美國
證券交易委員會
華盛頓特區 20549
表格
(標記一個)
截至2024年6月30日季度結束
或
為過渡期從__________________至__________________
委員會檔案編號：
PODCASTONE，INC。
（依憑章程所載的完整登記名稱）
| | | |
| (依據所在地或其他管轄區) | (國稅局雇主 | |
| | | |
| (總部辦公地址) | (郵遞區號) |
(
(註冊人電話號碼，包括區號)
269 S. Beverly Dr.，套房＃1450
比佛利山莊。加利福尼亞州90212
(如與上次報告不同，列明前名稱、前地址及前財政年度)
根據法案第12(b)條規定註冊的證券：
| 每種類別的名稱 | 交易標的（s） | 每個註冊交易所的名稱 | ||
| The |
請以√表示，指示是否(1)根據1934年證券交易所法案第13條或15(d)條的要求，申報了在過去12個月內應申報的所有報告(或申報了在註冊者需要申報此類報告的更短期間的報告)，以及(2)在過去90天內已受到這些申報要求的限制。
請用打勾的方式指示，本申報人是否在過去十二個月內（或其需提交此類文件的較短期間）已按照Regulation S-t條例第405條的規定遞交每個互動資料檔案。
請勾選指示登記者是否為大型快速提交人、快速提交人、非快速提交人、較小的報告公司或新興成長型公司。請參閱交易所法規120億2條，了解「大型快速提交人」、「快速提交人」、「較小的報告公司」和「新興成長型公司」的定義。
| 大型加速歸檔人 | ☐ | 加速歸檔人 | ☐ |
| | ☒ | 小型報告公司 | |
| 新興成長型企業 | | ||
如果是新興成長公司，請勾選指示，如果登記人已選擇不遵守根據《交易所法》第13(a)條規定提供的任何新的或修訂後的財務會計標準的擴展過渡期。
請在核准印章處打勾，表明公司是否為外殼公司（根據《交易所法》第120億2條所定義）。是
As of November 12, 2024, there were
PODCASTONE, INC.
| 頁面 |
|||
| 項目 1。 |
|||
| 項目2。 |
|||
| 項目3。 |
|||
| 項目4。 |
|||
| 項目 1。 |
|||
| 项目1A。 |
|||
| 項目2。 |
|||
| 項目3。 |
|||
| 項目4。 |
|||
| 项目5。 |
|||
| 第6項。 |
|||
| 頁面 |
|
簡明合併資產負債表
(未經審計，以千元為單位，除股份及每股數量外)
| 九月三十日， | 三月三十一日， | |||||||
| 2024 | 2024 | |||||||
| (未經審計) | （已經接受審計） | |||||||
| 資產 | ||||||||
| 流動資產 | ||||||||
| 現金及現金等價物 | $ | $ | ||||||
| 應收帳款，淨額 | ||||||||
| 預付費用及其他流動資產 | ||||||||
| 所有流動資产總額 | ||||||||
| 不動產及設備，淨額 | ||||||||
| 商譽 | ||||||||
| 無形資產，扣除累計攤銷 | ||||||||
| 關係方應收款項 | ||||||||
| 總資產 | $ | $ | ||||||
| 550,714 | ||||||||
| 流動負債 | ||||||||
| 應付帳款及應計負債 | $ | $ | ||||||
| 相關方應付款項 | ||||||||
| 全部流动负债 | ||||||||
| 其他長期負債 | ||||||||
| 總負債 | ||||||||
| 承諾和條件 | ||||||||
| 股東權益 | ||||||||
| 0.01 面值； 授權的股份； 和 分別為2024年9月30日和2024年3月31日，發行並流通的股份 | ||||||||
| 額外資本贈与金 | ||||||||
| 累積虧損 | ( | ) | ( | ) | ||||
| 股東權益總額 | ||||||||
| 負債總額和股東權益總額 | $ | $ | ||||||
隨附附注是這些簡明綜合財務報表的重要組成部分。
損益綜合表簡明合併報表
(未經審計，以千元為單位，除股份及每股數量外)
| 截至三個月 |
截至六個月的時間 |
|||||||||||||||
| 九月三十日， |
九月三十日， |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
| 營業收入: |
$ | $ | $ | $ | ||||||||||||
| 營運費用： |
||||||||||||||||
| 銷售成本 |
||||||||||||||||
| 銷售和市場推廣 |
||||||||||||||||
| 產品開發 |
||||||||||||||||
| 一般及行政費用 |
||||||||||||||||
| 無形資產減損 |
||||||||||||||||
| 無形資產攤薄 |
||||||||||||||||
| 營業費用總額 |
||||||||||||||||
| 營運(虧損)收入 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| 其他收益（支出）： |
||||||||||||||||
| 利息費用，淨額 |
( |
) | ( |
) | ||||||||||||
| 分拆嵌入式衍生工具公允價值變動 |
( |
) | ( |
) | ||||||||||||
| 其他合計（費用）收益，淨額 |
( |
) | ( |
) | ||||||||||||
| 收入稅前虧損 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| 所得稅準備 |
||||||||||||||||
| 淨虧損 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| 基本和稀釋每股淨損失 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| 普通股權加權平均值-基本和稀釋 |
||||||||||||||||
附帶附註是這些簡明綜合財務報表中不可或缺的一部分。
股東權益的縮編合併財務報表’ 股權
(未經審計，以千元為單位，除股份及每股數量外)
| 追加 |
總計 |
|||||||||||||||||||
| 普通股 |
已付入 |
累積的 |
股東的 |
|||||||||||||||||
| 股份 |
金額 |
資本 |
赤字 |
權益 |
||||||||||||||||
| 截至2024年3月31日的餘額 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| 基於股票的薪酬 |
- | - | - | |||||||||||||||||
| 員工已授予限制性股票單位 |
||||||||||||||||||||
| 來自家長的貢獻 |
||||||||||||||||||||
| 發行股票以支付服務 |
||||||||||||||||||||
| 淨虧損 |
- | ( |
) | ( |
) | |||||||||||||||
| 截至2024年6月30日的餘額 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| 基於股票的薪酬 |
- | - | - | |||||||||||||||||
| 持有員工受限股份 |
||||||||||||||||||||
| 父母的貢獻 |
||||||||||||||||||||
| 發行股票以支付服務 |
||||||||||||||||||||
| 淨虧損 |
- | ( |
) | ( |
) | |||||||||||||||
| 截至2024年9月30日的結餘 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| 追加 |
總計 |
|||||||||||||||||||
| 普通股 |
已付入 |
累積的 |
股東的 |
|||||||||||||||||
| 股份 |
金額 |
資本 |
赤字 |
權益 |
||||||||||||||||
| 截至2023年3月31日之結餘 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| 基於股票的薪酬 |
- | - | - | |||||||||||||||||
| 淨虧損 |
- | ( |
) | ( |
) | |||||||||||||||
| 截至2023年6月30日的結餘 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| 基於股票的薪酬 |
- | - | - | |||||||||||||||||
| 普通股認股權應分類為股本 |
- | |||||||||||||||||||
| 橋梁貸款轉換為普通股 |
||||||||||||||||||||
| 普通股股利 |
( |
) | ||||||||||||||||||
| 發行股票以支付服務 |
||||||||||||||||||||
| 發行普通股以購買無形資產 |
||||||||||||||||||||
| 淨虧損 |
- | ( |
) | ( |
) | |||||||||||||||
| 2023年9月30日的結餘 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
隨附附注是這些簡明綜合財務報表的重要組成部分。
簡明合併現金流量量表
（未經審核，以千計）
| 截至六個月的時間 |
||||||||
| 九月三十日， |
||||||||
| 2024 |
2023 |
|||||||
| 經營活動產生的現金流量： |
||||||||
| 淨虧損 |
$ | ( |
) | $ | ( |
) | ||
| 調整淨損失為經營活動提供的淨現金流量： |
||||||||
| 折舊及攤銷 |
||||||||
| 基於股票的薪酬 |
||||||||
| 債務折價攤銷 |
||||||||
| 分拆嵌入式衍生工具公允價值變動 |
||||||||
| 無形資產減值 |
||||||||
| （撤銷）信貸損失準備 |
( |
) | ||||||
| 營運資產和負債的變化： |
||||||||
| 應收賬款 |
( |
) | ( |
) | ||||
| 預付費用及其他流動資產 |
||||||||
| 關聯方應收／應付款 |
||||||||
| 應付帳款及應計負債 |
( |
) | ||||||
| 其他負債 |
||||||||
| 經營活動產生的淨現金流量 |
||||||||
| 投資活動之現金流量： |
||||||||
| 購置財產及設備 |
( |
) | ( |
) | ||||
| 購買無形資產 |
( |
) | ||||||
| 投資活動中使用的淨現金 |
( |
) | ( |
) | ||||
| 筹资活动现金流量： |
||||||||
| 在橋貸款上的付款 |
( |
) | ||||||
| 財務活動中使用的淨額 |
( |
) | ||||||
| 現金及現金等價物淨變動 |
( |
) | ( |
) | ||||
| 期初現金及現金等價物 |
||||||||
| 現金及現金等價物期末餘額 |
$ | $ | ||||||
| 現金流量資訊的補充披露： |
||||||||
| 支付所得稅現金 |
$ | $ | ||||||
| 支付利息的現金 |
$ | $ | ||||||
| 補充揭露與非現金投資及融資活動有關之事項： |
||||||||
| 普通股票已計提，以支付關聯公司餘額 |
$ | $ | ||||||
| 因無形資產減損而核銷應計費用 |
$ | $ | ||||||
隨附附注是這些簡明綜合財務報表的重要組成部分。
PODCASTONE，INC。
簡明綜合財務報表附註 (未經審計)
截至2024年和2023年9月30日的三個月和六個月
組織
PodcastOne, Inc.（"我們"、"我方"、"我們的"、"公司"或"PodcastOne"）是一家總部位於加州比佛利山的特拉華州公司。該公司是一個領先的播客平台和出版商，通過所有播客發行平台向受眾提供其內容，包括其網站（www.podcastone.com）、PodcastOne應用程式、蘋果播客、Spotify、亞馬遜音樂等。
該公司於德拉瓦州成立於 2014年2月25日，並且是LiveOne, Inc.（“LiveOne”）的控股子公司，LiveOne是一家納斯達克上市公司。在 2020年7月1日，LiveOne通過其全資子公司LiveXLive PodcastOne, Inc.收購了該公司。收購包括自收購日起的公司的基本報表。該公司對其收購採用購買會計，這使得所有收購業務的資產和負債在收購日以其估計公允價值記錄。在收購過程中，該公司的帳戶使用推送基礎會計方法進行調整，以確認認定的淨資產配置，該配置被確定為$
報告基礎
公司營運及財務狀況的結果已與LiveOne的基本報表合併，並假定這些基本報表是假設公司在該 三 和 六 截至之月份 2024年9月30日 和 2023。這些中期未經審計的簡明合併財務報表是根據公司截至該財政年度的經審計合併財務報表，以相同的基礎編製的 公司開始直接向員工發放RSU形式的股權獎勵，這是在2022年12月獲得批准的股權激勵計劃下的。 並包括所有調整，這些調整僅包括為了公司的中期未經核實的簡明綜合財務報表能夠公正呈現而必要的常規調整。 三 和 六 截至之月份 2024年9月30日。 與LiveOne進行的相關交易所記錄的金額 可以 不 被認為是公平交易，因此，基本報表 可以 不 必然地反映了公司若與不相關之方進行此等交易所獲得的營運成果、財務狀況和現金流量 第三 在該時期與一個不相關當事方進行此 六 截至之月份 2024年9月30日 和 2023。因此，公司的歷史基本報表是必要的。 不 不可避免地反映了公司未來的營運結果、財務狀況和現金流量，在公司與無關的第三方以公平市場價格訂立合同時。 第三 因此，所有板塊為LiveOne提供的服務成果。 六 截至之月份 2024 年 9 月 30 日結束， 此季度的結果不一定能夠代表截至3月31日完整財年的經營績效。 不 並不一定代表截至該年度3月31日結束的整個財政年度的預期結果。 3月31日結束的整個財政年度的基本報表2025 基本財務表 換為 所有板塊 2025）。基本財務表所示的總資產負債表截至 2024年3月31日 是從公司包含在公司年度報告第 10k表 (「年度報告」)，向美國證券交易所委員會（SEC）提交，日期為 2024 年 7 月 1 日。
根據美國普遍接受的會計原則（“GAAP”）為中期財務資訊編制的中期未經審核的簡明合併基本報表已經編製完成，並遵循第 10 號附則S-X. 它們確實 不 包括GAAP對於完整的經審核的基本報表所需的所有信息和附註。因此，這些中期未經審核的簡明合併基本報表應與公司在年度報告中包含的經審核的合併基本報表及其附註一起閱讀。
持續關注和流動性
公司的暫行未經查核的簡明合併財務報表是在假定公司將作為持續經營體而準備的，這意味著業務持續、資產實現，以及在正常業務運作過程中清償負債。
公司主要的流動資金來源，歷來一直是其債務發行和現金及現金等價物（現金及現金等價物金額為$
公司正在尋找額外的融資來源，以試圖獲得額外的臨時融資，繼續營運業務並滿足目前的責任，除非LiveOne提供此類融資。在缺乏額外流動性來源的情況下，管理層預期現有現金資源將會。 不 足以滿足11月以後的目前運營和流動性需求 之後2025. 沒有保證管理層將能夠獲得額外的流動性或成功籌集額外的資金，或者這些所需資金是否可用。 no 管理層務必要獲得額外流動性或成功籌措額外資金，或者如果有的話，獲得所需資金，即使LiveOne是否提供任何融資給公司，或這些融資是否以有吸引力的條件提供，或者其是否 不 對公司現有股東產生顯著的稀釋影響。此外，管理層目前無法判斷這些潛在資金來源中是否有任何一個能夠足以支撐公司未來業務運營。雖然公司目前沒有預料到流動性限制會導致當前業務運營和計劃途程延遲或受阻，但若缺乏額外資金，公司將無法繼續維持未來目前的業務運作水準。 不 能夠繼續其目前業務運營水平。財務報表未涵蓋可能因此不確定性結果而導致的任何調整。因此，財務報表是根據一項假設準備的，即公司將繼續作為持續經營的實體，並構思了資產的實現以及債務和承諾在業務一般過程中的滿足。 可以 不 包括任何可能來自這種不確定性結果的調整。因此，財務報表是根據假設公司將繼續作為持續營運的主體，並考慮在業務一般過程中實現資產以及滿足債務和承諾。 不 目前不預料由於流動性限制而導致當前業務運營和計劃途程延遲或受阻，但若缺乏額外資金，公司將無法繼續維持未來目前的業務運作水準。
