LiveOne(LVO) - 2025 Q4 - Annual Report

PART I Business Overview LiveOne, Inc. is an award-winning music, entertainment, and technology platform offering premium experiences globally through memberships and live/virtual events - LiveOne operates as a creator-first music, entertainment, and technology platform, focusing on premium experiences and content delivery worldwide through memberships and live/virtual events[19] - The company's core integrated services include LiveOne (live music streaming), Slacker (streaming music), PodcastOne (podcasting), and Custom Personalization Solutions (personalized merchandise)[19] - Revenue streams are diversified, including membership-based services, advertising, licensing of live music and podcast content, pay-per-view offerings, and retail sales of merchandise and gifts[20] - PodcastOne, acquired in July 2020, boasts a distribution network reaching over 1 billion listeners monthly and produces over 300 episodes per week from over 200 exclusive shows, generating over 204 million downloads in FY2025[24][26] - The company holds 46 registered or pending patents related to streaming Internet radio services, covering aspects like digital media playback, personalized content, and content scoring[42] Market and Industry Data (2024-2030) | Metric | 2024 | 2025 (Projected) | 2030 (Projected) | | :-------------------------------- | :--------- | :----------------- | :----------------- | | Global Recorded Music Revenue (in billions) | $29.6 | - | $80 | | Paid Digital Music Streaming Users | - | - | >1.2 billion | | Podcast Listeners (Monthly, in millions) | 135 | 158 | - | | Podcast Advertising Spend (in billions) | $2.43 | $4.6 | - | Risk Factors LiveOne faces significant risks including heavy reliance on its largest OEM customer (Tesla) for a substantial portion of revenue, a history of operating losses and substantial doubt about its ability to continue as a going concern - The company's business is highly dependent on its relationship with Tesla, its largest OEM customer, which accounted for 45% of consolidated revenue in FY2025 and 51% in FY2024; the loss or significant reduction of business from this customer would materially adversely affect operations[116] - LiveOne has a history of significant operating and net losses, including $20.4 million in FY2025 and $13.3 million in FY2024, and has an accumulated deficit of $265.1 million as of March 31, 2025, raising substantial doubt about its ability to continue as a going concern[123][129] - The company faces intense competition from various entertainment providers, including broadcast radio, interactive on-demand audio, podcast platforms, and large merchandise retailers, which could hinder revenue growth[157][162][369] - Advancements in AI technology pose risks by potentially enabling synthetic music that competes with licensed content and by competitors surpassing LiveOne's AI capabilities in personalization and content recommendation[214][215] - The company's disclosure controls and internal control over financial reporting were not effective for FY2024 due to material weaknesses, though no material weaknesses were identified for FY2025[225][226] Risks Related to Our Business and Industry This section details risks inherent to LiveOne's business model and the broader industry, including heavy reliance on a single OEM customer, the need for additional capital, and the challenges of securing and funding music streaming rights Revenue Concentration from Largest OEM Customer | Fiscal Year Ended March 31 | Percentage of Consolidated Revenue | | :------------------------- | :------------------------------- | | 2025 | 45% | | 2024 | 51% | - The company's ability to attract and retain users is highly sensitive to rapidly changing public tastes in music and technology, requiring continuous platform, content, and technology attractiveness[143] - Significant upfront and/or minimum guaranteed payments for live music streaming rights may limit operating flexibility and adversely impact margins if user forecasts or advertising sales do not meet expectations[140] - The company relies on third-party platforms (e.g., Google Cloud Platform, Amazon Web Services) for operations and data storage; disruptions or interference with these services could materially harm the business[169] - Cybersecurity risks, including unauthorized access to data and software bugs, could damage reputation, drive away users, and lead to significant liabilities and costs[189][190] Risks Related to Our Acquisition Strategy LiveOne's growth strategy heavily relies on strategic acquisitions, but there's no assurance of successfully completing future deals or integrating acquired businesses - The