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LiveOne, Inc.

LiveOne, Inc.LVOEarnings & Financial Report

Nasdaq · Communication Services · Retail-Eating Places

Live Nation Entertainment, Inc. is an American multinational entertainment company that was founded in 2010 following the merger of Live Nation and Ticketmaster. It continues to operate both brands as subsidiary companies, promoting and managing ticket sales for live entertainment internationally. It also owns and operates entertainment venues and manages the careers of music artists.

What changed in LiveOne, Inc.'s 10-K — 2023 vs 2024

Top changes in LiveOne, Inc.'s 2024 10-K

673 paragraphs added · 843 removed · 530 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Our near-term strategy is to continue aggressively producing, acquiring and aggregating live and on-demand performances (e.g., on stage sets) and non-performance (e.g., behind the scenes, interviews) music-related video content from festivals, clubs, events, concerts, artists, promoters, venues, music labels and publishers (collectively, the “Content Providers”); acquiring and producing original music-related video and audio content; and curating existing online and digital radio premium content.
Strategy Content Our near-term strategy is to continue aggressively producing, acquiring and aggregating live and on-demand performances (e.g., on stage sets) and non-performance (e.g., behind the scenes, interviews) music-related video content from festivals, clubs, events, concerts, artists, promoters, venues, music labels and publishers (collectively, the “Content Providers”); acquiring and producing original music-related video and audio content; and curating existing online and digital radio premium content.
Adori’s unique YouTube integration technology allows podcast hosts and networks to seamlessly import episodes from RSS feeds, enhance them with visual elements and upload enriched assets directly to YouTube.
Adori’s unique YouTube integration technology allows podcast hosts and networks to seamlessly import episodes from RSS feeds, enhance them with visual elements and upload enriched assets directly to YouTube.
During fiscal years ended March 31, 2023 and 2022, we launched our own franchises including “Music Lives,” our multi-artist virtual festival, “Music Lives ON,” our series of virtual live-streaming performances, “Self Made” our music competition platform, “The Lockdown Awards”, our award show celebrating the best in quarantine content, “The Snubbys”, our award show celebrating deserving artists who should have been but were not nominated for applicable awards, “The Breakout Awards,” our award show celebrating some of the year’s most iconic music, celebrities and pop culture moments and “One Rising” an emerging artist program that breaks up and coming talent across the music landscape. 2 In July 2020, we entered the podcasting business with the acquisition of PodcastOne and in December 2020, we entered the merchandising business with the acquisition of CPS.
During fiscal years ended March 31, 2023 and 2022, we launched our own franchises including “Music Lives,” our multi-artist virtual festival, “Music Lives ON,” our series of virtual live-streaming performances, “Self Made” our music competition platform, “The Lockdown Awards”, our award show celebrating the best in quarantine content, “The Snubbys”, our award show celebrating deserving artists who should have been but were not nominated for applicable awards, “The Breakout Awards,” our award show celebrating some of the year’s most iconic music, celebrities and pop culture moments and “One Rising” an emerging artist program that breaks up and coming talent across the music landscape. 2 Table of Contents In July 2020, we entered the podcasting business with the acquisition of PodcastOne and in December 2020, we entered the merchandising business with the acquisition of CPS.
As a result of such reincorporation merger, Loton ceased to exist as a separate entity, with LiveXLive Media, Inc. being the surviving entity. On October 6, 2021, our name changed from “LiveXLive, Media Inc.” to “LiveOne, Inc.” Our principal executive offices are located at 269 S. Beverly Drive, Suite #1450, Beverly Hills, 90212.
As a result of such reincorporation merger, Loton ceased to exist as a separate entity, with LiveXLive Media, Inc. being the surviving entity. On October 6, 2021, our name changed from “LiveXLive, Media Inc.” to “LiveOne, Inc.” Our principal executive offices are located at 269 S. Beverly Drive, Suite #1450, Beverly Hills, CA 90212.
Beginning mid-March 2020, the current pandemic associated with COVID-19 temporarily shut down the production of all on-ground, live music festivals and. As a result, we pivoted our production to 100% streaming, and began producing, curating, and broadcasting streaming music festivals, concerts and events across our platform.
Beginning mid-March 2020, the pandemic associated with COVID-19 temporarily shut down the production of all on-ground, live music festivals and. As a result, we pivoted our production to 100% streaming, and began producing, curating, and broadcasting streaming music festivals, concerts and events across our platform.
Our competitors include (i) broadcast radio providers, including terrestrial radio providers such as CBS and satellite radio providers such as Sirius XM, (ii) interactive on-demand audio content and pre-recorded entertainment, such as Apple Music, Amazon Music, Spotify and Pandora that allow listeners to stream music or select the audio content that they stream or purchase, (iii) podcast providers, including Amazon Music, Apple Music, Apple Podcasts, Spotify and iHeartMusic, (iv) large merchandise retailers, online and traditional specialty retailers, (v) other forms of entertainment, including Facebook, Twitch, Instagram, Google/YouTube and Twitter, and (v) promoters and producers of content on mobile, online and AR/VR platforms such as Red Bull TV, Live Nation TV and independent content owners.
Our competitors include (i) broadcast radio providers, including terrestrial radio providers such as CBS and satellite radio providers such as Sirius XM, (ii) interactive on-demand audio content and pre-recorded entertainment, such as Apple Music, Amazon Music, Spotify and Pandora that allow listeners to stream music or select the audio content that they stream or purchase, (iii) podcast providers, including Amazon Music, Apple Music, Apple Podcasts, Spotify and iHeartMusic, (iv) large merchandise retailers, online and traditional specialty retailers, (v) other forms of entertainment, including Facebook, Twitch, Instagram, Google/YouTube and X (formerly Twitter), and (v) promoters and producers of content on mobile, online and AR/VR platforms such as Red Bull TV, Live Nation TV and independent content owners.
By executing the above strategies, we are creating a platform that is dedicated to live music and has the breadth and depth of content to reach and be relevant to a global audience of all ages. 8 Expanding Podcasting Reach PodcastOne and its roster of top performing hosts are also able to integrate unique visual elements into the podcasts they produce and distribute them via YouTube, with PodcastOne becoming the first podcast network to utilize Adori, a pioneering interface technology.
By executing the above strategies, we are creating a platform that is dedicated to live music and has the breadth and depth of content to reach and be relevant to a global audience of all ages. 8 Table of Contents Expanding Podcasting Reach PodcastOne and its roster of top performing hosts are also able to integrate unique visual elements into the podcasts they produce and distribute them via YouTube, with PodcastOne becoming the first podcast network to utilize Adori, a pioneering interface technology.
When a given user makes a play request from their mobile device, the web, connected car, etc., the system sets up a secure connection to that user’s device, automatically detects the proper format and the highest quality bitrate that can be streamed, and delivers the stream to our users. 5 Live Music Technology is a key component of our network that brings our ecosystem to life for our users and Content Providers.
When a given user makes a play request from their mobile device, the web, connected car, etc., the system sets up a secure connection to that user’s device, automatically detects the proper format and the highest quality bitrate that can be streamed, and delivers the stream to our users. 5 Table of Contents Live Music Technology is a key component of our network that brings our ecosystem to life for our users and Content Providers.
More recently, some jurisdictions have proposed legislation that would restrict ticketing methods and mandate ticket inventory disclosure. 10 Privacy Policy As a company conducting business on the Internet, we are subject to a number of foreign and domestic laws and regulations relating to information security, data protection and privacy, among others.
More recently, some jurisdictions have proposed legislation that would restrict ticketing methods and mandate ticket inventory disclosure. 10 Table of Contents Privacy Policy As a company conducting business on the Internet, we are subject to a number of foreign and domestic laws and regulations relating to information security, data protection and privacy, among others.
Copies of our Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, Current Reports on Form 8-K and our other reports and documents filed with or furnished to the SEC, and any amendments to the foregoing, will be provided without charge to any shareholder submitting a written request to the Secretary at our principal executive offices or by calling (310) 601-2500.
Copies of our Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, Current Reports on Form 8-K and our other reports and documents filed with or furnished to the SEC, and any amendments to the foregoing, will be provided without charge to any shareholder submitting a written request to the Secretary at our principal executive offices or by calling (310) 601-2505.
The information included on our website or social media accounts, or any of the websites of entities that we are affiliated with, is not incorporated by reference into this Annual Report or in any other report or document we file with the SEC, and any references to our website or social media accounts are intended to be inactive textual references only. 13
The information included on our website or social media accounts, or any of the websites of entities that we are affiliated with, is not incorporated by reference into this Annual Report or in any other report or document we file with the SEC, and any references to our website or social media accounts are intended to be inactive textual references only. 13 Table of Contents
Pay Per View (“PPV”) — Due to the growing demand for digital-only events post COVID-19, we created our own PPV platform, which allows artists, venues, promoters and festivals to charge users direct for digital access to live events. We also expect our PPV platform to continue to grow substantially in the long term.
Pay-Per-View ( “ PPV ” ) — Due to the growing demand for digital-only events post COVID-19, we created our own PPV platform, which allows artists, venues, promoters and festivals to charge users direct for digital access to live events. We also expect our PPV platform to continue to grow substantially in the long term.
Merchandise includes the retail sales of licensed music-related goods and is estimated to be larger than $3.5 billion since 2018. 4 Digital Music Streaming Industry The addressable market for paid digital music streaming is large and growing, representing almost half of global music revenue.
Merchandise includes the retail sales of licensed music-related goods and is estimated to be larger than $3.5 billion since 2018. 4 Table of Contents Digital Music Streaming Industry The addressable market for paid digital music streaming is large and growing, representing almost half of global music revenue.
Technology We own 38 registered or pending patents on our streaming Internet radio services, including patents over playback of digital media content, method for providing user personalized content, systems for portable personalized radio, method for interactive distribution of digital content and systems for scoring and raking digital content based on activity of network users.
Technology We own 39 registered or pending patents on our streaming Internet radio services, including patents over playback of digital media content, method for providing user personalized content, systems for portable personalized radio, method for interactive distribution of digital content and systems for scoring and raking digital content based on activity of network users.
Furthermore, there are many smaller, regional companies that compete in the market as well. 9 Music Copyright and Rights Regulation As a participant in the global music and radio industries, we are subject to a variety of copyright and regulatory obligations. ● Broadcast Music, Inc.
Furthermore, there are many smaller, regional companies that compete in the market as well. 9 Table of Contents Music Copyright and Rights Regulation As a participant in the global music and radio industries, we are subject to a variety of copyright and regulatory obligations. ● Broadcast Music, Inc.
At March 31, 2023, we operated four core integrated services: (1) one of the industry’s leading online live music streaming platforms (LiveOne), (2) a fully integrated membership and advertising streaming music service Slacker operating as LiveOne powered by Slacker, (3) a leading podcasting platform operating as PodcastOne (“PodcastOne”), and (4) a retailer of personalized merchandise and gifts operating as Custom Personalization Solutions, Inc.
At March 31, 2024, we operated four core integrated services: (1) one of the industry’s leading online live music streaming platforms (LiveOne), (2) a fully integrated membership and advertising streaming music service Slacker operating as LiveOne powered by Slacker, (3) a leading podcasting platform operating as PodcastOne (“PodcastOne”), and (4) a retailer and wholesaler of personalized merchandise and gifts operating as Custom Personalization Solutions, Inc.
We believe that we have sustainable competitive advantages due to our growing market position in live events, technology and relationships with important music labels, content suppliers and festival owners. 6 Our fully owned and operated enterprise CMS rivals other paid platforms such as Megaphone (Spotify owned), Art19 (Amazon owned) and SimpleCast (SiriusXM/Pandora owned).
We believe that we have sustainable competitive advantages due to our growing market position in live events, technology and relationships with important music labels, content suppliers and festival owners. 6 Table of Contents Our fully owned and operated enterprise CMS rivals other paid platforms such as Megaphone (Spotify owned), Art19 (Amazon owned) and SimpleCast (SiriusXM/Pandora owned).
Android Automotive continues to see wide adoption from virtually all the major automotive OEMs including Ford, GMC, Dodge, Chrysler, Volvo, Polestar, Ford, Lincoln, Chevrolet, Nissan, Volkswagen, Mitsubishi, and others. For the fiscal year ended March 31, 2023 and 2022, we had one single customer that represented approximately 44% and 28% of our total consolidated revenue in the period, respectively.
Android Automotive continues to see wide adoption from virtually all the major automotive OEMs including Ford, GMC, Dodge, Chrysler, Volvo, Polestar, Ford, Lincoln, Chevrolet, Nissan, Volkswagen, Mitsubishi, and others. For the fiscal year ended March 31, 2024 and 2023, we had one single customer that represented approximately 51% and 44% of our total consolidated revenue in the period, respectively.
Included in the total number as of March 31, 2023 are certain members which are the subject of a contractual dispute. We are currently not recognizing revenue related to these members.
Included in the total number as of March 31, 2024 are certain members which are the subject of a contractual dispute. We are currently not recognizing revenue related to these members.
Moreover, we plan to drive more audience to our Music Services platform as we grow our streamed live events, helping us leverage and lower our overall marketing spending and drive more user growth. Approximately 53% and 35% of our revenue for the years ended March 31, 2023 and 2022, respectively, was from our membership services platform.
Moreover, we plan to drive more audience to our Music Services platform as we grow our streamed live events, helping us leverage and lower our overall marketing spending and drive more user growth. Approximately 56% and 53% of our revenue for the years ended March 31, 2024 and 2023, respectively, was from our membership services platform.
In order to do so, we seek to provide a work environment that creates a diverse, inclusive and supportive workplace, with opportunities for our employees to grow and develop in their careers, which is supported by competitive compensation, benefits, and health and wellness programs. 11 Workforce Composition As of March 31, 2023, we had a total of 165 employees as well as other persons who provide to us consulting and other services, including through our subsidiaries.
In order to do so, we seek to provide a work environment that creates a diverse, inclusive and supportive workplace, with opportunities for our employees to grow and develop in their careers, which is supported by competitive compensation, benefits, and health and wellness programs. 11 Table of Contents Workforce Composition As of March 31, 2024, we had a total of 140 employees as well as other persons who provide to us consulting and other services, including through our subsidiaries.
LiveOne has a blanket license in place with the MLC that enables us to make all songs delivered by our recorded music label partners available to our users in our music service upon delivery, eliminating any need for further rights clearances, making our service more robust and current. ● Other performing right organizations.
As of January 1, 2021, LiveOne has a blanket license in place with the MLC that enables us to make all songs delivered by our recorded music label partners available to our users in our music service upon delivery, eliminating any need for further rights clearances, making our service more robust and current. ● Other performing right organizations.
According to Edison One and Triton Digital, an estimated 100 million people listened to a podcast each month in 2022 and is expected to reach 125 million in 2023. As podcast listening grows, the addressable market for podcast advertising spend continues to grow.
According to Edison One and Triton Digital, an estimated 125 million people listened to a podcast each month in 2023 and is expected to reach 135 million in 2024. As podcast listening grows, the addressable market for podcast advertising spend continues to grow.
Multiple Live Channels — For Live video broadcasts, this video player feature allows for easily switching between multi-channel perspectives covering different performances and stages of the live event being watched. Social Sharing — With this social sharing functionality, app users are able to share content to Facebook, Twitter, Gmail, by SMS text and more.
Multiple Live Channels — For Live video broadcasts, this video player feature allows for easily switching between multi-channel perspectives covering different performances and stages of the live event being watched. Social Sharing — With this social sharing functionality, app users are able to share content to Facebook, Instagram, X (formerly Twitter), TikTok, Email, by SMS text and more.
PricewaterhouseCoopers estimated that podcast advertising spend was $1.8 billion in 2022 and is slated to reach $2.3 billion by 2023, annual growth of nearly 43% per their 2023 Global Entertainment and Media Outlook Report.
PricewaterhouseCoopers estimated that podcast advertising spend was $2.8 billion in 2023 and is slated to reach $3.3 billion by 2024, annual growth of nearly 23% per their 2023 Global Entertainment and Media Outlook Report.
We own one of the largest networks of podcast content in North America, which has over 300 exclusive podcast shows that produces over 300 episodes per week and has generated over 2.48 billion downloads during the year ended March 31, 2023.
We own one of the largest networks of podcast content in North America, which has over 300 exclusive podcast shows that produces over 300 episodes per week and has generated over 3.6 billion downloads during the year ended March 31, 2024.
Item 1. Business Overview LiveOne, Inc. (formerly LiveXLive Media, Inc.) (the “Company,” “LiveOne”, “we,” “us,” or “our”) is a creator-first, music, entertainment and technology platform focused on delivering premium experiences and content worldwide through memberships and live and virtual events.
Item 1. Business Overview LiveOne, Inc. (the “Company,” “LiveOne”, “we,” “us,” or “our”) is an award-winning, creator-first, music, entertainment and technology platform focused on delivering premium experiences and content worldwide through memberships and live and virtual events.
Under the new law, the U.S. Copyright Office has designated the Mechanical Licensing Collective, Inc. (The MLC) to collect and distribute mechanical royalty payments. As of January 1, 2021.
Under the new law, the U.S. Copyright Office has designated the Mechanical Licensing Collective, Inc. (The MLC) to collect and distribute mechanical royalty payments.
In 2022, we estimate that streaming revenue was $17.5 billion or approximately 67% of global music sales, and we further expect paid streaming users to surpass 1.2 billion by 2030.
In 2023, streaming revenue was $19.3 billion or approximately 67% of global music sales, and we further expect paid streaming users to surpass 1.2 billion by 2030.
MuxIP will enable PodcastOne to expand its content to viewers of niche content on Smart TVs and a wide range of devices. MuxIP is a global leader in powering the rapidly growing TV business model centered on FAST. In addition to PodcastOne’s core business, it also built, owns and operates a solution for the growing number of independent podcasters, LaunchPadOne.
MuxIP will enable PodcastOne to expand its content to viewers of niche content on Smart TVs and a wide range of devices. MuxIP is a global leader in powering the rapidly growing TV business model centered on FAST.
Today, our business is comprised of two operating segments; our Audio Group, which includes the operations of PodcastOne and Slacker, and our Media Group, which includes LiveOne, CPS, PPVOne, Gramophone, corporate and our remaining subsidiaries (hereon referred to as our “Media Operations”).
Today, our business is comprised of three operating segments; PodcastOne, Slacker and our Media Group. Our Audio Group consist of our PodcastOne and Slacker subsidiaries and our Media Group consists of our remaining subsidiaries (hereon referred to as our “Media Operations”).
The fees generated from any advertising, sponsored content, VOD/PPV and other services are generally subject to the aforementioned revenue sharing arrangements with certain artists, festival owners and/or music right holders, when applicable.
The fees generated from any advertising, sponsored content, VOD/PPV and other services are generally subject to the aforementioned revenue sharing arrangements with certain artists, festival owners and/or music right holders, when applicable. Our Industry Globally, its estimated that recorded music revenues increased to $28.6 billion in 2023, up 10.0% year over year.
Adori’s patented technology embeds contextual visuals, multi-format ads, augmented reality (“AR”) experiences, buy buttons, polls, and other “call to action” features in the audio creating a more enhanced and richer listener experience.
Adori’s patented technology embeds contextual visuals, multi-format ads, augmented reality (“AR”) experiences, buy buttons, polls, and other “call to action” features in the audio creating a more enhanced and richer listener experience. In creating visually enhanced podcasts, Adori’s YouTube product provides additional monetization avenues for PodcastOne’s slate of original programming, increased discoverability and search engine optimization presence.
In creating visually enhanced podcasts, Adori’s YouTube product provides additional monetization avenues for PodcastOne’s slate of original programming, increased discoverability and search engine optimization presence. 3 In June 2023, we launched PodcastOne TV, a free ad-supported streaming television (“FAST”) channel that will stream the video content from PodcastOne’s slate of award-winning podcasts, to be distributed through MuxIP to 60 outlets, using MuxIP’s FASTHub for OTT platform.
LaunchpadOne serves as a talent pool for us to find new podcasts and talent. 3 Table of Contents In June 2023, we launched PodcastOne TV, a free ad-supported streaming television (“FAST”) channel that will stream the video content from PodcastOne’s slate of award-winning podcasts, to be distributed through MuxIP to 60 outlets, using MuxIP’s FASTHub for OTT platform.
LaunchPadOne is a self-publishing podcast platform, created to provide a low or no cost tool for independent podcasters without access to parent podcasting networks or state of the art equipment to create shows. LaunchPadOne serves as a talent pool for us to find new podcasts and talent.
In addition to PodcastOne’s core business, it also built, owns and operates a solution for the growing number of independent podcasters, LaunchpadOne. LaunchpadOne is a self-publishing podcast platform, created to provide a low or no cost tool for independent podcasters without access to parent podcasting networks or state of the art equipment to create shows.
These markets are experiencing significant growth and now represent the majority of the music industry’s overall revenue, as physical and digital record sales have steadily declined. We both capitalize on these trends and provide additional earnings opportunities to industry stakeholders, including agents, managers, distributors, producers, labels, publishers, advertisers and social influencers (collectively, “Industry Stakeholders”).
We both capitalize on these trends and provide additional earnings opportunities to industry stakeholders, including agents, managers, distributors, producers, labels, publishers, advertisers and social influencers (collectively, “Industry Stakeholders”).
During the fiscal year ended March 31, 2023, we livestreamed 31 major music festivals and live music events and generated approximately 10 million views worldwide, and as of March 31, 2023, our membership services eclipsed 2,075,000 paid members and approximately 0.9 million monthly active users (“MAUs”) across our audio services.
Through the operations of our DayOne Music Publishing, Drumify and Splitmind subsidiaries, we operate our music publishing and artist and brand development businesses. During the fiscal year ended March 31, 2024, our membership services eclipsed 2,750,000 paid members and approximately 0.9 million monthly active users (“MAUs”) across our audio services.
To address the demand for live music events, we shifted our focus to live digital concerts and festivals, and our platform experienced tremendous growth in the number of live events streamed and overall viewership. During the fiscal year ended March 31, 2023, we live-streamed over 31 events with over 10 million views.
To address the demand for live music events, we shifted our focus to live digital concerts and festivals, and our platform experienced tremendous growth in the number of live events streamed and overall viewership. Additionally, the growth of the live music industry benefits ancillary verticals, such as merchandise and primary/secondary ticket marketplaces.
Merchandise With the acquisition of CPS, we now own a group of web-oriented businesses specializing in the merchandise personalization industry. CPS develops, manufactures, and distributes personalized products for wholesale and direct-to-consumer distribution. CPS offers thousands of exclusive personalized gift items for family, home, seasonal holidays, and special events along with personalized jewelry.
CPS develops, manufactures, and distributes personalized products for wholesale and direct-to-consumer distribution. CPS offers thousands of exclusive personalized gift items for family, home, seasonal holidays, and special events along with personalized jewelry. Ancillary Products and Services We also provide our customers the following: ● Regulatory Support – streaming of music is generally subject to copyright protection.
With respect to job roles that can be performed remotely, we quickly implemented a Work from Home policy that enabled our employees to continue working while also keeping themselves and their loved ones safe. 12 Going Concern We are dependent upon the receipt of capital investment and other financing to fund our ongoing operations and to execute our business plan.