合併原則
中期未經審核的簡明綜合財務報表包括公司及其全資擁有的子公司的帳戶。收購交易從收購日期起納入公司的中期經審核的簡明綜合財務報表。公司對其收購進行購買會計處理，導致所收購企業的所有資產和負債於收購日期被記錄為其估計公允值。所有公司內部結餘和交易在合併中被抵銷。
附註 2 — 重大會計政策摘要
公司的重大會計政策沒有做出任何實質性更改。 no 公司重大會計政策的重大變更，與前述包含在基本報表中的內容有所不同。 2024 表單 10-k，以下除外。
估算的使用
根據GAAP的要求，公司的管理層在編製符合標準的公司無審計的簡明綜合財務報表時，需要對資產和負債的報告金額，財務報表日期的相關資產和負債的披露，報告期間的營業收入和費用金額，作出估計和假設。涉及此類估計和假設的重要項目包括營業收入、應收帳款提撥、取得資產的指定價值以及與企業合併相關的後設和條件性負債、相關購買價格分配、財產和設備、無形資產、商譽和其他資產的可用壽命和減損、公司股權資本性報酬和可轉債券和債務工具、衍生工具和可能性的公平價值。
實際結果可能與這些估計存在重大差異。公司持續評估其估計與歷史經驗和趨勢的比較，這為對資產和負債的賬面價值做出判斷提供了基礎。
營業收入辨識政策
當存在已批准的合約，雙方權利已明確，支付條款已確定，合約具有商業實質且幾乎所有對價的可收回性均為可能，則公司會就客戶合約進行核算。當公司通過將商品或服務的控制權轉移給客戶來滿足其義務時，營業收入得以確認，金額反映公司預期因這些商品或服務而應獲得的對價。公司使用預期價值法來估計廣告合約的變量對價，以納入交易價格並在出現變動的期間內反映這些估算的變化。這些服務的變量對價按照相關廣告服務提供的時間期間分配並確認，因為該金額反映了公司應得的對價，並且特別與公司滿足其履約義務的努力有關。納入營業收入的變量對價金額的限制在於當該金額在與變量對價相關的不確定性隨後得到解決時，該金額將可能受到重大逆轉。 不 當與變量對價相關的不確定性隨後得到解決時，將可能受到重大逆轉。
實用豁免事項
公司選擇了實用性證明，並在產生時將獲得合同的增量成本（如果有的話）作為開支予以承認，如果本應承認的資產的攤銷期限為 一 一年或以下。
成本分配
公司的臨時未經審核的簡明綜合基本報表包含了LiveOne代表公司所產生成本的分配。這些產生的費用包括但不限於， 不 工資、福利、基於股份的補償費用、保險、會計、稅務、法律及科技服務。這些費用的分配是根據某些假設和估算所進行的，以便將這些費用合理地分配給公司，使公司的臨時未經審核的簡明綜合基本報表反映業務運營的所有成本。分配這些成本的權威指導方針載於員工會計公告，或稱SAB主題 1-B “子公司、部門或其他實體的較小業務元件的費用分配及相關披露的基本報表.”
如果該公司單獨經營，分配的成本會有很大不同。 不 對於這部分，分配的成本會大不相同。 六 截至之月份 2024年9月30日 和 2023，分別。
廣告營業收入
廣告營業收入主要由銷售音頻、視頻和蘋果-顯示屏廣告空間產生的收入組成， 第三給予第三方廣告交易所。收入根據合同期間內交付的印象來確認， 第三給予第三方交易所，無論是在訪客收聽或觀看廣告時，還是當訪客“點擊廣告”時。廣告交易公司每月報告執行的變量廣告營業收入，這代表公司的努力以滿足性能義務。公司主要通過在播客交付給觀眾時，從客戶購買的廣告投放中產生的費用賺取廣告營業收入，根據適用的播客協議中規定的條款和條件，使用印象進行計算。
公司不時會進行以廣告交換商品和服務的以物易物交易。以物易物交易的營業收入根據合同的條款，隨著交付印象的一致進行而按比例確認。所接收的服務以同樣的方式計入費用。該交易的以物易物收入為 三 截至之月份 2024年9月30日 $(未給出數字)。
銷售成本
銷售成本包括直接成本，其中包括應支付給內容創作者的營業收入支出和佣金。
銷售和營銷
銷售和市場推廣包括與公司的活動廣告和營銷相關的直接和間接成本。此外，銷售和市場推廣還包括商品廣告和特許權使用費用。促銷公司服務的廣告費用按發生時計入費用。計入銷售和市場推廣費用的廣告費用為$
產品開發
產品開發成本 不 資本化主要是用於研究與開發、產品和內容開發活動的支出，包括內部軟件開發及改進成本，這些成本已被 不 公司資本化。
基於股份的薪酬
股份報酬是根據SAB主題，根據LiveOne母公司向公司授予的員工股份報酬的數量，在LiveOne的形式以股份報酬的方式分配給公司。 1-B “在另一實體的子公司、部門或其他較小業務元件的基本報表中，分攤費用和相關披露.”
LiveOne和公司根據獎勵的公允價值在授予日衡量基於股票的補償成本，並將其作為費用在必要的服務期間內確認，該期間即為歸屬期，並採取加速的方式確認。LiveOne和公司對於分級歸屬的獎勵，按每一歸屬階段被視為單獨的獎勵來進行計算。LiveOne和公司使用Black-Scholes-Merton期權定價模型來判斷股票期權的授予日公允價值。此模型要求LiveOne和公司估計預期的波動性和股票期權的預期期限，這些都是高度複雜和主觀的變量。這些變量考量了實際和預測的員工行使股票期權行為等因素。LiveOne和公司使用預測的波動性，考慮到股票期權在預期生命期內的股票價格，該預測基於LiveOne和公司股票價格的歷史表現，以及使用參考公司進行估算。預期期限是使用簡化方法計算的，作為LiveOne和公司在缺乏實際行使歷史下的最佳估計。LiveOne和公司根據與期權預期期限相當的美國國債的隱含收益率選取無風險利率。管理層認為，股票期權的公允價值比提供的服務的公允價值更可靠地衡量。由授予的限制性股票單位和限制性股票獎勵所產生的補償費用在授予日按公允價值衡量，並在適用的歸屬期內作為基於股份的補償費用確認。以股票為基礎的獎勵主要包括股票期權、限制性股票、限制性股票單位（“RSUs”）和限制性股票獎勵（“RSAs”）。除非發生時，否則不得確認撤回。LiveOne按其成本在相關的歸屬期間內均攤記錄這些股權基礎獎勵的公允價值和費用。
在截至2024年3月31日的年度期间， 2024年3月31日該公司開始根據其2022經批准的股權激勵計劃 於2022年12月直接向其員工發放以RSU形式的股權獎勵。
所得稅
公司使用資產和負債方法對所得稅收入稅收入，該方法要求對已包含在財務報表或納稅申報表中的事件所帶來的預期未來稅收後果納入遞延稅資產和負債進行記錄。根據此方法，遞延稅款資產和負債是根據財務報表與資產和負債稅基礎之間的差異，使用預期差異會逆轉的年度實施的稅率。延期稅務資產會以估值豁免減少，但管理層認為有可能性高於 不 資產將 不 得到實現。延期稅務資產和負債是根據預期收回或結算的年度，預計適用於應稅收入的已訂定的稅率來衡量。稅率變化對延期稅務資產和負債的影響，將在包括生效日期的期間內公司的綜合業務報表中記錄。
每股盈利（虧損）
基本每股收益（損失）是根據期間內流通普通股的加權平均數量計算的。稀釋每股收益（損失）是根據期間內流通普通股的加權平均數量以及潛在流通股的稀釋效應計算的。潛在稀釋的流通股包括發給員工、董事、供應商和顧問的期權、限制性股票單位，以及可轉換票據，這些項目將被排除在稀釋每股收益的計算之外，因為它們所造成的影響是反稀釋的。
稀釋每股收益是根據我們的加權平均流通普通股計算的，其中包括根據庫藏股方法確定的股票獎勵的稀釋效應。在出現淨虧損的期間，股票獎勵將從我們的每股收益計算中排除，因為其納入將產生反稀釋效應。
板塊報告
本公司依據ASC主題 編號 280, 分部報告 （“ASC 280”）向投資者提供首席營運決策者（“CODM”）如何管理業務的透明度。本公司確定CODM為其首席執行官。CODM檢查基本報表並在其各個業務部門分配資源。 一 的營運業務部門。
現金及約當現金
現金及現金等價物包括所有原始到期日為高流動性投資，於購買時的 三 個月或更短。
下表提供的金額包含於公司截至的臨時未經審計的簡明綜合現金流量表中的現金及現金等價物。 2024年9月30日 和 2023 （以千元為單位）：
| 九月三十日， | 九月三十日， | |||||||
| 2024 | 2023 | |||||||
| 現金及現金等價物總額 | $ | $ | ||||||
應收帳款
公司根據多種因素評估應收賬戶的收回能力。通常，公司記錄特定儲備金，以降低記錄的金額至公司認為在客戶賬戶超出典型收款模式，或公司發現客戶無法履行財務義務時將會收回的金額。
公司認為，由於最大客戶的規模和穩定性，以及應收帳款的性質，應收帳款的信用風險是有限的。
公司的應收帳款是 2024 年 9 月 30 日結束， 和 2024年3月31日
| 九月三十日 | 三月三十一日 | |||||||
| 2024 | 2024 | |||||||
| 應收帳款總額 | $ | $ | ||||||
| 減：抵免信貸損失 | ( | ) | ( | ) | ||||
| 應收帳款淨額 | $ | $ | ||||||
關聯方應收款項及應付款項
LiveOne歷來與該公司保持貸款關係，以補充公司的營運資金需求。到截至 2024 年 9 月 30 日結束， 和 2024年3月31日，淨（應付）應收款為$(
物業及設備
財產和設備按成本記錄。延長經濟壽命或改善服務潛力的改善成本也會被資本化。資本化成本會在其估計有效期內折舊。正常維修和維護的費用按照產生的費用計算。本公司資本與其平台和其他軟件應用程序開發有關的部分成本以供內部使用。根據權威指引，當初步開發工作成功完成，管理層已授權並承諾項目資金，並且有可能將項目完成，並且軟件將按照預期使用，公司開始利用其軟件開發成本。當軟件完成完整且準備好用途，包括完成所有重要測試，公司就停止資本這些成本。這些成本在相關資產的估計有效期限內按直線攤銷，一般估計為 二年。當開支可能會導致維護以及小型升級和增強而產生額外的功能和費用成本時，本公司還會資本與特定升級和增強相關的成本。在符合這些標準之前所產生的成本，以及培訓和維護所產生的成本，均按照產生的開發費用進行計算，並記錄在本公司綜合運營報表中的產品開發費用中。
折舊以直線法記錄，通常根據資產的預估可用年限進行，一般如下：計算機、機械和軟體設備（年），傢具和固定設施（年），租賃改善按預估有用生命長短或租賃期限較短的期間計提折舊，並將軟體資本化（年）。3 在權利益分享區間內，
若公司發現其財產和設備的賬面價值存在潛在減值的因數，則將對其進行評估。如果存在潛在減值的因數，公司將進行分析以判斷資產組的賬面價值的可回收性，方法是將預期的未折現未來現金流與資產組的淨賬面價值進行比較。如果判斷預期的未折現未來現金流少於資產組的淨賬面價值，則公司將在合併營運報表中記錄淨賬面價值超過估計公允價值的部分。公允價值通常通過估價技術來估算，這些技術考慮到資產組的折現現金流，使用對於該類資產而言合理的折現率和資本化率，以及當前市場情況、評估、近期市場上相似交易，並且如有適當及可用的，還包括尚待報價的當前估計淨銷售收益。
商譽
商譽代表購買對價超過在業務結合中取得的淨有形資產和可識別無形資產的公允價值的部分，並按照成本計量。商譽為 不 進行攤銷，但需進行每年一次的減值測試，以及在事件或情況顯示可攜帶的價值 可以 不 可收回。公司在每年 每年1月1日 的時候進行年度減值測試。
公司的年度商譽減值測試在報告單位層面進行。 首先 公司通常通過進行質量評估來判斷商譽是否可能減值， 不 即報告單位的公允價值是否低於其賬面價值的可能性更高。 不 如果使用質量評估，或如果質量評估是 不 如果進行定量的減值測試，公司會判斷相關報告單位的公允價值，並將該價值與報告單位的記錄淨資產（包括商譽）進行比較。公司的報告單位的公允價值是基於活躍市場的報價，使用市場方法來確定。如果報告單位的記錄淨資產超過此類資產的估計公允價值，則會記錄減值費用。
將根據公司未來表現、業務結果的估算和假設，以及其市場資本化和淨賬面價值的可比性進行使用。
具有有限使用壽命的無形資產
本公司擁有某些有限使用壽命的無形資產，這些資產在收購時以其公允價值初步入帳。這些無形資產包括來自業務合併的智慧財產權和內容創作者關係。有限使用壽命的無形資產依據其各自的估計使用年限，採用直線法進行攤銷，通常如下所示：品牌和交易名稱（
公司在情況顯示其帶有值得所有有限生命無形資產應受損失時，會進行檢討。 可以 不 能夠回收的資產組合的帶有值如果是 不 ，公司將根據其合併綜合損益表中的公平值超過帶有值的部分，承認損耗損失。公司記錄了$損失。
公允價值測量 - 評價層級
公允價值定義為在測量日期（即退出價格）在市場參與者之間進行有序交易時資產賣出的價格或負債轉移的價格。公司使用。 三級別估值層次結構用於分類公允價值衡量基準。估值層次結構基於測量日資產或負債估值的輸入的透明度。輸入廣義上指市場參與者在定價資產或負債時會使用的假設。輸入。 可以 可觀察或不可觀察。可觀察輸入反映市場參與者在定價資產或負債時將使用的假設，這些假設是基於來源獨立數據而開發的。不可觀察輸入反映公司對數據的自有假設，這些假設是基於所處情況的最佳資訊而開發的。 三層次化輸入的三層層次結構如下:
| 水平 1 | 估值是基於活躍市場中相同資產或負債的報價價格（未調整）。 |
| 水平 2 | 估值基於在活躍市場中類似資產和負債的報價價格，或對資產或負債直接或間接地可觀察到的其他輸入，對工具的完整期限具有實質性影響。 |
| 水平 3 | 估值是基於其他重要的不可觀察輸入，對公平值的衡量至關重要。 |
資產和負債的分類取決於對整體公允值度量具有重要意義的較低輸入層級。在估值層級內進行公允值度量的正確分類在每個報告期內都會考慮。不同市場假設或估計方法的使用 可以 對估計公允值金額有著重大影響。以反覆基礎衡量的金融資產和負債是指每次準備財務報表時調整為公允值。衍生性負債反覆以公允值確認，在 2024 年 9 月 30 日結束，，並屬於第 3 層級估值。層級間曾發生 no 升降。
信用集中風險
該公司在商業銀行維持現金餘額。
附有認股權的債務
根據ASC主題，在公司發行帶有認股權的債務時，公司將認股權的公允價值視為債務折讓，記錄為與債務相抵的關聯負債，在合併綜合損益表中以直線法對基礎債務的壽命進行攤銷，作為債務折讓費用之攤銷。與關聯負債相對的抵銷額根據認股權的會計處理方式，在公司的合併資產負債表中記錄為股權或負債。如果提前償還債務，相應的債務折讓隨即被認為是債務折讓費用之攤銷，在合併綜合損益表中立即認列。 470-20-25, 當公司發行帶有認股權的債務時，公司將認股權的公允價值視為債務折讓，記錄為與債務相抵的關聯負債，在合併綜合損益表中以直線法對基礎債務的壽命進行攤銷，作為債務折讓費用之攤銷。與關聯負債相對的抵銷額根據認股權的會計處理方式，在公司的合併資產負債表中記錄為股權或負債。如果提前償還債務，相應的債務折讓隨即被認為是債務折讓費用之攤銷，在合併綜合損益表中立即認列。
可轉換債務 – 衍生工具處理
當公司發行帶有轉換特性的債務時，我們必須 首先 評估轉換特性是否符合作為衍生品的要求，如下：(a) 一 或更多基礎資產，通常是我們普通股的價格；(b) 一 或更多名義金額或支付條款或兩者，一般是轉換時的股份數量；(c) no 初始淨投資，通常不包括已借入的金額；以及(d)淨結算條款，在可轉換債券的情況下，通常意味著轉換後收到的股票可以迅速出售獲得現金。符合衍生工具定義的嵌入式股權連結組件在 不 如果該組件符合牽涉發行人自有權益的特定合約的範圍例外，則必須將嵌入式股權連結組件與母項工具分開。如果合約同時(a)與其自有股票掛鉤；並且(b)在資產負債表中歸類為股東權益，則該合約符合範圍例外的條件。
如果可轉換債務中的轉換特性符合作為衍生金融工具的要求，我們將在發行日期使用蒙特卡洛模擬模型估計可轉換債務衍生金融工具的公允價值。如果可轉換債務衍生金融工具的公允價值高於可轉換債務的面值，多餘部分會立即認列為利息費用。否則，可轉換債務衍生金融工具的公允價值會記錄為一個負債，同時以抵銷金額記錄為債務折扣，用以抵銷債務的攤銷金額。衍生金融工具會在每個報告期結束時重新評估，任何公允價值變動會記錄為損益表中的損益。債務折扣將透過利息費用以直線法在債務的壽命期間摊銷。
最近採納的會計準則
在 在2023年12月15日之后開始的財政年度， 美國財會標準委員會(FASB)發布了《出版宣布》(ASU)。 2023-07, 分部報告 (主題): 改善可報告分部披露要求，主要通過披露重要分部支出和評估分部業績所使用的信息加以加強。本更新將於公司的財政年度年度報告期生效，允許提前採用。該公司採用了ASU，以前瞻性的方式於 . (日期未給定)上採用了這一標準。本標準的採用並未對公司的中期簡明合併財務報表產生任何影響。 280改善報告部門披露以更新報告部門披露要求，主要通過加強對重要部門費用和評估部門表現所使用的信息的披露。該更新自公司的開始生效 2024 財政年度年度報告期，允許提前採用。公司在提交了基本報表基本報表 2023-07的情況下採用了ASU 2024年4月1日從前景角度來看。採用這個標準確實有影響了公司的中期簡明綜合基本報表。 不 對公司的中期簡明綜合基本報表產生了影響。