company's growth strategy depends on strategic acquisitions, but there is no assurance of consummating future acquisitions or integrating them successfully[277][279] - Integration challenges for acquired businesses include coordinating geographically dispersed organizations, combining different corporate cultures, and integrating individual websites and databases[279][281] - Due diligence may not uncover all material issues, such as fraud or accounting irregularities, in acquired businesses, potentially leading to unexpected liabilities or write-offs[286] Risks Related to Technology and Intellectual Property LiveOne's operations are heavily reliant on its proprietary and third-party technology, including the Slacker Radio app, LiveOne App, PodcastOne App, and Content Management System (CMS) - The business heavily relies on its Slacker Radio app, LiveOne App, PodcastOne App, and CMS technology; any failure or improper operation could impair user attraction and retention[287] - Inability to detect unauthorized use or sufficiently protect intellectual property rights (trademarks, patents, copyrights) could lead to legal action, erosion of brand names, or loss of rights[288][289] - The company faces risks of claims alleging infringement of third-party intellectual property rights, which could result in costly litigation, damages, or injunctions preventing the use of affected intellectual property[292][295] - Use of open-source software in its streaming network carries risks, including potential requirements to publicly disclose proprietary source code or face costly licensing/re-engineering efforts[299] Risks Related to Our PodcastOne Business PodcastOne's business is highly dependent on podcast and advertising sales, facing intense competition for listeners and advertising budgets from various audio content providers - PodcastOne's revenue is substantially generated from podcasting and advertising sales; failure to maintain or grow these revenues, or collect receivables, could adversely affect financial results[318] - Competition for listeners and advertising spend is intense, with rivals including internet radio, terrestrial radio, satellite radio, and major digital media companies like Apple, Amazon, and Spotify[319][320][321][323] - The business is dependent on the performance and talent of its podcasts; loss of popular hosts or increased compensation costs could negatively impact revenue and expenses[325][332] - Reliance on third-party advertising platforms (e.g., Apple, Spotify) for content integration and ad placement means disruptions or changes in their policies could materially impact PodcastOne's ability to reach listeners and monetize content[343] Risks Related to Our E-commerce Merchandising Business The e-commerce merchandising business (CPS) faces risks from seasonality, with higher sales typically in the third fiscal quarter, leading to potential fluctuations in operating results - CPS's merchandising business is seasonal, with higher sales in the third fiscal quarter (ending December 31), leading to potential fluctuations in operating results[358] - Failure to accurately forecast consumer demand can lead to excess inventories (resulting in write-downs and discounted sales) or inventory shortages (delaying shipments and harming customer relationships)[359] - The e-commerce merchandise market is intensely competitive, with minimal barriers to entry, and competition from large retailers like Amazon, AliExpress, eBay, Temu, and Rakuten[369] - Reliance on third-party carriers (FedEx, UPS, DHL, USPS) for product delivery exposes CPS to shipping delays, damage risks, and potential customer dissatisfaction[370] Risks Related to the Ownership of Our Common Stock Ownership of LiveOne's common stock carries risks including potential dilution from future equity issuances (e.g., for capital, acquisitions, or incentive plans) and conversion of Series A Preferred Stock and Debentures - Future sales and issuances of common stock or rights to purchase common stock, including under equity incentive plans or for acquisitions, could result in substantial dilution for existing stockholders[377] - Conversion of Series A Preferred Stock (approx. 6.8 million shares) and Debentures (approx. 