With respect to job roles that can be performed remotely, we quickly implemented a Work from Home policy that enabled our employees to continue working while also keeping themselves and their loved ones safe. 12 Table of Contents Geographic Information For additional information regarding our segments, including information about our financial results by geography, see Item 7.
Our Industry Globally, its estimated that recorded music revenues increased to $26.2 billion in 2022, up 9.0% year over year. We believe that by 2030, global recorded music revenues will increase to $80 billion. Our addressable market includes streaming of live music and entertainment, Internet radio, audio downloadable music, podcasts and online VOD services.
We believe that by 2030, global recorded music revenues will increase to $80 billion. Our addressable market includes streaming of live music and entertainment, Internet radio, audio downloadable music, podcasts and online VOD services. These markets are experiencing significant growth and now represent the majority of the music industry’s overall revenue, as physical and digital record sales have steadily declined.
Geographic Information For additional information regarding our segments, including information about our financial results by geography, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 1 – Organization and Basis of Presentation to our consolidated financial statements included elsewhere in this Annual Report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 1 – Organization and Basis of Presentation to our consolidated financial statements included elsewhere in this Annual Report. Going Concern We are dependent upon the receipt of capital investment and other financing to fund our ongoing operations and to execute our business plan.
Our aim is to also include features for personalization, social interaction services, multiple live channels, vertical video, merchandise and other offerings to further solidify users’ affinity toward our platform and their interests. 7 We currently run on a responsive HTML-based website that has been developed to work across browsers on any Internet-connected screen.
Our aim is to also include features for personalization, social interaction services, multiple live channels, vertical video, merchandise and other offerings to further solidify users’ affinity toward our platform and their interests. In addition, we also support B2B partnership integrations via application programming interfaces, web software development kits (“SDKs”), and other custom systems as necessary.
Our users are able to listen to a variety of podcasts, from music, radio personalities, news, entertainment, comedy and sports. The podcasts are available on the LiveOne platforms and also on other leading podcast listening platforms such as Apple Music, Spotify, and Amazon.
Our users are able to listen to a variety of podcasts, from music, radio personalities, news, entertainment, comedy and sports. PodcastOne has built a distribution network reaching over 1 billion listeners a month across all of its own properties, LiveOne platforms, Spotify, Apple Podcasts, iHeartRadio, Samsung and over 150 shows exclusively available in Tesla vehicles.
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In October 2021, we entered artist and brand development and music-related press relations business through our acquisition of Gramophone Media (“Gramophone”).
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On September 8, 2023, PodcastOne completed its spin out from the Company to become a standalone publicly traded company (the “Spin-Out”)) as a result of PodcastOne's direct listing on The NASDAQ Capital Market on such date. Merchandise Via the operations of CPS, we own and operate a group of web-oriented businesses specializing in the merchandise personalization industry.
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In October 2021, we entered artist and brand development and music-related press relations business through our acquisition of Gramophone.
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We support unique content offerings and application versions dependent on the country. We’ve also developed a rich set of features for music, podcasts, video, and other user generated content.
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Ancillary Products and Services We also provide our customers the following: ● Regulatory Support – streaming of music is generally subject to copyright protection.
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Collectively, these capabilities illustrate our technical excellence and provide the foundational architecture and knowledge base to continue innovating and building world-class experiences for both our B2C and B2B customers. 7 Table of Contents We currently run on a responsive HTML-based website that has been developed to work across browsers on any Internet-connected screen.
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These events featured artists such as T-Pain, Lil Jon, Tank and the Bangaz, Krooked Kings, Kid Ink, K Camp, OT Genesis, B.I. and Francis Karel, in addition to our own internally developed franchises such as “One Rising” our emerging artist platform, “Music Lives,” our largest digital music event, and “Music Lives ON,” our series of virtual live-streaming performances.
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Additionally, the growth of the live music industry benefits ancillary verticals, such as merchandise and primary/secondary ticket marketplaces.
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Strategy Content During the year ended March 31, 2023, we livestreamed 31 major music festivals and events. The majority of our agreements provide us exclusive rights to produce and digitally stream these live festivals across any screen in most major territories around the world.
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Moreover, and in certain cases, we also have the exclusive rights to VOD, AR, VR, broadcast TV and audio rights from these festivals (subject to music copyright clearances).
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We continue to see growth in PPV post COVID-19 lockdowns being eased.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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If applicable in the future, these rules may restrict the ability of brokers-dealers to sell our ordinary shares and may affect the ability of investors to sell their shares, until our ordinary shares no longer is considered a penny stock.
If applicable in the future, these rules may restrict the ability of brokers-dealers to sell our ordinary shares and may affect the ability of investors to sell their shares, until our ordinary shares is no longer considered a penny stock.
In particular, where the owner of a platform also is our direct competitor, the platform may attempt to use this position to affect our access to customers and ability to compete. For example, an online platform might arbitrarily remove our services from its platform, deprive us of access to business-critical data, or engage in other harmful practices.
In particular, where the owner of a platform is also our direct competitor, the platform may attempt to use this position to affect our access to customers and ability to compete. For example, an online platform might arbitrarily remove our services from its platform, deprive us of access to business-critical data, or engage in other harmful practices.
We are subject to governmental regulation, which may change from to time, and our failure to comply with these regulations could adversely affect our business, financial condition and results of operations. Our operations are subject to federal, state and local laws, statutes, rules, regulations, policies and procedures, both domestically and internationally, which may change from time to time.
We are subject to governmental regulation, which may change from time to time, and our failure to comply with these regulations could adversely affect our business, financial condition and results of operations. Our operations are subject to federal, state and local laws, statutes, rules, regulations, policies and procedures, both domestically and internationally, which may change from time to time.
In the event of an acceleration of amounts due under our debt instruments as a result of an event of default, including upon the occurrence of an event that would reasonably be expected to have a material adverse effect on our business, operations, properties, assets or condition or a failure to pay any amount due, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments.
In the event of an acceleration of amounts due under our debt instruments as a result of an event of default, including upon the occurrence of an event that would reasonably be expected to have a material adverse effect on our business, operations, properties, assets or condition or a failure to pay any amount due, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments.
Factors that may contribute to the variability of our operating results and cause the market price of our common stock to fluctuate include: ● the entrance of new competitors or competitive products in our market, whether by established or new companies; ● our ability to retain and grow the number of our active user base and increase engagement among new and existing users; ● our ability to maintain effective pricing practices, in response to the competitive markets in which we operate or other macroeconomic factors, such as inflation or increased product taxes; ● our revenue mix, which drives gross profit; ● seasonal or other shifts in festival, event, advertising and CPS revenue; ● the timing of the launch of our new or updated festivals, events, products, platforms, channels, podcasts or features; ● the addition or loss of popular content or talent; ● the popularity of EDM and EDM festivals, events, concerts and clubs; ● the popularity of podcasts and specifically our podcast content; ● an increase in costs associated with protecting our intellectual property, defending against third-party intellectual property infringement allegations or procuring rights to third-party intellectual property.
Factors that may contribute to the variability of our operating results and cause the market price of our common stock to fluctuate include: ● the entrance of new competitors or competitive products in our market, whether by established or new companies; ● our ability to retain and grow the number of our active user base and increase engagement among new and existing users; ● our ability to maintain effective pricing practices, in response to the competitive markets in which we operate or other macroeconomic factors, such as inflation or increased product taxes; ● our revenue mix, which drives gross profit; ● seasonal or other shifts in festival, event, advertising and CPS revenue; ● the timing of the launch of our new or updated festivals, products, platforms, channels, podcasts or features; ● the addition or loss of popular content or talent; ● the popularity of EDM and EDM festivals, events, concerts and clubs; ● the popularity of podcasts and specifically our podcast content; ● an increase in costs associated with protecting our intellectual property, defending against third-party intellectual property infringement allegations or procuring rights to third-party intellectual property.
However, on December 14, 2017, the FCC voted to repeal the “open Internet rules” and as a result, broadband services are now subject to less U.S. federal regulation.
However, on December 14, 2017, the FCC voted to repeal the “open Internet rules” and as a result, broadband services are now subject to less U.S. federal regulation.
Additionally, as part of its Digital Single Market initiative, the EU may impose network security, disability access, or 911-like obligations on “over-the-top” services such as those provided by us, which could increase our costs.
Additionally, as part of its Digital Single Market initiative, the EU may impose network security, disability access, or 911-like obligations on “over-the-top” services such as those provided by us, which could increase our costs.
If the EU or the courts modify these open Internet rules, mobile providers may be able to limit our users’ ability to access our platforms or make them a less attractive alternative to our competitors’ applications. If that occurs, our business, operating results and financial condition would be seriously harmed.
If the EU or the courts modify these open Internet rules, mobile providers may be able to limit our users’ ability to access our platforms or make them a less attractive alternative to our competitors’ applications. If that occurs, our business, operating results and financial condition would be seriously harmed.
Online platforms also may unilaterally impose certain requirements that negatively affect our ability to convert users to the premium service, such as conditions that limit our freedom to communicate promotions and offers to our users.
Online platforms also may unilaterally impose certain requirements that negatively affect our ability to convert users to the premium service, such as conditions that limit our freedom to communicate promotions and offers to our users.
For example, we have detected instances of third parties seeking to provide mobile device users a means to suppress advertisements without payment and gain access to features only available to the ad-supported services.
For example, we have detected instances of third parties seeking to provide mobile device users a means to suppress advertisements without payment and gain access to features only available to the ad-supported services.
Such laws and regulations include, but are not limited to, labor, advertising and marketing, real estate, taxation, user privacy, data collection and protection, intellectual property, anti-corruption, anti-money laundering, foreign exchange controls, antitrust and competition, electronic contracts, telecommunications, sales procedures, automatic membership renewals, credit card processing procedures, consumer protections, broadband Internet access and content restrictions.
Such laws and regulations include, but are not limited to, labor, advertising and marketing, real estate, taxation, user privacy, data collection and protection, intellectual property, anti-corruption, anti-money laundering, foreign exchange controls, antitrust and competition, electronic contracts, telecommunications, sales procedures, automatic membership renewals, credit card processing procedures, consumer protections, broadband Internet access and content restrictions.
Further, compliance with laws, regulations, and other requirements imposed upon our business may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business.
Further, compliance with laws, regulations, and other requirements imposed upon our business may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business.
Moreover, as Internet commerce continues to evolve, increasing regulation by U.S. federal and state agencies and other international regulators becomes more likely and may lead to more stringent consumer protection laws, which may impose additional burdens on us.
Moreover, as Internet commerce continues to evolve, increasing regulation by U.S. federal and state agencies and other international regulators becomes more likely and may lead to more stringent consumer protection laws, which may impose additional burdens on us.
Maintaining the strength of our festivals, events and online businesses will be challenging, and our relationship with our fans could be harmed for many reasons, including the quality of the experience at a particular festival or event, our competitors developing more popular events or attracting talent from our businesses, adverse occurrences or publicity in connection with an event and changes to public tastes that are beyond our control and difficult to anticipate.
Maintaining the strength of our online festivals, and events businesses will be challenging, and our relationship with our fans could be harmed for many reasons, including the quality of the experience at a particular online festival or event, our competitors developing more popular events or attracting talent from our businesses, adverse occurrences or publicity in connection with an event and changes to public tastes that are beyond our control and difficult to anticipate.
Stock repurchases could also increase the volatility of the trading price of our stock and could diminish our cash reserves. ● Our Chairman and Chief Executive Officer and stockholders affiliated with him own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval. ● Sales of a substantial number of shares of our common stock in the public market by certain of our stockholders could cause our stock price to fall. ● We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock. ● Provisions in our Certificate of Incorporation and Bylaws and provisions under Delaware law could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, and may prevent or frustrate attempts by our stockholders to replace or remove our current management. 16 Risks Related to Our Business and Industry We rely on one key customer for a substantial percentage of our revenue.
Stock repurchases could also increase the volatility of the trading price of our stock and could diminish our cash reserves. ● Our Chairman and Chief Executive Officer and stockholders affiliated with him own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval. ● Sales of a substantial number of shares of our common stock in the public market by certain of our stockholders could cause our stock price to fall. ● We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock. ● Provisions in our Certificate of Incorporation and Bylaws and provisions under Delaware law could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, and may prevent or frustrate attempts by our stockholders to replace or remove our current management. 16 Table of Contents Risks Related to Our Business and Industry We rely on one key customer for a substantial percentage of our revenue.
In addition, some of our larger competitors have substantially broader product or service offerings and leverage their relationships based on other products or services to gain additional share of advertising budgets. If we are not able to compete effectively for users and advertisers spend, our business, financial condition and results of operations would be materially and adversely affected.
In addition, some of our larger competitors have substantially larger resources, broader product and service offerings and leverage their relationships based on other products or services to gain additional share of advertising budgets. If we are not able to compete effectively for users and advertisers spend, our business, financial condition and results of operations would be materially and adversely affected.
Our substantial debt combined with our other financial obligations and contractual commitments could have other significant adverse consequences, including: ● requiring us to dedicate a substantial portion of cash flow from operations to the payment of interest on, and principal of, our debt, which will reduce the amounts available to fund working capital, capital expenditures, product development efforts and other general corporate purposes; ● increasing our vulnerability to adverse changes in general economic, industry and market conditions; ● obligating us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity financing; ● limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and ● placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options. 36 We intend to satisfy our current and future debt service obligations with our existing cash and cash equivalents and funds from external sources, including equity and/or debt financing.
Our substantial debt combined with our other financial obligations and contractual commitments could have other significant adverse consequences, including: ● requiring us to dedicate a substantial portion of cash flow from operations to the payment of interest on, and principal of, our debt, which will reduce the amounts available to fund working capital, capital expenditures, product development efforts and other general corporate purposes; ● increasing our vulnerability to adverse changes in general economic, industry and market conditions; ● obligating us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity financing; ● limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and ● placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options. 36 Table of Contents We intend to satisfy our current and future debt service obligations with our existing cash and cash equivalents and funds from external sources, including equity and/or debt financing.
Our operating margins are also sensitive to a number of additional factors that are beyond our control, including manufacturing and transportation costs, shifts in product sales mix and geographic sales trends, all of which we expect to continue. Results of operations in any period should not be considered indicative of the results to be expected for any future period.
CPS' operating margins are also sensitive to a number of additional factors that are beyond our control, including manufacturing and transportation costs, shifts in product sales mix and geographic sales trends, all of which we expect to continue. Results of operations in any period should not be considered indicative of the results to be expected for any future period.
Although we have developed systems and processes that are designed to protect our data and user data, to prevent data loss, to disable undesirable accounts and activities on our platform, and to prevent or detect security breaches, we cannot assure you that such measures will provide absolute security, and we may incur significant costs in protecting against or remediating cyber-attacks. 29 In addition, if an actual or perceived breach of security occurs to our systems or a third party’s systems, we may face regulatory or civil liability and public perception of our security measures could be diminished, either of which would negatively affect our ability to attract and retain Users, which in turn would harm our efforts to attract and retain advertisers, Content Providers and other business partners.
Although we have developed systems and processes that are designed to protect our data and user data, to prevent data loss, to disable undesirable accounts and activities on our platform, and to prevent or detect security breaches, we cannot assure you that such measures will provide absolute security, and we may incur significant costs in protecting against or remediating cyber-attacks. 29 Table of Contents In addition, if an actual or perceived breach of security occurs to our systems or a third party’s systems, we may face regulatory or civil liability and public perception of our security measures could be diminished, either of which would negatively affect our ability to attract and retain Users, which in turn would harm our efforts to attract and retain advertisers, Content Providers and other business partners.
If Slacker’s business does not perform as expected or if the rates are modified to be higher than the proposed rates, its content acquisition costs could increase and impact its ability to obtain content on pricing terms favorable to us, which could negatively harm our business, operating results and financial condition and hinder its ability to provide interactive features in its services, or cause one or more of our services not to be economically viable. 41 In the United States, public performance rights are generally obtained through intermediaries known as performing rights organizations (“PROs”), which negotiate blanket licenses with copyright users for the public performance of compositions in their repertory, collect royalties under such licenses, and distribute those royalties to copyright owners.
If Slacker’s business does not perform as expected or if the rates are modified to be higher than the proposed rates, its content acquisition costs could increase and impact its ability to obtain content on pricing terms favorable to us, which could negatively harm our business, operating results and financial condition and hinder its ability to provide interactive features in its services, or cause one or more of our services not to be economically viable. 41 Table of Contents In the United States, public performance rights are generally obtained through intermediaries known as performing rights organizations (“PROs”), which negotiate blanket licenses with copyright users for the public performance of compositions in their repertory, collect royalties under such licenses, and distribute those royalties to copyright owners.
Our customers’ preferences and tastes for these attractions can change and evolve rapidly, and our competitors actively seek to provide new and compelling experiences at their events. If we fail to anticipate or respond quickly to changes in public taste, our festivals and related offerings may become less attractive to consumers.
Our customers’ preferences and tastes for these attractions can change and evolve rapidly, and our competitors actively seek to provide new and compelling experiences at their events. If we fail to anticipate or respond quickly to changes in public taste, our online festivals and events and related offerings may become less attractive to consumers.
Our stock price could be subject to wide fluctuations in response to a variety of factors, including the following: ● actual or anticipated fluctuations in our revenue and other operating results; ● actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● issuance of our equity or debt securities, or disclosure or announcements relating thereto; ● the lack of a meaningful, consistent and liquid trading market for our common stock; ● additional shares of our common stock being sold into the market by us or our stockholders or the anticipation of such sales; ● our convertible debt securities being converted into equity or the anticipation of such conversion; ● announcements by us or our competitors of significant events or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; ● changes in operating performance and stock market valuations of companies in our industry; ● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; ● expiration of the lock-up period, as more fully discussed below; ● lawsuits threatened or filed against us; ● regulatory developments in the United States and foreign countries; and ● other events or factors, including those resulting from impact of COVID-19 epidemic, war or incidents of terrorism, other epidemics, or responses to these events.
Our stock price could be subject to wide fluctuations in response to a variety of factors, including the following: ● actual or anticipated fluctuations in our revenue and other operating results; ● actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● issuance of our equity or debt securities, or disclosure or announcements relating thereto; ● the lack of a meaningful, consistent and liquid trading market for our common stock; ● additional shares of our common stock being sold into the market by us or our stockholders or the anticipation of such sales; ● our convertible debt securities being converted into equity or the anticipation of such conversion; ● announcements by us or our competitors of significant events or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; ● changes in operating performance and stock market valuations of companies in our industry; ● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; ● expiration of the lock-up period, as more fully discussed below; ● lawsuits threatened or filed against us; ● regulatory developments in the United States and foreign countries; and ● other events or factors, including those resulting from impact of war or incidents of terrorism, other epidemics, or responses to these events.
A number of consumer-oriented music and/or tech websites that achieved early popularity have since seen their user bases or levels of engagement decline, in some cases precipitously. There is no guarantee that we will not experience a similar erosion of our user base.
A number of consumer-oriented music and/or tech websites that achieved early popularity have since seen their user bases or levels of engagement decline, in some cases precipitously. There is no guarantee that we will not experience a similar erosion of our user and member base.
Our new platform features, services and initiatives and changes to existing features, services and initiatives could fail to attract users, content partners, advertisers and platform partners or generate revenue. Our industry is subject to rapid and frequent changes in technology, evolving customer needs and the frequent introduction by our competitors of new and enhanced offerings.
Our new platform features, services and initiatives and changes to existing features, services and initiatives could fail to attract users and members, content partners, advertisers and platform partners or generate revenue. Our industry is subject to rapid and frequent changes in technology, evolving customer needs and the frequent introduction by our competitors of new and enhanced offerings.
We must be able to match the quality and inventiveness of these competitors at our own festivals and events. If we fail to do so, it could lead to reduced demand for tickets to our festivals and events, harm our reputation or the reputation of our festivals and events and adversely affect our business and financial results.
We must be able to match the quality and inventiveness of these competitors at our own online festivals and events. If we fail to do so, it could lead to reduced demand for tickets to our online festivals and events, harm our reputation or the reputation of our online festivals and events and adversely affect our business and financial results.
Further, there is no guarantee that, even if we are in compliance with PCI DSS, we will maintain PCI DSS compliance or that such compliance will prevent illegal or improper use of our payment systems or the theft, loss, or misuse of data pertaining to credit and debit cards, credit and debit card holders, and credit and debit card transactions. 27 If we fail to adequately control fraudulent credit card transactions, we may face civil liability, diminished public perception of our security measures, and significantly higher credit card-related costs, each of which could adversely affect our business, financial condition, and results of operations.
Further, there is no guarantee that, even if we are in compliance with PCI DSS, we will maintain PCI DSS compliance or that such compliance will prevent illegal or improper use of our payment systems or the theft, loss, or misuse of data pertaining to credit and debit cards, credit and debit card holders, and credit and debit card transactions. 27 Table of Contents If we fail to adequately control fraudulent credit card transactions, we may face civil liability, diminished public perception of our security measures, and significantly higher credit card-related costs, each of which could adversely affect our business, financial condition, and results of operations.
In addition, our gross margin and operating margin percentages, as well as overall profitability, may be adversely impacted as a result of a shift in music taste, geographic or sales mix, price competition, or the introduction of new technology and EDM festivals and events.
In addition, our gross margin and operating margin percentages, as well as overall profitability, may be adversely impacted as a result of a shift in music taste, geographic or sales mix, price competition, or the introduction of new technology and EDM festivals.
We do not have the right to redeem the Series A Preferred Stock other than our optional right to purchase up to $5,000,000 in aggregate of the outstanding shares of Series A Preferred Stock held by the Harvest Funds, in whole or in part, at a cash redemption price per share of Series A Preferred Stock equal to the Stated Value (as defined in the Certificate of Designation) (the “Redemption Price”). 39 Our quarterly operating results may be volatile and are difficult to predict in the future, and our stock price may decline if we fail to meet the expectations of securities analysts or investors.
We do not have the right to redeem the Series A Preferred Stock other than our optional right to purchase up to $5,000,000 in aggregate of the outstanding shares of Series A Preferred Stock held by the Harvest Funds, in whole or in part, at a cash redemption price per share of Series A Preferred Stock equal to the Stated Value (as defined in the Certificate of Designation) (the “Redemption Price”). 39 Table of Contents Our quarterly operating results may be volatile and are difficult to predict in the future, and our stock price may decline if we fail to meet the expectations of securities analysts or investors.
In the event of an acceleration of amounts due under our debt instruments as a result of an event of default, including upon the occurrence of an event that would reasonably be expected to have a material adverse effect on our business, operations, properties, assets or condition or a failure to pay any amount due, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments. 38 We may incur substantially more debt or take other actions that would intensify the risks discussed above.
In the event of an acceleration of amounts due under our debt instruments as a result of an event of default, including upon the occurrence of an event that would reasonably be expected to have a material adverse effect on our business, operations, properties, assets or condition or a failure to pay any amount due, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments. 38 Table of Contents We may incur substantially more debt or take other actions that would intensify the risks discussed above.