最近公佈的會計準則
在 十二月2023, FASB發布ASU。2023-09,所得稅（主題 740：改善所得稅披露（“ASU 2023-09”），將要求公司在其所得稅率調解中披露特定的額外信息，並提供符合定量閾值的調解項目的額外信息。ASU 2023-09 還將要求公司將所得稅支付的披露按聯邦稅、州稅和外國稅進行分解，對於具有重要單一管轄區的進一步分解將有所要求。公司將開始實施ASU 2023-09 。 首先 季度 2026. 亞利桑那州立大學 2023-09 允許採用前瞻性或後瞻性轉換方法進行採納。公司目前正在評估此標準對公司的合併基本報表產生的影響。
FASB最近發布的其他會計公告，包括其新興議題專責小組、全美註冊會計師協會以及美國證券交易委員會，已或將 不 或 不 管理層認為對公司目前或未來的合併財務報表呈現或揭露具有重大影響。
附註 3 — 財產與設備
公司的資產和設備在 2024 年 9 月 30 日結束， 和 2024年3月31日 如下所示（以千為單位）：
| 九月三十日， | 三月三十一日， | |||||||
| 2024 | 2024 | |||||||
| 不動產及設備，淨額 | ||||||||
| 計算機、機械及軟體設備 | $ | $ | ||||||
| 傢俱及裝置 | ||||||||
| 租賃改良 | ||||||||
| 資本化內部開發的軟體 | ||||||||
| 總固定資產 | ||||||||
| 減：累積折舊和攤銷 | ( | ) | ( | ) | ||||
| 總固定資產淨值 | $ | $ | ||||||
透過折舊的支出為2023年和2024年六月三十日止的三個月和六個月分別為$9,577和$465,639。
附註 4 — 商譽和無形資產
商譽
公司目前持有 報告單位。以下表格顯示了商譽的帳面價值變動。 六 截至之月份 2024 年 9 月 30 日結束， （以千元為單位）：
| 商譽 | ||||
| 截至2024年3月31日的餘額 | $ | |||
| 收購 | ||||
| 截至2024年9月30日的結餘 | $ | |||
有限壽命無形資產
公司有限壽命無形資產截至 2024 年 9 月 30 日結束， （以千元為單位）：
| 總額 | Net | |||||||||||
| 帳面 | 累積的 | 帳面 | ||||||||||
| 價值 | 攤銷 | 價值 | ||||||||||
| 內容創作者關係 | $ | $ | $ | |||||||||
| 品牌和交易名稱 | ||||||||||||
| 總計 | $ | $ | $ | |||||||||
本公司有限壽命的無形資產截至如下 2024年3月31日 （以千元為單位）：
| 總額 | Net | |||||||||||
| 帳面 | 累積的 | 帳面 | ||||||||||
| 價值 | 攤銷 | 價值 | ||||||||||
| 內容創作者關係 | $ | $ | $ | |||||||||
| 品牌及交易名稱 | ||||||||||||
| 總計 | $ | $ | $ | |||||||||
公司的有限壽命無形資產的攤銷費用為$
公司預計在截至的財政年度中記錄無形資產的攤銷， 2025年3月31日， 以及未來的財政年度如下（以千為單位）：
| 截至3月31日的年度結束時， | ||||
| 2025年（剩餘六個月） | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 其後 | ||||
| $ |
附註 5 — 應付帳款及應計負債
應付帳款及累計負債 二零二四年九月三十日 和 二零二四年三月三十一日 如下（以千計）：
| September 30, |
March 31, |
|||||||
| 2024 |
2024 |
|||||||
| Accounts payable |
$ | $ | ||||||
| Accrued revenue share |
||||||||
| Other accrued liabilities |
||||||||
| $ | $ | |||||||
Accrued revenue share can be attributed to monies owed to content creators who provide their podcast or other media content for the Company to sell to consumers. The Company accrues a liability based on the percentage of revenue owed to each content creator at the time of sale.
Note 6 — PodcastOne Bridge Loan
PodcastOne’s Private Placement
On July 15, 2022, the Company completed a private placement offering (the “PC1 Bridge Loan”) of its unsecured convertible notes with an original issue discount of
LiveOne also agreed (i) not to effect a Qualified Financing or a Qualified Event, as applicable, unless immediately following such event LiveOne owns no less than
The Company further agreed to register the shares of its common stock issuable upon conversion of the PC1 Notes and exercise of the PC1 Warrants in connection with a Qualified Financing or a Qualified Event. If the Company did not file such registration statement on or prior to April 15, 2023, the Company was required to prepay $
During the year ended March 31, 2024, the Company redeemed $
On September 8, 2023, the Company completed a Qualified Event (its direct listing on The Nasdaq Capital Market (the "Spin-Out")) as a result of its direct listing on The NASDAQ Capital Market on such date (the "Direct Listing"). In connection with such completed Qualified Event, all of the remaining PC1 Notes (including interest thereunder) in the aggregate amount of approximately $
Warrants
The PC1 Warrants are classified as liabilities at inception of the PC1 Bridge Loan as they represent an obligation to deliver a variable number of shares of the Company’s common stock in the future and are therefore required to be initially and subsequently measured at fair value each reporting period. The Company recorded a warrant liability in the amount of $
The fair value of the PC1 Warrants is measured in accordance with ASC 820 “Fair Value Measurement”, using “Black Scholes” modeling, incorporating the following inputs:
| September 8, | March 31, | |||||||
| 2023 | 2023 | |||||||
| Expected dividend yield | % | % | ||||||
| Expected stock-price volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Simulated share price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
Total unrealized gain of and $
Redemption Features
The Company determined that the redemption features associated with the PC1 Bridge Loan meet the accounting definition of an embedded derivative that must be separated from the PC1 Bridge Loan and initially and subsequently be reported as a liability (the “Redemption Liability”) and measured at fair value. The fair value of the Redemption Liability was determined using a Monte Carlo simulation model. On September 8, 2023, the Company completed its Spin-Out, therefore the redemption feature was cancelled and not exercised by the holder. Based on the fair value of the shares traded on September 8, 2023, the Company valued the derivative at $
The fair value of the redemption features are measured in accordance with ASC 820 “Fair Value Measurement”, using “Monte Carlo simulation” modeling, incorporating the following inputs:
| September 8, | ||||
| 2023 | ||||
| Simulations | ||||
| Expected stock-price volatility | % | |||
| Risk-free interest rate | % | |||
| Conversion price | $ | |||
| Stock price | $ | |||
The fair value of the Redemption Liability at September 30, 2023 was The $
The resulting discount from the OID, underwriting fees, PC1 Warrants, and embedded Redemption Liability derivative of $
Interest expense with respect to the PC1 Bridge Loan for the six months ended September 30, 2023 was $
Note 7 — Related Party Transactions
As of September 30, 2024, the Company’s parent, LiveOne, holds approximately
During the three and six months ended September 30, 2024 and 2023, the Company was allocated expenses by its parent company, LiveOne, attributed to the overhead expenses incurred on behalf of the Company. The amount allocated to the Company from LiveOne for the three months ended September 30, 2024 and 2023 was $
During the year ended March 31, 2023, the Company entered into a production agreement for a podcast and related show with an affiliate of Mr. Wachsberger, the Company’s director nominee and a director of LiveOne. The Company incurred cost of and $
As of September 30, 2024 and March 31, 2024, the Company had a related party payable owed to LiveOne of $
Note 8 — Commitments and Contingencies
Contractual Obligations
As of September 30, 2024, the Company is obligated under agreements with its content providers and other contractual obligations to make guaranteed payments as follows: $
On a quarterly basis, the Company records the greater of the cumulative actual content acquisition costs incurred or the cumulative minimum guarantee based on forecasted usage for the minimum guarantee period. The minimum guarantee period of time is the period that the minimum guarantee relates to, as specified in each agreement, which may be annual or a longer period. The cumulative minimum guarantee, based on forecasted usage, considers factors such as listening hours, revenue, members, and other terms of each agreement that impact the Company’s expected attainment or recoupment of the minimum guarantees based on the relative attribution method.
