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What changed in LiveOne, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of LiveOne, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+567 added−555 removedSource: 10-K (2023-06-29) vs 10-K (2022-06-29)

Top changes in LiveOne, Inc.'s 2023 10-K

567 paragraphs added · 555 removed · 406 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

58 edited+19 added−15 removed109 unchanged
Biggest changeDuring fiscal years ended March 31, 2022 and 2021, we launched our own franchises including “Music Lives,” our multi-artist virtual festival, “Music Lives ON,” our weekly series of virtual live-streaming performances, “The Lockdown Awards”, our award show celebrating the best in quarantine content, “Self Made” our music competition platform, “The Snubbys”, our award show celebrating deserving artists who should have been but were not nominated for applicable awards, and “The Breakout Awards,” our award show celebrating some of the year’s most iconic music, celebrities and pop culture moments.
Biggest changeDuring 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.
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. 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. 7 We currently run on a responsive HTML-based website that has been developed to work across browsers on any Internet-connected screen.
PodcastOne also majority owns LaunchPadOne, a free innovative podcast hosting, distribution, and monetization platform that provides an end-to-end podcast solution. 6 Members We currently stream our music services for live events globally to music fans worldwide, and with users located in North America for our digital music streaming services. We are currently developing plans to expand our music presence internationally.
PodcastOne also majority owns LaunchPadOne, a free innovative podcast hosting, distribution, and monetization platform that provides an end-to-end podcast solution. Members We currently stream our music services for live events globally to music fans worldwide, and with users located in North America for our digital music streaming services. We are currently developing plans to expand our music presence internationally.
ASCAP licenses songs and scores to the businesses that play them publicly. ● SoundExchange, Inc. – SoundExchange collects and distributes digital performance royalties on behalf of more than 245,000 recording artists and master rights owners and licensees. ● The Music Modernization Act (MMA) updated the copyright law to make statutory licensing more efficient for digital music providers.
ASCAP licenses songs and scores to the businesses that play them publicly. ● SoundExchange, Inc. – SoundExchange (“SX”) collects and distributes digital performance royalties on behalf of more than 245,000 recording artists and master rights owners and licensees. ● The Music Modernization Act (MMA) updated the copyright law to make statutory licensing more efficient for digital music providers.
We also believe the data we generate from our platform will be valuable to Industry Stakeholders and the ability to reach our audience to market more efficiently to them products and services. Platform Innovation Our platform engagement strategy is to build a compelling online and digital experience for our users, anchored by a pioneering website and our custom LiveOne App.
We believe the data we generate from our platform will be valuable to Industry Stakeholders and the ability to reach our audience to market more efficiently to them products and services. Platform Innovation Our platform engagement strategy is to build a compelling online and digital experience for our users, anchored by a pioneering website and our custom LiveOne App.
LiveOne is the first ‘live social music network, delivering premium live-streamed, digital audio and on-demand music experiences from the world’s top music festivals, concerts and events, including having worked with Rock in Rio, Electronic Daisy Carnival (“EDC”) Las Vegas, iHeartRadio’s Wango Tango and many more.
(“CPS”). LiveOne is the first ‘live social music network, delivering premium live-streamed, digital audio and on-demand music experiences from the world’s top music festivals, concerts and events, including having worked with Rock in Rio, Electronic Daisy Carnival (“EDC”) Las Vegas, iHeartRadio’s Wango Tango and many more.
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.
Through our acquisition of Slacker, we are able to add their highly developed enterprise content and user management systems to the LiveOne platform. Once they have been upgraded to work with video as well as audio, they will form the core of LiveOne’s data management platform and personalization system.
Through our acquisition of Slacker, we are able to add their highly developed enterprise content and user management systems to the LiveOne platform. Once they have been upgraded to work with video as well as audio, they will form the core of our data management platform and personalization system.
We also own over 25 trademarks and trademark applications covering our various brands, channels and product names. 12 We intend to protect our trademarks, brands, copyrights, patents and other original and acquired works, ancillary goods and services. In connection with the Slacker acquisition, we acquired a trademark for the Slacker name.
We also own over 25 trademarks and trademark applications covering our various brands, channels and product names. We intend to protect our trademarks, brands, copyrights, patents and other original and acquired works, ancillary goods and services. In connection with the Slacker acquisition, we acquired a trademark for the Slacker name.
During fiscal years ended March 31, 2022 and 2021, we launched our own franchises including “Music Lives,” our multi-artist virtual festival, “Music Lives ON,” our weekly 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, and “The Breakout Awards,” our award show celebrating some of the year’s most iconic music, celebrities and pop culture moments.
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, “The Lockdown Awards”, our award show celebrating the best in quarantine content, “Self Made” our music competition platform, “The Snubbys”, our award show celebrating deserving artists who should have been but were not nominated for applicable awards, and “The Breakout Awards,” our award show celebrating some of the year’s most iconic music, celebrities and pop culture moments.
More recently, some jurisdictions have proposed legislation that would restrict ticketing methods and mandate ticket inventory disclosure. 11 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 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.
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. 14
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
In connection with the Slacker acquisition, we acquired a trademark for the Slacker name. We believe that certain trademarks and other proprietary rights that we may apply for or otherwise obtain will have significant value and will be important to our brand-building efforts and the marketing of our services.
In connection with the Slacker, Inc. (“Slacker”) acquisition, we acquired a trademark for the Slacker name. We believe that certain trademarks and other proprietary rights that we may apply for or otherwise obtain will have significant value and will be important to our brand-building efforts and the marketing of our services.
Intellectual Property We own 15 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.
Intellectual Property 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.
Technology We own 15 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 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.
Geographic Information For additional information regarding our segment, 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.
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.
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, 2022.
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.
According to Edison One and Triton Digital, an estimated 100 million people listened to a podcast each month in 2020 and is expected to reach 125 million in 2022. As podcast listening grows, the addressable market for podcast advertising spend continues to grow.
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.
Furthermore, there are many smaller, regional companies that compete in the market as well. 10 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 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.
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, 2022 and 2021, we had one single customer that represented approximately 28% and 36% 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, 2023 and 2022, we had one single customer that represented approximately 44% and 28% of our total consolidated revenue in the period, respectively.
Included in the total number as of March 31, 2022 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, 2023 are certain members which are the subject of a contractual dispute. We are currently not recognizing revenue related to these members.
Strategy Content During the year ended March 31, 2022, we livestreamed 126 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.
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.
Whenever possible, we use our best efforts to clear music copyright licenses, artist streaming preferences and music publishing rights in advance of usage. ● Post-Implementation Support – once our LiveOne App is activated, we provide technical and network support, which includes 24/7 operational assistance and monitoring of our services and performance.
Whenever possible, we use our best efforts to clear music copyright licenses, artist streaming preferences and music publishing rights in advance of usage. ● Post-Implementation Support – once our customer’s content is activated on the LiveOne App, we provide technical and network support, which includes 24/7 operational assistance and monitoring of our services and performance.
Moreover, we plan to drive more audience to our Music Services platform of as we grow our streamed live events, helping us leverage and lower our overall marketing spending and drive more user growth. Approximately 35% and 51% of our revenue for the years ended March 31, 2022 and 2021, 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 53% and 35% of our revenue for the years ended March 31, 2023 and 2022, respectively, was from our membership services platform.
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, 2022, we live-streamed over 126 events with over 54 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. During the fiscal year ended March 31, 2023, we live-streamed over 31 events with over 10 million views.
We believe that all employees, regardless of our job role or title, have a shared responsibility in the promotion of health and safety in the workplace. We collectively are committed to providing and following all safety laws and rules, including internal policies and procedures.
Workplace Safety Employee health and safety in the workplace is of utmost importance to our Company. We believe that all employees, regardless of our job role or title, have a shared responsibility in the promotion of health and safety in the workplace. We collectively are committed to providing and following all safety laws and rules, including internal policies and procedures.
Beginning mid-March 2020, the current pandemic associated with COVID-19 temporarily shut down the production of all on-ground, live music festivals and events, which resulted in the termination of our agreement with iHeartMedia. 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 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.
In addition, our board of directors is committed to seeking director candidates who can best contribute to the future success of our Company and represent stockholder interests through the exercise of sound judgment and leveraging of the group’s diversity of skills and experience, resulting in board members with diverse backgrounds, including, among other attributes, gender, ethnicity and professional experience. 13 Workplace Safety Employee health and safety in the workplace is of utmost importance to our Company.
In addition, our board of directors is committed to seeking director candidates who can best contribute to the future success of our Company and represent stockholder interests through the exercise of sound judgment and leveraging of the group’s diversity of skills and experience, resulting in board members with diverse backgrounds, including, among other attributes, gender, ethnicity and professional experience.
During the fiscal year ended March 31, 2022, we livestreamed 126 major music festivals and live music events and generated approximately 54 million views worldwide, and as of March 31, 2022, our membership services eclipsed 1,481,000 paid members and approximately 0.8 million monthly active users (“MAUs”) across our audio services.
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.
In 2021, we estimate that streaming revenue was $16.9 billion or approximately 65% of global music sales, and we further expect paid streaming users to surpass 1.2 billion by 2030.
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.
PricewaterhouseCoopers estimated that podcast advertising spend was $1.5 billion in 2020 and is slated to reach $3.5 billion by 2024, annual growth of nearly 20% per their 2020 Global Entertainment and Media Outlook Report.
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.
The production infrastructure consists of servers housed in our data center and caching servers, managed by our partners, distributed across the Internet. The caching servers temporarily store the content and related formats that are in high demand, thereby placing the most popular content closest to user endpoints, reducing latency and the number of content requests sent to our data center.
The caching servers temporarily store the content and related formats that are in high demand, thereby placing the most popular content closest to user endpoints, reducing latency and the number of content requests sent to our data center.