This direct competition with our current and prospective Content Providers could harm our existing and future relationships with our Content Providers, and may result in a decline in the number of live events partnership, license, distribution and/or production opportunities available to us, which could adversely affect our business, financial condition and results of operations. 19 Some Content Providers and distributors, currently or in the future, may also take action to make it more difficult or impossible for us to partner with, license, distribute and/or produce their content, including as a result of them offering a competing product.
This direct competition with our current and prospective Content Providers could harm our existing and future relationships with our Content Providers, and may result in a decline in the number of live events partnership, license, distribution and/or production opportunities available to us, which could adversely affect our business, financial condition and results of operations. 19 Table of Contents Some Content Providers and distributors, currently or in the future, may also take action to make it more difficult or impossible for us to partner with, license, distribute and/or produce their content, including as a result of them offering a competing product.
These factors could result in lower prices and larger spreads in the bid and ask prices for our ordinary shares and would substantially impair our ability to raise additional funds and could result in a loss of institutional investor interest and fewer development opportunities for us. 18 In addition to the foregoing, if our ordinary shares are ultimately delisted from Nasdaq and they trade on the over-the-counter market, the application of the “penny stock” rules could adversely affect the market price of our ordinary shares and increase the transaction costs to sell those shares.
These factors could result in lower prices and larger spreads in the bid and ask prices for our ordinary shares and would substantially impair our ability to raise additional funds and could result in a loss of institutional investor interest and fewer development opportunities for us. 18 Table of Contents In addition to the foregoing, if our ordinary shares are ultimately delisted from Nasdaq and they trade on the over-the-counter market, the application of the “penny stock” rules could adversely affect the market price of our ordinary shares and increase the transaction costs to sell those shares.
Our new platform features, services and initiatives, changes to existing features, services and initiatives and our plan to continue to increase the number of live events that we produce could fail to attract users, content partners, advertisers and platform partners or generate revenue.
Our new platform features, services and initiatives, changes to existing features, services and initiatives and our plan to continue to increase the number of live events that we produce could fail to attract users and members, content partners, advertisers and platform partners or generate revenue.
Any such violations, even if prohibited by our internal policies, could result in fines, criminal sanctions against us and/or our employees, prohibitions on the conduct of our business and damage to our reputation, which could adversely affect our business, financial condition and results of operations. 32 Taxing authorities may successfully assert that we should have collected, or in the future should collect sales and use or similar taxes, and we could be subject to liability with respect to past or future tax, which could adversely affect our business, financial condition and results of operations.
Any such violations, even if prohibited by our internal policies, could result in fines, criminal sanctions against us and/or our employees, prohibitions on the conduct of our business and damage to our reputation, which could adversely affect our business, financial condition and results of operations. 32 Table of Contents Taxing authorities may successfully assert that we should have collected, or in the future should collect sales and use or similar taxes, and we could be subject to liability with respect to past or future tax, which could adversely affect our business, financial condition and results of operations.
If we fail to increase the number of users consuming our live music and music-related video content on our platform, and/or the number of members to Slacker, our business, financial condition and results of operations may be adversely affected.
If we fail to increase the number of users consuming our music and music-related video content on our platform, and/or the number of members to Slacker, our business, financial condition and results of operations may be adversely affected.
As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze our results of operations and financial prospects Because the market value of our common stock held by non-affiliates was less than $250 million as of the last business day of our fiscal quarter ended September 30, 2022, we continue to be a “smaller reporting company” as defined by the SEC’s revised rules.
As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze our results of operations and financial prospects Because the market value of our common stock held by non-affiliates was less than $250 million as of the last business day of our fiscal quarter ended September 30, 2023, we continue to be a “smaller reporting company” as defined by the SEC’s revised rules.
Unfavorable publicity regarding, for example, payments to music labels, publishers, artists and other copyright owners, our privacy practices, terms of service, service changes, service quality, litigation or regulatory activity, government surveillance, the actions of our advertisers, the actions of our developers whose services are integrated with our services, the use of our services for illicit, objectionable or illegal ends, the quality and integrity of content streamed on our services or the actions of other companies that provide similar services to us, could materially adversely affect our reputation.
Unfavorable publicity regarding, for example, our brands, payments to music labels, publishers, artists and other copyright owners, our privacy practices, terms of service, service changes, service quality, litigation or regulatory activity, government surveillance, the actions of our Content Providers, the actions of our advertisers, the actions of our developers whose services are integrated with our services, the use of our services for illicit, objectionable or illegal ends, the quality and integrity of content streamed on our services or the actions of other companies that provide similar services to us, could materially adversely affect our reputation.
Further, if our partners fail to maintain high standards for products that are integrated into our services, fail to display our trademarks on their products in breach of our agreements with them, or use our trademarks incorrectly or in an unauthorized manner, or if we partner with manufacturers of products that our users reject, the strength of our brand could be adversely affected. 26 We have historically been required to spend significant resources to establish and maintain our brands.
Further, if our partners fail to maintain high standards for products that are integrated into our services, fail to display our trademarks on their products in breach of our agreements with them, or use our trademarks incorrectly or in an unauthorized manner, or if we partner with manufacturers of products that our users reject, the strength of our brand could be adversely affected. 26 Table of Contents We have historically been required to spend significant resources to establish and maintain our brands.
As a result of the foregoing, we expect to continue to incur significant losses for the foreseeable future and we may not be able to achieve or sustain profitability. 17 The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a growing company, the difficulties that may be encountered with integrating acquired companies and the highly competitive environment in which we operate.
As a result of the foregoing, we expect to continue to incur significant losses for the foreseeable future and we may not be able to achieve or sustain profitability. 17 Table of Contents The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a growing company, the difficulties that may be encountered with integrating acquired companies and the highly competitive environment in which we operate.
Any disruption of, or interference with, our use of GCP or AWS could have a material adverse effect on our business, operating results, and financial condition. 25 If we fail to accurately predict, recommend, and stream and play music that our users enjoy, we may fail to retain existing users and attract new users in sufficient numbers to meet investor expectations for growth or to operate our business profitably.
Any disruption of, or interference with, our use of GCP or AWS could have a material adverse effect on our business, operating results, and financial condition. 25 Table of Contents If we fail to accurately predict, recommend, and stream and play music that our users enjoy, we may fail to retain existing users and attract new users in sufficient numbers to meet investor expectations for growth or to operate our business profitably.
In addition to the popularity of our content, we believe that our ability to attract and retain users depends upon many factors both within and beyond our control, including: ● the popularity, usefulness, ease of use, performance and reliability of our platform, products and services, including Slacker, our LiveOne App and our PodcastOne application (“PodcastOne App”), compared to those of our competitors; ● the timing and market acceptance of our platform, products and services, including Slacker, LiveOne App and PodcastOne App; ● users’ willingness to pay for membership rights to our platform; ● our ability to develop and monetize an effective strategy to attract advertisers and sponsor of our platform; ● the frequency and relative prominence of the ads displayed by us or our competitors; ● our ability to establish and maintain relationships with our Content Providers to provide new content for our network; ● user concerns related to user privacy and our ability to keep user data secure; ● changes mandated by, or that we elect to make to address, legislation, regulatory authorities or litigation, including settlements and consent decrees, some of which may have a disproportionate effect on us; ● our ability to attract, retain and motivate talented employees, particularly engineers, designers and platform and content managers; ● fluctuations in costs of content which we may be unwilling or unable to pass through to our users; ● competitors’ offerings that may include more favorable terms than we offer in order to obtain agreements for new content or venue, festival or ticketing arrangements; ● technological changes and innovations that we are unable to adopt or are late in adopting that offer more attractive entertainment alternatives than we or other live streamed entertainment providers currently offer; ● general economic conditions which could cause consumers to reduce discretionary spending; ● our ability to develop and monetize an effective strategy to buildout our e-commerce revenue stream; ● acquisitions or consolidation within our industry, which may result in more formidable competitors; and ● our reputation and the brand strength relative to our competitors. 21 In addition to attracting and retaining users, we will need to minimize user churn and attract lapsed users back to our platform and services, while ensuring that our user acquisition cost does not exceed user life-time value.
In addition to the popularity of our content, we believe that our ability to attract and retain users and/or members to Slacker depends upon many factors both within and beyond our control, including: ● the popularity, usefulness, ease of use, performance and reliability of our platform, products and services, including Slacker, our LiveOne App and our PodcastOne application (“PodcastOne App”), compared to those of our competitors; ● the timing and market acceptance of our platform, products and services, including Slacker, LiveOne App and PodcastOne App; ● users’ and members' willingness to pay for membership rights to our and Slacker's platforms; ● our ability to develop and monetize an effective strategy to attract advertisers and sponsor of our platform; ● the frequency and relative prominence of the ads displayed by us or our competitors; ● our ability to establish and maintain relationships with our Content Providers to provide new content for our network; ● user and member concerns related to user privacy and our ability to keep user and member data secure; ● changes mandated by, or that we elect to make to address, legislation, regulatory authorities or litigation, including settlements and consent decrees, some of which may have a disproportionate effect on us; ● our ability to attract, retain and motivate talented employees, particularly engineers, designers and platform and content managers; ● fluctuations in costs of content which we may be unwilling or unable to pass through to our users and members; ● competitors’ offerings that may include more favorable terms than we offer in order to obtain agreements for new content or venue, festival or ticketing arrangements; ● technological changes and innovations that we are unable to adopt or are late in adopting that offer more attractive entertainment alternatives than we or other live streamed entertainment providers currently offer; ● general economic conditions which could cause consumers to reduce discretionary spending; ● our ability to develop and monetize an effective strategy to buildout our e-commerce revenue stream; ● acquisitions or consolidation within our industry, which may result in more formidable competitors; and ● our reputation and the brand strength and awareness relative to our competitors. 21 Table of Contents In addition to attracting and retaining users and members, we will need to minimize user and member churn and attract lapsed users and members back to our platform and services, while ensuring that our user and member acquisition cost does not exceed user and member life-time value.
Our ability to increase the size and engagement of our user base, attract content partners, advertisers and platform partners and generate revenue will depend on those decisions.
Our ability to increase the size and engagement of our user and member base, attract content partners, advertisers and platform partners and generate revenue will depend on those decisions.
In this regard, we will engage with collection management organizations (“CMOs”) that hold certain rights to music interests in connection with streaming content into various territories. If we are unable to reach mutually acceptable terms with these organizations, we could become involved in litigation and/or could be enjoined from distributing certain content, which could adversely impact our business.
In this regard, we will engage with collection management organizations (“CMOs”) that hold certain rights to music interests in connection with streaming content into various territories. If we are unable to reach mutually acceptable terms with these organizations, we could become involved in litigation and/or could be prevented from distributing certain content, which could adversely impact our business.
However, our due diligence process may not uncover these liabilities, and where we identify a potential liability, we may incorrectly believe that we can consummate the acquisition without subjecting ourselves to that liability. Therefore, it is possible that we could be subject to litigation in respect of these acquired businesses. For example, see “Item 3.
However, our due diligence process may not uncover these liabilities, and when we identify a potential liability, we may incorrectly believe that we can consummate the acquisition without subjecting ourselves to that liability. Therefore, it is possible that we could be subject to litigation in respect of these acquired businesses. For example, see “Item 3.
Large internet companies with strong brand recognition, such as Facebook, Google, Amazon, and Twitter, have significant numbers of sales personnel, substantial advertising inventory, proprietary advertising technology solutions, and traffic across web, mobile, and connected devices that provide a significant competitive advantage and have a significant impact on pricing for reaching these listener bases.
Large internet companies with strong brand recognition, such as Facebook, Google, Amazon, and X (formerly Twitter), have significant numbers of sales personnel, substantial advertising inventory, proprietary advertising technology solutions, and traffic across web, mobile, and connected devices that provide a significant competitive advantage and have a significant impact on pricing for reaching these listener bases.
The loss of any of our executive officers could slow the growth of our business or have a material adverse effect on our business, results of operations and financial condition. 35 Rising inflation may adversely affect us by increasing costs of labor, equipment and other costs beyond what we can recover through price increases.
The loss of any of our executive officers could slow the growth of our business or have a material adverse effect on our business, results of operations and financial condition. 35 Table of Contents Rising inflation may adversely affect us by increasing costs of labor, equipment and other costs beyond what we can recover through price increases.
As these trends in the industry continue to evolve, our advertising revenue may be adversely affected by the availability, accuracy, and utility of the available analytics and measurement technologies as well as our ability to successfully implement and operationalize such technologies and standards. 24 Further, the digital advertising industry is shifting to data-driven technologies and advertising products, such as automated buying.
As these trends in the industry continue to evolve, our advertising revenue may be adversely affected by the availability, accuracy, and utility of the available analytics and measurement technologies as well as our ability to successfully implement and operationalize such technologies and standards. 24 Table of Contents Further, the digital advertising industry is shifting to data-driven technologies and advertising products, such as automated buying.
There also is no guarantee that we have all of the licenses we require to stream content, as the process of obtaining such licenses involves many rights holders, some of whom are unknown, and myriad complex legal issues across many jurisdictions, including open questions of law as to when and whether particular licenses are needed.
There also is no guarantee that we have all of the licenses we need to stream content, as the process of obtaining such licenses involves many rights holders, some of whom are unknown, and myriad complex legal issues across many jurisdictions, including open questions of law as to when and whether particular licenses are needed.
In connection with future acquisitions, we could take certain actions that could adversely affect our business, including: ● using a significant portion of our available cash; ● issuing equity securities, which would dilute current stockholders’ percentage ownership; ● incurring substantial debt; ● incurring or assuming contingent liabilities, known or unknown; ● incurring amortization expenses related to intangibles; and ● incurring large accounting write-offs or impairments. 44 We may also enter into joint ventures, which involve certain unique risks, including, among others, risks relating to the lack of full control of the joint venture, potential disagreements with our joint venture partners about how to manage the joint venture, conflicting interests of the joint venture, requirement to fund the joint venture and its business not being profitable.
In connection with future acquisitions, we could take certain actions that could adversely affect our business, including: ● using a significant portion of our available cash; ● issuing equity securities, which would dilute current stockholders’ percentage ownership; ● incurring substantial debt; ● incurring or assuming contingent liabilities, known or unknown; ● incurring amortization expenses related to intangibles; and ● incurring large accounting write-offs or impairments. 45 Table of Contents We may also enter into joint ventures, which involve certain unique risks, including, among others, risks relating to the lack of full control of the joint venture, potential disagreements with our joint venture partners about how to manage the joint venture, conflicting interests of the joint venture, requirement to fund the joint venture and its business not being profitable.
For our fiscal years ended March 31, 2023 and 2022 , our management conducted an assessment of our disclosure controls and procedures and our internal control over financial reporting and concluded that they were ineffective for each of such periods, due to the existence of certain material weaknesses in our internal control over financial reporting. See Item 9A.
For our fiscal years ended March 31, 2024 and 2023, our management conducted an assessment of our disclosure controls and procedures and our internal control over financial reporting and concluded that they were ineffective for each of such periods, due to the existence of certain material weaknesses in our internal control over financial reporting. See Item 9A. Controls and Procedures.
Any failure, or perceived failure, by us or the prior owners of acquired businesses to maintain the privacy of data relating to our users (including disclosing data in a manner that was objectionable to our users), to comply with our posted privacy policies, our predecessors’ posted policies, laws and regulations, rules of self-regulatory organizations, industry standards and contractual provisions to which we or they may be bound, could result in the loss of confidence in us, or result in actions against us by governmental entities or others, all of which could result in litigation and financial losses, and could potentially cause us to lose users, advertisers, revenue and employees. 48 Our reputation and relationships with members would be harmed if our member data, particularly billing data, were to be accessed by unauthorized persons.
Any failure, or perceived failure, by us or the prior owners of acquired businesses to maintain the privacy of data relating to our users (including disclosing data in a manner that was objectionable to our users), to comply with our posted privacy policies, our predecessors’ posted policies, laws and regulations, rules of self-regulatory organizations, industry standards and contractual provisions to which we or they may be bound, could result in the loss of confidence in us, or result in actions against us by governmental entities or others, all of which could result in litigation and financial losses, and could potentially cause us to lose users, advertisers, revenue and employees. 49 Table of Contents Our reputation and relationships with members would be harmed if our member data, particularly billing data, were to be accessed by unauthorized persons.
If we are unable to compete successfully for listeners against other digital media providers by maintaining and increasing our presence, ease of use, and visibility online, on devices, and in application stores, our number of paid members, free ad-supported users, and the amount of content streamed on our service may fail to increase or may decline and our membership fees and advertising sales may suffer. 53 We compete for a share of advertisers’ overall marketing budgets with other content providers on a variety of factors, including perceived return on investment, effectiveness and relevance of our advertising products, pricing structure, and ability to deliver large volumes or precise types of advertisements to targeted listener demographic pools.
If we are unable to compete successfully for listeners against other digital media providers by maintaining and increasing our presence, ease of use, and visibility online, on devices, and in application stores, our number of paid members, free ad-supported users, and the amount of content streamed on our service may fail to increase or may decline and our membership fees and advertising sales may suffer. 52 Table of Contents We compete for a share of advertisers’ overall marketing budgets with other content providers on a variety of factors, including perceived return on investment, effectiveness and relevance of our advertising products, pricing structure, and ability to deliver large volumes or precise types of advertisements to targeted listener demographic pools.
We may enter into settlement agreements in the future requiring us to make substantial payments as a result of claims that we are in breach of certain provisions in, or have exceeded the scope of, our content acquisition and other license agreements. 22 We may be unsuccessful in developing our original content.
We may enter into settlement agreements in the future requiring us to make substantial payments as a result of claims that we are in breach of certain provisions in, or have exceeded the scope of, our content acquisition and other license agreements. 22 Table of Contents We may be unsuccessful in developing our original content.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock. 34 We will continue to incur significant increased costs as a result of operating as a public company.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock. 34 Table of Contents We will continue to incur significant increased costs as a result of operating as a public company.
Our financial results could be adversely affected if we fail to maintain or grow our ecommerce merchandise revenue in the future.
Our financial results could be adversely affected if we fail to maintain or grow our CPS ecommerce merchandise revenue in the future.
We expect that existing and future traditional manufacturers and retailers will continue to add or improve their e-commerce offerings, and that our existing and future e-commerce competitors, including Amazon, will continue to increase their offerings and the ways in which they enable shoppers to purchase merchandise, including their mobile technology and the voice-activated shopping services offered by Amazon.
We expect that existing and future traditional manufacturers and retailers will continue to add or improve their e-commerce offerings, and that CPS’ existing and future e-commerce competitors, including Amazon, will continue to increase their offerings and the ways in which they enable shoppers to purchase merchandise, including their mobile technology and the voice-activated shopping services offered by Amazon.
We may face difficulty in integrating the operations of any businesses we may acquire in the future, such as coordinating geographically dispersed organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures, the diversion of management’s attention from other business concerns, the inherent risks in entering markets or lines of business in which we have either limited or no direct experience; and the potential loss of key employees, individual service providers, customers and strategic partners of acquired companies. 43 In addition, our growth strategy also includes further development of our online live streamed music network that we intend to integrate across all of our acquired businesses.
We may face difficulty in integrating the operations of any businesses we may acquire in the future, such as coordinating geographically dispersed organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures, the diversion of management’s attention from other business concerns, the inherent risks in entering markets or lines of business in which we have either limited or no direct experience; and the potential loss of key employees, individual service providers, customers and strategic partners of acquired companies. 44 Table of Contents In addition, our growth strategy also includes further development of our online live streamed music network that we intend to integrate across all of our acquired businesses.
If our platform or content become less popular with music fans, our growth strategy would be harmed, which could in turn harm our business and financial results. Our ability to attract and retain users depends upon many additional factors both within and beyond our control.
If our platform or content become less popular with music fans, our growth strategy would be harmed, which could in turn harm our business and financial results. Our ability to attract and retain users and/or members to Slacker depends upon many additional factors both within and beyond our control.
Beyond fiscal year ended March 31, 2023, we may not be able to remediate any current or future material weaknesses. If we are unable to establish and maintain proper and effective disclosure controls and procedures and internal control over financial reporting, we may not be able to produce timely and accurate financial statements.
Beyond fiscal year ended March 31, 2024, we may not be able to remediate any current or future material weaknesses. If we are unable to establish and maintain proper and effective disclosure controls and procedures and internal control over financial reporting, we may not be able to produce timely and accurate financial statements.
We incur a significant amount of up-front costs when we plan and prepare for a festival or event. Accordingly, if a planned festival or event is canceled, we would lose a substantial amount of sunk costs, fail to generate the anticipated revenue and may be forced to issue refunds for tickets sold.
We incur a significant amount of up-front costs when we plan and prepare for an online festival or event. Accordingly, if a planned festival or event is canceled, we would lose a substantial amount of sunk costs, fail to generate the anticipated revenue and may be forced to issue refunds for tickets sold.
If we are unable to attract and retain users, minimize user churn, fail to attract lapsed users and/or ensure that our user acquisition cost does not exceed our user life-time value, any of these factors could adversely affect our business, financial condition and results of operations.
If we are unable to attract and retain users and members, minimize user and member churn, fail to attract lapsed users and members and/or ensure that our user and member acquisition cost does not exceed our user and member life-time value, any of these factors could adversely affect our business, financial condition and results of operations.
It is possible that the popularity of electronic music and the EMC community will not continue their current growth or even decline. A substantial part of our festival and events business focuses on the broad market for electronic music and the EMC community, including electronic music festivals and events, venues, sponsorships and e-commerce.
It is possible that the popularity of electronic music and the EMC community will not continue their current growth or even decline. A substantial part of our online festival and events business focuses on the broad market for electronic music and the EMC community, including electronic music festivals and events, sponsorships and e-commerce.
Risks Related to Our Company ● For the years ended March 31, 2023 and 2022, our management concluded that our disclosure controls and procedures and our internal control over financial reporting were not effective due to the existence of material weaknesses in our internal control over financial reporting during such periods.
Risks Related to Our Company ● For the years ended March 31, 2024 and 2023, our management concluded that our disclosure controls and procedures and our internal control over financial reporting were not effective due to the existence of material weaknesses in our internal control over financial reporting during such periods.
In addition, if PodcastOne fails to collect its receivable balance from its key customers in its podcasting and advertising and e-commerce merchandise businesses, our financial results may be adversely affected. PodcastOne faces and will continue to face competition for listeners and listener listening time.
In addition, if PodcastOne fails to collect its receivable balance from its key customers in its podcasting and advertising and e-commerce merchandise businesses, our financial results may be adversely affected. PodcastOne faces and will continue to face competition for listeners and their listening time.
Due to the nature of our business, we could be accused of infringing on the copyrights of Content Providers or other rights holders, or such persons could attempt to prevent us from otherwise making certain content available to our users. 46 We may not be able to successfully defend against such claims, which may result in a limitation on our ability to use the intellectual property subject to these claims and also might require us to enter into settlement or license agreements, pay costly damage awards or face an injunction prohibiting us from using the affected intellectual property in connection with our services.
Due to the nature of our business, we could be accused of infringing on the copyrights of Content Providers or other rights holders, or such persons could attempt to prevent us from otherwise making certain content available to our users. 47 Table of Contents We may not be able to successfully defend against such claims, which may result in a limitation on our ability to use the intellectual property subject to these claims and also might require us to enter into settlement or license agreements, pay costly damage awards or face an injunction prohibiting us from using the affected intellectual property in connection with our services.