On August 28, 2023, the Company entered into a new two-year employment contract with its President for $
Legal Proceedings
From time to time, the Company is involved in legal proceedings and other matters arising in connection with the conduct of its business activities. Many of these proceedings may be at preliminary stages and/or seek an indeterminate amount of damages. In the opinion of management, after consultation with legal counsel, except as set forth below, such routine claims and lawsuits are not significant and we do not currently expect them to have a material adverse effect on our business, financial condition, results of operations, or liquidity. Also see Note 13 - Commitments and Contingencies - Legal Proceedings in the Company's Quarterly Report on Form 10-Q, filed with the SEC on August 13, 2024.
Parent Company Debt
The senior credit facility held by the Company’s parent, LiveOne, contains provisions that limit the Company’s operating activities, including covenant relating to the requirement to maintain a certain amount cash at LiveOne of $
Note 9 — Employee Benefit Plan
The Company’s parent LiveOne sponsors a 401(k) plan (the “401(k) Plan”) covering all the Company’s employees. Employees are eligible to participate in the 401(k) Plan the first day of the calendar month following their date of hire. The Company may make discretionary matching contributions to the 401(k) Plan on behalf of its employees up to a maximum of
Note 10 — Stockholders’ Equity
Spin-Out
Prior to the Spin-Out, LiveOne, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., canceled
Pursuant to the Company’s Amended and Restated Certificate of Incorporation which was approved by the Company’s board of directors and LiveOne as the sole stockholder on December 15, 2022, which became effective on September 12, 2023, in connection with the completion of the Spin-Out, the Company is authorized to issue up to
On September 8, 2023, the Company completed the Spin-Out and converted the outstanding PC1 Bridge Loan into
Finder's Agreement
In September 2023, the Company entered into a finder's fee arrangement pursuant to which the Company agreed to issue shares of its common stock at a price of $
2016 Equity Incentive Plan
LiveOne’s board of directors and stockholders approved its 2016 Equity Incentive Plan, as amended (the “2016 Plan”) which reserved a total of
The Company’s employees were awarded options and restricted stock awards under the 2016 Plan, therefore an allocation of the share-based compensation was made to the Company from LiveOne. The Company recognized stock-based compensation expense of $
LiveOne Options Grants to the Company’s Employees
Stock option awards are granted with an exercise price equal to the fair market value of LiveOne’s common stock at the date of grant based on the closing market price of its common stock as reported on The Nasdaq Capital Market. The option awards generally vest over to years and are exercisable any time after vesting. The stock options expire years after the date of grant.
As of September 30, 2024, unrecognized compensation costs for unvested awards to the Company's employees was less than million, which is expected to be recognized over a weighted-average service period of
The following table summarizes the activity of LiveOne’s options granted to the Company's employees during the six months ended September 30, 2024:
| Weighted- | ||||||||
| Average | ||||||||
| Exercise | ||||||||
| Number of | Price per | |||||||
| Shares | Share | |||||||
| Outstanding as of March 31, 2024 | $ | |||||||
| Granted | $ | |||||||
| Exercised | $ | |||||||
| Forfeited or expired | ( | ) | $ | |||||
| Outstanding as of September 30, 2024 | $ | |||||||
| Exercisable as of September 30, 2024 | $ | |||||||
The weighted-average remaining contractual term for options to the Company's employees outstanding and options to the Company's employees exercisable as of September 30, 2024 was
The fair value of stock options outstanding and exercisable at September 30, 2024 was $
Restricted Stock Units Grants to the Company's Employees
As of September 30, 2024, unrecognized compensation costs for unvested LiveOne restricted stock units awards to the Company's employees was $
The following table summarizes the activity of LiveOne’s restricted stock units granted to the Company's employees during the six months ended September 30, 2024:
| Number of | ||||
| Shares | ||||
| Outstanding as of March 31, 2024 | ||||
| Granted | ||||
| Vested | ( | ) | ||
| Outstanding as of September 30, 2024 | ||||
The fair value of restricted stock units that vested during the six months ended September 30, 2024 and 2023 was $
PodcastOne 2022 Equity Incentive Plan
On December 15, 2022, the Company’s board of directors and LiveOne as the sole stockholder, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., approved the Company’s 2022 Equity Incentive Plan (the “2022 Plan”) which reserved a total of
The following table summarizes the activity of the Company's restricted stock units issued to its employees under the 2022 Plan during the six months ended September 30, 2024:
| Number of | ||||
| Shares | ||||
| Nonvested as of March 31, 2024 | ||||
| Granted | ||||
| Vested | ( | ) | ||
| Forfeited or expired | ( | ) | ||
| Nonvested as of September 30, 2024 | ||||
As of September 30, 2024, the Company recognized $
Authorized Common Stock and Authority to Create Preferred Stock
Pursuant to the Company’s Amended and Restated Certificate of Incorporation which was approved by the Company’s board of directors and LiveOne as the sole stockholder on December 15, 2023, became effective in connection with the completion of the Spin-Out, the Company is authorized to issue up to
The Company may issue shares of preferred stock from time to time in one or more series, each of which will have such distinctive designation or title as shall be determined by the Company’s board of directors and will have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issue of such class or series of preferred stock as may be adopted from time to time by the Company’s board of directors. The Company’s board of directors will have the power to increase or decrease the number of shares of preferred stock of any series after the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased, the shares constituting such decrease will resume the status of authorized but unissued shares of preferred stock.
While the Company does not currently have any plans for the issuance of preferred stock, the issuance of such preferred stock could adversely affect the rights of the holders of common stock and, therefore, reduce the value of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the common stock until and unless the Company’s board of directors determines the specific rights of the holders of the preferred stock; however, these effects may include: restricting dividends on the common stock, diluting the voting power of the common stock, impairing the liquidation rights of the common stock, or delaying or preventing a change in control of the Company without further action by the stockholders.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
As used herein, “PodcastOne,” the “Company,” “we,” “our” or “us” and similar terms include PodcastOne, Inc. and its subsidiaries, unless the context indicates otherwise. The following discussion and analysis of our business and results of operations for the three and six months ended September 30, 2024, and our financial conditions at that date, should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”).
Forward-Looking Statements
Certain statements contained in this Quarterly Report that are not statements of historical fact constitute “forward-looking statements” within the meaning of the Securities Litigation Reform Act of 1995, notwithstanding that such statements are not specifically identified. These forward-looking statements relate to expectations or forecasts for future events, including without limitation our earnings, revenues, expenses or other future financial or business performance or strategies, or the impact of legal or regulatory matters on our business, results of operations or financial condition. These statements may be preceded by, followed by or include the words “may,” “might,” “will,” “would,” “could,” “should,” “will likely result,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “continue,” “target” or the negative or other variations thereof or comparable terminology. These forward-looking statements are not guarantees of future performance and are based on information available to us as of the date of this Quarterly Report and on our current expectations, forecasts and assumptions, and involve substantial risks and uncertainties. Actual results may vary materially from those expressed or implied by the forward-looking statements herein due to a variety of factors, including: our ability to consummate any proposed financing, acquisition, spin-out, distribution or transaction, the timing of the closing of such proposed event, including the risks that a condition to closing would not be satisfied within the expected timeframe or at all or that the closing of any proposed financing, acquisition or transaction, the timing of the closing of such proposed event will not occur or whether any such event will enhance shareholder value; our ability to continue as a going concern; if and when required, our ability to obtain additional capital, including to fund our and/or our parent's LiveOne, Inc.’s ("LiveOne") current debt obligations and to fund potential acquisitions and capital expenditures; our ability to attract, maintain and increase the number of our listeners; our ability to identify, acquire, secure and develop content; our ability to successfully implement our growth strategy, our ability to acquire and integrate our acquired businesses, the ability of the combined business to grow, including through acquisitions which we are able to successfully integrate, and the ability of our executive officers to manage growth profitably; the outcome(s) of any legal proceedings pending or that may be instituted against us, our subsidiaries, or third parties to whom we owe indemnification obligations; changes in laws or regulations that apply to us or our industry; our ability to recognize and timely implement future technologies in the podcasting and digital space; our ability to capitalize on investments in developing our service offerings, including our ability to deliver and develop upon current and future technologies; significant product development expenses associated with our technology initiatives; our ability to timely and economically obtain necessary approval(s), releases and or licenses on a timely basis for the use of our content on an appliable platform; our ability to obtain and maintain international authorizations to operate our service over the proper foreign jurisdictions our listeners utilize; our ability to expand our service offerings and deliver on our service roadmap; our ability to timely and cost-effectively produce, identify and or deliver compelling content that brands will advertise on and/or listeners desire to listen to; general economic and technological circumstances in the podcasting and digital streaming markets; our ability to obtain and maintain our current and new desirable content; the loss of, or failure to realize benefits from, agreements with our content providers and partners; unfavorable economic conditions in the podcasting industry and economy as a whole; our ability to expand our domestic or international operations, including our ability to grow our business with current and potential future podcasting platforms and partners; the effects of service interruptions or delays, technology failures, material defects or errors in our software, damage to our equipment or geopolitical restrictions; costs associated with defending pending or future intellectual property infringement actions and other litigation or claims; increases in our projected capital expenditures due to, among other things, unexpected costs incurred in connection with the roll out of our technology roadmap or our plans of expansion in North America and internationally; fluctuation in our operating results; the demand for podcasting and digital media streaming services and market acceptance for our products and services; our ability to generate sufficient cash flow to make payments on our and/or LiveOne’s indebtedness; our incurrence of additional indebtedness in the future; LiveOne’s compliance with the covenants in its indebtedness agreements; LiveOne’s ability to extend and/or refinance its indebtedness and/or repay its indebtedness when due;
LiveOne’s intent to repurchase shares of its and/or our common stock from time to time under its announced stock repurchase program and the timing, price, and quantity of repurchases, if any, under the program; risks and uncertainties applicable to the businesses of our Company and/or our subsidiaries; and other risks and uncertainties set forth herein. Other factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those set forth below in Part II – Item 1A. Except as required by law, we do not undertake any obligation to update forward-looking statements as a result of as a result of new information, future events or developments or otherwise.
Overview
We incorporated in the State of Delaware on February 5, 2014 and are a leading podcast platform and publisher that makes our content available to audiences via all podcasting distribution platforms, including our website (www.podcastone.com), our PodcastOne app, Apple Podcasts, Spotify, Amazon Music and more. We were recently ranked #12 on the September 2024 list of Top Podcast Publishers by the podcast metric company Podtrac.
After the completion of the spin-out of our Company from LiveOne the ("Spin-Out"), we became a standalone publicly traded company trading on The NASDAQ Capital Market under the symbol “PODC”. We remain a majority owned subsidiary of LiveOne, a Nasdaq listed company. We intend to mitigate risk by acquiring multiple assets over time and across a broad spectrum of podcast related media and companies. We intend to develop these assets to provide returns via organic growth, revenue production, out-licensing, sale or spin out.
We also produce vodcasts (video podcasts), branded podcasts, merchandise and live events on behalf of our talent and clients. With a proven 360-degree advertiser solution for multiplatform integration opportunities and hyper-targeting, we deliver millions of monthly impressions, 5.7+ million monthly unique listeners and 19+ million IAB monthly downloads. With content covering all verticals (i.e. sports, entertainment, true-crime, business, audio dramas, self-growth, etc.), we provide a platform for brands to reach their most sought after targeted audiences.
Our operating model is focused on offering white glove service to our shows, talent and advertising clients. With an in-house sales, production, marketing, and tech team, we believe PodcastOne delivers more to clients and talent than any other publisher in the marketplace. This allows us to scale our operations while attracting talent who bring in brand advertisers and revenue. We earn revenue through the sale of embedded host-read ads, dynamic ads (host read and otherwise), segment sponsorships, and programmatic monetization channels. We also provide the opportunity for clients to have 100% share of voice with branded podcast episodes or series as well as live tours, merch and IP ownership for original programming.
In addition to our core business, we also built, own and operate a solution for the growing number of independent podcasters, Launchpad One. Launchpad One is a self-publishing podcast platform, created to provide a low or no cost tool for independent podcasters without access to parent podcasting networks or state of the art equipment to create shows. Launchpad One serves as a talent pool for us to find new podcasts and talent.
We have experienced significant growth in recent years driven by increased advertising activity. Our revenue was $25.3 million and $21.2 million for the six months ended September 30, 2024 and 2023, respectively, representing year-over-year growth of 20%.
We are more than a podcast company. We are in the relationship business. Brands and creators partner with us to reach consumers who will purchase, listen and subscribe to their favorite PodcastOne podcasts across the audio landscape. We offer content for every type of listener with verticals including reality TV, sports, true crime self-help, and business. The visibility and reach of our network is evident with shows which consistently rank in the top 100 on the Apple Charts.
Recent Developments for the Quarter Ended September 30, 2024
As of the date of this Quarterly Report, we have continued to expand our slate of original programming, having acquired exclusive rights to certain podcasts, including ownership and intellectual property and derivative rights to several true crime podcasts for potential television and/or film projects and distribution.