7.86 million shares) into common stock will dilute existing stockholders' ownership interests and could depress the stock price[379] - The market price of the common stock may be highly volatile, influenced by fluctuations in revenue, analyst estimates, new product announcements, and overall market conditions[381] - The Chairman and CEO, Mr. Robert Ellin, and his affiliates beneficially owned approximately 21% of outstanding common stock as of May 31, 2025, allowing them to exert significant control over matters requiring stockholder approval[384] Unresolved Staff Comments There are no unresolved staff comments to report - The company has no unresolved staff comments[398] Cybersecurity LiveOne conducts annual formal risk assessments to identify and manage cybersecurity threats, utilizing policies, processes, internal controls, and third-party assessments - LiveOne performs annual formal risk assessments to consider potential cybersecurity threats, including interruptions, outages, and breaches to operational and financial systems[399] - The company employs a combination of cybersecurity awareness training, manual processes, specialized software, automated tools, and third-party assessments for its cybersecurity program[399] - The Audit Committee of the board of directors provides oversight for the internal control program, including cybersecurity, with management providing quarterly updates on risks and trends[401] - As of the report date, LiveOne is not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect its business strategy, results of operations, or financial condition[403] Properties LiveOne's principal executive offices are in Beverly Hills, California, and its subsidiaries also lease facilities in Los Angeles and Illinois, with no owned real property - LiveOne's principal executive offices are located at 269 S. Beverly Drive, Suite 1450, Beverly Hills, CA 90212[404] - PodcastOne leases premises in Beverly Hills, CA, on a month-to-month basis[404] - CPS leases facilities in Addison, Illinois (expiring September 2026) and Palatine, Illinois (expiring October 2027)[404] - The company does not own any real property[404] Legal Proceedings LiveOne is periodically involved in legal proceedings arising from its business activities, which management does not expect to have a material adverse effect, despite potential costs and resource diversion - LiveOne is involved in various legal proceedings arising from its business, which are discussed in Note 13 to the consolidated financial statements[405] - Management believes that routine claims and lawsuits are not significant and are not expected to have a material adverse effect on the business, financial condition, results of operations, or liquidity[405][709] - Litigation, regardless of outcome, can negatively impact the company due to defense and settlement costs and diversion of management resources[405] Mine Safety Disclosures This item is not applicable to LiveOne, Inc - This item is not applicable[406] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities LiveOne's common stock trades on The NASDAQ Capital Market under the symbol 'LVO' since October 6, 2021, with 397 stockholders of record as of July 1, 2025, and no cash dividends paid to date - LiveOne's common stock has been trading on The NASDAQ Capital Market under the symbol 'LVO' since October 6, 2021[409] - As of July 1, 2025, there were 397 stockholders of record for the common stock[410] - The company has not paid any cash dividends on its common stock to date and does not anticipate doing so in the foreseeable future, intending to retain earnings for business development[411][392] Common Stock Issued to Consultants, Employees, and Vendors | Fiscal Year Ended March 31 | Shares Issued | | :------------------------- | :------------ | | 2025 | 3,114,085 | | 2024 | 2,855,298 | | 2023 | 2,676,611 | Stock Repurchases by Issuer | Period (Fiscal Year Ended March 31) | Total Number of Shares Purchased | Amount (in thousands) | | :---------------------------------- | :------------------------------- | :-------------------- | | 2025 | 558,247 | $1,000 | | 2024 | 1,639,125 | $2,620 | Item 6. [Reserved] This item is reserved and contains no information Management's Discussion and Analysis This section provides an overview of LiveOne's financial performance, condition, and operational results for the fiscal year ended March 31, 2025, compared to 2024, highlighting decreased total revenue, increased advertising revenue, ongoing net losses, and a working capital deficiency - LiveOne is a pioneer in the acquisition, distribution, and monetization of live music, Internet radio, podcasting, and music-related streaming and video content, with principal operations in North America[426] - For FY2025, 50% of revenue came from paid memberships and 46% from advertising, with the remainder from merchandising[433] - In January 2025, total paid and monthly active ad-supported users exceeded 860k, with direct-billed premium subscribers increasing by 78% and overall direct-billed subscribers by 130% since October 2024, following a new conversion program with Tesla[428] - PodcastOne entered a