Maintaining, protecting and enhancing the “LiveOne” and “Slacker” brands is critical to expanding our base of ad-supported users, paid members and advertisers, and will depend largely on our ability to continue to develop and provide an innovative and high-quality experience for our users and to attract advertisers, content owners, mobile device manufacturers, and other consumer electronic product manufacturers to work with us, which we may not do successfully.
Maintaining, protecting and enhancing the “LiveOne”, "Slacker" and “PodcastOne” brands is critical to expanding our base of ad-supported users, paid members and advertisers, and will depend largely on our ability to continue to develop and provide an innovative and high-quality experience for our users and to attract advertisers, content owners, mobile device manufacturers, and other consumer electronic product manufacturers to work with us, which we may not do successfully.
If our key properties become less popular with consumers within the particular music community, such as electronic music culture (“EMC”), our growth strategy would be harmed, which could in turn adversely affect our business and financial results. 65 Maintaining the popularity of our festivals, events and online businesses requires that we anticipate consumer preferences and offer attractions that appeal to the music community, including EMC.
If our key properties become less popular with consumers within the particular music community, such as electronic music culture (“EMC”), our growth strategy would be harmed, which could in turn adversely affect our business and financial results. 65 Table of Contents Maintaining the popularity of our online festivals, and events requires that we anticipate consumer preferences and offer attractions that appeal to the music community, including EMC.
In connection with the preparation of our consolidated financial statements for the year ended March 31, 2023, management identified material weaknesses in the following: (i) our controls relating to proper evaluation and accounting of certain features embedded in complex debt and equity instruments.
In connection with the preparation of our consolidated financial statements for the year ended March 31, 2024, management identified material weaknesses in the following: (i) our controls relating to proper evaluation and accounting of certain features embedded in complex debt and equity instruments.
Significant up-front and/or minimum guarantees required under certain of PodcastOne’s podcast license agreements may limit its operating flexibility and may adversely affect our business, operating results, and financial condition. Certain of PodcastOne’s podcast license agreements contain significant up-front and/or require that PodcastOne makes minimum guarantee payments (“MGs”).
Significant up-front and/or minimum guarantees required under certain of PodcastOne ’ s podcast license agreements may limit its operating flexibility and may adversely affect our business, operating results, and financial condition. Certain of PodcastOne’s podcast license agreements contain significant up-front and/or require that PodcastOne makes minimum guarantee payments (“MGs”).
Even if we are willing to match our competitors’ terms, the profitability of our events could decline. 66 If we are forced to cancel or postpone all or part of a scheduled festival or event, our business may be adversely impacted, and our reputation may be harmed.
Even if we are willing to match our competitors’ terms, the profitability of our events could decline. 66 Table of Contents If we are forced to cancel or postpone all or part of a scheduled festival or event, our business may be adversely impacted, and our reputation may be harmed.
The loss of our largest customer or the significant reduction of business or growth of business from our largest customer could significantly adversely affect our business, financial condition and results of operations. ● We have incurred significant operating and net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future. ● We may require additional capital, including to fund our current debt obligations and to fund potential acquisitions and capital expenditures, which may not be available on terms acceptable to us or at all and which depends on many factors beyond our control. ● Our failure to meet the continued listing requirements of Nasdaq could result in a de-listing of our ordinary shares and penny stock trading. ● Our business is partially dependent on our ability to secure music streaming rights from Content Providers and to stream their live music and music-related video content on our platform, and we may not be able to secure such content on commercially reasonable terms or at all. ● We may be unable to fund any significant up-front and/or guaranteed payment cash requirements associated with our live music streaming rights, which could result in the inability to secure and retain such streaming rights and may limit our operating flexibility, which may adversely affect our business, operating results and financial condition. ● We face intense competition from competitors, and we may not be able to increase our revenues, which could adversely impact our business, financial condition and results of operations.
The loss of our largest customer or the significant reduction of business or growth of business from our largest customer could significantly adversely affect our business, financial condition and results of operations. ● We have incurred significant operating and net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future. ● We may require additional capital, including to fund our current debt obligations and to fund potential acquisitions and capital expenditures, which may not be available on terms acceptable to us or at all and which depends on many factors beyond our control. ● Our failure to meet the continued listing requirements of Nasdaq could result in a de-listing of our ordinary shares and penny stock trading. ● There is substantial doubt about our ability to continue as a going concern. ● Our business is partially dependent on our ability to secure music streaming rights from Content Providers and to stream their live music and music-related video content on our platform, and we may not be able to secure such content on commercially reasonable terms or at all. ● We may be unable to fund any significant up-front and/or guaranteed payment cash requirements associated with our live music streaming rights, which could result in the inability to secure and retain such streaming rights and may limit our operating flexibility, which may adversely affect our business, operating results and financial condition. ● We face intense competition from competitors, and we may not be able to increase our revenues, which could adversely impact our business, financial condition and results of operations.
Controls and Procedures. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis.
If either were to happen, the demand for and interest in EMC festivals, events and venues and our online properties could fail to meet our expectations or even decline. This would have a material adverse effect on our business and financial results.
If either were to happen, the demand for and interest in EMC festivals and events and our online properties could fail to meet our expectations or even decline. This could have a material adverse effect on our business and financial results.
In addition, any cancellation or postponement could harm both our reputation and the reputation of the particular festival or event.
In addition, any cancellation or postponement could harm both our reputation and the reputation of the particular online festival or event.
There is currently a tremendous amount of innovation among EMC-focused businesses, including the different experiential aspects of festivals and other live performances. These include things such as video presentations, lighting, special effects, sets and other creative elements.
There is currently a tremendous amount of innovation among EMC-focused businesses, including the different experiential aspects of online festivals and other performances. These include things such as video presentations, lighting, special effects, sets and other creative elements.
Working with certain third-party distribution partners, we currently offer listeners the ability to access our service through a variety of consumer electronics products used in the home and devices connected to or installed in automobiles.
Working with certain third-party distribution partners, we currently offer listeners (including members) the ability to access our service through a variety of consumer electronics products used in the home and devices connected to or installed in automobiles.
Our existing agreements with partners in the automobile and consumer electronics industries generally do not obligate those partners to offer our service in their products. In addition, some automobile manufacturers or their supplier partners may terminate their agreements with us for convenience.
Our existing agreements with partners in the automobile and consumer electronics industries generally do not obligate those partners to offer our service in their products. In addition, some automobile manufacturers or their supplier partners may terminate their agreements with us for convenience with minimal notice.
For the fiscal year ended March 31, 2023 we failed to remediate all of the material weaknesses identified during the fiscal year ended March 31, 2022 and 2021, see Item 9A. Controls and Procedures. We may need to expend significant financial resources to remediate these material weaknesses.
For the fiscal year ended March 31, 2024 we failed to remediate all of the material weaknesses identified during the fiscal year ended March 31, 2023 and 2022, see Item 9A. Controls and Procedures. We may need to expend significant financial resources to remediate these material weaknesses.
Given uncertainty around these rules, including changing interpretations, amendments or repeal, coupled with potentially significant political and economic power of local network operators, we could experience discriminatory or anti-competitive practices that could impede our growth, cause us to incur additional expense or otherwise negatively affect our business. 33 Risks Related to Our Company For the years ended March 31, 2023 and 202 2 , our management concluded that our disclosure controls and procedures and our internal control over financial reporting were not effective due to the existence of material weaknesses in our internal control over financial reporting during such periods.
Given uncertainty around these rules, including changing interpretations, amendments or repeal, coupled with potentially significant political and economic power of local network operators, we could experience discriminatory or anti-competitive practices that could impede our growth, cause us to incur additional expense or otherwise negatively affect our business. 33 Table of Contents Risks Related to Our Company For the years ended March 31, 2024 and 2023, our management concluded that our disclosure controls and procedures and our internal control over financial reporting were not effective due to the existence of material weaknesses in our internal control over financial reporting during such periods.
Our success depends, to a large degree, upon certain key members of our management, particularly our Chairman and Chief Executive Officer, Robert Ellin, and our Interim Chief Financial Officer, Vice President, Controller, Interim Treasurer and Interim Secretary, Aaron Sullivan. Each of Messrs.
Our success depends, to a large degree, upon certain key members of our management, particularly our Chairman and Chief Executive Officer, Robert Ellin, and our Chief Financial Officer, Vice President, Treasurer and Secretary, Aaron Sullivan. Each of Messrs.
In addition, the fixed cost nature of these MGs may limit our flexibility in planning for, or reacting to, changes in our business and the market segments in which we operate. 54 PodcastOne relies on estimates of the market share of streamed and/or downloaded content by the provider, as well as its own user growth and forecasted advertising revenue, to forecast whether such MGs could be recouped against its actual content acquisition costs incurred over the duration of the license agreement.
In addition, the fixed cost nature of these MGs may limit our flexibility in planning for, or reacting to, changes in our business and the market segments in which we operate. 53 Table of Contents PodcastOne relies on estimates of the market share of streamed and/or downloaded content by the provider, as well as its own user growth and forecasted advertising revenue, to forecast whether such MGs could be recouped against its actual content acquisition costs incurred over the duration of the license agreement.

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Item 2. Properties

Properties — owned and leased real estate

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On December 22, 2020, the Company acquired CPS which included the assumption of an operating lease for a 55,120 square foot light manufacturing facility located in Addison Illinois, expiring June 30, 2024. We believe that each of these properties are in good condition and suitable for the conduct of our business.
On December 22, 2020, we acquired CPS which included the assumption of an operating lease for a 55,120 square foot light manufacturing facility located in Addison Illinois, which expires on June 30, 2024. We believe that each of these properties are in good condition and suitable for the conduct of our business. We do not own any real property.
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We currently have no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings We are from time to time, party to various legal proceedings arising out of our business. Certain legal proceedings in which we are involved are discussed in Note 16 - Commitments and Contingencies, to the consolidated financial statements included in Item 8. Financial Statement and Supplementary Data, and are incorporated herein by reference.
Item 3. Legal Proceedings We are from time to time, party to various legal proceedings arising out of our business. Certain legal proceedings in which we are involved are discussed in Note 15 - Commitments and Contingencies, to the consolidated financial statements included in Item 8. Financial Statement and Supplementary Data, and are incorporated herein by reference.
Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters — Securities Authorized for Issuance Under Equity Compensation Plans” of this Annual Report.
Securities Authorized for Issuance Under Equity Compensation Plans See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters — Securities Authorized for Issuance Under Equity Compensation Plans” of this Annual Report.
Number of Holders As of May 31, 2023 , there were 407 stockholders of record of our common stock. This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies.
Number of Holders As of June 24, 2024, there were 402 stockholders of record of our common stock. This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies.
Issuance of Securities in Private Offerings for Cash Fiscal Years 202 3 , 202 2 and 202 1 None. 76 Except as otherwise noted, the securities in the transactions describe above were sold in reliance on the exemption from registration provided in Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D as offers and sales of securities not involving any public offering.
Issuance of Securities in Private Offerings for Cash Fiscal Years 2024, 2023 and 2022 None. 73 Table of Contents Except as otherwise noted, the securities in the transactions describe above were sold in reliance on the exemption from registration provided in Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D as offers and sales of securities not involving any public offering.
Issuances of Shares, Options and Restricted Stock Units to Consultants, Employees, and Vendors Fiscal Year 202 3 During the fiscal year ended March 31, 2023 , we issued an aggregate of 2,676,611 shares of our common stock to our consultants, employees, and vendors.
Issuances of Shares, Options and Restricted Stock Units to Consultants, Employees, and Vendors Fiscal Year 2024 During the fiscal year ended March 31, 2024, we issued an aggregate of 2,855,298 shares of our common stock to our consultants, employees, and vendors.
Fiscal Year 2022 During the fiscal year ended March 31, 2022, we issued an aggregate of 3,618,731 shares of our common stock to our consultants, employees, and vendors. Fiscal Year 2021 During the fiscal year ended March 31, 2021 , we issued an aggregate of 10,428,085 shares of our common stock to our consultants, employees, and vendors.
Fiscal Year 2023 During the fiscal year ended March 31, 2023, we issued an aggregate of 2,676,611 shares of our common stock to our consultants, employees, and vendors. Fiscal Year 2022 During the fiscal year ended March 31, 2022, we issued an aggregate of 3,618,731 shares of our common stock to our consultants, employees, and vendors.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our shares of common stock were trading publicly on The NASDAQ Capital Market (“Nasdaq”) under the symbol LIVX from February 2018 until October 5, 2021 and have been trading on the Nasdaq under the symbol of LVO since October 6, 2021.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our common stock have been trading publicly on The NASDAQ Capital Market (“Nasdaq”) under the symbol “LVO” since October 6, 2021.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers As of May 31, 2023, our board of directors has authorized in November 2022 and April 2023 the repurchase up to an aggregate of $3.5 million worth of shares of our outstanding common stock from time to time.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers As of May 31, 2024, our board of directors and/or management has authorized the repurchase up to an aggregate of $10.0 million worth of shares of our and/or PodcastOne’s outstanding common stock from time to time, of which $2.5 million is subject to approval of our board of directors.
The following table summarizes our purchases of securities for each month during the period of April 1, 2022 to March 31, 2023: Period (a) Total number of shares (or units) purchased (b) Average price paid per share (or unit) (c) Total number of shares (or units) purchased as part of publicly announced plans or programs (d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs April 1, 2022 – April 30, 2022 82,899 $ 0.7388 82,899 1,917,101 shares May 1, 2022 – May 31, 2022 542,314 $ 0.6866 625,213 1,374,787 shares June 1, 2022 – June 30, 2022 561,008 $ 0.9549 1,186,221 813,779 shares July 1, 2022 – July 31, 2022 617,501 $ 1.1101 1,803,722 196,278 shares August 1, 2022 – August 31, 2022 196,278 $ 1.3021 2,000,000 0 shares September 1, 2022 – September 30, 2022 - $ - - - October 1, 2022 – October 31, 2022 - $ - - - November 1, 2022 – November 31, 2022 - $ - - - December 1, 2022 – December 31, 2022 - $ - - - January 1, 2023 – January 31, 2023 - $ - - - February 1, 2023 – February 28, 2023 - $ - - - March 1, 2023 – March 31, 2023 220,914 $ 1.01 2,220,914 - Total ( April 1, 2022 - March 31, 202 3 ) 2, 220,914 $ 1.01 2,220,914 - Securities Authorized for Issuance Under Equity Compensation Plans See “Item 12.
The following table summarizes our purchases of securities for each month during the period of January 1, 2024 to March 31, 2024: (d) (c) Maximum number Total (or approximate number of shares (dollar value) of (or units) shares (b) purchased as (or units) (a) Average part of publicly that may yet Total price paid announced be purchased number of shares per share plans under the plans Period (or units) purchased (or unit) or programs or programs* January 1, 2024 – January 31, 2024 170,812 $ 1.40 2,458,531 1,422,251 February 1, 2024 – February 28, 2024 214,004 $ 1.61 2,672,535 1,208,247 March 1, 2024 – March 31, 2024 152,811 $ 1.97 2,825,346 1,055,436 Total (January 1, 2024 – March 31, 2024) 537,627 $ 1.65 2,825,346 1,055,436 * Does not include a $2.5 million increase to our repurchase program announced by us in September 2023, which is subject to approval of our board of directors, pursuant to which we may repurchase shares of our and/or PodcastOne’s common stock.
Removed
This is in addition to our board of directors’ prior authorization of a repurchase program of up to 2 million shares of our common stock, which has been completed.
Added
Securities Authorized for Issuance Under Equity Compensation Plans See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report for information regarding securities authorized for issuance under equity compensation plans.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+24 added−17 removed110 unchanged
Any license fees collected in advance of an event are deferred until the event airs. We report our licensing revenue on a gross basis as we act as the principal in the underlying transactions.
Any license fees collected in advance of an event are deferred until the event airs. We report our licensing revenue on a gross basis as we act as the principal in the underlying transactions. We report our licensing revenue on a gross basis as we act as the principal in the underlying transactions.
Cash Flows Provided By Financing Activities Net cash provided by financing activities for the year ended March 31, 2023 of $1.8 million was primarily due to proceeds from our PC1 Bridge Loan of $4.4 million, offset by a $2.2 million payment for treasury stock and a $0.4 million payment of a contingent consideration.
Net cash provided by financing activities for the year ended March 31, 2023 of $1.8 million was primarily due to proceeds from our PC1 Bridge Loan of $4.4 million, offset by a $2.2 million payment for treasury stock and a $0.4 million payment of a contingent consideration.
Credit Agreement and Other Debt For additional information regarding our credit agreement and other debt, see “Contractual Obligations” in this Item 7 below and in the footnotes to the Consolidated Financial Statements (Notes 8, 9, 10, and 11 to our financial statements included elsewhere in this Annual Report).
Credit Agreement and Other Debt For additional information regarding our credit agreement and other debt, see “Contractual Obligations” in this Item 7 below and in the footnotes to the Consolidated Financial Statements (Notes 8, 9, and 10 to our financial statements included elsewhere in this Annual Report).
Cash Flows Used In Investing Activities Net cash used in investing activities for the year ended March 31, 2023 of $2.5 million was principally due to the $2.4 million cash used for the purchase of property and equipment during such period.
Net cash used in investing activities for the year ended March 31, 2023 of $2.5 million was principally due to the $2.4 million cash used for the purchase of property and equipment during such period.
Beyond fiscal year 2023, the future revenue and operating growth across our music platform will rely heavily on our ability to grow our member base in a cost effective manner, continue to develop and deploy quality and innovative new music services, provide unique and attractive content to our customers, continue to grow the number of listeners on our platform and live music festivals we stream, grow and retain customers and secure sponsorships to facilitate future revenue growth from advertising and e-commerce across our platform.
Beyond fiscal year 2024, the future revenue and operating growth across our music platform will rely heavily on our ability to grow our member base in a cost effective manner, continue to develop and deploy quality and innovative new music services, provide unique and attractive content to our customers, continue to grow the number of listeners on our platform and live music festivals we stream, grow and retain customers and secure sponsorships to facilitate future revenue growth from advertising and e-commerce across our platform.
Sources of Liquidity In July 2022, PodcastOne completed a private placement offering (the “PC1 Bridge Loan”) of its unsecured convertible notes with an original issue discount of 10% (the “OID”) in the aggregate principal amount of $ 8.8 million (the “PC1 Notes”) to certain accredited investors and institutional investors (collectively, the “Purchasers”), for gross proceeds of $8,035,000 pursuant to the Subscription Agreements entered into with the Purchasers.
In July 2022, PodcastOne completed a private placement offering (the “PC1 Bridge Loan”) of its unsecured convertible notes with an original issue discount of 10% (the “OID”) in the aggregate principal amount of $8.8 million (the “PC1 Notes”) to certain accredited investors and institutional investors (collectively, the “Purchasers”), for gross proceeds of $8,035,000 pursuant to the Subscription Agreements entered into with the Purchasers.
Actual results may vary materially from those expressed or implied by the forward-looking statements herein due to a variety of factors, including: our reliance on one key customer for a substantial percentage of its revenue; our ability to consummate any proposed financing, acquisition, spin-out, distribution or transaction, the timing of the closing of such proposed event, including the risks that a condition to closing would not be satisfied within the expected timeframe or at all, or that the closing of any proposed financing, acquisition, spin-out, distribution or transaction will not occur or whether any such event will enhance shareholder value; our ability to continue as a going concern; our ability to attract, maintain and increase the number of its users and paid members; our identifying, acquiring, securing and developing content; our intent to repurchase shares of our common stock from time to time under our announced stock repurchase program and the timing, price, and quantity of repurchases, if any, under the program; our ability to maintain compliance with certain financial and other covenants; successfully implementing our growth strategy, including relating to our technology platforms and applications; management's relationships with industry stakeholders; the effects of the global Covid-19 pandemic; changes in economic conditions; competition; risks and uncertainties applicable to the businesses of our subsidiaries; and other risks, uncertainties and factors set forth in “Item 1A.
Actual results may vary materially from those expressed or implied by the forward-looking statements herein due to a variety of factors, including: our reliance on one key customer for a substantial percentage of its revenue; our ability to consummate any proposed financing, acquisition, spin-out, distribution or transaction, the timing of the closing of such proposed event, including the risks that a condition to closing would not be satisfied within the expected timeframe or at all, or that the closing of any proposed financing, acquisition, spin-out, distribution or transaction will not occur or whether any such event will enhance shareholder value; our ability to continue as a going concern; our ability to attract, maintain and increase the number of its users and paid members; our identifying, acquiring, securing and developing content; our intent to repurchase shares of our and/or PodcastOne's common stock from time to time under our announced stock repurchase program and the timing, price, and quantity of repurchases, if any, under the program; our ability to maintain compliance with certain financial and other covenants; successfully implementing our growth strategy, including relating to our technology platforms and applications; management's relationships with Industry Stakeholders; changes in economic conditions; competition; risks and uncertainties applicable to the businesses of our subsidiaries; and other risks, uncertainties and factors set forth in “Item 1A.
As a result, and during the fiscal year ending March 31, 2024, we will continue to invest in product and engineering to further develop our future music apps and services, and we expect to continue making significant product development investments to our existing technology solutions over the next 12 to 24 months to address these opportunities.
As a result, and during the fiscal year ending March 31, 2025, we will continue to invest in product and engineering to further develop our future music apps and services, and we expect to continue making significant product development investments to our existing technology solutions over the next 12 to 24 months to address these opportunities.
The following discussion and analysis of our business and results of operations for the fiscal year ended March 31, 2023 , and our financial conditions at that date, should be read in conjunction with the financial statements and the notes thereto included elsewhere in this Annual Report.
The following discussion and analysis of our business and results of operations for the fiscal year ended March 31, 2024, and our financial conditions at that date, should be read in conjunction with the financial statements and the notes thereto included elsewhere in this Annual Report.
We record a refund liability for expected returns based on prior returns history, recent trends, and projections for returns on sales in the current period. The refund liability at March 31, 2023 and 2022 , was less than $0.1 million, respectively.
We record a refund liability for expected returns based on prior returns history, recent trends, and projections for returns on sales in the current period. The refund liability at March 31, 2024 and 2023, was less than $0.1 million, respectively.
Over the next twelve to eighteen months , our net use of our working capital could be substantially higher or lower depending on the number and timing of new live festivals and paid members that we add to our businesses. 93 Subject to applicable limitations in the instruments governing our outstanding indebtedness, we may from time to time repurchase our debt, including the unsecured convertible notes, in the open market, through tender offers, through exchanges for debt or equity securities, in privately negotiated transactions or otherwise.
Over the next twelve to eighteen months, our net use of our working capital could be substantially higher or lower depending on the number and timing of new live festivals and paid members that we add to our businesses. 90 Table of Contents Subject to applicable limitations in the instruments governing our outstanding indebtedness, we may from time to time repurchase our debt, including the unsecured convertible notes, in the open market, through tender offers, through exchanges for debt or equity securities, in privately negotiated transactions or otherwise.