As of the date of this Quarterly Report, we are actively pursuing potential other podcasts, shows and other asset acquisitions consistent with our strategy.
Our Business Model
We are an Ad-Supported Service that provides free content to listeners via their mobile and desktop devices. We generate revenue from the sale of audio, video and social advertising delivered through advertising impressions. We generally enter into arrangements with advertising agencies that purchase advertising on our platform on behalf of the agencies’ clients. These advertising arrangements typically specify the type of advertising product, pricing, insertion dates, and number of impressions in a stated period. Revenue for our Ad-Supported segment is affected primarily by the number of a show’s listeners and our ability to provide innovative advertising products that are relevant to our Ad-Supported Users and enhance returns for our advertising partners. Our advertising strategy centers on the belief that advertising products that are based on content and are relevant to the Ad-Supported User can enhance Ad-Supported Users’ experiences and provide even greater returns for advertisers through the strength of our host-read embedded promos. According to a Super Listener Survey in 2021, an estimated 49% of listeners believe the hosts actually use the products and services they recommend and 60% of podcast listeners say they have bought something from hearing a podcast ad. Offering advertisers additional ways to purchase advertising on a programmatic basis is another key way that we expand our portfolio of advertising products and enhance advertising revenue. Furthermore, we continue to focus on analytics and measurement tools to evaluate, demonstrate, and improve the effectiveness of advertising campaigns on our platform.
When we onboard new talent both parties have the common interest of creating content that advertisers want to purchase. We craft our deals with a percentage split of the advertising revenue (host-read embedded ads, DAI and programmatic) which strengthens our partnerships because when advertisers spend, we all win.
Key Factors Affecting Our Performance
We believe that the growth and future success of our business depends on many factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations.
Impressions
The digital advertising industry is introducing new ways to measure and price advertising inventory. For example, a significant portion of advertisers are in the process of moving from purchasing advertisement impressions based on the number of advertisements served by the applicable ad server to a new “viewable” impression standard (based on number of pixels in view and duration) for select products. In the absence of a uniform industry standard, agencies and advertisers have adopted several different measurement methodologies and standards. In addition, measurement services may require technological integrations, which are still being evaluated by the advertising industry without an agreed-upon industry standard metric. 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. These data-driven advertising products and automated buying technologies allow publishers and advertisers to use data to target advertising toward specific groups of users who are more likely to be interested in the advertising message delivered to them. These advertising products and programmatic technologies are currently more developed in terms of advertising technology and industry adoption on the web than they are on mobile or on other software applications, and may not integrate with our desktop software version of the ad-supported services. Because the majority of our ad-supported user hours occur on mobile devices, if we are unable to deploy effective solutions to monetize the mobile device usage by our ad-supported user base, our ability to attract advertising spend, and ultimately our advertising revenue, may be adversely affected by this shift. In addition, we rely on third-party advertising technology platforms to participate in automated buying, and if these platforms cease to operate or experience instability in their business models, it also may adversely affect our ability to capture advertising spend.
We generate revenue by charging a cost per thousand impressions (“CPM”) based on the volume of purchased digital ads that we measure on behalf of these customers. If the volume of impressions we measure does not continue to grow or decreases for any reason, our business will suffer. For example, if digital ad spending remains constant and our advertiser customers transition to higher CPM ad inventory, overall impression volumes may decrease, which may result in fewer impressions for us to verify and a corresponding decline in our revenues.
Podcast Services
Our podcasts are available to users online alongside LiveOne’s digital Internet radio. Our users are able to listen to a variety of podcasts, from music, radio personalities, news, entertainment, comedy and sports. The podcasts are available on our platform, the LiveOne platforms and also on other leading podcast listening platforms, though various car manufacturers such as Apple Music, Spotify, and Amazon. We monetize podcasts through paid advertising. We own one of the largest networks of podcast content in North America, which has over 300 exclusive podcast shows that produces over 182 episodes per week and has generated over 3.6 billion downloads during the year ended March 31, 2024.
In addition to our core business, we also built, own and operate a solution for the growing number of independent podcasters, LaunchPadOne. LaunchPadOne is a self-publishing podcast platform, created to provide a low or no cost tool for independent podcasters without access to parent podcasting networks or state of the art equipment to create shows. LaunchPadOne serves as a talent pool for us to find new podcasts and talent.
Key Business Metric
We review various operating and financial metrics, including the number of podcasts downloaded to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. However, while we believe that other than the number of podcasts downloaded on our platform, such metrics do not materially help to evaluate our business, measure our performance or provide a better understanding of our results, our management uses its experience and understanding of the podcasting and advertising industry to evaluate such metrics, as well as CPM and various underlying podcast agreement terms (such as minimum guarantee payments, term, marketing spend) and others, such as advertiser engagement with a show, on a show by show basis and in totality across all shows on our network to predict our future business and financial performance. Accordingly, we are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies who may calculate similarly-titled metrics in a different way, and provide the number of podcasts downloaded on our platform as the metric that we believe provides the best understanding of our results, as more fully discussed below.
| Year Ended |
Six Months Ended |
|||||||||||||||||||||||
| March 31, |
September 30, |
|||||||||||||||||||||||
| 2024 |
2023 |
YoY Growth |
2024 |
2023 |
YoY Growth |
|||||||||||||||||||
| Number of podcast downloads |
368,812,413 | 617,445,568 | (40 | )% | 106,796,000 | 223,349,413 | (52 | )% | ||||||||||||||||
The decrease in the number of podcast downloads is largely due to modified download behavior by Apple iOS 17 as it continues to be adopted by podcast listeners, as well as the departure of non-revenue generating partner networks from our podcast network.
Number of Podcast Downloads
We are an Ad-Supported Service that provides free content to listeners via their mobile and desktop devices. We generate revenue from the sale of audio, video and social advertising delivered through advertising impressions. We generally enter into arrangements with advertising agencies that purchase advertising on our platform on behalf of the agencies’ clients. These advertising arrangements typically specify the type of advertising product, pricing, insertion dates, and number of impressions in a stated period. Revenue for our Ad-Supported segment is affected primarily by the number of a show’s listeners and our ability to provide innovative advertising products that are relevant to our Ad-Supported Users and enhance returns for our advertising partners. Therefore, we believe our ability to grow and measure our effectiveness of advertisers is dependent on tracking the number of podcast downloaded on our platform.
Components of Results of Operations
Revenue
We generate revenue primarily from the sale of audio, video, and display advertising space to third-party advertising exchanges. Revenues are recognized based on delivery of impressions over the contract period to the third-party exchanges, either when an ad is placed for listening or viewing by a visitor or when the visitor “clicks through” on the advertisement. The advertising exchange companies report the variable advertising revenue performed on a monthly basis which represents our efforts to satisfy the performance obligation. We earn advertising revenues primarily for fees earned from advertisement placement purchased by the customer during the time the podcast is delivered to the viewing audience, under the terms and conditions as set forth in the applicable podcasting agreement calculated using impressions.
Cost of Sales
Cost of sales consists of direct costs comprised of revenue sharing expenses owed to content creators and commissions.
Operating Expenses
Our operating expenses consist of cost of sales, product development, sales and marketing, and general and administrative expenses. Personnel-related expenses are the most significant component of operating expenses and consist of salaries, benefits, stock-based compensation expense, and, in the case of sales and marketing expenses, sales commissions. Operating expenses also include an allocation of overhead costs for facilities and shared IT-related expenses. As we continue to invest in our business, we expect our operating expenses to continue to increase in dollar amount, and although we believe our operating expenses as a percentage of revenue will decrease over the longer term, we expect operating expenses as a percentage of revenue will increase in the short term as we invest in product innovation and sales growth and incur additional professional services and compliance costs as we operate as a public company.
Sales and Marketing
Sales and Marketing include direct and indirect costs related to our event advertising and marketing. Additionally, sales and marketing include merchandising advertising and royalty costs. Advertising expenses to promote our services are expensed as incurred.
Product Development
Product development costs not capitalized are primarily expenses for research and development, product and content development activities, including internal software development and improvement costs which have not been capitalized by us.
Sales and Marketing
Sales and Marketing include the direct and indirect costs related to our product and event advertising and marketing. Additionally, sales and marketing include merchandising advertising and royalty costs. Advertising expenses to promote our services are expensed as incurred.
General and Administrative
General and administrative expenses consist primarily of personnel-related expenses for our finance, human resources, information technology, and legal organizations. These expenses also include non-personnel costs, such as outside legal, accounting, and other professional fees, software subscriptions, as well as certain tax, license, and insurance-related expenses, and allocated overhead costs.
We also recognized certain expenses as part of our transition to a publicly-traded company, consisting of professional fees and other expenses. In the quarters leading up to the listing of our common stock, we incurred professional fees and expenses, and in the quarter of our listing we incurred fees paid to our financial advisors in addition to other professional fees and expenses related to such listing. After the listing of our common stock, we continue to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a U.S. securities exchange and costs related to compliance and reporting obligations pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). In addition, as a public company, we continue to incur additional costs associated with accounting, compliance, insurance, and investor relations. As a result, we expect our general and administrative expenses to continue to increase in dollar amount for the foreseeable future but to generally decrease as a percentage of our revenue over the longer term, although the percentage may fluctuate from period to period depending on the timing and amount of our general and administrative expenses, including in the short term as we expect to incur increased compliance and professional service costs.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest expense and gain/losses on derivatives.
Results of Operations
Three Months Ended September 30, 2024, as compared to Three Months Ended September 30, 2023
The following tables set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results (in thousands):
| Three Months Ended |
||||||||
| September 30, |
||||||||
| 2024 |
2023 |
|||||||
| Revenue: |
$ | 12,154 | $ | 10,516 | ||||
| Operating expenses: |
||||||||
| Cost of sales |
11,142 | 9,057 | ||||||
| Sales and marketing |
877 | 1,451 | ||||||
| Product development |
13 | 28 | ||||||
| General and administrative |
1,452 | 1,215 | ||||||
| Amortization of intangible assets |
328 | 191 | ||||||
| Total operating expenses |
13,812 | 11,942 | ||||||
| Income (loss) from operations |
(1,658 | ) | (1,426 | ) | ||||
| Other income (expense): |
||||||||
| Interest expense, net |
- | (654 | ) | |||||
| Change in fair value of derivatives |
- | (8,793 | ) | |||||
| Total other income (expense), net |
- | (9,447 | ) | |||||
| Loss before provision for income taxes |
(1,658 | ) | (10,873 | ) | ||||
| Provision for income taxes |
11 | - | ||||||
| Net loss |
$ | (1,669 | ) | $ | (10,873 | ) | ||
| Net loss per share – basic and diluted |
$ | (0.07 | ) | $ | (0.52 | ) | ||
| Weighted average common shares – basic and diluted |
24,162,612 | 20,714,161 | ||||||
The following table sets forth the depreciation expense included in the above line items (in thousands):
| Three Months Ended |
||||||||||||
| September 30, |
||||||||||||
| 2024 |
2023 |
% Change |
||||||||||
| Depreciation expense |
||||||||||||
| Cost of sales |
$ | 39 | $ | 34 | 15 | % | ||||||
| Sales and marketing |
22 | 21 | 5 | % | ||||||||
| General and administrative |
5 | 7 | (29 | )% | ||||||||
| Total depreciation expense |
$ | 66 | $ | 62 | 6 | % | ||||||
The following table sets forth the stock-based compensation expense included in the above line items (in thousands):
| Three Months Ended |
||||||||||||
| September 30, |
||||||||||||
| 2024 |
2023 |
% Change |
||||||||||
| Stock-based compensation expense |
||||||||||||
| Cost of sales |
$ | 24 | $ | 313 | (92 | )% | ||||||
| Sales and marketing |
83 | 135 | (39 | )% | ||||||||
| General and administrative |
631 | 406 | 55 | % | ||||||||
| Total stock-based compensation expense |
$ | 738 | $ | 854 | (14 | )% | ||||||
The following table sets forth our results of operations, as a percentage of revenue, for the periods presented:
| Three Months Ended |
||||||||
| September 30, |
||||||||
| 2024 |
2023 |
|||||||
| Revenue |
100 | % | 100 | % | ||||
| Operating expenses |
||||||||
| Cost of sales |
92 | % | 86 | % | ||||
| Sales and marketing |
7 | % | 14 | % | ||||
| Product development |
0 | % | 0 | % | ||||
| General and administrative |
12 | % | 12 | % | ||||
| Amortization of intangible assets |
0 | % | 0 | % | ||||
| Impairment of intangible assets |
0 | % | 0 | % | ||||
| Total operating expenses |
114 | % | 114 | % | ||||
| Income (loss) from operations |
(14 | )% | (14 | )% | ||||
| Other income (expense), net |
0 | % | (90 | )% | ||||
| Loss before income taxes |
(14 | )% | (103 | )% | ||||
| Income tax provision |
0 | % | 0 | % | ||||
| Net loss |
(14 | )% | (103 | )% | ||||
Revenue
Revenue increased $1.6 million, or 16%, to $12.2 million for the three months ended September 30, 2024, as compared to $10.5 million for the months ended September 30, 2023. The increase in revenue was primarily due to growth in barter revenue and advertising inventory.
Cost of Sales
Cost of sales increased $2.1 million, or 23%, to $11.1 million for the three months ended September 30, 2024, as compared to $9.1 million for the months ended September 30, 2023. The increase was in line with our revenue growth as revenue share splits with our content creators remained consistent.