three-year Enterprise Service and Advertising Agreement with ART19 LLC (an Amazon subsidiary) in January 2025, expected to drive additional monetization opportunities with a minimum guarantee of $15.0 million[430][700] - The company incurred a net loss of $20.4 million in FY2025 and had a working capital deficiency of $21.3 million, indicating substantial doubt about its ability to continue as a going concern[512] Consolidated Results of Operations LiveOne reported a 3% decrease in total revenue to $114.4 million in FY2025 from $118.4 million in FY2024, primarily due to a 14% decrease in membership services revenue and a 37% decrease in merchandising revenue, partially offset by a 20% increase in advertising revenue Consolidated Statement of Operations (in thousands) | Metric | Year Ended March 31, 2025 | Year Ended March 31, 2024 | % Change | | :------------------------- | :------------------------ | :------------------------ | :------- | | Revenue | $114,405 | $118,440 | -3% | | Total Operating Expenses | $132,462 | $123,108 | 8% | | Loss from Operations | $(18,057) | $(4,668) | 287% | | Total Other Expense, Net | $(2,498) | $(8,525) | -71% | | Net Loss | $(20,370) | $(13,311) | 53% | Revenue Breakdown (in thousands) | Revenue Stream | Year Ended March 31, 2025 | Year Ended March 31, 2024 | % Change | | :---------------------- | :------------------------ | :------------------------ | :------- | | Membership services | $56,939 | $66,182 | -14% | | Advertising | $52,285 | $43,729 | 20% | | Merchandising | $5,181 | $8,271 | -37% | | Sponsorship and licensing | $- | $126 | -100% | | Ticket/Event | $- | $132 | -100% | | Total Revenue | $114,405 | $118,440 | -3% | - Impairment of fixed assets, intangible assets, and goodwill increased significantly to $11.6 million in FY2025 from $0.1 million in FY2024, contributing to the increased operating loss[442][460] Cost of Sales Breakdown (in thousands) | Cost of Sales Stream | Year Ended March 31, 2025 | Year Ended March 31, 2024 | % Change | | :------------------- | :------------------------ | :------------------------ | :------- | | Membership services | $32,089 | $42,121 | -24% | | Advertising | $48,300 | $38,065 | 27% | | Production | $322 | $(288) | 212% | | Merchandising | $4,530 | $6,493 | -30% | | Total Cost of Sales | $85,241 | $86,391 | -1% | Business Segment Results LiveOne manages its business through three operating segments: PodcastOne, Slacker, and Media Group, with PodcastOne seeing a 20% revenue increase but a 46% wider operating loss, Slacker's revenue decreasing by 14% and operating income dropping by 59%, and the Media Group experiencing a 40% revenue decrease and a 12% increase in operating loss PodcastOne Operations (in thousands) | Metric | Year Ended March 31, 2025 | Year Ended March 31, 2024 | % Change | | :------------------------- | :------------------------ | :------------------------ | :------- | | Revenue | $52,119 | $43,302 | 20% | | Cost of Sales | $47,394 | $37,326 | 27% | | Operating Income (Loss) | $(6,434) | $(4,421) | 46% | | Adjusted EBITDA* | $(501) | $501 | -200% | Slacker Operations (in thousands) | Metric | Year Ended March 31, 2025 | Year Ended March 31, 2024 | % Change | | :------------------------- | :------------------------ | :------------------------ | :------- | | Revenue | $56,787 | $65,959 | -14% | | Cost of Sales | $32,997 | $42,867 | -23% | | Operating Income (Loss) | $5,876 | $14,341 | -59% | | Adjusted EBITDA* | $18,679 | $20,553 | -9% | Media Group Operations (in thousands) | Metric | Year Ended March 31, 2025 | Year Ended March 31, 2024 | % Change | | :------------------------- | :------------------------ | :------------------------ | :------- | | Revenue | $5,499 | $9,179 | -40% | | Cost of Sales | $4,850 | $6,197 | -22% | | Operating Income (Loss) | $(7,050) | $(6,268) | 12% | | Adjusted EBITDA* | $(3,085) | $(3,888) | -21% | Corporate Expenses (in thousands) | Metric | Year Ended March 31, 2025 | Year Ended March 31, 2024 | % Change | | :------------------------- | :------------------------ | :------------------------ | :------- | | Sales & Marketing, Product Development, and G&A | $10,448 | $8,321 | 26% | | Operating Loss | $(10,448) | $(8,321) | 26% | | Adjusted EBITDA* | $(6,709) | $(6,189) | -8% | Non-GAAP Measures This section defines and reconciles non-GAAP financial measures used by LiveOne, specifically Contribution Margin and Adjusted EBITDA, to evaluate segment performance and provide insights into operations, separate from non-operational factors - Contribution Margin is a non-GAAP measure defined as Revenue less Cost of Sales[479] - Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before specific non-cash GAAP