Our acquisitions of PodcastOne, CPS and Gramophone are reflective of our flywheel operating model. Conversely, the evolution of technology presents an inherent risk to our business. Today, we see large opportunities to expand our music services within North America and other parts of the world where we will need to make substantial investments to improve our current service offerings.
Our acquisitions of PodcastOne, CPS, Drumify and Splitmind are reflective of our flywheel operating model. Conversely, the evolution of technology presents an inherent risk to our business. Today, we see large opportunities to expand our music services within North America and other parts of the world where we will need to make substantial investments to improve our current service offerings.
This significant concentration of revenue from one customer poses risks to our operating results, and any change in the means this customer utilizes our services beyond March 31 , 2023 could cause our revenue to fluctuate significantly.
This significant concentration of revenue from one customer poses risks to our operating results, and any change in the means this customer utilizes our services beyond March 31, 2024 could cause our revenue to fluctuate significantly.
Our cash flows f rom operating activities are significantly affected by our cash-based investments in our operations, including acquiring live music events and festivals rights, our working capital, and corporate infrastructure to support our ability to generate revenue and conduct operations through cost of services, product development, sales and marketing and general and administrative activities.
Our cash flows from operating activities are significantly affected by our cash-based investments in our operations, including acquiring live music events and festivals rights, our working capital, and corporate infrastructure to support our ability to generate revenue and conduct operations through cost of services, product development, sales and marketing and general and administrative activities.
In the near term, we will continue aggregating our digital traffic across these festivals and monetizing the live broadcasting of these events through advertising, brand sponsorships and licensing of certain broadcasting rights outside of North America. 79 With the acceleration of our live events, we have also begun to package, produce and broadcast our live music content on a 24/7/365 basis across our music platform and grow our paid members.
In the near term, we will continue aggregating our digital traffic across these festivals and monetizing the live broadcasting of these events through advertising, brand sponsorships and licensing of certain broadcasting rights outside of North America. 76 Table of Contents With the acceleration of our live events, we have also begun to package, produce and broadcast our live music content on a 24/7/365 basis across our music platform and grow our paid members.
As used herein, “LiveOne,” the “Company,” “we,” “our” or “us” and similar terms refer collectively to LiveOne, Inc. (formerly known as LiveXLive Media, Inc.) and its subsidiaries, unless the context indicates otherwise. Overview of the Company We are a pioneer in the acquisition, distribution and monetization of live music, Internet radio, podcasting and music-related streaming and video content.
As used herein, “LiveOne,” the “Company,” “we,” “our” or “us” and similar terms refer collectively to LiveOne, Inc. and its subsidiaries, unless the context indicates otherwise. Overview of the Company We are a pioneer in the acquisition, distribution and monetization of Internet radio, podcasting and music-related streaming and live music and video content.
In the long term, we plan to expand our business internationally in places such as Europe, Asia Pacific and Latin America, and as a result will continue to incur significant incremental upfront expenses associated with these growth opportunities. 80 Consolidated Results of Operations The following tables set forth our results of operations for the periods presented.
In the long term, we plan to expand our business internationally in places such as Europe, Asia Pacific and Latin America, and as a result will continue to incur significant incremental upfront expenses associated with these growth opportunities. 77 Table of Contents Consolidated Results of Operations The following tables set forth our results of operations for the periods presented.
Basis of Presentation Our consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the fiscal year ended March 31, 202 2 , and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our consolidated financial statements for the year ended March 31, 2023 .
Basis of Presentation Our consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the fiscal year ended March 31, 2023, and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our consolidated financial statements for the year ended March 31, 2024.
During fiscal year ended March 31, 2023 , we (i) delivered live events digitally live streamed across our platform, (ii) increased our sponsorship revenue from live events when compared to prior fiscal years and (i ii ) had revenue from our PPV platform for an entire year, allowing us to charge customers directly to access and watch certain live events digitally on our music platform.
During fiscal year ended March 31, 2024, we (i) delivered live events digitally live streamed across our platform, (ii) increased our sponsorship revenue from online events when compared to prior fiscal years and (iii) had revenue from our PPV platform for an entire year, allowing us to charge customers directly to access and watch certain live events digitally on our music platform.
Therefore, we consider these to be our critical accounting policies and estimates. 88 Revenue Recognition We account for a contract with a customer when an approved contract exists, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of substantially all of the consideration is probable.
Therefore, we consider these to be our critical accounting policies and estimates. 85 Table of Contents Revenue Recognition We account for a contract with a customer when an approved contract exists, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of substantially all of the consideration is probable.
Forfeitures are recognized as incurred. 90 Stock option awards issued to non-employees are accounted for at the grant date fair value determined using the Black-Scholes-Merton option pricing model. Management believes that the fair value of the stock options is more reliably measured than the fair value of the services received.
Forfeitures are recognized as incurred. 87 Table of Contents Stock option awards issued to non-employees are accounted for at the grant date fair value determined using the Black-Scholes-Merton option pricing model. Management believes that the fair value of the stock options is more reliably measured than the fair value of the services received.
Beginning in late March 2020, the COVID-19 pandemic had an adverse impact on on-premise live music events and festivals.
Beginning in late March 2020, the COVID-19 pandemic had an adverse impact on our on-premise live events and festivals.
Furthermore, this measure may vary among other companies; thus, Adjusted EBITDA as presented herein may not be comparable to similarly titled measures of other companies. 87 Adjusted EBITDA Margin Adjusted EBITDA Margin is a non-GAAP financial measure that we define as the ratio of Adjusted EBITDA to Revenue.
Furthermore, this measure may vary among other companies; thus, Adjusted EBITDA as presented herein may not be comparable to similarly titled measures of other companies. 84 Table of Contents Adjusted EBITDA Margin Adjusted EBITDA Margin is a non-GAAP financial measure that we define as the ratio of Adjusted EBITDA to Revenue.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements We make forward-looking statements in this Annual Report and the documents incorporated by reference herein within the meaning of the Securities Litigation Reform Act of 1995.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements We make forward-looking statements in this Annual Report and the documents incorporated by reference herein within the meaning of the Securities Litigation Reform Act of 1995.
A substantial modification of terms is accounted for like an extinguishment. 91 If there is a conversion feature within the debt instrument, the Company evaluates whether the conversion feature should be bifurcated under ASC 815 as a derivative.
A substantial modification of terms is accounted for like an extinguishment. 88 Table of Contents If there is a conversion feature within the debt instrument, the Company evaluates whether the conversion feature should be bifurcated under ASC 815 as a derivative.
Opportunities, Challenges and Risks For our fiscal year ended March 31, 2023 , we derived 53% of our revenue from paid memberships and the remainder from advertising, ticketing, sponsorship, merchandising and licensing.
Opportunities, Challenges and Risks For our fiscal year ended March 31, 2024, we derived 56% of our revenue from paid memberships and the remainder from advertising, ticketing, sponsorship, merchandising and licensing.
The payment terms for memberships sold through Mobile Providers vary, but are generally payable within 30 days. 89 Third-Party Original Equipment Manufacturers We generate revenue for membership services through memberships sold through a third-party OEM.
The payment terms for memberships sold through Mobile Providers vary, but are generally payable within 30 days. 86 Table of Contents Third-Party Original Equipment Manufacturers We generate revenue for membership services through memberships sold through a third-party OEM.
Liquidity and Capital Resources Current Financial Condition As of March 31, 2023 , our principal sources of liquidity were our cash and cash equivalents, including restricted cash balances in the amount of $8.6 million, which primarily are invested in cash in banking institutions in the U.S.
Liquidity and Capital Resources Current Financial Condition As of March 31, 2024, our principal sources of liquidity were our cash and cash equivalents, including restricted cash balances in the amount of $7.1 million, which primarily are invested in cash in banking institutions in the U.S.
Merchandise Revenue Revenue is recognized upon the transfer of control to the customer. We recognize revenue and measure the transaction price net of taxes collected from customers and remitted to governmental authorities. Sales commissions are expensed as incurred and are recorded in sales and marketing expenses in the consolidated statements of operations.
We recognize revenue and measure the transaction price net of taxes collected from customers and remitted to governmental authorities. Sales commissions are expensed as incurred and are recorded in sales and marketing expenses in the consolidated statements of operations.
Merchandising Merchandising revenue decreased by $4.6 million, or 30% to $10.8 million for the year ended March 31, 2023, as compared to $15.4 million for the year ended March 31, 2022 due to a reduction in demand from both retail partners and our direct to consumer merchandising business.
Merchandising Merchandising revenue decreased by $2.6 million, or 24%, to $8.3 million for the year ended March 31, 2024, as compared to $10.8 million for the year ended March 31, 2023 due to a reduction in demand from both retail partners and our direct to consumer merchandising business.
As a result of these actions, our revenue for the fiscal year ended March 31, 2023 was comprised of 53% from paid members, 35% from advertising, 9% from merchandise and 1% from ticketing. We believe there is substantial near and long-term value in our live music content.
As a result of these actions, our revenue for the fiscal year ended March 31, 2024 was comprised of 56% from paid members, 37% from advertising and 7% from merchandise. We believe there is substantial near and long-term value in our live music content.
The increase was primarily as a result of member growth with our largest OEM customer. 82 Advertising Revenue Advertising revenue increased by $1.4 million, or 4%, to $35.1 million during the year ended March 31, 2023 , as compared to $33.7 million the year ended March 31, 2022 , which is primarily due to growth in advertising at PodcastOne year-over-year.
The increase was primarily as a result of member growth with our largest OEM customer. 79 Table of Contents Advertising Revenue Advertising revenue increased by $8.6 million, or 24%, to $43.7 million during the year ended March 31, 2024, as compared to $35.1 million the year ended March 31, 2023, which is primarily due to growth in advertising at PodcastOne year-over-year.
The vast majority of our cash proceeds were received as a result of operations, the issuance of convertible notes, public offerings of our common shares, and PPP loans.
The vast majority of our cash proceeds were received as a result of operations, the issuance of convertible notes, public offerings of our common shares, SBA loan, line of credit and our Capchase loan.
For the Year ended March 31 , 202 3 and 202 2 , all material amounts of our revenue were derived from customers located in the United States and moreover, one of our customers accounted for 43% and 28 % of our consolidated revenue.
For the Year ended March 31, 2024 and 2023, all material amounts of our revenue were derived from customers located in the United States and moreover, one of our customers accounted for 51% and 44% of our consolidated revenue.
The decrease was due to an increase in other income of $3.8 million from the prior year period as a result of the settlement of an acquisition earnout in the current period, partially offset by increased interest expense primarily attributable to accretion of interest on our debt discounts related to the PC1 Bridge loan in the year ended March 31, 2023 and loss on extinguishment of debt in the amount of $1.0 million during such period.
The decrease was due to an increase in other income of $1.6 million from the prior year period as a result of the settlement of an acquisition earnout in the prior period partially offset by increased interest expense primarily attributable to accretion of interest on our debt discounts related to the PC1 Bridge loan in the prior period.
The increase was in line with the higher membership revenues noted above. Advertising Advertising cost of sales decreased by $0.5 million, or 1%, to $30.1 million for the year ended March 31, 2023 , as compared to $30.6 million for the year ended March 31, 2022 .
The increase was in line with the higher membership revenues noted above. Advertising Advertising cost of sales increased by $7.9 million, or 26%, to $38.1 million for the year ended March 31, 2024, as compared to $30.1 million for the year ended March 31, 2023.
Sources and Uses of Cash The following table provides information regarding our cash flows for the fiscal years ended March 31, 2023 and 2022 (in thousands): Year Ended March 31, 2023 2022 Net cash used in operating activities $ (3,843 ) $ (9,123 ) Net cash used in investing activities (2,450 ) (3,979 ) Net cash provided by financing activities 1,788 7,486 Net change in cash and cash equivalents and restricted cash $ (4,505 ) $ (5,616 ) Cash Used In Operating Activities Net cash used in our operating activities for the year ended March 31, 2023 of $3.8 million primarily resulted from our net loss during the period of $10.0 million, which included non-cash charges of $9.6 million largely comprised of depreciation and amortization, stock-based compensation and loss of extinguishment of debt.
Sources and Uses of Cash The following table provides information regarding our cash flows for the fiscal years ended March 31, 2024 and 2023 (in thousands): Year Ended March 31, 2024 2023 Net cash provided by (used in) operating activities $ 6,848 $ (3,843 ) Net cash used in investing activities (4,046 ) (2,450 ) Net cash (used in) provided by financing activities (4,309 ) 1,788 Net change in cash and cash equivalents and restricted cash $ (1,507 ) $ (4,505 ) Cash Provided By (Used In) Operating Activities Net cash provided by our operating activities for the year ended March 31, 2024 of $6.8 million primarily resulted from our net loss during the period of $13.3 million, which included non-cash charges of $18.2 million largely comprised of depreciation and amortization, stock-based compensation, amortization of debt discount and changes in the fair value of embedded derivatives.
For the fiscal years ended March 31, 2023 and 202 2 , we reported revenue of $99.6 million and $ 117.0 million, respectively.
For the fiscal years ended March 31, 2024 and 2023, we reported revenue of $118.4 million and $99.6 million, respectively.
Sponsorship and Licensing Sponsorship and licensing revenue decreased by $6.6 million, or 94%, to $0.5 million from $7.1 million for the year ended March 31, 2023 as compared to the year ended March 31, 2022 .
Sponsorship and Licensing Sponsorship and licensing revenue decreased by $0.3 million, or 71%, to $0.1 million from $0.4 million for the year ended March 31, 2024 as compared to the year ended March 31, 2023.
Corporate expense Our Corporate operating results and discussions of significant variances are, as follows (in thousands): Year Ended March 31, % Change 2023 vs. 2023 2022 2022 Sales & Marketing, Product Development, and G&A $ 6,480 $ 22,800 72 % Operating Loss $ (6,480 ) $ (22,800 ) 72 % Operating Margin N/A N/A - % Adjusted EBITDA* $ (5,822 ) $ (12,563 ) 54 % * See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA Operating Loss Operating loss decreased by $16.3 million, or 72%, to $6.5 million for the year ended March 31, 2023 , as compared to $22.8 million for the year ended March 31, 2022, largely due to the reduction of corporate personnel.
Corporate expense Our Corporate operating results and discussions of significant variances are, as follows (in thousands): % Change Year Ended March 31, 2024 vs. 2024 2023 2023 Sales & Marketing, Product Development, and G&A $ 8,321 $ 6,470 -29 % Operating Loss $ (8,321 ) $ (6,470 ) -29 % Operating Margin N/A N/A - % Adjusted EBITDA* $ (6,189 ) $ (7,040 ) 12 % * See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA Operating Loss Operating loss increased by $1.9 million, or 29%, to $8.3 million for the year ended March 31, 2024, as compared to $6.5 million for the year ended March 31, 2023, largely due to an increase in legal and accounting costs.
Impairment of Intangible Assets Impairment of intangible assets increased $1.4 million, or 100%, to $1.4 million for the year ended March 31, 2023, as compared to none for the year ended March 31, 2022 , which is attributed to the impairment of intangible assets of React Presents acquisition (see Note 6 – Goodwill and Intangible Assets). 84 Total Other Expense, Net Year Ended March 31, % Change 2023 vs. 2023 2022 2022 Total other expense, net $ (7,770 ) $ (5,876 ) 32 % Total other expense, net increased by $1.9 million, or 32%, to $7.8 million for the year ended March 31, 2023 , as compared to $5.9 million for the year ended March 31, 2022 .
Impairment of Intangible Assets Impairment of intangible assets decreased $1.2 million, or 92%, to $0.1 million for the year ended March 31, 2024, as compared to $1.4 million for the year ended March 31, 2023, which is attributed to the impairment within our Media Group for the year ended March 31, 2024 and React Presents acquisition for the year ended March 31, 2023 (see Note 6 – Goodwill and Intangible Assets). 81 Table of Contents Total Other Expense, Net % Change Year Ended March 31, 2024 vs. 2024 2023 2023 Total other expense, net $ (8,525 ) $ (7,770 ) 10 % Total other expense, net increased by $0.8 million, or 10%, to $8.5 million for the year ended March 31, 2024, as compared to $7.8 million for the year ended March 31, 2023.
Media Group Operations Our Media Group Operations which consist of all of our other operating subsidiaries outside of PodcastOne and Slacker operating results were, and discussions of significant variances are, as follows (in thousands): Year Ended March 31 , 2023 2022 % Change Revenue $ 12,763 $ 42,474 -70 % Cost of Sales 7,068 38,258 -82 % Sales & Marketing, Product Development and G&A 7,636 16,581 -54 % Intangible Asset Amortization 1,947 758 157 % Operating Income (Loss) $ (3,888 ) $ (13,123 ) -70 % Operating Margin -30 % -31 % 1 % Adjusted EBITDA* $ (1,484 ) $ (9,737 ) -85 % Adjusted EBITDA Margin* -12 % -23 % 11 % * See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin.
Media Group Operations Our Media Group Operations which consist of all of our other operating subsidiaries outside of PodcastOne and Slacker operating results were, and discussions of significant variances are, as follows (in thousands): Year Ended March 31, 2024 2023 % Change Revenue $ 9,179 $ 12,763 -28 % Cost of Sales 6,197 7,077 -12 % Sales & Marketing, Product Development and G&A 8,574 7,636 12 % Intangible Asset Amortization 676 1,947 -65 % Operating Income (Loss) $ (6,268 ) $ (3,897 ) 61 % Operating Margin -68 % -31 % -38 % Adjusted EBITDA* $ (3,888 ) $ (224 ) 1636 % Adjusted EBITDA Margin* -42 % -2 % -41 % * See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin.
Other Operating Expenses Other operating expenses were as follows (in thousands): Year Ended March 31, % Change 2023 vs. 2023 2022 2022 Sales and marketing expenses $ 8,302 $ 14,114 -41 % Product development 5,136 8,092 -37 % General and administrative 15,877 33,681 -53 % Amortization of intangible assets 4,342 6,005 -28 % Impairment of intangible assets 1,356 - 100 % Total Other Operating Expenses $ 35,013 $ 61,892 -43 % Sales and Marketing Expenses Sales and marketing expenses decreased by $5.8 million, or 41%, to $8.3 million for the year ended March 31, 2023 , as compared to $14.1 million for the year ended March 31, 2022 .
Other Operating Expenses Other operating expenses were as follows (in thousands): % Change Year Ended March 31, 2024 vs. 2024 2023 2023 Sales and marketing expenses $ 7,838 $ 8,302 -6 % Product development 4,681 5,136 -9 % General and administrative 22,268 15,877 40 % Amortization of intangible assets 1,815 4,342 -58 % Impairment of intangible assets 115 1,356 -92 % Total Other Operating Expenses $ 36,717 $ 35,013 5 % Sales and Marketing Expenses Sales and marketing expenses decreased by $0.5 million, or 6%, to $7.8 million for the year ended March 31, 2024, as compared to $8.3 million for the year ended March 31, 2023.
As reflected in our consolidated financial statements included elsewhere in this Annual Report, we have a history of losses and incurred a net loss of $10.0 million and utilized cash of $3.8 million in operating activities for the year ended March 31, 2023 and had a working capital deficiency of $16.8 million as of March 31, 2023 .
As reflected in our consolidated financial statements included elsewhere in this Annual Report, we have a history of losses and incurred a net loss of $13.3 million and had a working capital deficiency of $22.5 million as of March 31, 2024.
Adjusted EBITDA Corporate Adjusted EBITDA decreased $6.7 million, or 54%, to $(5.8) million for the year ended March 31, 2023 as compared to $(12.6) million for the year ended March 31, 2022 . The decrease was largely due to the reduction of corporate personnel as mentioned above.
Adjusted EBITDA Corporate Adjusted EBITDA loss decreased $0.8 million, or 12%, to a $6.2 million loss for the year ended March 31, 2024 as compared to $7.0 million loss for the year ended March 31, 2023. The decrease was largely due to the reduction of employee and employee-related expenses.
The period-to-period comparison of financial results is not necessarily indicative of future results (in thousands): Year Ended March 31, Year Ended March 31, 2023 2022 Revenue: $ 99,611 $ 117,019 Operating expenses: Cost of sales 66,782 92,980 Sales and marketing 8,302 14,114 Product development 5,136 8,092 General and administrative 15,877 33,681 Impairment of intangible assets 1,356 - Amortization of intangible assets 4,342 6,005 Total operating expenses 101,795 154,872 Loss from operations (2,184 ) (37,853 ) Other income (expense): Interest expense, net (7,341 ) (4,123 ) Loss on extinguishment of debt (1,034 ) (4,321 ) Forgiveness of PPP loans - 3,110 Other expense 605 (542 ) Total other expense, net (7,770 ) (5,876 ) Loss before income taxes (9,954 ) (43,729 ) Income tax provision 65 183 Net loss $ (10,019 ) $ (43,912 ) Net loss per share – basic and diluted $ (0.12 ) $ (0.56 ) Weighted average common shares – basic and diluted 84,772,708 79,084,930 The following table provides the depreciation expense included in the above line items (in thousands): Year Ended March 31, % Change 2023 vs. 2023 2022 2022 Depreciation expense Cost of sales $ 115 $ 65 78 % Sales and marketing 188 164 15 % Product development 2,405 2,770 -13 % General and administrative 920 620 48 % Total depreciation expense $ 3,628 $ 3,619 - % 81 The following table provides the stock-based compensation expense included in the above line items (in thousands): Year Ended March 31, % Change 2023 vs. 2023 2022 2022 Stock-based compensation expense: Cost of sales $ 1,090 $ 708 54 % Sales and marketing 23 2,022 -99 % Product development 292 417 -30 % General and administrative 2,551 9,556 -73 % Total stock-based compensation expense $ 3,956 $ 12,703 -69 % The following table provides our results of operations, as a percentage of revenue, for the periods presented: Year Ended March 31, 2023 2022 Revenue 100 % 100 % Operating expenses Cost of sales 67 % 80 % Sales and marketing 8 % 12 % Product development 5 % 7 % General and administrative 16 % 29 % Impairment of intangible assets 1 % - % Amortization of intangible assets 5 % 5 % Total operating expenses 102 % 133 % Loss from operations -2 % -33 % Other expense -8 % -5 % Loss before income taxes -10 % -38 % Income tax provision (benefit) - % - % Net loss -10 % -38 % Revenue Revenue was as follows (in thousands): Year Ended March 31, % Change 2023 vs. 2023 2022 2022 Membership services $ 52,388 $ 41,264 27 % Advertising 35,143 33,739 4 % Merchandising 10,830 15,447 -30 % Sponsorship and licensing 430 7,051 -94 % Ticket/Event 820 19,518 -96 % Total Revenue $ 99,611 $ 117,019 -15 % Membership Revenue Membership revenue increased by $11.1 million, or 27%, to $52.4 million for the year ended March 31, 2023 , as compared to $41.3 million for the year ended March 31, 2022 .