We will work with our developers to continue to iterate, add and tweak features based on internal and external feedback. 8 Our unified LiveOne App ecosystem includes live streaming video, VOD, streaming music stations, podcasts, vodcasts, push notifications, festival-specific functionality, original content video, locally sold and programmatic ads capability, the capability to display time-shifted content and enhanced functionality that will support social media sharing and user community engagement.
Our unified LiveOne App ecosystem includes live streaming video, VOD, streaming music stations, podcasts, vodcasts, push notifications, festival-specific functionality, original content video, locally sold and programmatic ads capability, the capability to display time-shifted content and enhanced functionality that will support social media sharing and user community engagement.
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). 7 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.
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.
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.
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.
Our Industry Globally, we estimated that recorded music revenues increased to $25.1 billion in 2021, up 18.4%. We believe that by 2030, global recorded music revenues will increase to $56 billion. Our addressable market includes streaming of live music and entertainment, Internet radio, audio downloadable music, podcasts and online VOD services.
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.
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.
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.
We use MAUs, which is a non-GAAP financial measure, as a measure of our audience reach and define a MAU as a user of one of our platforms who has logged in and visited our music membership platform, as a unique user, on the day of measurement. 2 Live Music Events We produce, edit, curate and stream live music events through (i) broadband transmission over the Internet and/or satellite networks to our users throughout the world, where permitted (“Digital Live Events”) both advertisers supported and PPV events, and (ii) physical ticket sales of on-location music events and festivals at a variety of indoor clubs and outdoor venues and arenas (“On-premise Live Events”).
Live Music Events We produce, edit, curate and stream live music events through (i) broadband transmission over the Internet and/or satellite networks to our users throughout the world, where permitted (“Digital Live Events”) both advertisers supported and PPV events, and (ii) physical ticket sales of on-location music events and festivals at a variety of indoor clubs and outdoor venues and arenas (“On-premise Live Events”).
Live Music Technology is a key component of our network that brings our ecosystem to life for our users and Content Providers. We currently deliver our video viewer experience through our LiveOne App and an HTML-based website compatible with most major web browsers (e.g., Chrome, Safari, Internet Explorer) and operating systems (e.g., Windows, MacOS, iOS, Android).
We currently deliver our video viewer experience through our LiveOne App and an HTML-based website compatible with most major web browsers (e.g., Chrome, Safari, Internet Explorer) and operating systems (e.g., Windows, MacOS, iOS, Android).
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.
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.
With the onset of COVID-19 in early calendar year 2020, substantially all major live music events to be held in calendar year 2020 were cancelled, including our own Spring Awakening.
As a result of the popularity of live music performances, there has been a growing interest in experiencing live events and performances via online streaming distribution. With the onset of COVID-19 in early calendar year 2020, substantially all major live music events to be held in calendar year 2020 were cancelled, including our own Spring Awakening.
Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The failure by us to obtain such financing would have a material adverse effect upon our business, financial condition and results of operations. Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
We cannot predict, however, whether steps taken by us to protect our proprietary rights will be successful or adequate to prevent misappropriation, infringement or other violation of these rights.
We cannot predict, however, whether steps taken by us to protect our proprietary rights will be successful or adequate to prevent misappropriation, infringement or other violation of these rights. Upon the consummation of any future acquisitions, we may acquire additional registered trademarks, as well as applied-for trademarks potentially for worldwide use.
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.
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).
At March 31, 2022, we operated five 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, 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.
Our users can also access our music platform from our websites, including www.liveone.com and www.slacker.com.
Our users can also access our music platform from our websites, including www.liveone.com and www.slacker.com. Our users may also access our podcasts on www.podcastone.com or our PodcastOne app and acquire merchandise and gifts on www.personalizedplanet.com and www.limogesjewelry.com.
In October 2021, we entered artist and brand development and music-related press relations business through our acquisition of Gramophone. Today, our business is comprised of a single operating segment (hereon referred to as our “operations”).
In October 2021, we entered artist and brand development and music-related press relations business through our acquisition of Gramophone Media (“Gramophone”).
Center for Disease Control and other applicable agencies to maximize the safety and well-being of our employees. 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.
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.
In April 2021, we announced an agreement with Samsung for all PodcastOne distributed content to be available via the Listen tab on Samsung TV. In addition to PodcastOne’s core business, it also built, owns and operates a solution for the growing number of independent podcasters, LaunchPadOne.
In April 2021, we announced an agreement with Samsung for all PodcastOne distributed content to be available via the Listen tab on Samsung TV.
CPS offers thousands of exclusive personalized gift items for family, home, seasonal holidays, and special events along with personalized jewelry. 3 Ancillary Products and Services We also provide our customers the following: ● Regulatory Support – streaming of music is generally subject to copyright protection.
Ancillary Products and Services We also provide our customers the following: ● Regulatory Support – streaming of music is generally subject to copyright protection.
These master files are stored in a secure database and transcoded into various audio formats that are then pushed to our production environment. The production system supports numerous streaming formats as required to serve the numerous end-user consumption devices that our service supports, including mobile handsets, connected car audio systems, smart TVs, HTML web players, etc.
The production system supports numerous streaming formats as required to serve the numerous end-user consumption devices that our service supports, including mobile handsets, connected car audio systems, smart TVs, HTML web players, etc. The production infrastructure consists of servers housed in our data center and caching servers, managed by our partners, distributed across the Internet.
LaunchPadOne is a free innovative self-publishing podcast hosting, distribution, and monetization platform that provides an end-to-end podcast solution. LaunchPadOne was 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 was 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.
We generate revenue through the sale of membership-based services and advertising from our music offerings, from the licensing, advertising and sponsorship of our live music and podcast content rights and services, from our expanding pay-per-view offerings, from retail sales of merchandise and gifts and expect to generate revenue from ticket sales as live events return post-COVID 19 pandemic and other revenue streams.
We generate revenue through the sale of membership-based services and advertising from our music offerings, from the licensing, advertising and sponsorship of our live music and podcast content rights and services, from our expanding pay-per-view offerings and from retail sales of merchandise and gifts. Operations We provide services through a dedicated over-the-top application powered by Slacker (“LiveOne App”) called LiveOne.
The CMS is the platform where podcast episodes are uploaded, really simple syndication (RSS) feeds are created and distributed to listening platforms, and the listening data is analyzed and displayed in a dashboard for the hosts / producers to see.
CMS is the platform where podcast episodes are uploaded, RSS feeds are created and distributed to listening platforms, and the listening data is analyzed and displayed in a dashboard for the creators / producers to see. PodcastOne is one of the few podcast networks with proprietary CMS/Content Delivery Network (“CDN”) that allows for optimized programmatic capabilities and improved audience analytics.
Our users may also access our podcasts on www.podcastone.com or our PodcastOne app and acquire merchandise and gifts on www.personalizedplanet.com and www.limogesjewelry.com. 1 Historically, we acquired the rights to stream our live and recorded music and broadcasts from a combination of festival owners and promoters, such as Anschutz Entertainment Group (“AEG”) and Live Nation Entertainment, Inc.
Historically, we acquired the rights to stream our live and recorded music and broadcasts from a combination of festival owners and promoters, such as Anschutz Entertainment Group (“AEG”) and Live Nation Entertainment, Inc. (“Live Nation”), music labels, including Universal Music, Warner Music and Sony Music, and through individual music publishers and rights holders.
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. If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement our plan of operations.
If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement our plan of operations. We may be required to obtain alternative or additional financing, from financial institutions or otherwise, in order to maintain and expand our existing operations.
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. 9 Expanding Podcasting Reach PodcastOne has built, owns and operates a solution for the growing number of independent podcasters called LaunchPadOne.
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.
This fully owned and operated enterprise CMS rivals other paid platforms such as Megaphone (Spotify owned), Art19 (Amazon owned) and SimpleCast (SiriusXM/Pandora owned). The CMS day to day operation and maintenance is managed by a vendor we contract with and is constantly being updated to be a best-in-class system.
The CMS day to day operation and maintenance is managed by a vendor we contract with and is constantly being updated to be a best-in-class system. We provide analytical support that creators need to optimize their performance and focus on doing what they do best — creating unique, entertaining experiences to share with fans around the world.
Removed
(“Slacker”) operating as LiveOne powered by Slacker, (3) a leading podcasting platform operating as PodcastOne (“PodcastOne”), (4) producer of original music-related content, including live music festivals, concerts and events through React Presents LLC (“React Presents”), and (5) a retailer of personalized merchandise and gifts operating as Custom Personalization Solutions, Inc. (“CPS”).
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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”).
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Operations We provide services through a dedicated over-the-top application powered by Slacker (“LiveOne App”) called LiveOne.
Added
We use MAUs, which is a non-GAAP financial measure, as a measure of our audience reach and define a MAU as a user of one of our platforms who has logged in and visited our music membership platform, as a unique user, on the day of measurement.
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(“Live Nation”), music labels, including Universal Music, Warner Music and Sony Music, and through individual music publishers and rights holders. In March 2019, we entered into a multi-year agreement with iHeartMedia that combines content, production, distribution and promotion, which was further extended in March 2020, giving us exclusive global livestreaming rights to over 20 of their events per year.
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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.
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In February 2020, we acquired React Presents, giving us the capability to produce and stream over 200 events annually, including React Presents’ tent pole festival Spring Awakening. 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.
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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.
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In February 2020, we acquired React Presents, a Chicago based live music promoter which promoted, produced and ran over 200 live events in 2019, including React Presents’ owned tent pole festival Spring Awakening.
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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.
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As a result of the popularity of live music performances, there has been a growing interest in experiencing live events and performances via online streaming distribution.
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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.
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To address this growing opportunity, we acquired React Presents in February 2020, which promoted, produced and ran over 200 live events in 2019, including its tent pole Spring Awakening, one of the largest music festivals in the Chicago, Illinois and drawing a large regional audience.
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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.