Other Operating Expenses
Other operating expenses were as follows (in thousands):
| Three Months Ended |
||||||||||||
| September 30, |
||||||||||||
| 2024 |
2023 |
% Change |
||||||||||
| Sales and marketing expenses |
$ | 877 | $ | 1,451 | (40 | )% | ||||||
| Product development |
13 | 28 | (54 | )% | ||||||||
| General and administrative |
1,452 | 1,215 | 20 | % | ||||||||
| Amortization of intangible assets |
328 | 191 | 72 | % | ||||||||
| Total Other Operating Expenses |
$ | 2,670 | $ | 2,885 | (7 | )% | ||||||
Sales and Marketing Expenses
Sales and Marketing expenses decreased by $0.6 million, or 40%, to $0.9 million for the three months ended September 30, 2024, as compared to $1.5 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in advertising spending as the amount of marketing programs was reduced.
Product Development
Product development expenses decreased by $15,000, or 54%, to $13,000 for the three months ended September 30, 2024, as compared to $28,000 for the three months ended September 30, 2023, as no significant projects took place during both periods.
General and Administrative
General and administrative expenses increased by $0.2 million, or 20%, to $1.4 million for the three months ended September 30, 2024, as compared to $1.2 million for the three months ended September 30, 2023, as we incurred additional cost for stock-based compensation.
Amortization of Intangible Assets
Amortization of intangible assets increased by $0.1 million, or 72%, to $0.3 million for the three months ended September 30, 2024, as compared to $0.2 million during the three months ended September 30, 2023. The increase can be attributed to the increase in content related intangibles associated with the acquisition of certain podcasts.
Total Other Income (Expense)
Total other income (expense) was as follows (in thousands):
| Three Months Ended |
||||||||||||
| September 30, |
||||||||||||
| 2024 |
2023 |
% Change |
||||||||||
| Total other income (expense), net |
$ | - | $ | (9,447 | ) | -100 | % | |||||
Total other expense decreased by $9.4 million, or 100%, to none for the three months ended September 30, 2024, as compared to $9.4 million for the three months ended September 30, 2023. The decrease is due to the $8.8 million change attributed to our warrant liability and derivative liability associated with the Bridge Loan (as defined below) and a decrease of $0.7 million in interest expense attributed to our Bridge Loan which was converted in September 2023.
Six Months Ended September 30, 2024, as compared to Six Months Ended September 30, 2023
The following tables set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results (in thousands):
| Six Months Ended |
||||||||
| September 30, |
||||||||
| 2024 |
2023 |
|||||||
| Revenue: |
$ | 25,312 | $ | 21,153 | ||||
| Operating expenses: |
||||||||
| Cost of sales |
22,851 | 17,279 | ||||||
| Sales and marketing |
1,724 | 2,701 | ||||||
| Product development |
31 | 55 | ||||||
| General and administrative |
2,849 | 2,135 | ||||||
| Impairment of intangible assets |
176 | |||||||
| Amortization of intangible assets |
705 | 216 | ||||||
| Total operating expenses |
28,336 | 22,386 | ||||||
| Income (loss) from operations |
(3,024 | ) | (1,233 | ) | ||||
| Other income (expense): |
||||||||
| Interest expense, net |
- | (2,247 | ) | |||||
| Change in fair value of derivatives |
- | (7,603 | ) | |||||
| Total other income (expense), net |
- | (9,850 | ) | |||||
| Loss before provision for income taxes |
(3,024 | ) | (11,083 | ) | ||||
| Provision for income taxes |
11 | - | ||||||
| Net loss |
$ | (3,035 | ) | $ | (11,083 | ) | ||
| Net loss per share – basic and diluted |
$ | (0.13 | ) | $ | (0.54 | ) | ||
| Weighted average common shares – basic and diluted |
23,991,772 | 20,357,080 | ||||||
The following table sets forth the depreciation expense included in the above line items (in thousands):
| Six Months Ended |
||||||||||||
| September 30, |
||||||||||||
| 2024 |
2023 |
% Change |
||||||||||
| Depreciation expense |
||||||||||||
| Cost of sales |
$ | 76 | $ | 70 | 9 | % | ||||||
| Sales and marketing |
46 | 43 | 7 | % | ||||||||
| General and administrative |
10 | 10 | 0 | % | ||||||||
| Total depreciation expense |
$ | 132 | $ | 123 | 7 | % | ||||||
The following table sets forth the stock-based compensation expense included in the above line items (in thousands):
| Six Months Ended |
||||||||||||
| September 30, |
||||||||||||
| 2024 |
2023 |
% Change |
||||||||||
| Stock-based compensation expense |
||||||||||||
| Cost of sales |
$ | 46 | $ | 366 | (87 | )% | ||||||
| Sales and marketing |
42 | 163 | (74 | )% | ||||||||
| General and administrative |
1,175 | 409 | 187 | % | ||||||||
| Total stock-based compensation expense |
$ | 1,263 | $ | 938 | 35 | % | ||||||
The following table sets forth our results of operations, as a percentage of revenue, for the periods presented:
| Six Months Ended |
||||||||
| September 30, |
||||||||
| 2024 |
2023 |
|||||||
| Revenue |
100 | % | 100 | % | ||||
| Operating expenses |
||||||||
| Cost of sales |
90 | % | 82 | % | ||||
| Sales and marketing |
7 | % | 13 | % | ||||
| Product development |
0 | % | 0 | % | ||||
| General and administrative |
11 | % | 10 | % | ||||
| Amortization of intangible assets |
3 | % | 1 | % | ||||
| Total operating expenses |
112 | % | 106 | % | ||||
| Income (loss) from operations |
(12 | )% | (6 | )% | ||||
| Other income (expense), net |
0 | % | (47 | )% | ||||
| Loss before income taxes |
(12 | )% | (52 | )% | ||||
| Income tax provision |
0 | % | 0 | % | ||||
| Net loss |
(12 | )% | (52 | )% | ||||
Revenue
Revenue increased $4.2 million, or 20%, to $25.3 million for the six months ended September 30, 2024, as compared to $21.2 million for the six months ended September 30, 2023. The increase in revenue was primarily due to growth in barter revenue and advertising inventory.
Cost of Sales
Cost of sales increased $5.6 million, or 32%, to $22.9 million for the six months ended September 30, 2024, as compared to $17.3 million for the six months ended September 30, 2023. The increase was in line with our revenue growth as revenue share splits with our content creators remained consistent.
Other Operating Expenses
Other operating expenses were as follows (in thousands):
| Six Months Ended |
||||||||||||
| September 30, |
||||||||||||
| 2024 |
2023 |
% Change |
||||||||||
| Sales and marketing expenses |
$ | 1,724 | $ | 2,701 | (36 | )% | ||||||
| Product development |
31 | 55 | (44 | )% | ||||||||
| General and administrative |
2,849 | 2,135 | 33 | % | ||||||||
| Amortization of intangible assets |
705 | 216 | 226 | % | ||||||||
| Impairment of intangible assets |
176 | - | 100 | % | ||||||||
| Total Other Operating Expenses |
$ | 5,485 | $ | 5,107 | 7 | % | ||||||
Sales and Marketing Expenses
Sales and Marketing expenses decreased by $1.0 million, or 36%, to $1.7 million for the six months ended September 30, 2024, as compared to $2.7 million for the six months ended September 30, 2023. The decrease was primarily due to a decrease in advertising spending as the amount of marketing programs was reduced.
Product Development
Product development expenses decreased by $24,000, or 44%, to $31,000 for the six months ended September 30, 2024, as compared to $55,000 for the six months ended September 30, 2023, as no significant projects took place during the period.
General and Administrative
General and administrative expenses increased by $0.7 million, or 33%, to $2.9 million for the six months ended September 30, 2024, as compared to $2.1 million for the six months ended September 30, 2023, as we incurred additional cost for stock-based compensation.
Amortization of Intangible Assets
Amortization of intangible assets increased by $0.5 million, or 226%, to $0.7 million for the six months ended September 30, 2024, as compared to $0.2 million during the six months ended September 30, 2023. The increase can be attributed to the increase in content related intangibles associated with the acquisition of certain podcasts.
Impairment of Intangible Assets
Impairment of intangible assets increased $0.2 million, or 100%, to $0.2 million for the six months ended September 30, 2024, as compared to none for the six months ended September 30, 2023, which is attributed to the cancellation of a show previously acquired (see Note 4 – Goodwill and Intangible Assets).
Total Other Income (Expense)
Total other income (expense) was as follows (in thousands):
| Six Months Ended |
||||||||||||
| September 30, |
||||||||||||
| 2024 |
2023 |
% Change |
||||||||||
| Total other income (expense), net |
$ | - | $ | (9,850 | ) | -100 | % | |||||
Total other expense decreased by $9.9 million, or 100%, to none for the six months ended September 30, 2024, as compared to $9.9 million for the six months ended September 30, 2023. The decrease is due to a decrease of $7.6 million of gain attributed to our warrant liability and derivative liability associated with the Bridge Loan and a decrease of $2.2 million in interest expense attributed to our Bridge Loan which was converted in September of 2023.
Non-GAAP Financial Measures
The following table presents certain non-GAAP financial measures, along with the most directly comparable U.S. GAAP measure, for each period presented below. In addition to our results determined in accordance with U.S. GAAP, we believe these non-GAAP financial measures are useful in evaluating our operating performance. See below for a description of the non-GAAP financial measures and their limitations as an analytical tool. A reconciliation is also provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP.
Contribution Margin
Contribution Margin is a non-GAAP financial measure defined as Revenue less Cost of Sales.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) before (a) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (b) legal, accounting and other professional fees directly attributable to acquisition activity, (c) employee severance payments and third party professional fees directly attributable to acquisition or corporate realignment activities, (d) certain non-recurring expenses associated with legal settlements or reserves for legal settlements in the period that pertain to historical matters that existed at acquired companies prior to their purchase date, (e) depreciation and amortization (including goodwill and intangible asset impairment, if any), and (f) certain stock-based compensation expense. We use Adjusted EBITDA to evaluate the performance of our operating segment. We believe that information about Adjusted EBITDA assists investors by allowing them to evaluate changes in the operating results of our business separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results. Adjusted EBITDA is not calculated or presented in accordance with GAAP. A limitation of the use of Adjusted EBITDA as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, Adjusted EBITDA should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. 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.
Adjusted EBITDA Margin
Adjusted EBITDA Margin is a non-GAAP financial measure that we define as the ratio of Adjusted EBITDA to Revenue.
The following table sets forth the reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure for the three and six months ended September 30, 2024 (in thousands):
| Non- |
||||||||||||||||||||||||||||
| Recurring |
||||||||||||||||||||||||||||
| Depreciation |
Acquisition and |
Other |
(Benefit) |
|||||||||||||||||||||||||
| Net Income |
and |
Stock-Based |
Realignment |
(Income) |
Provision |
Adjusted |
||||||||||||||||||||||
| (Loss) |
Amortization |
Compensation |
Costs |
Expense |
for Taxes |
EBITDA |
||||||||||||||||||||||
| Three Months Ended September 30, 2024 |
||||||||||||||||||||||||||||
| Total |
$ | (1,669 | ) | $ | 394 | $ | 861 | $ | - | $ | - | $ | 11 | $ | (403 | ) | ||||||||||||
| Three Months Ended September 30, 2023 |
||||||||||||||||||||||||||||
| Total |
$ | (10,873 | ) | $ | 253 | $ | 854 | $ | 413 | $ | 9,447 | $ | - | $ | 94 | |||||||||||||
| Non- |
||||||||||||||||||||||||||||
| Recurring |
||||||||||||||||||||||||||||
| Depreciation |
Acquisition and |
Other |
(Benefit) |
|||||||||||||||||||||||||
| Net Income |
and |
Stock-Based |
Realignment |
(Income) |
Provision |
Adjusted |
||||||||||||||||||||||
| (Loss) |
Amortization |
Compensation |
Costs |
Expense |
for Taxes |
EBITDA |
||||||||||||||||||||||
| Six Months Ended September 30, 2024 |
||||||||||||||||||||||||||||
| Total |
$ | (3,035 | ) | $ | 1,013 | $ | 1,263 | $ | 38 | $ | - | $ | 11 | $ | (710 | ) | ||||||||||||
| Six Months Ended September 30, 2023 |
||||||||||||||||||||||||||||
| Total |
$ | (11,083 | ) | $ | 338 | $ | 938 | $ | 719 | $ | 9,850 | $ | - | $ | 762 | |||||||||||||
The following table sets forth the reconciliation of Contribution Margin to Revenue, the most comparable GAAP financial measure (in thousands):
| Three Months Ended |
||||||||
| September 30, |
||||||||
| 2024 |
2023 |
|||||||
| Revenue: |
$ | 12,154 | $ | 10,516 | ||||
| Less: |
||||||||
| Cost of sales |
(11,142 | ) | (9,057 | ) | ||||
| Amortization of developed technology |
(61 | ) | (58 | ) | ||||
| Gross Profit |
951 | 1,401 | ||||||
| Add back amortization of developed technology: |
61 | 58 | ||||||
| Contribution Margin |
$ | 1,012 | $ | 1,459 | ||||
| Six Months Ended |
||||||||
| September 30, |
||||||||
| 2024 |
2023 |
|||||||
| Revenue: |
$ | 25,312 | $ | 21,153 | ||||
| Less: |
||||||||
| Cost of sales |
(22,851 | ) | (17,279 | ) | ||||
| Amortization of developed technology |
(121 | ) | (112 | ) | ||||
| Gross Profit |
2,340 | 3,762 | ||||||
| Add back amortization of developed technology: |
121 | 112 | ||||||
| Contribution Margin |
$ | 2,461 | $ | 3,874 | ||||
Limitations and Reconciliations of Non-GAAP Financial Measures
Non-GAAP financial measures are presented for supplemental informational purposes only. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under U.S. GAAP. There are a number of limitations related to the use of non-GAAP financial measures versus comparable financial measures determined under U.S. GAAP. For example, other companies in our industry may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance. In addition, free cash flow does not reflect our future contractual commitments and the total increase or decrease of our cash balance for a given period. All of these limitations could reduce the usefulness of these non-GAAP financial measures as analytical tools. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures and to not rely on any single financial measure to evaluate our business.