The period-to-period comparison of financial results is not necessarily indicative of future results (in thousands): Year Ended Year Ended March 31, March 31, 2024 2023 Revenue: $ 118,440 $ 99,611 Operating expenses: Cost of sales 86,391 66,782 Sales and marketing 7,838 8,302 Product development 4,681 5,136 General and administrative 22,268 15,877 Impairment of intangible assets 115 1,356 Amortization of intangible assets 1,815 4,342 Total operating expenses 123,108 101,795 Loss from operations (4,668 ) (2,184 ) Other income (expense): Interest expense, net (4,366 ) (7,341 ) Loss on extinguishment of debt - (1,034 ) Other expense (4,159 ) 605 Total other expense, net (8,525 ) (7,770 ) Loss before income taxes (13,193 ) (9,954 ) Income tax provision 118 65 Net loss $ (13,311 ) $ (10,019 ) Net loss per share – basic and diluted $ (0.14 ) $ (0.12 ) Weighted average common shares – basic and diluted 87,617,392 84,772,708 The following table provides the depreciation expense included in the above line items (in thousands): % Change Year Ended March 31, 2024 vs. 2024 2023 2023 Depreciation expense Cost of sales $ 144 $ 115 25 % Sales and marketing 209 188 11 % Product development 1,764 2,405 -27 % General and administrative 1,175 920 28 % Total depreciation expense $ 3,292 $ 3,628 -9 % 78 Table of Contents The following table provides the stock-based compensation expense included in the above line items (in thousands): % Change Year Ended March 31, 2024 vs. 2024 2023 2023 Stock-based compensation expense: Cost of sales $ 1,664 $ 1,090 53 % Sales and marketing 968 23 4109 % Product development 734 292 151 % General and administrative 4,599 2,551 80 % Total stock-based compensation expense $ 7,965 $ 3,956 101 % The following table provides our results of operations, as a percentage of revenue, for the periods presented: Year Ended March 31, 2024 2023 Revenue 100 % 100 % Operating expenses Cost of sales 73 % 67 % Sales and marketing 7 % 8 % Product development 4 % 5 % General and administrative 19 % 16 % Impairment of intangible assets 0 % 1 % Amortization of intangible assets 2 % 5 % Total operating expenses 104 % 102 % Loss from operations -4 % -2 % Other expense -7 % -8 % Loss before income taxes -11 % -10 % Income tax provision (benefit) - % - % Net loss -11 % -10 % Revenue Revenue was as follows (in thousands): % Change Year Ended March 31, 2024 vs. 2024 2023 2023 Membership services $ 66,182 $ 52,388 26 % Advertising 43,729 35,143 24 % Merchandising 8,271 10,830 -24 % Sponsorship and licensing 126 429 -71 % Ticket/Event 132 821 -84 % Total Revenue $ 118,440 $ 99,611 19 % Membership Revenue Membership revenue increased by $13.8 million, or 26%, to $66.2 million for the year ended March 31, 2024, as compared to $52.4 million for the year ended March 31, 2023.
Cost of Sales Cost of sales was as follows (in thousands): Year Ended March 31, % Change 2023 vs. 2023 2022 2022 Membership $ 29,556 $ 26,200 13 % Advertising 30,149 30,579 -1 % Production (438 ) 24,928 -102 % Merchandising 7,515 11,273 -33 % Total Cost of Sales $ 66,782 $ 92,980 -28 % Membership Membership cost of sales increased by $3.4 million, or 13%, to $29.6 million for the year ended March 31, 2023 , as compared to $26.2 million for the year ended March 31, 2022 .
Cost of Sales Cost of sales was as follows (in thousands): % Change Year Ended March 31, 2024 vs. 2024 2023 2023 Membership $ 42,121 $ 29,556 43 % Advertising 38,065 30,149 26 % Production (288 ) (438 ) -34 % Merchandising 6,493 7,515 -14 % Total Cost of Sales $ 86,391 $ 66,782 29 % Membership Membership cost of sales increased by $12.6 million, or 43%, to $42.1 million for the year ended March 31, 2024, as compared to $29.6 million for the year ended March 31, 2023.
Operating Loss Operating loss decreased by $9.4 million or 70% to a loss of $3.9 million for the y ear ended March 31 , 2023 from a loss of $13.1 million for the y ear ended March 31 , 2022 , as a result of an increase in contribution margin coupled with the decrease in expenses due to a reduction in staff and credits due to settlements of payables made during the year ended March 31, 2023. 86 Adjusted EBITDA Adjusted EBITDA loss increased by $8.3 million, or 85%, to $(1.5) million loss for the y ear ended March 31 , 2023 , as compared to a $(9.7) million loss for the y ear ended March 31 , 2022 .
Operating Loss Operating loss increased by $2.4 million, or 61%, to $6.3 million for the year ended March 31, 2024 from $3.9 million for the year ended March 31, 2023, as a result of a decrease in contribution margin coupled with the increase in expenses due to an increase in general and administrative expenses. 83 Table of Contents Adjusted EBITDA Adjusted EBITDA loss increased by $3.7 million, or 1,636%, to $3.9 million loss for the year ended March 31, 2024, as compared to a $0.2 million loss for the year ended March 31, 2023.
Our principal operations and decision-making functions are located in North America. We manage and report our businesses as a single operating segment. Our senior management regularly reviews our operating results, principally to make decisions about how we allocate our resources and to measure our segment and consolidated operating performance.
Our senior management regularly reviews our operating results, principally to make decisions about how we allocate our resources and to measure our segment and consolidated operating performance.
The decrease was primarily driven by the sponsorship and licensing revenues earned related to the Social Gloves event held during the fiscal year ended March 31, 2022 , with no comparable event held during the year ended March 31, 2023.
The decrease was primarily driven by the decrease in events held by us during the fiscal year ended March 31, 2023, with no comparable event held during the year ended March 31, 2024.
Product Development Product development expenses decreased by $3.0 million, or 37%, to $5.1 million for the year ended March 31, 2023 , as compared to $8.1 million for the year ended March 31, 2022 . The decrease was primarily due to headcount reductions in the year ended March 31, 2023.
The decrease was largely due to lower salaries and wages of $0.5 million. Product Development Product development expenses decreased by $0.5 million, or 9%, to $4.7 million for the year ended March 31, 2024, as compared to $5.1 million for the year ended March 31, 2023.
The decrease was due to the corresponding decrease in revenue noted above as less live events took place in the current year.
The decrease was due to the corresponding decrease in revenue noted above.
The key estimates applied when preparing cash flow projections relate to revenue, operating margins, economic lives of assets, overheads, taxation and discount rates. To date, we have not recognized any such impairment loss associated with our long-lived assets. 92 Goodwill is tested for impairment at the reporting unit level, which is the same or one level below an operating segment.
To date, we have not recognized any material impairment losses associated with our long-lived assets. 89 Table of Contents Goodwill is tested for impairment at the reporting unit level, which is the same or one level below an operating segment.
As of March 31, 2023 , we have a senior secured line of credit of $7.0 million, Bridge Loan of $5.5 million (not including interest and debt discount) and a notes payable balance of $0.2 million.
As of March 31, 2024, we have a senior secured line of credit of $7.0 million and a notes payables balance of $1.5 million, net of discounts.
Amortization of Intangible Assets Amortization of intangible assets decreased by $1.6 million, or 28%, to $4.3 million for the year ended March 31, 2023 , as compared to $6.0 million for the year ended March 31, 2022 .
Amortization of Intangible Assets Amortization of intangible assets decreased by $2.5 million, or 58%, to $1.8 million for the year ended March 31, 2024, as compared to $4.3 million for the year ended March 31, 2023. The decrease was primarily due to intangible assets becoming fully amortized in the prior year.
Ticket/Event Ticket/Event revenue decreased by $18.7 million, or 96%, to $0.8 million for the year ended March 31, 2023 , as compared to $19.5 million for the year ended March 31, 2022 .
Ticket/Event Ticket/Event revenue decreased by $0.7 million, or 84%, to $0.1 million for the year ended March 31, 2024, as compared to $0.8 million for the year ended March 31, 2023. The decrease was driven by the lack of in-person events during the current year.
The decrease was primarily due to a reduction in revenue share expense paid to partners compared to the prior year. 83 Production Production cost of sales decreased by $25.5 million, or 102%, to a credit of $0.4 million for the year ended March 31, 2023 , as compared to $24.9 million for the year ended March 31, 2022 .
The increase was primarily due to an increase in revenue share expense compared to the prior year period and is line with the increase in revenue for the period. 80 Table of Contents Production Production cost of sales increased by $0.2 million, or 34%, to a credit of $0.3 million for the year ended March 31, 2024, as compared to a credit of $0.4 million for the year ended March 31, 2023.
The following table sets forth the reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure for the year ended March 31 (in thousands): Net Income (Loss) Depreciation and Amortization Stock-Based Compensation Non- Recurring Acquisition and Realignment Costs Other (Income) Expense Provision for Taxes Adjusted EBITDA Year Ended March 31, 2023 Operations - Audio $ 4,277 $ 7,112 $ 1,804 $ 1,136 $ 3,906 $ - $ 18,235 Operations - Other (2,800 ) 2,348 319 (262 ) (1,115 ) 27 (1,483 ) Corporate (11,496 ) 22 1,833 (1,198 ) 4,979 38 (5,822 ) Total $ (10,019 ) $ 9,482 $ 3,956 $ (324 ) $ 7,770 $ 65 $ 10,930 Year Ended March 31, 2022 Operations - Audio $ (2,266 ) $ 8,617 $ 2,070 $ 153 $ 307 $ - $ 8,881 Operations - Other (12,754 ) 970 2,097 290 (340 ) - (9,737 ) Corporate (28,892 ) 37 8,536 1,664 5,909 183 (12,563 ) Total $ (43,912 ) $ 9,624 $ 12,703 $ 2,107 $ 5,876 $ 183 $ (13,419 ) The following table sets forth the reconciliation of gross profit, the most comparable GAAP financial measure to Contribution Margin for the years ended March 31, 2023 and 2022 (in thousands): Year Ended March 31, 2023 2022 Revenue: $ 99,611 $ 117,019 Less: Cost of sales (66,782 ) (92,980 ) Amortization of developed technology (3,300 ) (3,856 ) Gross Profit 29,529 20,183 Add back amortization of developed technology: 3,300 3,856 Contribution Margin $ 32,829 $ 24,039 Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States.
The following table sets forth the reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure for the year ended March 31 (in thousands): Non- Recurring Net Depreciation Acquisition and Other Income and Stock-Based Realignment (Income) Provision Adjusted (Loss) Amortization Compensation Costs Expense for Taxes EBITDA Year Ended March 31, 2024 Operations – PodcastOne $ (14,732 ) $ 1,148 $ 3,483 $ 881 $ 9,666 $ 55 $ 501 Operations – Slacker 13,382 2,926 1,684 1,026 1,535 - 20,553 Operations – Media (1,397 ) 1,134 672 457 (4,754 ) - (3,888 ) Corporate (10,564 ) 14 2,126 94 2,078 63 (6,189 ) Total $ (13,311 ) $ 5,222 $ 7,965 $ 2,458 $ 8,525 $ 118 $ 10,977 Year Ended March 31, 2023 Operations – PodcastOne $ (6,967 ) $ 323 $ 1,001 $ 939 $ 5,132 $ - $ 428 Operations – Slacker 9,186 6,789 802 197 792 - 17,766 Operations – Media (2,800 ) 2,348 319 (262 ) 144 27 (224 ) Corporate (9,438 ) 22 1,834 (1,198 ) 1,702 38 (7,040 ) Total $ (10,019 ) $ 9,482 $ 3,956 $ (324 ) $ 7,770 $ 65 $ 10,930 The following table sets forth the reconciliation of gross profit, the most comparable GAAP financial measure to Contribution Margin for the years ended March 31, 2024 and 2023 (in thousands): Year Ended March 31, 2024 2023 Revenue: $ 118,440 $ 99,611 Less: Cost of sales (86,391 ) (66,782 ) Amortization of developed technology (3,009 ) (3,300 ) Gross Profit 29,040 29,529 Add back amortization of developed technology: 3,009 3,300 Contribution Margin $ 32,049 $ 32,829 Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States.
Business Segment Results Year Ended March 31 , 202 3 , as compared to Year Ended March 31 , 202 2 Audio Group Operations Our Audio Group Operations, which include our PodcastOne and Slacker operating results were, and discussions of significant variances are, as follows (in thousands): Year Ended March 31 , 2023 2022 % Change Revenue $ 86,848 $ 74,545 17 % Cost of Sales 59,705 54,750 9 % Sales & Marketing, Product Development and G&A 15,209 16,507 -8 % Intangible Asset Amortization 3,751 5,247 -28 % Operating Income (Loss) $ 8,183 $ (1,959 ) -518 % Operating Margin 9 % -3 % 12 % Adjusted EBITDA* $ 18,235 $ 8,882 105 % Adjusted EBITDA Margin* 21 % 12 % 10 % * See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin. 85 Revenue Revenue increased $12.3 million, or 17%, during the y ear ended March 31 , 202 3 , primarily due to increased membership revenue as a result of increased membership growth with our largest OEM customer.
Business Segment Results Year Ended March 31, 2024 , as compared to Year Ended March 31, 2023 Audio Group - PodcastOne Operations Our Audio Group Operations, which include our PodcastOne operating results were, and discussions of significant variances are, as follows (in thousands): Year Ended March 31, 2024 2023 % Change Revenue $ 43,302 $ 34,645 25 % Cost of Sales 37,326 27,579 35 % Sales & Marketing, Product Development and G&A 9,500 8,224 16 % Intangible Asset Amortization 897 99 806 % Operating Income (Loss) $ (4,421 ) $ (1,257 ) 252 % Operating Margin (10 )% -4 % -7 % Adjusted EBITDA* $ 501 $ 428 17 % Adjusted EBITDA Margin* 1 % 1 % 0 % * See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin. 82 Table of Contents Revenue Revenue increased $8.7 million, or 25%, during the year ended March 31, 2024, primarily due to increased advertising.
Operating Income Operating income increased by $10.1 million or 518%, for the y ear ended March 31 , 2023, as the decrease in revenue was lower than the decrease in operating expenses due to lower headcount and cost efficiencies.
Operating Loss Operating loss increased by $3.1 million or 252%, for the year ended March 31, 2024, as the increase in revenue was lower than the increase in operating expenses due to growing the business and the Spin-Out costs.
Adjusted EBITDA Adjusted EBITDA increased by $9.4 million, or 105%, to $18.2 million for the y ear ended March 31 , 2023 , as compared to $8.9 million for the y ear ended March 31 , 202 2 . This was largely due to an increase in revenue and decrease in operating expenses.
Adjusted EBITDA Adjusted EBITDA increased by $0.1 million, or 17%, to $0.5 million for the year ended March 31, 2024, as compared to $0.4 million for the year ended March 31, 2023. This was largely due to a decrease in general and administrative costs.
In the fourth quarter of our fiscal year ended March 31, 2020, we began generating ticketing, sponsorship, and promotion-related revenue from live music events through our February 2020 acquisition of React Presents. In May 2020, we launched a new pay-per-view (“PPV”) offering enabling new forms of artist revenue including digital tickets, tipping, digital meet and greets, merchandise sales and sponsorship.
In May 2020, we launched a new pay-per-view (“PPV”) offering enabling new forms of artist revenue including digital tickets, tipping, digital meet and greets, merchandise sales and sponsorship. In July 2020, we entered the podcasting business with the acquisition of PodcastOne and in December 2020, we entered the merchandising business with the acquisition of CPS.
General and Administrative General and administrative expenses decreased by $17.8 million, or 53%, to $15.9 million for the year ended March 31, 2023 , as compared to $33.7 million for the year ended March 31, 2022 .
The decrease was primarily due to headcount reductions in the year ended March 31, 2024. General and Administrative General and administrative expenses increased by $6.4 million, or 40%, to $22.3 million for the year ended March 31, 2024, as compared to $15.9 million for the year ended March 31, 2023.
In addition, during the current year we settled past due payables at a discount with certain vendors. Merchandising Merchandising cost of sales decreased by $3.7 million, or 33% from $11.3 million for the year ended March 31, 2022, as compared to $7.5 million for the year ended March 31, 2023.
The increase was primarily due to us settling past amounts owed for vendors, therefore credits were recorded during the prior period. Merchandising Merchandising cost of sales decreased by $1.0 million, or 14%, to $6.5 million for the year ended March 31, 2024, as compared to $7.5 million for the year ended March 31, 2023.
Revenue Revenue decreased $29.7 million, or 70%, to $12.8 million during the y ear ended March 31 , 2023 , as compared to $42.5 million for the y ear ended March 31 , 2022 , primarily due to decrease in events which took place in the prior year including Social Gloves and the Spring Awakening Music Festival.
Revenue Revenue decreased $3.6 million, or 28%, to $9.2 million during the year ended March 31, 2024, as compared to $12.8 million for the year ended March 31, 2023, primarily due to a decrease in merchandising revenue due to a reduction in demand from both retail partners and our direct to consumer business.
Removed
In July 2020, we entered the podcasting business with the acquisition of PodcastOne and in December 2020, we entered the merchandising business with the acquisition of CPS. In October 2021, we entered artist and brand development and music-related press relations business through our acquisition of Gramophone.
Added
Our principal operations and decision-making functions are located in North America. We manage and report our businesses as three operating segments: PodcastOne, Slacker and our Media Group. Our Audio Group consist of our PodcastOne and Slacker subsidiaries, and our Media Group consists of our remaining subsidiaries.
Removed
For the years ended March 31, 2023 and 202 2 , one customer accounted for 44% and 28 % of our consolidated revenues, respectively. 78 Fiscal 202 3 Significant Transactions Extinguishment of Debt We entered into an exchange agreement (collectively, the “Exchange Agreements”) with (i) Harvest Small Cap Partners Master, Ltd.
Added
For the years ended March 31, 2024 and 2023, one customer accounted for 51% and 44% of our consolidated revenues, respectively. 75 Table of Contents Fiscal 2024 Significant Transactions Spin-Out of PodcastOne On September 8, 2023, PodcastOne completed its Spin-Out” as a result of its direct listing on The NASDAQ Capital Market on such date.
Removed
(“HSCPM”) in regard to that certain 8.5% Senior Secured Convertible Note in the aggregate amount of $10,503,965 issued by the Company on September 15, 2020, as amended on June 3, 2021 and July 6, 2022, to HSCPM (the “HSCPM Note”), (ii) Harvest Small Cap Partners, L.P.
Added
In connection with such completed Qualified Event, all of the remaining PC1 Notes (including interest thereunder) in the aggregate amount of approximately $7.02 million converted into approximately 2,341,000 shares of PodcastOne’s common stock.
Removed
(“HSCP”) in regard to that certain 8.5% Senior Secured Convertible Note in the aggregate amount of $4,496,035 issued by the Company on September 15, 2020, as amended on June 3, 2021 and July 6, 2022, to HSCP (the “HSCP Note”); and (iii) Trinad Capital Master Fund Ltd., a fund controlled by Mr.
Added
The increase was largely due to an increase in share-based compensation of $1.7 million, an increase of $1.0 million in bad debt expense attributed to the bankruptcy of a merchandise retail partner and a $3.7 million increase primarily driven by the increase of professional services as a result of completing the spin-off of PodcastOne in September 2023.
Removed
Ellin, the Company’s Chief Executive Officer, Chairman, director and principal stockholder (“Trinad Capital” and collectively with HSCPM and HSCP, the “Holders”) in regard to all promissory notes in the aggregate principal and interest amount of $6,177,218 issued by the Company to Trinad Capital (the “Trinad Notes” and collectively with the HSCPM Note and the HSCP Note, the “Notes”).
Added
The increase can also be attributed to $4.5 million change in the fair value of derivatives.
Removed
Pursuant to the Exchange Agreements, the Holders exchanged the Notes, and with respect to Trinad Capital, together with interest, due and payable thereon, and relinquished any and all rights thereunder, for 21,177 shares of the Company’s newly designated and issued Series A Perpetual Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), with a stated value of $1,000 per share (the “Stated Value”), having the terms as set forth in the Company’s Certificate of Designation of Preferences, Rights and Limitations of Series A Perpetual Convertible Preferred Stock (the “Certificate of Designation”) filed by the Company on February 2, 2023 with the Secretary of State of the State of Delaware.
Added
Audio Group - Slacker Operations Our Audio Group Operations, which include our Slacker operating results were, and discussions of significant variances are, as follows (in thousands): Year Ended March 31, 2024 2023 % Change Revenue $ 65,959 $ 52,203 26% Cost of Sales 42,867 32,126 33% Sales & Marketing, Product Development and G&A 8,393 6,985 20% Intangible Asset Amortization 358 3,652 -90% Operating Income (Loss) $ 14,341 $ 9,440 52% Operating Margin 22% 18% 4% Adjusted EBITDA* $ 20,553 $ 17,766 16% Adjusted EBITDA Margin* 31% 34% -3% Revenue Revenue increased $13.8 million, or 26%, during the year ended March 31, 2024, primarily due to increased membership revenue as a result of increased membership growth with our largest OEM customer.
Removed
Legal Settlement On February 3, 2023, we entered into an agreement with SX to settle the dispute between the parties with respect to SX’s complaint filed in the U.S.
Added
Operating Loss Operating income increased by $4.9 million, or 52%, for the year ended March 31, 2024, as the increase in revenue was higher than the increase in operating expenses as no significant increases in cost were noted.
Removed
District Court, Central District of California, against the Company and Slacker, and related court judgement entered against the defendants on October 13, 2022, pursuant to which agreement the Company agreed to make certain monthly payments to SX for a period of 24 months and certain other payments in the event the Company obtains additional financing(s), unless the Company repays the judgment amount earlier pursuant to the terms of the agreement, and SX agreed not to take any action to enforce such judgment, so long as the defendants are not in default under the agreement.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

184 edited+74 added−159 removed167 unchanged
Stock Repurchase Program In December 2020, the Company announced that its board of directors has authorized the repurchase up to two million shares of its outstanding common stock from time to time.
Stock Repurchase Program In December 2020, the Company announced that its board of directors has authorized the repurchase of up to two million shares of its outstanding common stock from time to time.
Accordingly the Series A Preferred Stock was not accreted to the redemption amount in effect on the balance sheet date. Each share of Series A Preferred Stock is entitled to receive cumulative dividends payable at a rate per annum of 12% of the Series A Stated Value.
Accordingly the Series A Preferred Stock was not accreted to the redemption amount in effect on the balance sheet date. Each share of Series A Preferred Stock is entitled to receive cumulative dividends payable at a rate per annum of 12% of the Stated Value.
The Company may, at its option (the “Optional Redemption Right”), on or before the Mandatory Redemption Date (as defined herein), purchase up to $5,000,000 in aggregate of the then outstanding shares of Series A Preferred Stock held by the Harvest Funds at a cash redemption price per share of Series A Preferred Stock equal to the Stated Value (the “Redemption Price”).
The Company may, at its option (the “Optional Redemption Right”), on or before the Redemption Date (as defined herein), purchase up to $5,000,000 in aggregate of the then outstanding shares of Series A Preferred Stock held by the Harvest Funds at a cash redemption price per share of Series A Preferred Stock equal to the Stated Value (the “Redemption Price”).
As a result of the reincorporation merger, Loton ceased to exist as a separate entity, with LiveXLive being the surviving entity. On December 29, 2017, the Company acquired Slacker, Inc. (“Slacker”), an Internet music and radio streaming service incorporated in the state of Delaware, and it became a wholly owned subsidiary of LiveOne.