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These events featured artists such as Pitbull, Wiz Khalifa, Dierks Bentley, Billie Eilish, and The Foo Fighters, in addition to our own internally developed franchises such as “Music Lives,” our largest digital music event, “Music Lives ON,” our weekly series of virtual live-streaming performances, “The Snubbys”, our award show celebrating deserving artists who should have been but were not nominated for applicable awards, and “The Breakout Awards,” our award show celebrating some of the year’s most iconic music, celebrities and pop culture moments.
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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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Upon the consummation of any future acquisitions, we may acquire additional registered trademarks, as well as applied-for trademarks potentially for worldwide use. 5 Streaming Internet Radio We continuously obtain high-quality digital content and associated data from the record labels.
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Streaming Internet Radio We continuously obtain high-quality digital content and associated data from the record labels. These master files are stored in a secure database and transcoded into various audio formats that are then pushed to our production environment.
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Podcasting PodcastOne is one of the few podcast networks with proprietary Content Management System (“CMS”)/Content Delivery Network (“CDN”) that allows for optimized programmatic capabilities and improved audience analytics. Our hosts/talent are also able to view their download numbers, trends and analytics on this proprietary software, something many competitors don’t provide.
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Podcasting PodcastOne has built an internal Content Management System (“CMS”) that creators and producers can use to track metrics about shows on an episode-by-episode basis.
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The diversification of our revenue streams was driven by increases in ticket and event revenue as an overall percentage of total revenues from 3% to 17% along with the increase in the number of digital-only live events and live views across our platform, however growth in paid sponsorship revenue remained constant at 6%.
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Our hosts/talent are also able to view their download numbers, trends and analytics on this proprietary software, something many competitors don’t provide. This fully owned and operated enterprise CMS rivals other paid platforms such as Megaphone (Spotify owned), Art19 (Amazon owned) and SimpleCast (SiriusXM/Pandora owned).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

272 edited+100 added−71 removed646 unchanged
Biggest changeThe 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. ● Our limited operating history makes it difficult to evaluate our current business and future prospects, and we may be unsuccessful in executing our business model. ● 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. ● The COVID-19 pandemic adversely impacted our ability to produce on-premise live events, and to a lesser extent portions of our programmatic advertising revenue; the pandemic also adversely affected the global economy, which adversely impacted other parts of our business, including our ability to access capital markets, if and when required. ● The ability of our employees to work may be significantly impacted by the coronavirus. ● We cannot predict the impact of the COVID-19 pandemic on our customers, suppliers, vendors, and other business partners, and the full effects of the COVID-19 pandemic are highly uncertain and cannot be predicted. ● 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. ● 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. ● Our ability to increase the number of our listeners depends in part on our ability to establish and maintain relationships with automakers, automotive suppliers and consumer electronics manufacturers with products that integrate our service. ● We may be unsuccessful in developing our original content. ● 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. ● Expansion of our content beyond live events and pre-recorded music, such as podcasts, subjects us to additional business, legal, financial and competitive risks. 15 ● We face significant competition for advertiser and sponsorship spend. ● Emerging industry trends in digital advertising may pose challenges for our ability to forecast or optimize our advertising inventory, which may adversely impact our ad-supported revenue. ● Negative media coverage could adversely affect our business. ● Our business depends on a strong brand, and any failure to maintain, protect and enhance our brand would hurt our ability to retain or expand our base of ad-supported users, paid members and advertisers. ● We plan to expand into international markets in the 2023 fiscal year, which would subject us to risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to such markets, which could adversely affect our business, financial condition and results of operations.
Biggest changeThe 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.
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.
We cannot guarantee that our licenses with collecting societies and its direct licenses with publishers provide full coverage for all of the musical compositions we make available to our users in such countries.
We cannot guarantee that its licenses with collecting societies and its direct licenses with publishers provide full coverage for all of the musical compositions we make available to our users in such countries.
During these periods, we may not have assurance of long-term access to such rights holders’ content, which could have a material adverse effect on its business and could lead to potential copyright infringement claims. It is also possible that such agreements will never be renewed at all.
During these periods, we may not have assurance of long-term access to such rights holders’ content, which could have a material adverse effect on its business and could lead to potential copyright infringement claims. It also is possible that such agreements will never be renewed at all.
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.
In addition, the promulgation of new laws, rules and regulations could restrict or unfavorably impact our business, which could decrease demand for services, reduce revenue, increase costs and subject us to additional liabilities.
In addition, the promulgation of new laws, rules and regulations could restrict or unfavorably impact our business, which could decrease demand for services, reduce revenue, increase costs and subject us to additional liabilities.
From time to time, federal, state and local authorities and consumers commence investigations, inquiries or litigation with respect to our compliance with applicable consumer protection, advertising, unfair business practice, antitrust (and similar or related laws) and other laws. We may be required to incur significant legal expenses in connection with the defense of future governmental investigations and litigation.
From time to time, federal, state and local authorities and consumers commence investigations, inquiries or litigation with respect to our compliance with applicable consumer protection, advertising, unfair business practice, antitrust (and similar or related laws) and other laws. We may be required to incur significant legal expenses in connection with the defense of future governmental investigations and litigation.
Our festival and events operations are subject to federal, state and local laws, statutes, rules, regulations, policies and procedures, which are subject to change at any time, governing matters such as: ● operation of venues; ● licensing, permitting and zoning, including ordinances relating to health, noise, traffic and pollution; ● human health, safety and sanitation requirements; ● the service of food and alcoholic beverages; ● working conditions, labor, minimum wage and hour, citizenship and employment laws; ● the ADA; ● the FCPA and similar regulations in other countries; ● sales and other taxes and withholding of taxes; ● privacy laws and protection of personally identifiable information; ● marketing activities via the telephone and online; and ● primary ticketing and ticket resale services. 73 Our failure to comply with these laws and regulations could result in fines and proceedings against us by governmental agencies and consumers, which if material, could adversely affect our business, financial condition and results of operations.
Our festival and events operations are subject to federal, state and local laws, statutes, rules, regulations, policies and procedures, which are subject to change at any time, governing matters such as: ● operation of venues; ● licensing, permitting and zoning, including ordinances relating to health, noise, traffic and pollution; ● human health, safety and sanitation requirements; ● the service of food and alcoholic beverages; ● working conditions, labor, minimum wage and hour, citizenship and employment laws; ● the ADA; ● the FCPA and similar regulations in other countries; ● sales and other taxes and withholding of taxes; ● privacy laws and protection of personally identifiable information; ● marketing activities via the telephone and online; and ● primary ticketing and ticket resale services. 69 Our failure to comply with these laws and regulations could result in fines and proceedings against us by governmental agencies and consumers, which if material, could adversely affect our business, financial condition and results of operations.
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. 43 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 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.
New taxes and rulings could also create significant increases in internal costs necessary to capture data and collect and remit taxes. Any of these events could have a material adverse effect on our business, financial condition and operating results. We face intense competition and may not be able to compete successfully against existing or future competitors.
New taxes and rulings could also create significant increases in internal costs necessary to capture data and collect and remit taxes. Any of these events could have a material adverse effect on our business, financial condition and operating results. 63 We face intense competition and may not be able to compete successfully against existing or future competitors.
Failure to obtain or retain rights to podcasts or other non-music content on acceptable terms, or at all, to successfully monetize and generate revenues from such content, or to effectively manage the numerous risks and challenges associated with such expansion could adversely affect our business and financial condition. 29 We face significant competition for advertiser and sponsorship spend.
Failure to obtain or retain rights to podcasts or other non-music content on acceptable terms, or at all, to successfully monetize and generate revenues from such content, or to effectively manage the numerous risks and challenges associated with such expansion could adversely affect our business and financial condition. We face significant competition for advertiser and sponsorship spend.
Errors or inaccuracies in our metrics or data could result in incorrect business decisions and inefficiencies. In addition, advertisers generally rely on third-party measurement services to calculate our metrics, and these third-party measurement services may not reflect our true audience. Some of our demographic data also may be incomplete or inaccurate because listeners self-report their names and dates of birth.
Errors or inaccuracies in PodcastOne’s metrics or data could result in incorrect business decisions and inefficiencies. In addition, advertisers generally rely on third-party measurement services to calculate our metrics, and these third-party measurement services may not reflect our true audience. Some of our demographic data also may be incomplete or inaccurate because listeners self-report their names and dates of birth.
The adoption or modification of laws or regulations relating to the Internet or other areas of our business could limit or otherwise adversely affect the manner in which we currently conduct our business. For example, certain jurisdictions have implemented or are contemplating implementing laws which may negatively impact our automatic renewal structure or our free or discounted trial incentives.
The adoption or modification of laws or regulations relating to the Internet or other areas of PodcastOne’s business could limit or otherwise adversely affect the manner in which we currently conduct our business. For example, certain jurisdictions have implemented or are contemplating implementing laws which may negatively impact our automatic renewal structure or our free or discounted trial incentives.
There can be no assurance that consumer and corporate spending will not be adversely impacted by current economic conditions, or by any further or future deterioration in economic conditions, thereby possibly impacting our operating results and growth. 39 During past economic slowdowns and recessions, many consumers reduced their discretionary spending and advertisers reduced their advertising expenditures.
There can be no assurance that consumer and corporate spending will not be adversely impacted by current economic conditions, or by any further or future deterioration in economic conditions, thereby possibly impacting our operating results and growth. During past economic slowdowns and recessions, many consumers reduced their discretionary spending and advertisers reduced their advertising expenditures.
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. 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 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. 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 Further, the digital advertising industry is shifting to data-driven technologies and advertising products, such as automated buying.
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. 50 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. 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.
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. 35 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 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.
Ellin and Sullivan have extensive knowledge about our business and our operations, and the loss of either of them or any other key member of our senior management (including senior management of Slacker) would likely have a material adverse effect on our business and operations. We do not currently maintain a key-person insurance policy for either of Messrs.