Liquidity and Capital Resources
Current Financial Condition
As of September 30, 2024, our principal sources of liquidity were our cash and cash equivalents in the amount of $1.4 million, which primarily are invested in cash in banking institutions in the U.S. The vast majority of our cash proceeds were received as a result of our operations, completed private placement offering (the “Bridge Loan”) of our unsecured convertible notes with an original issue discount of 10% (the “OID”) in the aggregate principal amount of $8.8 million (the “Bridge Notes”), which were converted in full in September 2023, and intercompany loans from our parent, LiveOne. As of September 30, 2024, we had a related party payable balance of $0.7 million. Our parent is required to maintain a minimum cash balance as a result of debt covenants on its debt.
On July 15, 2022, we completed a private placement offering of the Bridge Notes for gross proceeds of $8.0 million. In connection with the sale of the Bridge Notes, the holders of the Bridge Note received the Bridge Warrants, and we issued the Placement Agent Warrants to the placement agent. The Bridge Notes were scheduled to mature on July 15, 2023, subject to a one-time three-month extension at our election. We elected the extension and extended the maturity date to October 15, 2023. The Bridge Notes bore interest at a rate of 10% per annum payable on maturity. On September 8, 2023, we completed our direct listing on The NASDAQ Capital Market (our spin-out from LiveOne to become a standard publicly trading company) and as a result of the direct listing, all of the remaining Bridge Notes (including interest thereunder) in the aggregate amount of approximately $7.02 million converted into approximately 2,341,000 shares of our common stock.
In August 2023, LiveOne entered into a $1.7 million secured loan with Capchase which accrues interest at 8% and matures 30 months form issuance (the “Capchase Loan”). On September 8, 2023 and effective as of August 22, 2023, LiveOne entered into a new Business Loan Agreement with the senior credit facility provider to convert the senior credit facility into an assets backed loan credit facility, which shall continue to be collateralized by a first lien on all of the assets of LiveOne and its subsidiaries (the “ABL Credit Facility”). The Business Loan Agreement provides LiveOne with borrowing capacity of up to the Borrowing Base (as defined in the Business Loan Agreement). Pursuant to the Business Loan Agreement, the requirement that LiveOne and its related entities shall at all times maintain a certain minimum deposit with the senior credit facility provider was reduced from $7,000,000 to $5,000,000. In November 2024, LiveOne repaid $1.0 million of the principal amount underlying the ABL Credit Facility and accordingly decreased the size of the facility to $6.0 million. As of September 30, 2024, LiveOne was in compliance with all covenants under the Capchase Loan and the ABL Credit Facility.
As of September 30, 2024, LiveOne’s total outstanding consolidated indebtedness was $8.1 million, net of fees and discounts, which consisted of ABL Credit Facility and the Capchase Loan. The ABL Credit Facility documents contain a covenant that if a material adverse change occurs in its financial condition, or such lender reasonably believes the prospect of payment or performance of their loan is materially impaired, the lender at its option may immediately accelerate their debt and require LiveOne to repay all outstanding amounts owed thereunder. For example, if for any reason LiveOne fails to comply with the terms of its settlement agreement with SoundExchange, its senior credit facility provider may declare an event of default and at its option may immediately accelerate its debt and require LiveOne and/or us to repay all outstanding amounts owed under the senior credit facility, which would materially adversely impact our business, operating results and financial condition.
On October 1, 2024, LiveOne announced an amended relationship with our largest OEM customer. The OEM customer will no longer subsidize our products to some of its customers, however, LiveOne will offer all OEM customer vehicles in North America the opportunity to convert to become direct subscribers of LiveOne’s LiveOne music app. The direct subscription to the LiveOne app will allow such users for the first time to access their LiveOne music and LiveOne’s other service offerings directly across all of their devices. LiveOne’s music streaming button/icon, which allows users to directly connect their subscription to LiveOne, is expected to remain in the OEM customer’s music streaming services dashboard in perpetuity. The OEM customer will continue to pay LiveOne monthly for grandfathered vehicles for the term of the OEM license agreement. Accordingly, the change in LiveOne’s relationship with the OEM customer in October 2024 is likely to cause its liquidity and cash flows to fluctuate significantly beyond September 30, 2024, which may then have an impact on our liquidity and potentially cause our liquidity to fluctuate significantly beyond September 30, 2024. LiveOne’s liquidity will depend upon its ability to convert as many of the OEM drivers as possible to become direct subscribers of its LiveOne app and the OEM customer continuing to pay for any grandfather users, as well as LiveOne’s ability to enter into new B2B agreements to provide its services that could materially contribute its our liquidity and cash flows, which may then have an impact on our liquidity and potentially cause our liquidity to fluctuate significantly. In addition, LiveOne’s liquidity will depend on its ability to negotiate with its music labels, publishers and other partners to achieve flexibility in the terms of its license agreements to match our OEM driver conversions, which may then have an impact on our liquidity and potentially cause our liquidity to fluctuate significantly. Furthermore, LiveOne’s liquidity will be dependent on its ability to extend and/or refinance the terms of its senior secured line of credit and/or its ability to pay any amounts that LiveOne has agreed to pay under the SX Settlement Agreement, which may then have an impact on our liquidity and potentially cause our liquidity to fluctuate significantly.
We are looking to secure additional interim financing in the immediate future, which is needed to continue our current level of operations in the future and satisfy our obligations. In the absence of additional sources of liquidity, management anticipates that existing cash resources will not be sufficient to meet current operating and liquidity needs beyond November 2025. There is no assurance that we will be able to obtain additional liquidity or be successful in raising additional funds or that such required funds, if available, will be available on attractive terms, or at all, or that they will not have a significant dilutive effect on our existing stockholders. In addition, management is unable to determine at this time whether any of these potential sources of liquidity will be adequate to support our future business operations. While we do not currently anticipate delays or hindrances to our current business operations and initiatives schedule due to liquidity constraints, without additional funding we may not be able to continue our current level of business operations in the future.
As reflected in our consolidated financial statements included elsewhere in this Quarterly Report, we have a history of losses and had working capital of $0.7 million as of September 30, 2024. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year from the date that the financial statements are issued. In addition, our independent registered public accounting firm in their audit report to our financial statements for the fiscal year ended March 31, 2024 expressed substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to execute our strategy and on our ability to raise additional funds through the sale of equity and/or debt securities via public and/or private offerings.
Our long-term ability to continue as a going concern is dependent upon our ability to increase revenue, reduce costs, achieve a satisfactory level of profitable operations, and obtain additional sources of suitable and adequate financing. Our ability to continue as a going concern is also dependent its ability to further develop and execute on our business plan. 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.
Sources and Uses of Cash
The following table provides information regarding our cash flows for the six months ended September 30, 2024 and 2023 (in thousands):
| Six Months Ended |
||||||||
| September 30, |
||||||||
| 2024 |
2023 |
|||||||
| Net cash provided by operating activities |
$ | 45 | $ | 581 | ||||
| Net cash used in investing activities |
(135 | ) | (652 | ) | ||||
| Net cash used in financing activities |
- | (3,000 | ) | |||||
| Net change in cash, cash equivalents and restricted cash |
$ | (90 | ) | $ | (3,071 | ) | ||
Operating Activities
For the six months ended September 30, 2024
Net cash provided by our operating activities of $45,000 for the six months ended September 30, 2024 primarily resulted from our net loss during the period of $3.0 million, which included non-cash charges of $2.3 million largely comprised of depreciation and amortization, stock-based compensation and impairment of intangibles. In addition, $0.8 million of the change for the six months ended September 30, 2024 was from changes in our working capital, primarily from timing of accounts receivable, accounts payable and accrued liabilities and related party payables.
For the six months ended September 30, 2023
Net cash used in operating activities of $0.6 million for the six months ended September 30, 2023 primarily resulted from our net loss during the period of $11.1 million, which included non-cash charges of $10.9 million largely comprised of depreciation and amortization, stock-based compensation, change in fair value of derivatives and amortization of debt discount. The remainder of our sources of cash used in operating activities of $0.7 million for the six months ended September 30, 2023 was from changes in our working capital, primarily from timing of accounts receivable, accounts payable, and related party receivables/payables.
Investing Activities
For the six months ended September 30, 2024
Net cash used in investing activities of $0.1 million for the six months ended September 30, 2024 was for the purchase of fixed assets.
For the six months ended September 30, 2023
Net cash used in investing activities of $0.7 million for the six months ended September 30, 2023 was for the purchase of intangibles of $0.5 million and the purchase of fixed assets of $0.1 million.
Financing Activities
For the six months ended September 30, 2024
No cash was used in or provided by financing activities for the six months ended September 30, 2024
.
For the six months ended September 30, 2023
Debt Covenants
As of September 30, 2024, we did not have any debt covenants, and LiveOne was in compliance with all covenants under the ABL Credit Facility and the Capchase Loan.
Recent Accounting Pronouncements
See Note 2 — Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Quarterly Report for a discussion of new accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including our President (Principal Executive Officer) and Chief Financial Officer, to allow timely decisions regarding required disclosures.
As of the end of the period covered by this Quarterly Report, we carried out an evaluation (the “Evaluation”), under the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) pursuant to Rule 13a-15 of the Exchange Act. Based upon that evaluation in our Annual Report on Form 10-K, filed with the SEC on July 1, 2024 (the “Annual Report”), our President (Principal Executive Officer) and Chief Financial Officer concluded that as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.
Limitations of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to reasonably ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. A control system, no matter how well designed and operated, can provide only reasonable assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in our periodic reports. Inherent limitations to any system of disclosure controls and procedures include, but are not limited to, the possibility of human error and the circumvention or overriding of such controls by one or more persons. In addition, we have designed our system of controls based on certain assumptions, which we believe are reasonable, about the likelihood of future events, and our system of controls may therefore not achieve its desired objectives under all possible future events.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting, during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
CEO and CFO Certifications
Exhibits 31.1 and 31.2 to this Quarterly Report are the Certifications of our President (Principal Executive Officer) and Chief Financial Officer, respectively. These Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act (the “Section 302 Certifications”). This Item 4 of this Quarterly Report, which you are currently reading, is the information concerning the Evaluation referred to above and in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
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 8 - Commitments and Contingencies, to the condensed consolidated financial statements included elsewhere in this Quarterly Report, and are incorporated herein by reference. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
We operate in a rapidly changing environment that involves a number of risks, which could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I-Item 1A under the heading “Risk Factors” in our Annual Report. During the six months ended September 30, 2024, there were no material changes to the risk factors that were disclosed in our Annual Report on Form 10-K for the year ended March 31, 2024 except as noted below.
Risks Related to Our Business and Industry
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.
As reflected in our consolidated financial statements included elsewhere herein, we have a history of losses, incurred significant operating and net losses in each year since our inception, including net losses of $14.7 million and $7.0 million for the fiscal years ended March 31, 2024 and 2023, respectively, and cash provided by(used in) operating activities of $2.2 million and $(4.7) million for the fiscal years ended March 31, 2024 and 2023, respectively, and had cash provided by operating activities of $0.1 million and $0.6 million for the six months ended September 30, 2024 and 2023, respectively. We incurred a net loss of $3.0 million and $11.1 million for the six months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $32.6 million and a working capital of $0.7 million. We anticipate incurring additional losses until such time that we can generate significant increases to our revenues, and/or reduce our operating costs and losses. To date, we have financed our operations exclusively through the sale of equity securities (including convertible securities), and after our acquisition by LiveOne on July 1, 2020, through LiveOne’s sale of its and our equity and/or debt securities (including convertible securities). The size of our future net losses will depend, in part, on the rate of future expenditures and our ability to significantly grow our business and increase our revenues. We expect to continue to incur substantial and increased expenses as we grow our business. We also expect an increase in our expenses associated with our operations as a publicly-traded company. We may incur significant losses in the future for a number of other reasons, including unsuccessful acquisitions, costs of integrating new businesses, expenses, difficulties, complications, delays and other unknown events. As a result of the foregoing, we expect to continue to incur significant losses for the foreseeable future and we may not be able to achieve or sustain profitability.
Our ability to meet our total liabilities of $7.6 million as of September 30, 2024, and to continue as a going concern, is dependent on our ability to increase revenue, reduce costs, achieve a satisfactory level of profitable operations, obtain additional sources of suitable and adequate financing and further develop and execute on our business plan. We may never achieve profitability, and even if we do, we may not be able to sustain being profitable. As a result of the going concern uncertainty, there is an increased risk that you could lose the entire amount of your investment in our company, which assumes the realization of our assets and the satisfaction of our liabilities and commitments in the normal course of business.
If LiveOne does not comply with the provisions of its ABL Credit Facility and/or the Capchase Loan, its senior lenders may terminate its obligations to LiveOne and require LiveOne and/or us to repay all outstanding amounts owed thereunder.