As a result of the reincorporation merger, Loton ceased to exist as a separate entity, with LiveXLive Media, Inc. being the surviving entity. On December 29, 2017, the Company acquired Slacker, Inc. (“Slacker”), an Internet music and radio streaming service incorporated in the state of Delaware, and it became a wholly owned subsidiary of LiveOne.
Share-based compensation expense during the year ended March 31, 2023 and 2022 includes the impact from differences in the timing of expense recognized in the statement of operations and the share issuances recorded in additional paid in capital, capitalization of internally developed software costs, and the benefit from the reversal of a previously accrued discretionary share-based award bonus of $1.1 million during the year ended March 31, 2022 .
Share-based compensation expense during the year ended March 31, 2024 and 2023 includes the impact from differences in the timing of expense recognized in the statement of operations and the share issuances recorded in additional paid in capital, capitalization of internally developed software costs, and the benefit from the reversal of a previously accrued discretionary share-based award bonus of $1.1 million during the year ended March 31, 2022.
The PC1 Notes shall automatically convert into the securities of PodcastOne sold in a Qualified Financing (an initial public offering of PodcastOne’s securities from which PodcastOne’s trading market at the closing of such offering is a national securities exchange) or Qualified Event (a direct listing of PodcastOne’s securities on a national securities exchange), as applicable, upon the closing of a Qualified Financing or Qualified Event, as applicable, at a price per share equal to the lesser of (i) the price equal to $60.0 million divided by the aggregate number of shares of PodcastOne’s common stock outstanding immediately prior to the closing of a Qualified Financing or Qualified Event, as applicable (assuming full conversion or exercise of all convertible and exercisable securities of PodcastOne then outstanding, subject to certain exceptions), and (ii) 70% of the offering price of the shares (or whole units, as applicable) in the Qualified Financing or 70% of the initial listing price of the shares on a national securities exchange in the Qualified Event, as applicable.
The PC1 Notes would automatically convert into the securities of PodcastOne sold in a Qualified Financing (an initial public offering of PodcastOne’s securities from which PodcastOne’s trading market at the closing of such offering is a national securities exchange) or Qualified Event (a direct listing of PodcastOne’s securities on a national securities exchange), as applicable, upon the closing of a Qualified Financing or Qualified Event, as applicable, at a price per share equal to the lesser of (i) the price equal to $60.0 million divided by the aggregate number of shares of PodcastOne’s common stock outstanding immediately prior to the closing of a Qualified Financing or Qualified Event, as applicable (assuming full conversion or exercise of all convertible and exercisable securities of PodcastOne then outstanding, subject to certain exceptions), and (ii) 70% of the offering price of the shares (or whole units, as applicable) in the Qualified Financing or 70% of the initial listing price of the shares on a national securities exchange in the Qualified Event, as applicable.
Warrants The PC1 Warrants are classified as liabilities as they represent an obligation to deliver a variable number of shares of common stock in the future and are therefore required to be initially and subsequently measured at fair value each reporting period.
Warrants The PC1 Warrants were classified as liabilities as they represent an obligation to deliver a variable number of shares of common stock in the future and are therefore required to be initially and subsequently measured at fair value each reporting period.
The Company is a creator-first, music, entertainment and technology platform focused on delivering premium experiences and content worldwide through memberships, live and virtual events. The Company was reincorporated in the State of Delaware on August 2, 2017, pursuant to a reincorporation merger of Loton, Corp (“Loton”) with and into LiveXLive, Loton’s wholly owned subsidiary at the time.
The Company is a creator-first, music, entertainment and technology platform focused on delivering premium experiences and content worldwide through memberships, live and virtual events. The Company was reincorporated in the State of Delaware on August 2, 2017, pursuant to a reincorporation merger of Loton, Corp (“Loton”) with and into LiveXLive Media, Inc., Loton’s wholly owned subsidiary at the time.
On December 22, 2020, the Company acquired CPS which included the assumption of an operating lease for a 55,120 square foot light manufacturing facility located in Addison Illinois, expiring June 30, 2024. The Company leases several office locations with lease terms that are less than 12 months or are on month to month terms.
Note 13 — Leases On December 22, 2020, the Company acquired CPS which included the assumption of an operating lease for a 55,120 square foot light manufacturing facility located in Addison Illinois, expiring June 30, 2024. The Company leases several office locations with lease terms that are less than 12 months or are on month to month terms.
The CODM reviews operating segment performance exclusive of share-based compensation expense, amortization of intangible assets, depreciation, and other expenses (including legal fees, expenses, and accruals) related to acquisitions, associated integration activities, and certain other non-cash charges. As a result, the segment information for the prior periods has been recast to confirm with the current period presentation.
The CODM reviews operating segment performance exclusive of share-based compensation expense, amortization of intangible assets, depreciation, and other expenses (including legal fees, expenses, and accruals) related to acquisitions, associated integration activities, and certain other non-cash charges. As a result, the segment information for the prior periods has been recast to conform with the current period presentation.
The Company’s two operating segments are also consistent with its internal organizational structure, which is the way the Company assesses operating performance and allocates resources . Customers The Company has one external customer that accounts for more than 10% of its revenue and accounts receivable. Such original equipment manufacturer (the “OEM”) provides premium Slacker service in its new vehicles.
The Company’s three operating segments are also consistent with its internal organizational structure, which is the way the Company assesses operating performance and allocates resources. Customers The Company has one external customer that accounts for more than 10% of its revenue and accounts receivable. Such original equipment manufacturer (the “OEM”) provides premium Slacker service in its new vehicles.
The Company uses purchase accounting for its acquisitions, which results in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. See the Company’s accounting policy “ Business Combinations” within Note 2 – Summary of Significant Accounting Policies. All intercompany balances and transactions have been eliminated in consolidation.
The Company uses purchase accounting for its acquisitions, which results in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. See the Company’s accounting policy “ Business Combinations ” within Note 2 – Summary of Significant Accounting Policies. All intercompany balances and transactions have been eliminated in consolidation.
As of March 31, 2023 , the Company’s board of directors has not yet determined the number of shares of the Company’s common stock and/or restricted stock units to be issued to the CEO as such compensation. Legal Proceedings On April 10, 2018, Joseph Schnaier, Danco Enterprises, LLC (an entity solely owned by Mr. Schnaier, “Danco”), Wantmcs Holdings, LLC (Mr.
As of March 31, 2024, the Company’s board of directors has not yet determined the number of shares of the Company’s common stock and/or restricted stock units to be issued to the CEO as such compensation. Legal Proceedings On April 10, 2018, Joseph Schnaier, Danco Enterprises, LLC (an entity solely owned by Mr. Schnaier, “Danco”), Wantmcs Holdings, LLC (Mr.
The intrinsic value of options to non-employees outstanding and options to non-employees exercisable was none at March 31, 2023 . Restricted Stock Units Grants As of March 31, 2023 , unrecognized compensation costs for unvested awards to employees was $1.2 million, which is expected to be recognized over a weighted-average service period of 0.70 years.
The intrinsic value of options to non-employees outstanding and options to non-employees exercisable was none at March 31, 2024 . Restricted Stock Units Grants As of March 31, 2024 , unrecognized compensation costs for unvested awards to employees was $1.2 million, which is expected to be recognized over a weighted-average service period of 0.70 years.
During the years ended March 31, 2023 and 2022 , the Company capitalized $2.4 million and $3.4 million of internal use software, respectively. Goodwill and Indefinite-Lived Assets Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is carried at cost.
During the years ended March 31, 2024 and 2023 , the Company capitalized $3.4 million and $2.4 million of internal use software, respectively. Goodwill and Indefinite-Lived Assets Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is carried at cost.
Based on our annual impairment assessment, no impairments of acquired trademarks and trade names were identified in the fiscal years ended March 31, 2023 and 2022 . Intangible Assets with Finite Useful Lives The Company has certain finite-lived intangible assets that were initially recorded at their fair value at the time of acquisition.
Based on our annual impairment assessment, no impairments of acquired trademarks and trade names were identified in the fiscal years ended March 31, 2024 and 2023 . Intangible Assets with Finite Useful Lives The Company has certain finite-lived intangible assets that were initially recorded at their fair value at the time of acquisition.
Pursuant to the Exchange Agreements, the Company agreed that at any time that any of the shares of Series A Preferred Stock issued to the Harvest Funds are outstanding, (i) to directly or through its 100% owned subsidiaries (as applicable), to own on a fully diluted basis at least 66% of the total equity and voting rights of any and all classes of securities of each of PodcastOne, Slacker, PPV One, Inc., and LiveXLive Events, LLC subsidiaries of the Company, (ii) not to issue shares of its common stock or convertible equity securities at a price less than $2.10 per share (subject to certain exceptions), provided, that such consent shall not be required in connection with any merger, acquisition or other business combinations of the Company and/or any of its subsidiaries with any unaffiliated third party, (iii) not to raise more than an aggregate of $20,000,000 of capital in one or more offerings, including without limitation, one or more equity or debt offerings or a combination thereof, on an accumulated basis commencing after the Effective Date (the “Qualified Offering”); provided, that such consent shall not be required for any equity financing of the Company at a price of $2.25 per share or above, and (iv) if after the Effective Date the Company distributes any of its assets or any shares of its common stock or Common Stock Equivalents (as defined in the Exchange agreements) of any of its subsidiaries pro rata to the record holders of any class of shares of its common stock, the Company shall distribute to the Holders its pro rata portion of any such distribution (calculated on an as-converted basis with respect to the then outstanding Series A Preferred Stock) concurrently with the distribution to the then record holders of any class of its common stock (including an applicable distribution of shares of PodcastOne’s common stock to the Harvest Funds in connection with the Company’s recently announced spin-out and special dividend of PodcastOne’s common stock to the Company’s stockholders of record), in each case without the Majority Holders’ prior written consent.
Pursuant to the Exchange Agreements, the Company agreed that at any time that any of the shares of Series A Preferred Stock issued to the Harvest Funds are outstanding, (i) to directly or through its 100% owned subsidiaries (as applicable), to own on a fully diluted basis at least 66% of the total equity and voting rights of any and all classes of securities of each of PodcastOne, Slacker, PPV One, Inc., and LiveXLive Events, LLC subsidiaries of the Company, (ii) not to issue shares of its common stock or convertible equity securities at a price less than $2.10 per share (subject to certain exceptions), provided, that such consent shall not be required in connection with any merger, acquisition or other business combinations of the Company and/or any of its subsidiaries with any unaffiliated third party, (iii) not to raise more than an aggregate of $20,000,000 of capital in one or more offerings, including without limitation, one or more equity or debt offerings or a combination thereof, on an accumulated basis commencing after February 3, 2023 ( the “Qualified Offering”); provided, that such consent shall not be required for any equity financing of the Company at a price of $2.25 per share or above, and (iv) if after February 3, 2023 the Company distributes any of its assets or any shares of its common stock or Common Stock Equivalents (as defined in the Exchange agreements) of any of its subsidiaries pro rata to the record holders of any class of shares of its common stock, the Company shall distribute to the Holders its pro rata portion of any such distribution (calculated on an as-converted basis with respect to the then outstanding Series A Preferred Stock) concurrently with the distribution to the then record holders of any class of its common stock (including an applicable distribution of shares of PodcastOne’s common stock to the Harvest Funds in connection with the Spin-Out and special dividend of PodcastOne’s common stock to the Company’s stockholders of record), in each case without the Majority Holders’ prior written consent.
The Company also agreed (i) not to effect a Qualified Financing or a Qualified Event, as applicable, unless immediately following such event the Company owns no less than 66% of PodcastOne’s equity, unless in either case otherwise permitted by the written consent of the holders of the majority of the PC1 Notes (excluding the Company) (the “Majority Noteholders”) and the senior lender, as applicable, (ii) that until a Qualified Financing or a Qualified Event, as applicable, is consummated, the Company guaranteed the repayment of the PC1 Notes when due (other than the Bridge Notes issued to LiveOne) and any interest or other fees due thereunder, and (iii) that if the Company has not consummated a Qualified Financing or a Qualified Event, as applicable, by February 15, 2023, March 15, 2023 or April 15, 2023, unless in either case permitted by the written consent of the Majority Noteholders, the Company shall be required to redeem $1,000,000 of the then outstanding PC1 Notes (other than the PC1 Notes issued to the Company) by the tenth calendar day of each month immediately following such respective date, up to an aggregate redemption of $3,000,000 over the course of such three months, each of which shall be distributed to the holders of the Bridge Notes (other than LiveOne) on a prorated basis (the “Early Redemption”).
The Company also agreed (i) not to effect a Qualified Financing or a Qualified Event, as applicable, unless immediately following such event the Company owns no less than 66% of PodcastOne’s equity, unless in either case otherwise permitted by the written consent of the holders of the majority of the PC1 Notes (excluding the Company) (the “Majority Noteholders”) and the senior lender, as applicable, (ii) that until a Qualified Financing or a Qualified Event, as applicable, is consummated, the Company guaranteed the repayment of the PC1 Notes when due (other than the Bridge Notes issued to LiveOne) and any interest or other fees due thereunder, and (iii) that if PodcastOne had not consummated a Qualified Financing or a Qualified Event, as applicable, by February 15, 2023, March 15, 2023 or April 15, 2023, unless in either case permitted by the written consent of the Majority Noteholders, PodcastOne was required to redeem $1,000,000 of the then outstanding PC1 Notes (other than the PC1 Notes issued to the Company) by the tenth calendar day of each month immediately following such respective date, up to an aggregate redemption of $3,000,000 over the course of such three months, each of which was to be distributed to the holders of the Bridge Notes (other than the Company) on a prorated basis (the “Early Redemption”).
However, as of March 31, 2023, the Company does not believe it is probable that these provisions of its agreements discussed above will, individually or in the aggregate, have a material adverse effect on its business, financial position, results of operations or cash flows.
However, as of March 31, 2024 , the Company does not believe it is probable that these provisions of its agreements discussed above will, individually or in the aggregate, have a material adverse effect on its business, financial position, results of operations or cash flows.
F-19 Convertible Debt – Derivative Treatment When the Company issues debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: (a) one or more underlyings, typically the price of our common stock; (b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; (c) no initial net investment, which typically excludes the amount borrowed; and (d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash.
F- 18 Table of Contents Convertible Debt – Derivative Treatment When the Company issues debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: (a) one or more underlyings, typically the price of our common stock; (b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; (c) no initial net investment, which typically excludes the amount borrowed; and (d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash.
On September 17, 2020, our stockholders approved the amendment to the 2016 Plan to increase the number of shares available for issuance under the plan by 5,000,000 shares increasing the total up to 17,600,000 shares which the Company formally increased on June 30, 2021.
On September 17, 2020, the Company's stockholders approved the amendment to the 2016 Plan to increase the number of shares available for issuance under the plan by 5,000,000 shares increasing the total up to 17,600,000 shares which the Company formally increased on June 30, 2021.
If the Optional Redemption Right is exercised up to the full $5,000,000 amount, the Mandatory Redemption requirement shall be terminated; provided, that if the Optional Redemption Right is exercised in any amount less than $5,000,000, the Mandatory Redemption Amount shall be reduced by the amount that the Optional Redemption Right has been elected and exercised.
If the Optional Redemption Right is exercised up to the full $5,000,000 amount, the Mandatory Redemption requirement was to be terminated; provided, that if the Optional Redemption Right is exercised in any amount less than $5,000,000, the Mandatory Redemption Amount was to be reduced by the amount that the Optional Redemption Right has been elected and exercised.
The Company further agreed to register the shares of its common stock issuable upon conversion of the PC1 Notes and exercise of the PC1 Warrants in connection with a Qualified Financing or a Qualified Event.
PodcastOne further agreed to register the shares of its common stock issuable upon conversion of the PC1 Notes and exercise of the PC1 Warrants in connection with a Qualified Financing or a Qualified Event.
In July 2022, the Company extended the maturity date of its revolving credit facility to June 2024 and its variable interest rate was increased to 2.5%. The Revolving Credit Facility bears interest at a variable rate equal to the Wall Street Journal Prime Rate, plus 2.5%. The interest rate for the period ended March 31, 2023 was 10.00%.
In July 2022, the Company extended the maturity date of its revolving credit facility to June 2024 and its variable interest rate was increased to 2.5%. The Revolving Credit Facility bears interest at a variable rate equal to the Wall Street Journal Prime Rate , plus 2.5%. The interest rate for the period ended March 31, 2024 was 11.00%.
Fair Value of Consideration Transferred: Cash $ 150 Common stock 89 Contingent consideration 174 Total $ 413 Contingent consideration in the form of a cash earnout of $0.3 million will be paid to the seller of Gramophone if, during the period commencing June 1, 2021 and ending on May 31, 2022 (“First Year Target”), Gramophone reports GAAP revenues of $1.4 million and EBITDA (as defined in the purchase agreement) of $0.3 million.
Fair Value of Consideration Transferred: Cash $ 150 Common stock 89 Contingent consideration 174 Total $ 413 Contingent consideration in the form of a cash earnout of $0.3 million was to be paid to the seller of Gramophone if, during the period commencing June 1, 2021 and ending on May 31, 2022 ( “First Year Target”), Gramophone reported GAAP revenues of $1.4 million and EBITDA (as defined in the purchase agreement) of $0.3 million.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Options Grants to Non-Employees As of March 31, 2023 , there were no unrecognized compensation costs for unvested awards to non-employees. There were no option grants to non-employees for the last two fiscal years.
Options Grants to Non-Employees As of March 31, 2024 , there were no unrecognized compensation costs for unvested awards to non-employees. There were no option grants to non-employees for the last two fiscal years.
The following table summarizes the significant changes in contract liabilities (deferred revenue) balances during the years ended March 31, 2023 and 2022 (in thousands): Contract Liabilities Balance as of April 1, 2021 $ 1,262 Revenue recognized that was included in the contract liability at beginning of the year (1,262 ) Increase due to cash received, excluding amounts recognized as revenue during the year 1,157 Balance as of March 31, 2022 1,157 Revenue recognized that was included in the contract liability at beginning of the year (506 ) Increase due to cash received, excluding amounts recognized as revenue during the year 341 Balance as of March 31, 2023 $ 992 F-22 Note 4 — Business Combinations Gramophone On October 17, 2021, the Company’s wholly owned subsidiary, LiveXLive PR, Inc., acquired 100% of the equity interests of Gramophone for net consideration of $0.4 million consisting of 79,365 shares of the Company’s common stock with a fair value of $0.1 million net of a 25% discount for lack of marketability described below, contingent consideration with a fair value of $0.2 million comprised of shares held in escrow and a cash earnout, and cash of $0.2 million.
The following table summarizes the significant changes in contract liabilities (deferred revenue) balances during the years ended March 31, 2024 and 2023 (in thousands): Contract Liabilities Balance as of April 1, 2022 $ 1,157 Revenue recognized that was included in the contract liability at beginning of the year (506 ) Increase due to cash received, excluding amounts recognized as revenue during the year 341 Balance as of March 31, 2023 992 Revenue recognized that was included in the contract liability at beginning of the year (389 ) Increase due to cash received, excluding amounts recognized as revenue during the year 125 Balance as of March 31, 2024 $ 728 F- 21 Table of Contents Note 4 — Business Combinations Gramophone On October 17, 2021, the Company’s wholly owned subsidiary, LiveXLive PR, Inc., acquired 100% of the equity interests of Gramophone for net consideration of $0.4 million consisting of 79,365 shares of the Company’s common stock with a fair value of $0.1 million net of a 25% discount for lack of marketability described below, contingent consideration with a fair value of $0.2 million comprised of shares held in escrow and a cash earnout, and cash of $0.2 million.
Additionally, sales and marketing include merchandising advertising and royalty costs. Advertising expenses to promote the Company’s services are expensed as incurred. Advertising expenses included in sales and marketing expense were $0.3 million and $0.3 million for the years ended March 31, 2023 and 2022 , respectively.
Additionally, sales and marketing include merchandising advertising and royalty costs. Advertising expenses to promote the Company’s services are expensed as incurred. Advertising expenses included in sales and marketing expense were $0.2 million and $0.3 million for the years ended March 31, 2024 and 2023 , respectively.
Accordingly, the Company did not recognize any benefit from income taxes in the accompanying consolidated statements of operations to offset its pre-tax losses. The valuation allowance against deferred tax assets is $40.0 million and $39.8 million for the years ended March 31, 2023 and 2022 , respectively.
Accordingly, the Company did not recognize any benefit from income taxes in the accompanying consolidated statements of operations to offset its pre-tax losses. The valuation allowance against deferred tax assets is $41.8 million and $40.0 million for the years ended March 31, 2024 and 2023 , respectively.
The fair value of the shares was determined to be $1.0 million based on the Company’s share price at the date the shares were issued. As of March 31, 2023, $0.1 million was recorded as a prepaid asset related to this transaction in order to fund future amounts owed for royalties.
The fair value of the shares was determined to be $1.0 million based on the Company’s share price at the date the shares were issued. As of March 31, 2024 , no amount was recorded as a prepaid asset related to this transaction in order to fund future amounts owed for royalties.
During each of the quarters ended March 31, 2023 and 2022 , the Company recorded legal settlement expenses relating to potential claims arising in connection with litigation brought against the Company by certain third parties were not material and were included in general and administrative expenses in the accompanying consolidated statement of operations.
During each of the quarters ended March 31, 2024 and 2023 , the Company recorded legal settlement expenses relating to potential claims arising in connection with litigation brought against the Company by certain third parties were not material and were included in general and administrative expenses in the accompanying consolidated statements of operations.
Rent expense for these operating leases totaled $0.4 million and $0.8 million the years ended March 31, 2023 and 2022 , respectively, which is included in general and administrative expenses in the consolidated statement of operations.
Rent expense for these operating leases totaled $0.4 million and $0.4 million the years ended March 31, 2024 and 2023 , respectively, which is included in general and administrative expenses in the consolidated statement of operations.
The option awards generally vest over four years and are exercisable any time after vesting. The stock options expire ten years after the date of grant. As of March 31, 2023 , unrecognized compensation costs for unvested awards to employees was $0.4 million, which is expected to be recognized over a weighted-average service period of 1.3 years.
The option awards generally vest over four years and are exercisable any time after vesting. The stock options expire ten years after the date of grant. As of March 31, 2024 , unrecognized compensation costs for unvested awards to employees was $0.1 million, which is expected to be recognized over a weighted-average service period of 0.89 years.
Each holder of the PC1 Notes (other than the Company) may at such holder’s option require the Company to redeem up to 45% of the principal amount of such holder’s PC1 Notes (together with accrued interest thereon, but excluding the OID), in aggregate up to $3,000,000 for all of the PC1 Notes (other than those held by the Company), immediately prior to the completion of a Qualified Financing or a Qualified Event, as applicable, with such redemption to be made pro rata to the redeeming holders of the PC1 Notes (the “Optional Redemption”).