Ellin and Sullivan have extensive knowledge about our business and our operations, and the loss of either of them or any other key member of our senior management (including senior management of Slacker and PodcastOne) would likely have a material adverse effect on our business and operations. We do not currently maintain a key-person insurance policy for either of Messrs.
Any errors, bugs or other vulnerabilities discovered in the underlying code or backend after release could damage our reputation, drive away listeners, allow third parties to manipulate or exploit our software, lower revenue and expose us to claims for damages, any of which could seriously harm our business.
Any errors, bugs or other vulnerabilities discovered in the underlying code or backend after release could damage our reputation, drive away listeners, allow third parties to manipulate or exploit our software, lower revenue and expose us to claims for damages, any of which could seriously harm PodcastOne’s business.
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. 49 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. 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.
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. 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 We will continue to incur significant increased costs as a result of operating as a public company.
As a result, if any events occur to reduce the amount of advertising spending during the fourth quarter, or reduce the amount of inventory available to advertisers during that period, it could have a disproportionate adverse effect on our podcasting revenue and operating results for that fiscal year.
As a result, if any events occur to reduce the amount of advertising spending during the fourth quarter, or reduce the amount of inventory available to advertisers during that period, it could have a disproportionate adverse effect on its podcasting revenue and our operating results for that fiscal year.
We will incur additional costs complying with these additional obligations and any failure or perceived failure to comply would adversely affect our business and reputation. 67 Changes in tax treatment of companies engaged in e-commerce may adversely affect the commercial use of our sites and our financial results.
We will incur additional costs complying with these additional obligations and any failure or perceived failure to comply would adversely affect our business and reputation. Changes in tax treatment of companies engaged in e-commerce may adversely affect the commercial use of our sites and our financial results.
If we are unable to increase our prices to offset the effects of inflation, our business, operating results, and financial condition could be materially and adversely affected. 42 Unfavorable outcomes in legal proceedings may adversely affect our business, financial conditions and results of operations. Our results may be affected by the outcome of future litigation.
If we are unable to increase our prices to offset the effects of inflation, our business, operating results, and financial condition could be materially and adversely affected. Unfavorable outcomes in legal proceedings may adversely affect our business, financial conditions and results of operations. Our results may be affected by the outcome of future litigation.
A number of parties have already stated they would appeal this order, and it is possible United States Congress may adopt legislation restoring some of the “open Internet rules.” If, as a result of the repeal of “open Internet rules,” broadband providers in the United States decrease access to certain content, start entering into arrangements with specific Content Providers for faster or better access over their data networks, or otherwise unfairly discriminate against Content Providers like us, this could increase our cost of doing business and put us at a competitive disadvantage relative to larger competitors.
A number of parties have already stated they would appeal this order, and it is possible United States Congress may adopt legislation restoring some of the “open Internet rules.” If, as a result of the repeal of “open Internet rules,” broadband providers in the United States decrease access to certain content, start entering into arrangements with specific Content Providers for faster or better access over their data networks, or otherwise unfairly discriminate against Content Providers like LiveOne and PodcastOne, this could increase our cost of doing business and put us at a competitive disadvantage relative to larger competitors.
In addition, this program 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. Mr.
In addition, this program could diminish our cash reserves. 72 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. Mr.
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. 33 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 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.
Additionally, changes in law may be implemented, or changes in interpretation of such laws may occur, that may affect our ability to protect and enforce our patents and other intellectual property. 52 We may be accused of infringing upon intellectual property rights of third parties.
Additionally, changes in law may be implemented, or changes in interpretation of such laws may occur, that may affect our ability to protect and enforce our patents and other intellectual property. We may be accused of infringing upon intellectual property rights of third parties.
We are aware of a number of judicial decisions and legislative proposals that could bring about major reforms in worker classification, including the California legislature’s recent passage of California Assembly Bill 5 (“AB 5”).
We are aware of a number of judicial decisions and legislative proposals that could bring about major reforms in worker classification, including the California legislature’s passage of California Assembly Bill 5 (“AB 5”).
A failure to adequately control fraudulent credit card transactions would harm our business and results of operations. 55 Regulatory and business practice developments relating to personal information of our users and/or failure to adequately protect the personal information of our users may adversely affect our business.
A failure to adequately control fraudulent credit card transactions would harm our business and results of operations. Regulatory and business practice developments relating to personal information of our users and/or failure to adequately protect the personal information of our users may adversely affect our business.
Online platforms may limit our access to information about users, limiting our ability to convert and retain them. Online platforms also may deny access to application programming interfaces (“API”) or documentation, limiting functionality of our services on the platform.
Online platforms may limit PodcastOne's access to information about users, limiting our ability to convert and retain them. Online platforms also may deny access to application programming interfaces (“API”) or documentation, limiting functionality of our services on the platform.
As a result, we may experience increased difficulty obtaining high policy limits of coverage at reasonable costs, including coverage for acts of terrorism and weather-related property damage. 71 We cannot guarantee that our insurance policy coverage limits, including insurance coverage for property, casualty, liability, artist and business interruption losses and acts of terrorism, would be adequate under the circumstances should one or multiple adverse events occur at or near any of our venues or events, or that our insurers would have adequate financial resources to pay our related claims.
As a result, we may experience increased difficulty obtaining high policy limits of coverage at reasonable costs, including coverage for acts of terrorism and weather-related property damage. 67 We cannot guarantee that our insurance policy coverage limits, including insurance coverage for property, casualty, liability, artist and business interruption losses and acts of terrorism, would be adequate under the circumstances should one or multiple adverse events occur at or near any of our venues or events, or that our insurers would have adequate financial resources to pay our related claims.
For example, from time to time, our license agreements with certain rights holders and/or their agents expire while we negotiate their renewals and, per industry custom and practice, we may enter into brief (for example, month-, week-, or even days-long) extensions of those agreements or provisional licenses and/or continue to operate on an at will basis as if the license agreement had been extended, including by our continuing to make content available.
For example, from time to time, our license agreements with certain rights holders and/or their agents may expire while we negotiate their renewals and, per industry custom and practice, we may enter into brief (for example, month-, week-, or even days-long) extensions of those agreements or provisional licenses and/or continue to operate on an at will basis as if the license agreement had been extended, including by our continuing to make music available.
Such integrations may not be replaceable, and so loss of any such integrations could materially impact our business and our results of operations and we may lose listeners. Our business and revenues could also be affected by social issues or disruptions.
Such integrations may not be replaceable, and so loss of any such integrations could materially impact our business and our results of operations and we and/or PodcastOne may lose listeners. Our business and revenues could also be affected by social issues or disruptions.
Regardless of whether any claims made against us are valid or whether we are liable, we may be adversely affected by negative publicity resulting from such laws. 72 Certain activities or conduct, such as illegal drug use, at our in person festivals or events or festival or events we produce may expose us to liability, cause us to lose business licenses or government approvals, result in the cancellation of all or a part of an event or festival or result in adverse publicity.
Regardless of whether any claims made against us are valid or whether we are liable, we may be adversely affected by negative publicity resulting from such laws. 68 Certain activities or conduct, such as illegal drug use, at our in person festivals or events or festival or events we produce may expose us to liability, cause us to lose business licenses or government approvals, result in the cancellation of all or a part of an event or festival or result in adverse publicity.
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. 32 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 We have historically been required to spend significant resources to establish and maintain our brands.
Changes to the terms of these social networking services to limit promotional communications, any restrictions that would limit our ability or our customers’ ability to send communications through their services, disruptions or downtime experienced by these social networking services or decline in the use of or engagement with social networking services by customers and potential customers could materially adversely affect our business, financial condition and operating results. 66 We are subject to risks related to online payment methods.
Changes to the terms of these social networking services to limit promotional communications, any restrictions that would limit our ability or our customers’ ability to send communications through their services, disruptions or downtime experienced by these social networking services or decline in the use of or engagement with social networking services by customers and potential customers could materially adversely affect our business, financial condition and operating results. 62 We are subject to risks related to online payment methods.
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. 31 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 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.
If we are unable to retain and attract users, our network and services could also be less attractive to potential new users, as well as to Content Providers and other Industry Stakeholders, which could have a material and adverse impact on our business, financial condition and results of operations. 25 Our ability to attract and retain users is highly sensitive to rapidly changing public tastes in music and technology.
If we are unable to retain and attract users, our network and services could also be less attractive to potential new users, as well as to Content Providers and other Industry Stakeholders, which could have a material and adverse impact on our business, financial condition and results of operations. 20 Our ability to attract and retain users is highly sensitive to rapidly changing public tastes in music and technology.
We currently generate substantially all of our revenue from advertising and sponsorship, which is dependent on the number of listeners consuming our podcast content that we attract.
We currently generate substantially all of our revenue from advertising and sponsorship, which is dependent on the number of listeners consuming its podcast content that we attract.
For example, if there is public disapproval or boycotting of a specific podcasting platform, such as Spotify or other podcasting platform, our ability to optimize ad placement or to forecast listener metrics may be impacted based on unforeseen trends or events. Our revenue model also depends in part on high impression volumes, the growth of which may not be sustained.
For example, if there is public disapproval or boycotting of a specific podcasting platform, such as Spotify or other podcasting platform, PodcastOne’s ability to optimize ad placement or to forecast listener metrics may be impacted based on unforeseen trends or events. PodcastOne’s revenue model also depends in part on high impression volumes, the growth of which may not be sustained.
System interruption and the lack of integration and redundancy in the information systems and infrastructures, both of our own systems and other computer systems and of affiliate and third-party software, Wi-Fi and other communications systems service providers on which we rely, may adversely affect our ability to operate websites, process and fulfill transactions, respond to user inquiries and generally maintain cost-efficient operations.
System interruption and the lack of integration and redundancy in the information systems and infrastructures, both of our own systems and other computer systems and of affiliate and third-party software, Wi-Fi and other communications systems service providers on which we rely, may adversely affect our ability to operate websites, process and fulfill transactions, respond to listener inquiries and generally maintain cost-efficient operations.