LiveOne’s ABL Credit Facility and the Capchase Loan contain certain provisions that limit its and our operating activities, including the ABL Credit Facility containing a covenant relating to the requirement to maintain a certain amount cash (as provided in the ABL Credit Facility loan agreement). If an event of default occurs and is continuing, the ABL Credit Facility lender and/or Capchase may among other things, terminate their obligations thereunder, accelerate their debt and require LiveOne and/or us to repay all amounts thereunder. For example, on October 13, 2022, a judgement was entered in favor of SoundExchange, Inc. (“SX”) against LiveOne and Slacker in the United States District Court Central District of California in the amount of approximately $9.8 million. On February 3, 2023, LiveOne and Slacker entered into an agreement (the "SX Settlement Agreement") to settle the dispute with SX and related court judgement entered against the defendants, pursuant to which LiveOne agreed to make certain monthly payments to SX for a period of 24 months and certain other payments in the event LiveOne obtains additional financing(s), unless LiveOne or Slacker 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. LiveOne’s debt agreements with the ABL Credit Facility lender contains a covenant that if a material adverse change occurs in its financial condition, or such lender reasonably believes the prospect of payment or performance of their loan is materially impaired, the lender at its option may immediately accelerate their debt and require LiveOne to repay all outstanding amounts owed thereunder. If for any reason LiveOne fails to comply with the terms of the SX Settlement Agreement, its ABL Credit Facility lender may declare an event of default and at its option may immediately accelerate its debt and require LiveOne and/or us to repay all outstanding amounts owed under the ABL Credit Facility and which would then allow Capchase to declare a default under their loan agreement with us, which would materially adversely impact our business, operating results and financial condition. In the event LiveOne fails to make any payment of any principal of, or interest or premium on, any indebtedness owed to the ABL Credit Facility lender, Capchase would have the right to declare a default under its loan agreement with LiveOne. As of September 30, 2024, LiveOne was in compliance with all covenants under the Capchase Loan and the ABL Credit Facility.
We may be subject to risks associated with artificial intelligence and machine learning technology.
Recent technological advances in artificial intelligence (“AI”) and machine learning technology may pose risks to us. Our use of AI could give rise to legal or regulatory action, create liabilities, or materially harm our business. While we aim to develop and use AI and machine learning technology responsibly and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise. Further, as the technology is rapidly evolving, costs and obligations could be imposed on us to comply with new regulations.
We also could be exposed to the risks of machine learning technology if third-party service providers or any counterparties, whether or not known to us, also use machine learning technology in their business activities. We will not be in a position to control the use of such technology in third-party products or services. Use by third-party service providers could give rise to issues pertaining to data privacy, data protection, and intellectual property considerations.
Increased data protection regulation may result in increased complexities and risk in connection with the operation of our business and our products.
Our business is highly dependent on information systems and technology. The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. Cybersecurity has become a priority for regulators in the U.S. and around the world. Recently, the SEC adopted rules requiring public companies to disclose material cybersecurity incidents on Form 8-K and periodic disclosure of a registrant’s cybersecurity risk management, strategy, and governance in annual reports. The rules became effective beginning with annual reports for fiscal years ending on or after December 15, 2023, beginning with Form 8-Ks on December 18, 2023. The SEC has also particularly focused on cybersecurity, and we expect increased scrutiny of our policies and systems designed to manage our cybersecurity risks and our related disclosures as a result. We also expect to face increased costs to comply with the new SEC rules, including increased costs for cybersecurity training and management. The SEC has indicated in recent periods that one of its examination priorities for the Division of Examinations is to continue to examine cybersecurity procedures and controls, including testing the implementation of these procedures and controls.
There may be substantial financial penalties or fines for breach of privacy laws (which may include insufficient security for our personal or other sensitive information). Non-compliance with any applicable privacy or data security laws represents a serious risk to our business. Some jurisdictions have also enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal information. Breaches in security could potentially jeopardize our or our stockholders’ or counterparties’ confidential or other information processed and stored in, or transmitted through, our computer systems and networks (or those of our third-party vendors), or otherwise cause interruptions or malfunctions in our or our stockholders’ or our counterparties’ or third parties’ operations, which could result in significant losses, increased costs, disruption of our business, liability to our stockholders and other counterparties, fines or penalties, litigation, regulatory intervention or reputational damage, which could also lead to loss of stockholders.
Finally, there has been significant evolution and developments in the use of AI technologies. We cannot fully determine the impact or cybersecurity risk of such evolving technology to our business at this time.
If we do not respond to technological innovations or changes or upgrade our technology systems, our growth prospects and results of operations could be adversely affected.
To remain competitive, we must continue to enhance and improve the functionality, features and security of our technology infrastructure. Infrastructure upgrades may require significant capital investment outside of the normal course of business. In the future, we will likely need to improve and upgrade our technology, database systems and network infrastructure to allow our business to grow in both size and scope. Without such improvements, our operations might suffer from unanticipated system disruptions, slow performance or unreliable service levels, any of which could negatively affect our ability to provide rapid customer service. We may face significant delays in introducing new services or developing new technologies. Moreover, if we do not keep pace with the rapid innovations and changes taking place in information technology in our industry, we could be at a competitive disadvantage. Further, the rapid dissemination and increasing transparency of information, particularly for public companies, increases the risks to our business that could result from negative media or announcements about ethics lapses, improper behavior or other operational problems, which could lead clients to terminate or reduce their relationships with us. If competitors introduce new products and services using new technologies, our proprietary technology and systems may become less competitive, and our business may be harmed. In addition, the expansion and improvement of our systems and infrastructure may require us to commit substantial financial, operational and technical resources, with no assurance that our business will improve.
Risks Related to Our Company
For the years ended March 31, 2024 and 2023, our management concluded that our disclosure controls and procedures and our internal control over financial reporting were not effective due to the existence of material weakness in our internal control over financial reporting during such periods. While such weaknesses were subsequently remediated, if we are unable to maintain effective disclosure controls and internal controls over financial reporting, our ability to produce accurate financial statements on a timely basis or prevent fraud could be impaired, and the market price of our securities may be negatively affected.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet PodcastOne’s reporting obligations. In addition, any testing by our Company conducted in connection with Section 404, or the subsequent testing by our independent registered public accounting firm, if and when required, may reveal additional deficiencies in its internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. For our fiscal years ended March 31, 2024 and 2023, our management conducted an assessment of its 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, which were subsequently remediated. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis.
If we are unable to establish and maintain proper and effective disclosure controls and procedures and internal control over financial reporting, it may not be able to produce timely and accurate financial statements.
Risks Related to Our Relationship with LiveOne and its Indebtedness
LiveOne may not have the ability to repay the amounts then due under its ABL Credit Facility, Capchase Loan and/or SX Settlement Agreement.
At maturity, the entire outstanding principal amount of LiveOne’s senior secured ABL Credit Facility, will become due and payable by LiveOne. As of September 30, 2024, $8.1 million of LiveOne’s total indebtedness is due in fiscal 2025. LiveOne’s failure to repay any outstanding amount of its ABL Credit Facility would constitute a default under such facility. A default would increase the interest rate to the default rate under the ABL Credit Facility or the maximum rate permitted by applicable law until such amount is paid in full and may materially adversely impact our business, operating results and financial condition. In addition, pursuant to the terms of the SX Settlement Agreement, LiveOne and Slacker are required to pay SX the amount of $9,765,396.70 in equal monthly payments, subject to increase in the event LiveOne or Slacker complete certain future financings, with a final payment of $2,189,775.08 on or before February 1, 2025, unless the parties agree to further extend the timing of such payment. If for any reason LiveOne or Slacker fail to comply with the terms of the SX settlement agreement, the final payment will increase by $925,391.40, and SX will have the right to declare a default under the SX Settlement Agreement and at its option require LiveOne and Slacker to repay all outstanding amounts owed thereunder and/or enforce its consent judgment and/or pursue a new judgment against LiveOne and Slacker, which may materially adversely impact our business, operating results and financial condition. As of September 30, 2024, LiveOne and Slacker owed $4.9 million to SX under the SX Settlement Agreement.
A default under the ABL Credit Facility could also lead to a default under agreements governing our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, LiveOne may not have sufficient funds to repay its ABL Credit Facility, the Capchase Loan or make cash payments thereon. Furthermore, upon the occurrence and during the continuation of any event of default, the ABL Credit Facility provider shall have the right to, among other things, take possession of LiveOne’s, our Company’s and LiveOne’s and our respective subsidiaries’ assets and property constituting the collateral thereunder and the right to assign, sell, lease or otherwise dispose of all or any part of the collateral. Upon the occurrence and during the continuation of any event of default under the Capchase Loan, Capchase shall have the right to, among other things, take possession of certain assets and property of LiveOne constituting the collateral thereunder and the right to assign, sell, lease or otherwise dispose of all or any part of such collateral.
LiveOne’s debt agreements contain restrictive and financial covenants that may limit our operating flexibility, and LiveOne’s substantial indebtedness may limit cash flow available to invest in the ongoing needs of our business.
LiveOne has a significant amount of indebtedness. Its total outstanding consolidated indebtedness as of September 30, 2024 was $8.1 million, net of fees and discounts. In addition, while LiveOne has certain restrictions and covenants with its current indebtedness, LiveOne could in the future incur additional indebtedness beyond such amount. LiveOne’s existing debt agreements with the senior lenders contain certain restrictive covenants that limit our ability to merge with other companies or consummate certain changes of control, make certain investments, pay dividends or repurchase shares of our common stock, transfer or dispose of assets, or enter into various specified transactions. We therefore may not be able to engage in any of the foregoing transactions unless we obtain the consent of LiveOne’s senior secured lenders or terminate our existing debt agreements. LiveOne’s debt agreements under the ABL Credit Facility also contain certain financial covenants, including maintaining a minimum cash amount at all times and are secured by substantially all of our assets. There is no guarantee that LiveOne, our Company and LiveOne’s other subsidiaries will be able to generate sufficient cash flow or sales to meet the financial covenants or pay the principal and interest under our debt agreements or to satisfy all of the financial covenants. We may also incur significant additional indebtedness in the future.
LiveOne’s substantial debt combined with its and our other financial obligations and contractual commitments could have other significant adverse consequences, including:
| ● |
requiring us to dedicate a substantial portion of our cash flow from operations to the payment of interest on, and principal of, LiveOne’s debt, which will reduce the amounts available to fund our 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. |
LiveOne intends to satisfy its current and future debt service obligations with its and our existing cash and cash equivalents and funds from external sources, including its and/or its subsidiaries' equity and/or debt financing. However, LiveOne and its subsidiaries (including our Company) may not have sufficient funds or may be unable to arrange for additional financing to pay the amounts due under our existing debt. Funds from external sources may not be available on acceptable terms, if at all. 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, LiveOne and/or our Company may not have sufficient funds or may be unable to arrange for additional financing to repay LiveOne’s and/or our indebtedness or to make any accelerated payments.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuance of Unregistered Securities
Other than as set forth below and as reported in our Current Reports on Form 8-K, there have been no other sales or issuances of unregistered securities during the period covered by this Quarterly Report that were not registered under the Securities Act.
During the six months ended September 30, 2024, we issued 234,428 shares of our common stock valued at $0.4 million to various consultants. We valued these shares at prices between $0.96 and $2.22 per share, the market price of our common stock on the date of issuance.
During the six months ended September 30, 2024, we issued 137,710 shares of our common stock valued at $0.2 million to employees. We valued these shares at prices between $0.89 and $4.39 per share, the market price of our common stock on the date of issuance.
During the six months ended September 30, 2024, we issued 424,000 shares of our common stock valued at $0.7 million to Live One, Inc. We valued these share prices between $1.50 and $2.00 per share.
We believe the offers, sales and issuances of the securities described above were made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder and involved a transaction by an issuer not involving any public offering. Each of the recipients of securities in any transaction exempt from registration either received or had adequate access, through employment, business or other relationships, to information about us.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
| (c) |
(d) |
|||||||||||||||
| Total |
Maximum |
|||||||||||||||
| number of |
number |
|||||||||||||||
| shares |
(or approximate |
|||||||||||||||
| (or units) |
dollar value) of |
|||||||||||||||
| (a) |
purchased |
shares |
||||||||||||||
| Total |
(b) |
as part of |
(or units) |
|||||||||||||
| number of |
Average |
publicly |
that may yet |
|||||||||||||
| shares |
price paid |
announced |
be purchased |
|||||||||||||
| (or units) |
per share |
plans or |
under the plans |
|||||||||||||
| Period |
purchased |
(or unit) |
programs |
or programs* |
||||||||||||
| July 1, 2024 – July 31, 2024 |
69,600 | $ | 1.64 | - | $ | 605,000 | ||||||||||
| August 1, 2024 – August 31, 2024 |
86,054 | $ | 1.58 | - | $ | 469,000 | ||||||||||
| September 1, 2024 – September 30, 2024 |
- | $ | - | - | $ | 469,000 | ||||||||||
| Total (July 1, 2024 – September 30, 2024) |
155,654 | $ | 1.61 | - | $ | 6,500,000 | ||||||||||
* Represents LiveOne’s repurchase program pursuant to which LiveOne may repurchase shares of its and/or our common stock.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Mine Safety Disclosures.
Not applicable.
| † |
Management contract or compensatory plan or arrangement. |
| * |
Filed herewith. |
| ** |
Furnished herewith. |
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PODCASTONE, INC. |
||
| Date: November 14, 2024 |
By: |
/s/ Kit Gray |
| Name: |
Kit Gray |
|
| Title: |
President |
|
| (Principal Executive Officer) |
||
| Date: November 14, 2024 |
By: |
/s/ Aaron Sullivan |
| Name: |
Aaron Sullivan |
|
| Title: |
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
|