Each holder of the PC1 Notes (other than the Company) could have at such holder’s option require PodcastOne to redeem up to 45% of the principal amount of such holder’s PC1 Notes (together with accrued interest thereon, but excluding the OID), in aggregate up to $3,000,000 for all of the PC1 Notes (other than those held by the Company), immediately prior to the completion of a Qualified Financing or a Qualified Event, as applicable, with such redemption to have been made pro rata to the redeeming holders of the PC1 Notes (the “Optional Redemption”).
In July 2022, the Company entered into an amendment with Trinad Capital pursuant to which the maturity date of all of the Trinad Notes was extended to July 1, 2024, and in consideration of such extension, the Company issued to Trinad Capital 500,000 shares of the Company’s restricted common stock.
F- 30 Table of Contents In July 2022, the Company entered into an amendment with Trinad Capital pursuant to which the maturity date of all of the Trinad Notes was extended to July 1, 2024, and in consideration of such extension, the Company issued to Trinad Capital 500,000 shares of the Company’s restricted common stock.
The Company believes that the complaint is an intentional act by the plaintiffs to publicly tarnish the Company’s and its senior management’s reputations through the public domain in an effort to obtain by threat of litigation certain results for Mr. Schnaier’s self-serving and improper purposes.
The Company believed that the complaint was an intentional act by the plaintiffs to publicly tarnish the Company’s and its senior management’s reputations through the public domain in an effort to obtain by threat of litigation certain results for Mr. Schnaier’s self-serving and improper purposes.
On June 26, 2018, the Company and LXL Tickets, filed counterclaims against the plaintiffs for breach of contract (including under the Asset Purchase Agreement), fraudulent inducement, and other causes of action, seeking injunctive relief, damages, attorneys’ fees and expenses and such other relief as the court may award.
On June 26, 2018, the Company and LXL Tickets, filed counterclaims against the plaintiffs for breach of contract (including under the APA), fraudulent inducement, and other causes of action, seeking injunctive relief, damages, attorneys’ fees and expenses and such other relief as the court may award.
F-16 Property and Equipment Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve service potential are also capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal repairs and maintenance are expensed as incurred.
F- 15 Table of Contents Property and Equipment Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve service potential are also capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal repairs and maintenance are expensed as incurred.
F-39 From time to time, the Company is involved in legal proceedings and other matters arising in connection with the conduct of its business activities. Many of these proceedings may be at preliminary stages and/or seek an indeterminate amount of damages.
F- 35 Table of Contents From time to time, the Company is involved in legal proceedings and other matters arising in connection with the conduct of its business activities. Many of these proceedings may be at preliminary stages and/or seek an indeterminate amount of damages.
F-11 The Company’s revenue is principally derived from the following services: Membership Services Membership services revenue substantially consist of monthly to annual recurring membership fees, which are primarily paid in advance by credit card or through direct billings arrangements.
F- 10 Table of Contents The Company’s revenue is principally derived from the following services: Membership Services Membership services revenue substantially consist of monthly to annual recurring membership fees, which are primarily paid in advance by credit card or through direct billings arrangements.
F-14 Income Taxes The Company accounts for income taxes using the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.
F- 13 Table of Contents Income Taxes The Company accounts for income taxes using the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.
F-40 Series A Preferred Stock The Series A Preferred Stock is convertible at any time at a Holder’s option into shares of the Company’s common stock, at a price of $2.10 per share of common stock, bears a dividend of 12% per annum, is perpetual and has no maturity date.
F- 36 Table of Contents Series A Preferred Stock The Series A Preferred Stock is convertible at any time at a Holder’s option into shares of the Company’s common stock, at a price of $2.10 per share of common stock, bears a dividend of 12% per annum, is perpetual and has no maturity date.
The Company believes that the credit risk with respect to trade receivables is limited due to the large and established nature of its largest customers and the short-term nature of its membership receivables. At March 31, 2023 and 2022, the Company had one customer that made up 32% and 24% of the total accounts receivable balance.
The Company believes that the credit risk with respect to trade receivables is limited due to the large and established nature of its largest customers and the short-term nature of its membership receivables. At March 31, 2024 and 2023 , the Company had one customer that made up 42% and 32% of the total accounts receivable balance, respectively.
Any license fees collected in advance of an event are deferred until the event airs. Sponsorship Revenue Sponsorship revenue primarily consists of sales of sponsorship programs that provide sponsors with opportunities to reach our customers. Sponsorship revenue is recognized as the event airs.
Sponsorship Revenue Sponsorship revenue primarily consists of sales of sponsorship programs that provide sponsors with opportunities to reach our customers. Sponsorship revenue is recognized as the event airs. Any sponsorship fees collected in advance of the contract term (typically an event) are deferred until the event airs.
The fair value of restricted stock units that were forfeited during the year ended March 31, 2023 and 2022 was $1.1 million and $5.0 million, respectively.
The fair value of restricted stock units that were forfeited during the year ended March 31, 2024 and 2023 was $0.1 million and $1.1 million, respectively.
If the First Year Target is not met, the cash earnout will be paid to the seller of Gramophone if, during the period commencing June 1, 2022 and ending on May 31, 2023 (“Second Year Target”), Gramophone reports GAAP revenues of $2 million and EBITDA of $0.5 million.
If the First Year Target was not met, the cash earnout was to be paid to the seller of Gramophone if, during the period commencing June 1, 2022 and ending on May 31, 2023 ( “Second Year Target”), Gramophone reported GAAP revenues of $2 million and EBITDA of $0.5 million.
F-13 Cost of Sales Cost of Sales principally consist of royalties paid for the right to stream video, music and non-music content to the Company’s customers and the cost of securing the rights to produce and stream live events from venues and promoters.
F- 12 Table of Contents Cost of Sales Cost of Sales principally consist of royalties paid for the right to stream video, music and non-music content to the Company’s customers and the cost of securing the rights to produce and stream live events from venues and promoters.
(formerly LiveXLive Media, Inc.) Beverly Hills, CA Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of LiveOne, Inc. and its subsidiaries (the “Company”) as of March 31, 2023, the related consolidated statement of operations, stockholders' equity and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively, the “financial statements”).
Beverly Hills, CA Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of LiveOne, Inc. and its subsidiaries (the “Company”) as of March 31, 2024 and 2023, the related consolidated statement of operations, stockholders' equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the “financial statements”).
The Company provided a contribution of $0.1 million and $0.1 million, to its employees for the years ended March 31, 2023 and 2022, respectively.
The Company provided a contribution of $0.2 million and $0.1 million, to its employees for the years ended March 31, 2024 and 2023 , respectively.
Financial Statements and Supplementary Data ​ Report of Independent Registered Public Accounting Firm (Macias Gini & O’Connell LLP; Los Angeles, California; PCAOB ID#324) F-2 Report of Independent Registered Public Accounting Firm (BDO USA, LLP; Los Angeles, California; PCAOB ID #243) F-4 Consolidated Balance Sheets as of March 31, 2023 and 2022 F-5 Consolidated Statements of Operations for the years ended March 31, 2023 and 2022 F-6 Consolidated Statements of Stockholders’ Deficit for the years ended March 31, 2023 and 2022 F-7 Consolidated Statements of Cash Flows for the years ended March 31, 2023 and 2022 F-8 Notes to the Consolidated Financial Statements F-9 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholders and Board of Directors LiveOne, Inc.
Financial Statements and Supplementary Data ​ Report of Independent Registered Public Accounting Firm (Macias Gini & O’Connell LLP; Los Angeles, California; PCAOB ID#324) F-2 Consolidated Balance Sheets as of March 31, 2024 and 2023 F-4 Consolidated Statements of Operations for the years ended March 31, 2024 and 2023 F-5 Consolidated Statements of Stockholders’ Deficit for the years ended March 31, 2024 and 2023 F-6 Consolidated Statements of Cash Flows for the years ended March 31, 2024 and 2023 F-7 Notes to the Consolidated Financial Statements F-8 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholders and Board of Directors LiveOne, Inc.
F-44 Note 1 9 — Income Tax Provision The Company’s income tax provision can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items.
F- 41 Table of Contents Note 18 — Income Tax Provision The Company’s income tax provision can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items.
The fair value of the PC1 Warrant liability is remeasured each reporting period using a Monte Carlo simulation model, and the change in fair value is recorded as an adjustment to the PC1 Warrant liability with the unrealized gains or losses reflected in other income (expense).
The fair value of the PC1 Warrant liability is remeasured each reporting period using a Black Scholes model, and the change in fair value is recorded as an adjustment to the PC1 Warrant liability with the unrealized gains or losses reflected in other income (expense).
Given the overall uncertainty surrounding the COVID-19 pandemic, there is a reasonable possibility that actual results could differ from those estimates and such differences could be material to the financial position and results of operations, specifically in assessing when the collectability of revenue related consideration is probable, and the impairment assessment of goodwill, indefinite lived assets or long-lived assets that are depreciated or amortized.
There is a reasonable possibility that actual results could differ from those estimates and such differences could be material to the financial position and results of operations, specifically in assessing when the collectability of revenue related consideration is probable, and the impairment assessment of goodwill, indefinite lived assets or long-lived assets that are depreciated or amortized.
The Company recorded impairment losses of $1.4 million and none in the fiscal years ended March 31, 2023 and 2022 . Deferred Revenue and Costs Deferred revenue consists substantially of amounts received from customers in advance of the Company’s performance service period.
The Company recorded impairment losses of $0.1 million and $1.4 million in the fiscal years ended March 31, 2024 and 2023, respectively. Deferred Revenue and Costs Deferred revenue consists substantially of amounts received from customers in advance of the Company’s performance service period.
As of March 31, 2023 , and 2022 , the Company accrued $16.6 million and $ 13.5 million of royalties, respectively, due to artists from use of Slacker’s radio services. Cost of sales for the Company’s advertising revenue primarily includes PodcastOne direct costs comprised of revenue sharing and commissions.
As of March 31, 2024 and 2023 , the Company accrued $18.4 million and $16.6 million of royalties, respectively, due to artists from use of Slacker’s radio services. Cost of sales for the Company’s advertising revenue primarily includes PodcastOne direct costs comprised of revenue sharing and commissions.
The fair value of the Redemption Liability at March 31, 2023 is $1.2 million. The $0.1 million change in the fair value of the Redemption Liability derivative is recorded as an unrealized gain and included in other income in the accompanying consolidated statements of operations at March 31, 2023 .
The $0.1 million change in the fair value of the Redemption Liability derivative is recorded as an unrealized gain and included in other income in the accompanying consolidated statements of operations for the year ended March 31, 2023.
The components of pretax loss and income tax (benefit) expense are as follows (in thousands): Year Ended March 31, 2023 2022 Loss before income taxes: Domestic $ (9,954 ) $ (43,729 ) Foreign - - Total loss before income taxes $ (9,954 ) $ (43,729 ) The provision for income taxes consisted of the following: Current U.S.
The components of pretax loss and income tax (benefit) expense are as follows (in thousands): Year Ended March 31, 2024 2023 Loss before income taxes: Domestic $ (13,193 ) $ (9,954 ) Foreign - - Total loss before income taxes $ (13,193 ) $ (9,954 ) The provision for income taxes consisted of the following: Current U.S.
If the Company does not file such registration statement on or prior to April 15, 2023, the Company shall be required to prepay $1,000,000 of the PC1 Notes pro rata to the PC1 Notes holders (other than the Company), and if the Company does not file such registration statement on or prior to July 15, 2023, the Company shall be required to prepay $2,000,000 of the PC1 Notes pro rata to the PC1 Notes holders (other than the Company) (the “Reg St Redemption”).
If PodcastOne did not file such registration statement on or prior to April 15, 2023, PodcastOne was required to prepay $1,000,000 of the PC1 Notes pro rata to the PC1 Notes holders (other than the Company), and if PodcastOne did not file such registration statement on or prior to July 15, 2023, PodcastOne was required to prepay $2,000,000 of the PC1 Notes pro rata to the PC1 Notes holders (other than the Company) (the “Reg St Redemption”).
The Company recognized share-based compensation expense of $3.0 million and $12.7 million during the years ended March 31, 2023 and 2022 , respectively. The total tax benefit recognized related to share-based compensation expense was $0 for the years ended March 31, 2023 and 2022 .
The Company recognized share-based compensation expense of $7.9 million and $3.0 million during the years ended March 31, 2024 and 2023 , respectively. The total tax benefit recognized related to share-based compensation expense was none for the years ended March 31, 2024 and 2023 .
The Company shall use its commercially reasonable best efforts to cause such registration statement to be declared effective promptly thereafter on or before 60 days after the filing of such registration statement (or if the SEC issues any comments with respect to such registration statement, on or before 120 days after the filing of such registration statement).
The Company agreed to use its commercially reasonable best efforts to cause such registration statement to be declared effective promptly thereafter on or before 45 days after the filing of such registration statement (or if the SEC issues any comments with respect to such registration statement, on or before 90 days after the filing of such registration statement).
F-41 Issuance of Restricted Shares of Common Stock for Services to Consultants and Vendors During the year ended March 31, 2023 , the Company incurred $0.7 million in accounts payable and accrued liabilities for stock earned by its consultants, but not yet issued.
F- 37 Table of Contents Issuance of Restricted Shares of Common Stock for Services to Consultants and Vendors During the year ended March 31, 2024 and 2023, the Company incurred $0.9 million and $0.7 million, respectively, in accounts payable and accrued liabilities for stock earned by its consultants, but not yet issued.
The Company shall not be required to redeem or repay more than a total of $3,000,000 of the principal amount of the PC1 Notes as a result of the Optional Redemption, the Early Redemption and/or the Reg St Redemption.
PodcastOne was not required to redeem or repay more than a total of $3,000,000 of the principal amount of the PC1 Notes as a result of the Optional Redemption, the Early Redemption and/or the Reg St Redemption.
Note 1 8 — Stockholders’ Equity Authorized Common Stock and Authority to Create Preferred Stock The Company has the authority to issue up to 510,000,000 shares, consisting of 500,000,000 shares of the Company’s common stock, $0.001 par value per share, and 10,000,000 shares of the Company’s preferred stock, $0.001 par value per share (the “preferred stock”).
Note 17 — Stockholders ’ Equity Authorized Common Stock and Authority to Create Preferred Stock The Company has the authority to issue up to 510,000,000 shares, consisting of 500,000,000 shares of the Company’s common stock, $0.001 par value per share, and 10,000,000 shares of the Company’s preferred stock, $0.001 par value per share (the “preferred stock”).
Goodwill and indefinite-lived assets are not amortized, but are subject to an annual impairment testing, as well as between annual tests when events or circumstances indicate that the carrying value may not be recoverable. We perform our annual impairment testing at January 1 of each year. F-17 Our annual goodwill impairment test is performed at the reporting unit level.
Goodwill and indefinite-lived assets are not amortized, but are subject to an annual impairment testing, as well as between annual tests when events or circumstances indicate that the carrying value may not be recoverable. We perform our annual impairment testing at January 1 of each year.
The principal balance under the Revolving Credit Facility as of March 31, 2023 and 2022 was $7.0 million, respectively. The Company recorded interest expense of $0.6 million and $0.2 million for the year ended March 31, 2023 and 2022, respectively.
The principal balance under the ABL Credit Facility as of March 31, 2024 and 2023 was $7.0 million, respectively. The Company recorded interest expense of $0.6 million and $0.6 million for the year ended March 31, 2024 and 2023 , respectively.
The intrinsic value of options to employees outstanding and options to employees exercisable was none and none, respectively, at March 31, 2023 . The intrinsic value of options exercised was none and $0.3 million, respectively, at March 31, 2023 and 2022 .
The intrinsic value of options to employees outstanding and options to employees exercisable was $0.1 million and none, respectively, at March 31, 2024 . The intrinsic value of options exercised was none and none, respectively, at March 31, 2024 and 2023 .
The following table summarizes the activity of our options issued to non-employees during the years ended March 31, 2023 and 2022: Number of Shares Weighted- Average Exercise Price per Share Outstanding as of April 1, 2021 25,000 $ 4.00 Granted - - Exercised - - Forfeited or expired - - Outstanding as of March 31, 2022 25,000 4.00 Granted - - Exercised - - Forfeited or expired - - Outstanding as of March 31, 2023 25,000 4.00 Exercisable as of March 31, 2023 25,000 4.00 F-43 The weighted average remaining contractual term for options to non-employees outstanding as of March 31, 2023 was 4.9 years.
The following table summarizes the activity of our options issued to non-employees under the 2016 Equity Plan during the years ended March 31, 2024 and 2023 : Weighted-Average Exercise Price per Number of Shares Share Outstanding as of April 1, 2022 25,000 $ 4.00 Granted - - Exercised - - Forfeited or expired - - Outstanding as of March 31, 2023 25,000 4.00 Granted - - Exercised - - Forfeited or expired - - Outstanding as of March 31, 2024 25,000 $ 4.00 Exercisable as of March 31, 2024 25,000 $ 4.00 F- 40 Table of Contents The weighted average remaining contractual term for options to non-employees outstanding as of March 31, 2024 was 3.9 years.
F-10 Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with the United States of America (“US”) generally accepted accounting principles (“GAAP”) requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.
Note 2 — Summary of Significant Accounting Policies F- 9 Table of Contents Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with the United States of America (“US”) generally accepted accounting principles (“GAAP”) requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.
F-8 LiveOne, Inc. (formerly LiveXLive Media, Inc.) Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023 and 2022 Note 1 — Organization and Basis of Presentation Organization LiveOne, Inc. (formerly LiveXLive Media, Inc.) together with its subsidiaries (“we,” “us,” “our”, the “Company” or “LiveOne”) is a Delaware corporation headquartered in Beverly Hills, California.
F-7 Table of Contents LiveOne, Inc. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2024 and 2023 Note 1 — Organization and Basis of Presentation Organization LiveOne, Inc. together with its subsidiaries (“we,” “us,” “our”, the “Company” or “LiveOne”) is a Delaware corporation headquartered in Beverly Hills, California.
As of March 31, 2023 and 2022 , the Company had restricted cash of $0.2 million and $0.3 million, respectively. Allowance for Doubtful Accounts The Company evaluates the collectability of its accounts receivable based on a combination of factors.
As of March 31, 2024 and 2023 , the Company had restricted cash of $0.2 million and $0.2 million, respectively. Allowance for Credit Losses The Company evaluates the collectability of its accounts receivable based on a combination of factors.
Federal $ - $ - State 70 22 Foreign - - Total Current 70 22 Deferred: U.S.
Federal $ - $ - State 111 70 Foreign - - Total Current 111 70 Deferred: U.S.
The derivative liability fair value as of March 31, 2023 was $1.3 million. The resulting discount from the OID, underwriting fees, PC1 Warrants, and embedded Redemption Liability derivative of $2.8 million is being amortized to interest expense through July 15, 2023, the expected term of the Bridge Loan, using the effective interest method.
The resulting discount from the OID, underwriting fees, PC1 Warrants, and embedded Redemption Liability derivative of $2.8 million is being amortized to interest expense through July 15, 2023, the expected term of the Bridge Loan, using the effective interest method.
Note 1 2 — Senior Secured Revolving Line of Credit On June 2, 2021, the Company entered into a Business Loan Agreement with East West Bank (the “Senior Lender”), which provides for a revolving credit facility collateralized by all the assets of the Company and its subsidiaries.
F- 29 Table of Contents Note 10 — Senior Secured Revolving Line of Credit On June 2, 2021, the Company entered into a Business Loan Agreement with East West Bank (the “Senior Lender”), which provided for a revolving credit facility collateralized by all the assets of the Company and its subsidiaries.
Operating lease costs for the years ended March 31, 2023 and 2022 consisted of the following (in thousands): Year Ended March 31, 2023 2022 Fixed rent cost $ 490 752 Short term lease cost 141 210 Total operating lease cost $ 631 962 Supplemental balance sheet information related to leases was as follows (in thousands): Operating leases March 31, 2023 March 31, 2022 Operating lease right-of-use assets $ 423 728 Operating lease liability, current $ 273 273 Operating lease liability, noncurrent 161 468 Total operating lease liabilities $ 434 741 The operating lease right-of-use assets are included in other assets in the March 31, 2023 and 2022 consolidated balance sheets, and operating lease liabilities are included in accounts payable and accrued liabilities and lease liabilities non-current in the March 31, 2023 and 2022 consolidated balance sheets.
Operating lease costs for the years ended March 31, 2024 and 2023 consisted of the following (in thousands): Year Ended March 31, 2024 2023 Fixed rent cost $ 324 $ 490 Short term lease cost 596 141 Total operating lease cost $ 920 $ 631 Supplemental balance sheet information related to leases was as follows (in thousands): March 31, March 31, Operating leases 2024 2023 Operating lease right-of-use assets $ 88 $ 423 Operating lease liability, current $ 91 $ 273 Operating lease liability, noncurrent - 161 Total operating lease liabilities $ 91 $ 434 The operating lease right-of-use assets are included in other assets in the March 31, 2024 and 2023 consolidated balance sheets, and operating lease liabilities are included in accounts payable and accrued liabilities and lease liabilities non-current in the March 31, 2024 and 2023 consolidated balance sheets.
For the years ended March 31, 2023 and 2022 , one customer accounted for 44% and 28% of our consolidated revenues, respectively.
For the years ended March 31, 2024 and 2023 , one customer accounted for 51% and 44% of our consolidated revenues, respectively.
In addition, this program could diminish our cash reserves. The Company purchased 2,220,914 and no shares of its common stock under the stock repurchase program for the year ended March 31, 2023 and 2022, for a total of $2.2 million and none, respectively.
In addition, this program could diminish our cash reserves. The Company purchased 1,639,125 and 2,220,914 shares of its common stock under the stock repurchase program for the year ended March 31, 2024 and 2023 , for a total of $2.6 million and $2.2 million, respectively.
The Company’s principal sources of liquidity have historically been its debt and equity issuances and its cash and cash equivalents (which cash, cash equivalents and restricted cash amounted to $8.6 million as of March 31, 2023 ).
The Company’s principal sources of liquidity have historically been its debt and equity issuances and its cash and cash equivalents (which cash, cash equivalents and restricted cash amounted to $7.1 million as of March 31, 2024 ).
Note 1 6 — Commitments and Contingencies Contractual Obligations As of March 31, 2023 , the Company is obligated under agreements with Content Providers and other contractual obligations to make guaranteed payments as follows: $8.6 million for the fiscal year ending March 31, 2024 , $0.6 million for the fiscal year ending March 31, 2025 and, $0.3 million for the fiscal year ending March 31, 2026.
Note 15 — Commitments and Contingencies Contractual Obligations As of March 31, 2024 , the Company is obligated under agreements with Content Providers and other contractual obligations to make guaranteed payments as follows: $6.6 million, $0.6 million, $0.5 million and $0.5 million for the fiscal year ending March 31, 2025, 2026, 2027 and 2028, respectively.
The Company evaluated the Amendment Agreement and the amendment was not required to be accounted for as a TDR under ASC 470-60 as no concession was granted to the Company. The Company then evaluated the Amendment Agreement and the amendment was not required to be accounted for as an extinguishment under ASC 470-50, Debt – Modifications and Extinguishment.
The Company evaluated the Amendment Agreement and the amendment was not required to be accounted for as a TDR under ASC 470 - 60 as no concession was granted to the Company.

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