If our competitors’ platforms offer higher revenue sharing percentage with an intent to attract our popular podcast content creators, costs to retain such content creators may increase.
If PodcastOne’s competitors’ platforms offer higher revenue sharing percentage with an intent to attract our popular podcast content creators, costs to retain such content creators may increase.
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. 80 In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law (“Section 203”) regulating corporate takeovers.
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. 74 In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law (“Section 203”) regulating corporate takeovers.
Furthermore, consumer preferences change from time to time, and our failure to anticipate, identify or react to these changes could result in reduced demand for our services, which would adversely affect our business, financial condition and results of operations. 74 Poor weather adversely affects attendance at our live music events, which could negatively impact our financial performance from period to period.
Furthermore, consumer preferences change from time to time, and our failure to anticipate, identify or react to these changes could result in reduced demand for our services, which would adversely affect our business, financial condition and results of operations. 70 Poor weather adversely affects attendance at our live music events, which could negatively impact our financial performance from period to period.
The lack of renewal, or termination, of one or more of our license agreements, or the renewal of a license agreement on less favorable terms, could have a material adverse effect on its business, financial condition, and results of operations. 48 Difficulties in obtaining accurate and comprehensive information necessary to identify the compositions embodied in sound recordings on Slacker’s services and the ownership thereof may impact Slacker’s ability to perform its obligations under its licenses, affect the size of its catalog, impact its ability to control content acquisition costs, and lead to potential copyright infringement claims.
The lack of renewal, or termination, of one or more of our license agreements, or the renewal of a license agreement on less favorable terms, also could have a material adverse effect on its business, financial condition, and results of operations. 42 Difficulties in obtaining accurate and comprehensive information necessary to identify the compositions embodied in sound recordings on Slacker’s services and the ownership thereof may impact Slacker’s ability to perform its obligations under its licenses, affect the size of its catalog, impact its ability to control content acquisition costs, and lead to potential copyright infringement claims.
Additionally, 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. 34 The European Union (the “EU”) currently requires equal access to Internet content.
Additionally, 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. 28 The European Union (the “EU”) currently requires equal access to Internet content.
However, these are subject to change by such providers from time to time and in many instances the provider may choose to terminate these contracts without cause and with short notice periods. Many of these agreements are short term with automatic renewal provisions, and there can be no assurances that such providers will agree to renew their agreements with us.
However, these are subject to change by such providers from time to time and in many instances the provider may choose to terminate these contracts without cause and with short notice periods. Many of these agreements are short term with automatic renewal provisions, and there can be no assurances that such providers will agree to renew their agreements with PodcastOne.
Similarly, online platforms may force us to use the platform’s payment processing systems which may be inferior to and more costly than other payment processing services available in the market. Online platforms frequently change the rules and requirements for services like ours to access the platform, and such changes may adversely affect the success or desirability of our services.
Similarly, online platforms may force us to use the platform’s payment processing systems which may be inferior to and more costly than other payment processing services available in the market. Online platforms frequently change the rules and requirements for services like PodcastOne to access the platform, and such changes may adversely affect the success or desirability of our services.
For our fiscal years ended March 31, 2022 and 2021, 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.
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.
Furthermore, the popularity and audience loyalty of our key podcasts is highly sensitive to rapidly changing public tastes. A loss of such popularity or audience loyalty is beyond our control and could have a material adverse effect on our ability to attract local and/or national advertisers and on our revenue and/or ratings, and could result in increased expenses.
Furthermore, the popularity and audience loyalty of its key podcasts is highly sensitive to rapidly changing public tastes. A loss of such popularity or audience loyalty is beyond our control and could have a material adverse effect on PodcastOne’s ability to attract local and/or national advertisers and on our revenue and/or ratings, and could result in increased expenses.
Competition for these podcasts and talent is intense and certain of these talent and podcasts are under no legal obligation to remain with us after the expiration of their podcast license agreements. Our competitors may choose to extend offers to any of these podcasts and/or talent on terms which we may be unwilling to meet.
Competition for these podcasts and talent is intense and certain of these talent and podcasts are under no legal obligation to remain with us after the expiration of their podcast license agreements. PodcastOne’s competitors may choose to extend offers to any of these podcasts and/or talent on terms which we may be unwilling to meet.
If advertisers reduce their overall advertising spending, our revenue and results of operations are directly affected. Many advertisers devote a disproportionate amount of their advertising budgets to the fourth quarter of the calendar year to coincide with increased holiday purchasing, and buyers may spend more in the fourth quarter for budget reasons.
If advertisers reduce their overall advertising spending, PodcastOne’s revenue and results of operations are directly affected. Many advertisers devote a disproportionate amount of their advertising budgets to the fourth quarter of the calendar year to coincide with increased holiday purchasing, and buyers may spend more in the fourth quarter for budget reasons.
If our customers adjust their buying patterns or alter their preference to higher CPM ad inventory, our business, financial condition, and results of operations may be harmed. Our advertising sales depend on how our listener data is collected and how advertisers select their ad listener targeting in the future.
If PodcastOne’s customers adjust their buying patterns or alter their preference to higher CPM ad inventory, our business, financial condition, and results of operations may be harmed. PodcastOne’s advertising sales depend on how its listener data is collected and how advertisers select their ad listener targeting in the future.
Risks Related to Our Acquisition Strategy ● We can give no assurances as to when we will consummate any future acquisitions or whether we will consummate any of them at all. 16 Risks Related to Technology and Intellectual Property ● We rely heavily on technology to stream content and manage other aspects of our operations and on our Content Management System (“CMS”).
Risks Related to Our Acquisition Strategy ● We can give no assurances as to when we will consummate any future acquisitions or whether we will consummate any of them at all. Risks Related to Technology and Intellectual Property ● We rely heavily on technology to stream content and manage other aspects of our operations and on our Content Management System.
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. 27 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 We may be unsuccessful in developing our original content.
Beyond fiscal year ended March 31, 2022, 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, 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.
Any such event could adversely impact our business, operating results, and financial condition. 59 Increases in the costs in relation to podcast content creators, such as higher hosts’ compensation and costs of discovering and cultivating a top podcast content creator, may have an adverse effect on our business, financial condition and results of operations.
Any such event could adversely impact our business, operating results, and financial condition. 55 Increases in the costs in relation to podcast content creators, such as higher hosts’ compensation and costs of discovering and cultivating a top podcast content creator, may have an adverse effect on our business, financial condition and results of operations.
Changes in our services or those operating systems, hardware, networks, regulations, or standards, and our limitations on our ability to access those platforms, operating systems, hardware or networks may seriously harm our business. Our services require high-bandwidth data capabilities. If the costs of data usage increase or access to data networks is limited, our business may be seriously harmed.
Changes in PodcastOne’s services or those operating systems, hardware, networks, regulations, or standards, and PodcastOne’s limitations on its ability to access those platforms, operating systems, hardware or networks may seriously harm its business. PodcastOne’s services require high-bandwidth data capabilities. If the costs of data usage increase or access to data networks is limited, our business may be seriously harmed.
We currently produce and plan to continue to produce original music-related video content, including LiveZone, and our other digital magazine-style news programming and original-concept digital pilots, documentaries and other original content. We believe that a positive reputation with users concerning our original content is important in attracting and retaining users.
We currently produce and plan to continue to produce original music-related video content, including LiveZone and One Rising, and our other digital magazine-style news programming and original-concept digital pilots, documentaries and other original content. We believe that a positive reputation with users concerning our original content is important in attracting and retaining users.
Apple or Spotify may determine to only host shows that are proprietary to them, which would have a significant effect on our ability to offer our podcasts to larger group of listeners and would materially adversely affect our business, results of operations and financial condition.
Apple or Spotify may determine to only host shows that are proprietary to them, which would have a significant effect on PodcastOne’s ability to offer its podcasts to larger group of listeners and would materially adversely affect our business, results of operations and financial condition.
The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting. It also is likely that if our business grows and evolves and our solutions are used more globally, we will become subject to laws and regulations in additional jurisdictions.
The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting. It also is likely that if PodcastOne’s business grows and evolves and our solutions are used more globally, it will become subject to laws and regulations in additional jurisdictions.
Risks Related to Our Company ● For the years ended March 31, 2022 and 2021, 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, 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.
In addition, due to the global COVID-19 pandemic and various government actions taken as a result continuing, we postponed React Presents’ flagship annual Spring Awakening festival from 2022 to 2023 and canceled most of the 2022 events and festivals that React produces.
In addition, due to the global COVID-19 pandemic and various government actions taken as a result continuing, we postponed React Presents’ flagship annual Spring Awakening festival and canceled most of the 2022 events and festivals that React produces.
We cannot be sure that the Slacker Radio app will continue to, or that the LiveOneApp and/or the PodcastOne App or our CMS technology or any enhancements or other modifications we make in the future to such technology or accompanying third-party technology or integration of such third-party technology will perform as intended.
We cannot be sure that the Slacker Radio app will continue to, or that the LiveOne App and/or the PodcastOne App or our CMS technology or any enhancements or other modifications we make in the future to such technology or accompanying third-party technology or integration of such third-party technology will perform as intended.
Our tech providers have a practice of updating their tech solutions and software and some errors in their technology and software may be discovered only after a product has been used by listeners, and may in some cases be detected only under certain circumstances or after extended use.
PodcastOne’s tech providers have a practice of updating their tech solutions and software and some errors in their technology and software may be discovered only after a product has been used by listeners, and may in some cases be detected only under certain circumstances or after extended use.
We may not be successful in attracting and retaining such personnel. 65 Our business may be adversely affected if we are unable to provide our customers a cost-effective shopping platform that is able to respond and adapt to rapid changes in technology.
We may not be successful in attracting and retaining such personnel. 61 Our business may be adversely affected if we are unable to provide our customers a cost-effective shopping platform that is able to respond and adapt to rapid changes in technology.
