str = "Loading...",
+    frame_counter: int = 0,
+    progress: Optional[float] = None
+) -> np.ndarray:
+    """
+    Create a loading overlay frame with animated progress bar.
+    
+    Args:
+        width: Frame width in pixels
+        height: Frame height in pixels
+        message: Loading message to display
+        frame_counter: Current frame number for animations
+        progress: Progress value 0.0-1.0, or None for animated progress
+    
+    Returns:
+        np.ndarray: Loading overlay frame as BGR image
+    """
+    # Create dark background
+    frame = np.zeros((height, width, 3), dtype=np.uint8)
+    frame[:] = (30, 30, 30)  # Dark gray background
+    
+    # Calculate center position
+    center_x = width // 2
+    center_y = height // 2
+    
+    # Add overlay panel
+    overlay_width = min(400, width - 40)
+    overlay_height = min(200, height - 40)
+    overlay_x = center_x - overlay_width // 2
+    overlay_y = center_y - overlay_height // 2
+    
+    # Create overlay background
+    frame[overlay_y:overlay_y + overlay_height, overlay_x:overlay_x + overlay_width] = (20, 20, 20)
+    
+    # Add border
+    cv2.rectangle(frame, (overlay_x, overlay_y), 
+                 (overlay_x + overlay_width, overlay_y + overlay_height), 
+                 (60, 60, 60), 2)
+    
+    # Add loading message in center
+    if message:
+        message_size = 1.2
+        message_thickness = 2
+        message_y = center_y
+        
+        (msg_width, _), _ = cv2.getTextSize(message, cv2.FONT_HERSHEY_SIMPLEX, 
+                                          message_size, message_thickness)
+        message_x = center_x - msg_width // 2
+        
+        cv2.putText(frame, message, (message_x, message_y), 
+                    cv2.FONT_HERSHEY_SIMPLEX, message_size, (200, 200, 200), message_thickness)
+    
+    # Add progress bar
+    bar_width = overlay_width - 60
+    bar_height = 6
+    bar_x = overlay_x + 30
+    bar_y = center_y + 40
+    
+    # Progress bar background
+    cv2.rectangle(frame, (bar_x, bar_y), (bar_x + bar_width, bar_y + bar_height), 
+                 (40, 40, 40), -1)
+    
+    # Use controllable progress or animated progress
+    if progress is not None and progress > 0:
+        current_progress = min(1.0, max(0.0, progress))
+    else:
+        # Animated progress (oscillating)
+        current_progress = (math.sin(frame_counter * 0.1) + 1) * 0.5
+    
+    progress_width = int(bar_width * current_progress)
+    
+    if progress_width > 0:
+        cv2.rectangle(frame, (bar_x, bar_y), 
+                     (bar_x + progress_width, bar_y + bar_height), 
+                     (100, 150, 255), -1)  # Blue progress
+    
+    return frame
\ No newline at end of file