Even if we are willing to match our competitors’ terms, the profitability of our events could decline. 70 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 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.
Factors that affect the amount of advertising spending, such as economic downturns, can make it difficult to predict our revenue and could adversely affect our business. Our business depends on the overall demand for advertising and on the economic health of our current and prospective advertisers.
Factors that affect the amount of advertising spending, such as economic downturns, can make it difficult to predict our revenue and could adversely affect its business. PodcastOne’s business depends on the overall demand for advertising and on the economic health of its current and prospective advertisers.
Economic downturns or instability in political or market conditions generally may cause current or new advertisers to reduce their advertising budgets. Adverse economic conditions and general uncertainty about economic prospects in the future are likely to affect our business prospects.
Economic downturns or instability in political or market conditions generally may cause current or new advertisers to reduce their advertising budgets. Adverse economic conditions and general uncertainty about economic prospects in the future are likely to affect PodcastOne’s business prospects.
Additionally, there is a risk that rights holders, creators, performers, writers and their agents, or societies, unions, guilds, or legislative or regulatory bodies will create or attempt to create new rights or regulations that could require Slacker to enter into license agreements with, and pay royalties to, newly defined groups of rights holders, some of which may be difficult or impossible to identify.
Additionally, there is a risk that rights holders, creators, performers, writers and their agents, or societies, unions, guilds, or legislative or regulatory bodies will create or attempt to create new rights that could require us to enter into license agreements with, and pay royalties to, newly defined groups of rights holders, some of which may be difficult or impossible to identify.
If we are unable to retain the key personnel of the acquired businesses, we may not be able to achieve the anticipated benefits and synergies of an acquisition. 46 We engage a number of consultants to work for us.
If we are unable to retain the key personnel of the acquired businesses, we may not be able to achieve the anticipated benefits and synergies of an acquisition. 40 We engage a number of consultants to work for us.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that each of these properties are in good condition and suitable for the conduct of our business. 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.
Biggest changeWe 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 2. Properties Effective January 1, 2021, our temporary principal executive offices are located at 269 S. Beverly Drive, Suite #1450, Beverly Hills, 90212. We intend to combine all of our Los Angeles-based operations under one address.
Item 2. Properties Effective January 1, 2021, our principal executive offices are located at 269 S. Beverly Drive, Suite #1450, Beverly Hills, CA 90212. We intend to combine all of our Los Angeles-based operations under one address.
Removed
Slacker leases its San Diego premises located at 16935 West Bernardo Drive, Suite #270, San Diego, CA 92127, under operating leases which expired on December 31, 2021, and is currently month to month.
Added
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.
Removed
React Presents leased its Chicago, Illinois premises under an operating lease which expired October 9, 2020 and was month to month until terminated effective April 30, 2022. CPS leases its Chicago premises located at 31 Mitchell Court, Addison, IL 60101, under an operating lease which expires on June 30, 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLitigation 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. Item 4. Mine Safety Disclosures Not applicable. 82 PART II
Biggest changeLitigation 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.
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.
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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFiscal Year 2021 During the fiscal year ended March 31, 2021, we issued an aggregate of 10,428,085 shares of our common stock and no shares of unregistered restricted stock units to our consultants, employees, and vendors, respectively.
Biggest changeFiscal 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.
Recent Sales of Unregistered Securities Other than as set forth below and as reported in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, there have been no other sales or issuances of unregistered securities since April 1, 2019 were not registered under the Securities Act of 1933, as amended (the “Securities Act”).
Recent Sales of Unregistered Securities Other than as set forth below and as reported in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, there have been no other sales or issuances of unregistered securities since April 1, 2020 were not registered under the Securities Act of 1933, as amended (the “Securities Act”).
Number of Holders As of May 31, 2022, there were 416 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 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.
Issuance of Securities in Private Offerings for Cash Fiscal Years 2022, 2021 and 2020 None. 83 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 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.
Issuances of Shares, Options and Restricted Stock Units to 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 and no shares of unregistered restricted stock units to our consultants, employees, and vendors, respectively.
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.
Issuer Purchases of Equity Securities In December 2020, we announced that our board of directors has authorized the repurchase up to 2 million shares of our outstanding common stock from time to time.
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.
In addition, this program could diminish our cash reserves. As of March 31, 2022, there have been no repurchases of our outstanding common stock.
In addition, this program could diminish our cash reserves.
Removed
Fiscal Year 2020 During the fiscal year ended March 31, 2020, we issued an aggregate of 1,709,146 shares of our common stock and 4,048,306 unregistered restricted stock units to our consultants, employees, and vendors, respectively.
Added
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.
Removed
Subsequent to March 31, 2022, and as of June 28, 2022, we repurchased 1,186,221 shares of our common stock at an average price of $0.84 per share Securities Authorized for Issuance Under Equity Compensation Plans See “Item 12.
Added
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.

Item 7. Management's Discussion & Analysis

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

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Biggest changeBusiness Operations Results Operations Our operating results were, and discussions of significant variances are, as follows (in thousands): Year Ended March 31, % Change 2022 vs. 2022 2021 2021 Revenue $ 117,019 $ 65,230 79 % Cost of Sales 92,980 48,987 90 % Sales & Marketing, Product Development and G&A 33,087 26,867 23 % Intangible Asset Amortization 6,005 5,585 8 % Operating Loss $ (15,053 ) $ (16,209 ) -7 % Operating Margin -13 % -25 % - % Adjusted EBITDA* $ (856 ) $ 30 2,934 % Adjusted EBITDA Margin* -1 % 0 % - % * See “—Non-GAAP Measures” above for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin Fiscal Year 2022 Compared to Fiscal Year 2021 Revenue Revenue increased by $51.8 million, or 79% to $117.0 million during the year ended March 31, 2022, as compared to $65.2 million for the year ended March 31, 2021, primarily due to increased membership revenue of $7.7 million as a result of member growth with our largest OEM customer, increased advertising revenue of $13.0 million as a result of growth in advertising at PodcastOne, increased merchandising revenue of $10.3 million due to the acquisition of CPS near the end of the prior year, an increase of $3.2 million in sponsorship and licensing due to an increase in members and events, and an increase of $17.7 million in Ticket/Event revenues driven by the Social Gloves event and Spring Awakening music festival in the current year, with no comparable events in the prior year. 95 Operating Loss Operating loss decreased $1.2 million, or 7%, to $15.1 million for the year ended March 31, 2022 as compared to $16.2 million for the year ended March 31, 2021, as a result of the increase in revenue due to member growth and an increase in events that took place during the year.
Biggest changeBusiness 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.
In the future, we may utilize additional commercial financings, bonds, debentures, lines of credit and term loans with a syndicate of commercial banks or other bank syndicates and/or issue equity securities (publicly or privately) for general corporate purposes, including acquisitions and investing in our intangible assets, music equipment, platform and technologies.
In the future, we may utilize additional commercial financings, bonds, notes, debentures, lines of credit and term loans with a syndicate of commercial banks or other bank syndicates and/or issue equity securities (publicly or privately) for general corporate purposes, including acquisitions and investing in our intangible assets, music equipment, platform and technologies.
Non-Income Tax Contingencies We do not collect and remit sales and use or similar taxes in all jurisdictions in which we have sales, based on our belief that such taxes are not applicable or legally required. 99 The June 2018 U.S. Supreme Court ruling in South Dakota v.
Non-Income Tax Contingencies We do not collect and remit sales and use or similar taxes in all jurisdictions in which we have sales, based on our belief that such taxes are not applicable or legally required. The June 2018 U.S. Supreme Court ruling in South Dakota v.
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. 100 Goodwill is tested for impairment at the reporting unit level, which is the same or one level below an operating segment.
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.
As a result, and during the fiscal year ending March 31, 2022, 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, 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.
Therefore, we consider these to be our critical accounting policies and estimates. 96 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. 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.
The following discussion and analysis of our business and results of operations for the fiscal year ended March 31, 2022, 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, 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.
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. 89 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. 87 Adjusted EBITDA Margin Adjusted EBITDA Margin is a non-GAAP financial measure that we define as the ratio of Adjusted EBITDA to Revenue.
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, 2022 and 2021, 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, 2023 and 2022 , was less than $0.1 million, respectively.
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, 2022 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 , 2023 could cause our revenue to fluctuate significantly.
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.
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.
For the majority of our agreements with festival owners, we acquire the global broadcast rights. Moreover, the digital rights we acquire principally include any format and screen, and future rights to VR and AR.
For the majority of our agreements with festival owners, we acquire the global broadcast rights. Moreover, the digital rights we acquire principally include any format and screen, and where applicable, future rights to VR and AR.
As our platform matures, we also expect our Contribution Margins, Adjusted Earnings before income tax, depreciation and amortization (“EBITDA”) and Adjusted EBITDA Margins to improve in the near and long term, which are non-GAAP measures as defined in section following below titled, “Non-GAAP Measures”.
As our platform matures, we also expect our Contribution Margins*, adjusted earnings before income tax, depreciation and amortization (“Adjusted EBITDA”)* and Adjusted EBITDA Margins* to improve in the near and long term, which are non-GAAP measures as defined in section following below titled, “Non-GAAP Measures”.
We have selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the stock. Stock-based awards are comprised principally of stock options, restricted stock and restricted stock units (“RSUs”). Forfeitures are recognized as incurred.
We have selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the stock. Stock-based awards are comprised principally of stock options, restricted stock and restricted stock units (“RSUs”).
The increase was due to PPV ticket fees and production revenues earned related to the Social Gloves event held during the fiscal year ended March 31, 2022, in addition to ticket sales from the Spring Awakening music festival in October 2021, with no comparable events held during the prior year comparable period.
The decrease was due to PPV ticket fees and production revenues earned related to the Social Gloves event held during the fiscal year ended March 31, 2022 , in addition to ticket sales from the Spring Awakening music festival in October 2021, with no comparable events held during the year ended March 31, 2023.
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. 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.
The increase 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 prior year.
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.
Opportunities, Challenges and Risks For our fiscal year ended March 31, 2022, we derived 35% 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, 2023 , we derived 53% 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. 97 Third-Party Original Equipment Manufacturers We generate revenue for membership services through memberships sold through a third-party Original Equipment Manufacturer (the “OEM”).
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.
Liquidity and Capital Resources Current Financial Condition As of March 31, 2022, our principal sources of liquidity were our cash and cash equivalents, including restricted cash balances in the amount of $13.2 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, 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.
During fiscal year ended March 31, 2022, we (i) acquired Gramophone (effective October 17, 2021), (ii) delivered live events digitally live streamed across our platform, (iii) increased our sponsorship revenue from live events when compared to prior fiscal years and (iv) 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, 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.
The increase was primarily due to production costs related to the Social Gloves event held in June 2021 in addition to production and ticketing costs related to the Spring Awakening music festival held in October 2021, with no comparable events in the prior year.
The decrease was primarily due to production costs related to the Social Gloves event held in June 2021 in addition to production and ticketing costs related to the Spring Awakening music festival held in October 2021, with no comparable events in 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 $43.9 million and utilized cash of $9.1 million in operating activities for the year ended March 31, 2022 and had a working capital deficiency of $28.8 million as of March 31, 2022.
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 .
Sources and Uses of Cash The following table provides information regarding our cash flows for the fiscal years ended March 31, 2022 and 2021 (in thousands): Year Ended March 31, 2022 2021 Net cash used in operating activities $ (9,123 ) $ (9,508 ) Net cash used in investing activities (3,979 ) (791 ) Net cash provided by financing activities 7,486 16,632 Net change in cash and cash equivalents and restricted cash $ (5,616 ) $ 6,333 Cash Used In Operating Activities Net cash used in our operating activities for 2022 of $9.1 million primarily resulted from our net loss during the period of $43.9 million, which included non-cash charges of $25.5 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, 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.
The presented financial information for the fiscal year ended March 31, 2022 includes the financial information and activities of LiveOne, PodcastOne and CPS for the full year and Gramophone from the effective date of the acquisition.
The presented financial information for the fiscal year ended March 31, 2023 includes the financial information and activities of LiveOne, Gramophone, PodcastOne and CPS for the full year .
The increase was primarily as a result of member growth with our largest OEM customer. 92 Advertising Revenue Advertising revenue increased by $13.0 million, or 62%, to $33.7 million during the year ended March 31, 2022, as compared to $20.8 million the year ended March 31, 2021, 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. 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.
We use the Black-Scholes-Merton option pricing model to determine the grant date fair value of stock options. This model requires us to estimate the expected volatility and the expected term of the stock options which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected employee stock option exercise behavior.
This model requires us to estimate the expected volatility and the expected term of the stock options which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected employee stock option exercise behavior.
For the years ended March 31, 2022 and 2021, all material amounts of our revenue were derived from customers located in the United States and moreover, one of our customers accounted for 28% and 36% of our consolidated revenue.
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.
Cash Flows Used In Investing Activities Net cash used in investing activities for 2022 of $4.0 million was principally due to the $3.7 million cash used for the purchase of property and equipment during the year ended March 31, 2022, and cash used in the acquisitions of Gramophone of $0.2 million.
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.
For the fiscal years ended March 31, 2022 and 2021, we reported revenue of $117.0 million and $65.2 million, respectively.
For the fiscal years ended March 31, 2023 and 202 2 , we reported revenue of $99.6 million and $ 117.0 million, respectively.
The increase was in line with the higher subscription revenues noted above. Advertising Advertising cost of sales increased by $13.4 million, or 78%, to $30.6 million for the year ended March 31, 2022, as compared to $17.1 million for the year ended March 31, 2021.
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 .
Corporate Our Corporate operating results were, and discussions of significant variances are, as follows (in thousands): Year Ended March 31, % Change 2022 vs. 2022 2021 2020 Sales & Marketing, Product Development, and G&A $ 22,800 $ 13,161 73 % Operating Loss $ (22,800 ) $ (13,161 ) 73 % Operating Margin N/A N/A - % Adjusted EBITDA* $ (12,563 ) $ (5,870 ) 114 % * See “—Non-GAAP Measures” above for the definition and reconciliation of Adjusted EBITDA Operating Loss Operating loss increased by $9.6 million, or 73%, to $22.8 million for the year ended March 31, 2022, as compared to $13.2 million for the year ended March 31, 2021 largely due to the addition of corporate personnel.
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.
Amortization of Intangible Assets Amortization of intangible assets increased by $0.4 million, or 8%, to $6.0 million for the year ended March 31, 2022, as compared to $5.6 million for the year ended March 31, 2021.
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 .
Adjusted EBITDA Corporate Adjusted EBITDA increased $6.7 million, or 114%, to $(12.6) million for the year ended March 31, 2022 as compared to $(5.9) million for the year ended March 31, 2021. The increase was largely due to the addition of corporate personnel as mentioned above.
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.
General and Administrative General and administrative expenses increased by $12.9 million, or 62%, to $33.7 million for the year ended March 31, 2022, as compared to $20.8 million for the year ended March 31, 2021.
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 .
Ticket/Event Ticket/Event revenue increased by $17.7 million, or 968%, to $19.5 million for the year ended March 31, 2022, as compared to $1.8 million for the year ended March 31, 2021.
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 .
Ellin, desiring to continue to demonstrate confidence in our Company and to assist our objective to achieve annual cost and expense reductions, agreed to forego his monthly cash base salary through at least December 31, 2022 in exchange for shares of our common stock that are anticipated to vest in full in calendar year 2023, and will vest, be calculated and issued subject to our board of directors’ approval. 86 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, 2021, 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, 2022.
Ellin, desiring to continue to demonstrate confidence in our Company and to assist our objective to achieve annual cost and expense reductions, agreed to forego his monthly cash base salary through at least December 31 , 2022 in exchange for shares of our common stock that are anticipated to vest in full in calendar year 2023, and will vest, be calculated and issued subject to our board of directors’ approval.
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, 2022 2021 Revenue: $ 117,019 $ 65,230 Operating expenses: Cost of sales 92,980 48,987 Sales and marketing 14,114 9,517 Product development 8,092 9,680 General and administrative 33,681 20,831 Amortization of intangible assets 6,005 5,585 Total operating expenses 154,872 94,600 Loss from operations (37,853 ) (29,370 ) Other income (expense): Interest expense, net (4,123 ) (5,303 ) Loss on extinguishment of debt (4,321 ) (5,180 ) Forgiveness of PPP loans 3,110 - Other expense (542 ) (2,312 ) Total other expense, net (5,876 ) (12,795 ) Loss before income taxes (43,729 ) (42,165 ) Income tax provision (benefit) 183 (345 ) Net loss $ (43,912 ) $ (41,820 ) Net loss per share – basic and diluted $ (0.56 ) $ (0.61 ) Weighted average common shares – basic and diluted 79,084,930 69,040,055 The following table provides the depreciation expense included in the above line items (in thousands): Year Ended March 31, % Change 2022 vs. 2022 2021 2021 Depreciation expense Cost of sales $ 65 $ 47 38 % Sales and marketing 164 200 -18 % Product development 2,770 2,188 27 % General and administrative 620 750 -17 % Total depreciation expense $ 3,619 $ 3,185 14 % 91 The following table provides the stock-based compensation expense included in the above line items (in thousands): Year Ended March 31, % Change 2022 vs. 2022 2021 2021 Stock-based compensation expense: Cost of sales $ 708 $ 820 -14 % Sales and marketing 2,022 2,358 -14 % Product development 417 2,135 -80 % General and administrative 9,556 5,969 60 % Total stock-based compensation expense $ 12,703 $ 11,282 13 % The following table provides our results of operations, as a percentage of revenue, for the periods presented: Year Ended March 31, 2022 2021 Revenue 100 % 100 % Operating expenses Cost of sales 80 % 75 % Sales and marketing 12 % 15 % Product development 7 % 15 % General and administrative 29 % 32 % Amortization of intangible assets 5 % 9 % Total operating expenses 133 % 145 % Loss from operations -33 % -45 % Other expense -5 % -20 % Loss before income taxes -38 % -65 % Income tax provision (benefit) - % -1 % Net loss -38 % -64 % Revenue Revenue was as follows (in thousands): Year Ended March 31, % Change 2022 vs. 2022 2021 2021 Membership services $ 41,264 $ 33,577 23 % Advertising 33,739 20,779 62 % Merchandising 15,447 5,168 199 % Sponsorship and licensing 7,051 3,878 82 % Ticket/Event 19,518 1,828 968 % Total Revenue $ 117,019 $ 65,230 79 % Membership Revenue Membership revenue increased by $7.7 million, or 23%, to $41.3 million for the year ended March 31, 2022, as compared to $33.6 million for the year ended March 31, 2021.
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 .
As a thought leader in live music, we plan to acquire the broadcasting rights to as many of the top live music events and festivals that are available to us. During the fiscal year ended March 31, 2022, we livestreamed 126 major festivals and live music events compared to 146 in the prior fiscal year.
As a thought leader in live music, we plan to acquire the broadcasting rights to as many of the top live music events and festivals that are available to us.
Sponsorship and Licensing Sponsorship and licensing revenue increased by $3.2 million, or 82%, to $7.1 million from $3.9 million for the year ended March 31, 2022 as compared to the year ended March 31, 2021.
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 .
Under the New Shelf S-3, we will have the ability to raise up to $150.0 million in cash from the sale of our equity, debt and/or other financial instruments. 103 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, 10, and 11 to our financial statements included elsewhere in this Annual Report).
Other Operating Expenses Other operating expenses were as follows (in thousands): Year Ended March 31, % Change 2022 vs. 2022 2021 2021 Sales and marketing expenses $ 14,114 $ 9,517 48 % Product development 8,092 9,680 -16 % General and administrative 33,681 20,831 62 % Amortization of intangible assets 6,005 5,585 8 % Total Other Operating Expenses $ 61,892 $ 45,613 36 % Sales and Marketing Expenses Sales and marketing expenses increased by $4.6 million, or 48%, to $14.1 million for the year ended March 31, 2022, as compared to $9.5 million for the year ended March 31, 2021.
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 .
Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
Cost of Sales Cost of sales was as follows (in thousands): Year Ended March 31, % Change 2022 vs. 2022 2021 2021 Membership $ 26,200 $ 20,449 28 % Advertising 30,579 17,146 78 % Production 24,928 8,226 203 % Merchandising 11,273 3,166 256 % Total Cost of Sales $ 92,980 $ 48,987 90 % Membership Membership cost of sales increased by $5.8 million, or 28%, to $26.2 million for the year ended March 31, 2022, as compared to $20.4 million for the year ended March 31, 2021.
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 .
Revenue from our ticketing operations primarily consists of service fees charged at the time a ticket for an event is sold.
Revenue from our ticketing operations primarily consists of service fees charged at the time a ticket for an event is sold. For tickets sold to our festival events the revenue for the tickets and associated ticket service charges collected in advance of the event is recorded as deferred revenue until the event occurs.
Beyond fiscal year 2022, 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. 87 As our music platform continues to evolve, we believe there are opportunities to expand our services by adding more content in a greater variety of formats such as podcasts and vodcasts, extending our distribution to include pay television, OTT and social channels, deploying new services for our members, artist merchandise and live music event ticket sales, and licensing user data across our platform.
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.
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.
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.
We may also have to reduce certain overhead costs through the reduction of salaries and other means and settle liabilities through negotiation.
We may also have to reduce certain overhead costs through the reduction of salaries and other means and settle liabilities through negotiation. There can be no assurance that management’s attempts at any or all of these endeavors will be successful.
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. 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.
Product Development Product development expenses decreased by $1.6 million, or 16%, to $8.1 million for the year ended March 31, 2022, as compared to $9.7 million for the year ended March 31, 2021.
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.
In the long term, we plan to expand our business further 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. 88 Effects of COVID-19 An outbreak of a novel strain of coronavirus, COVID-19 in December 2019 subsequently became a pandemic after spreading globally, including the United States.
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.
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. Recently, we have entered into distribution relationships with a variety of platforms, including Roku, AppleTV, Amazon Fire, linear OTT platforms such as STIRR and XUMO.
Recently, we have entered into distribution relationships with a variety of platforms, including Roku, AppleTV, Amazon Fire, linear OTT platforms such as STIRR and XUMO.
As a result of these actions, our revenue for the fiscal year ended March 31, 2022 was comprised of 35% from paid members, 29% from advertising, 13% from merchandise, 17% from ticketing and 6% from sponsorship and licensing.
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.
For tickets sold to our festival events the revenue for the tickets and associated ticket service charges collected in advance of the event is recorded as deferred revenue until the event occurs. 98 Stock-Based Compensation Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period, on a straight-line basis.
Stock-Based Compensation Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period, on a straight-line basis. We use the Black-Scholes-Merton option pricing model to determine the grant date fair value of stock options.
Historically, our live events business has not generated enough direct revenue to cover the costs to produce such events, and as a result generated negative Contribution Margins, Adjusted EBITDA and Adjusted EBITDA Margins and operating losses. Beginning in late March 2020, the COVID-19 pandemic had an adverse impact on on-premise live music events and festivals.
Historically, our live events business has not generated enough direct revenue to cover the costs to produce such events, and as a result generated negative Contribution Margins*, Adjusted EBITDA*, Adjusted EBITDA Margins* and operating losses. Historically, we produced and digitally distributed the live music performances of many of these large global music events to fans all around the world.
This was offset by $3.1 million attributed to forgiveness of our PPP loan. The remainder of our sources of cash provided by operating activities of $9.3 million was from changes in our working capital, including $3.1 million offset from timing of accounts receivable and $11.1 million from timing of accounts payable and accrued liabilities.
This was offset by $2.2 million attributed to a write off of contingent consideration and $7.6 million attributed to the write off of accrued expenses. The remainder of our sources of cash used in operating activities of $3.4 million was from changes in our working capital, including $2.5 million from timing of prepaid expenses and other assets.
As of March 31, 2022, we had a senior secured line of credit of $7.0 million, secured convertible notes with aggregate principal amount of $13.7 million and unsecured convertible notes with aggregate principal balances of $5.9 million and a notes payable balance of $0.2 million.
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.
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 Loss Depreciation and Amortization Stock-Based Compensation Non-Recurring Acquisition and Realignment Costs Other (income) expense Provision for (benefit from) income taxes Adjusted EBITDA 2022 Operations $ (15,020 ) $ 9,587 $ 4,167 $ 443 $ (33 ) $ - $ (856 ) 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 ) 2021 Operations $ (21,199 ) $ 8,756 $ 6,093 $ 1,107 $ 5,665 $ (392 ) $ 30 Corporate (20,621 ) 14 5,189 2,371 7,130 47 (5,870 ) Total $ (41,820 ) $ 8,770 $ 11,282 $ 3,478 $ 12,795 $ (345 ) $ (5,840 ) The following table sets forth the reconciliation of Contribution Margin to Revenue, the most comparable GAAP financial measure (in thousands): Year Ended March 31, 2022 2021 Revenue: $ 117,019 $ 65,230 Less: Cost of sales (92,980 ) (48,987 ) Amortization of developed technology (3,856 ) (3,856 ) Gross Profit 20,183 12,387 Add back amortization of developed technology: 3,856 3,856 Contribution Margin $ 24,039 $ 16,243 90 Consolidated Results of Operations The following tables set forth our results of operations for the periods presented.
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 increase was largely due to an increase in share-based compensation of $3.6 million and salaries and benefits of $3.8 million, partially driven by the addition of corporate personnel to support future expected growth and the timing of vesting of share-based awards.
The decrease was largely due to a decrease in share-based compensation of $8.0 million and salaries and benefits of $9.8 million, primarily driven by the reduction of corporate personnel in the year ended March 31, 2023.
The increase was due to intangible assets acquired in the acquisition CPS, which was acquired near the end of the prior year along with the acquisition of Gramophone in the current year. 94 Total Other Expense, Net Year Ended March 31, % Change 2022 vs. 2022 2021 2021 Total other expense, net $ (5,876 ) $ (12,795 ) -54 % Total other expense, net decreased by $6.9 million, or 54%, to $5.9 million for the year ended March 31, 2022, as compared to $12.8 million for the year ended March 31, 2021.
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 .
Merchandising Merchandising revenue increased by $10.3 million to $15.4 million from $5.2 million for the year ended March 31, 2022, as compared to the year ended March 31, 2021 due to the acquisition of CPS.
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.
Cash Flows Provided By Financing Activities Net cash provided by financing activities for 2022 of $7.5 million was primarily due to proceeds of $7.0 million from the draw down on our line of credit and $0.9 million from the exercise of stock options, partially offset by the repayment of senior secured convertible debentures of $0.4 million.
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.
Under the terms of the Promissory Note, the Revolving Credit Facility bears interest at a variable rate equal to the Wall Street Journal Prime Rate, plus 0.5%. CEO Salary In calendar 2022, our Chief Executive Officer, Chairman, director and significant stockholder, Robert S.
CEO Salary In calendar 2022, our Chief Executive Officer, Chairman, director and significant stockholder, Robert S.
Merchandising Merchandising cost of sales increased to $11.3 million from $3.2 million for the year ended March 31, 2022 due to the acquisition of CPS.
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 in line with the higher advertising revenues noted above. 93 Production Production cost of sales increased by $16.7 million, or 203%, to $24.9 million for the year ended March 31, 2022, as compared to $8.2 million for the year ended March 31, 2021.
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 .
Removed
For the years ended March 31, 2022 and 2021, one customer accounted for 28% and 36% of our consolidated revenues, respectively. 85 Fiscal 2022 Significant Transactions Acquisition of Gramophone On October 17, 2021, our 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 our common stock with a fair value of $0.1 million net of a 25% discount for lack of marketability, 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.
Added
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.
Removed
The shares of our common stock are subject to a twelve-month lock-up period and will thereafter remain subject to sales volume restrictions.
Added
(“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.
Removed
Unsecured Convertible Promissory Note Effective December 31, 2021, the Note holder converted the Note in whole pursuant to an exchange agreement which provided for an exchange of the Note into shares of our common stock at a price of $2.10 per share, resulting in 1,155,143 shares issued upon the exchange.
Added
(“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.
Removed
As a result of the incentives offered to the Note holder, we recorded a $0.8 million expense to Other Income (expense). Extinguishment of Debt We had outstanding 8.5% unsecured convertible notes payable (the “Trinad Notes”) issued to Trinad Capital Master Fund Ltd. (“Trinad Capital”), a fund controlled by Mr. Ellin, our Chief Executive Officer, Chairman, director and principal stockholder.
Added
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”).
Removed
The Trinad Notes are convertible into shares of our common stock at a fixed conversion price of $3.00 per share.
Added
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.
Removed
On August 11, 2021, we entered into an Amendment of Notes Agreement (the “Amendment Agreement”) with Trinad Capital pursuant to which the maturity date of all of the Trinad Notes was extended to May 31, 2023, and in consideration of such extension, we issued to Trinad Capital 33,654 shares of our common stock.
Added
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.
Removed
We determined that the amendment should be accounted for as an extinguishment and recorded the amended debt instrument at fair value which included the consideration in common stock transferred. The resulting loss on extinguishment recorded of $4.3 million is included in “Loss on extinguishment of debt”.
Added
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.
Removed
We may not redeem any of the Trinad Notes prior to May 31, 2023 without Trinad Capital’s consent.

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