adjustments, legal/acquisition fees, severance, legal settlements, depreciation and amortization (including goodwill impairment), and stock-based compensation[480] - Adjusted EBITDA Margin is a non-GAAP measure defined as the ratio of Adjusted EBITDA to Revenue[481] Reconciliation of Adjusted EBITDA to Net Loss (in thousands) | Metric | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :-------------------------------------- | :------------------------ | :------------------------ | | Net Loss | $(20,370) | $(13,311) | | Depreciation and Amortization | $16,981 | $5,222 | | Stock-Based Compensation | $7,643 | $7,965 | | Non-Recurring Acquisition and Realignment Costs | $1,817 | $2,458 | | Other (Income) Expense | $2,498 | $8,525 | | Provision for Taxes | $(185) | $118 | | Total Adjusted EBITDA | $8,384 | $10,977 | Reconciliation of Gross Profit to Contribution Margin (in thousands) | Metric | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :----------------------------------- | :------------------------ | :------------------------ | | Revenue | $114,405 | $118,440 | | Less: Cost of sales | $(85,241) | $(86,391) | | Less: Amortization of developed technology | $(3,087) | $(3,009) | | Gross Profit | $26,077 | $29,040 | | Add back amortization of developed technology | $3,087 | $3,009 | | Contribution Margin | $29,164 | $32,049 | Critical Accounting Policies and Estimates LiveOne's financial statements rely on critical accounting policies and estimates, including revenue recognition, allowance for doubtful accounts, valuation of acquired assets and liabilities in business combinations, legal settlement provisions, and impairment assessments of long-lived assets, goodwill, and intangible assets - Critical accounting policies and estimates include revenue recognition, allowance for doubtful accounts, valuation of acquired assets/liabilities in business combinations, legal settlement provisions, and impairment of property, equipment, goodwill, and intangible assets[482] - Revenue is recognized when performance obligations are satisfied by transferring control of goods or services to customers, with variable consideration estimated using the expected value method[483][577] - Membership services revenue is recognized straight-line over the membership period, as customers simultaneously receive and consume the benefits[485][581] - Goodwill and indefinite-lived assets are tested for impairment annually or when circumstances indicate impairment, using a qualitative or quantitative assessment based on fair value estimates[507][510][618][620] - The company recorded a goodwill impairment of $1.7 million in FY2025 and an indefinite-lived asset impairment of $3.9 million in FY2025 due to changes in forecasted revenues and market conditions[645][646] Liquidity and Capital Resources As of March 31, 2025, LiveOne's liquidity sources included $4.1 million in cash and cash equivalents, but the company reported a net loss of $20.4 million and a working capital deficiency of $21.3 million, raising substantial doubt about its ability to continue as a going concern - As of March 31, 2025, principal liquidity sources were $4.1 million in cash and cash equivalents, including restricted cash[511] - The company had a net loss of $20.4 million and a working capital deficiency of $21.3 million as of March 31, 2025, raising substantial doubt about its ability to continue as a going concern[512] - An amended relationship with the largest OEM customer, effective December 1, 2024, ceased product subsidies for some customers, impacting liquidity and cash flows, with a focus on converting OEM drivers to direct LiveOne subscribers[513] - In May 2025, LiveOne issued $16.8 million in Original Issue Discount Senior Secured Convertible Debentures to institutional investors, with an option to sell an additional $11.0 million[514][520] - The company has a universal shelf Registration Statement on Form S-3, effective February 2025, allowing it to raise up to $150.0 million from the sale of equity, debt, and/or other financial instruments[526][574] Credit Agreement and Other Debt LiveOne's debt structure includes a Capchase Loan of $1.7 million and, as of May 2025, $16.8 million in Initial Debentures, with the previous ABL Credit Facility terminated upon issuance of the Debentures - In August 2023, LiveOne entered into a Loan and Security Agreement with Capchase Inc. for $1.7 million, bearing a 9% interest rate, with final amortization due February 4, 2026[519][658] - In May 2025, the company issued $16.8 million in Initial Debentures, maturing May 19, 2028, with an 11.75% annual interest rate[520][760] - The Debentures include monthly redemption rights for holders, starting at $100,000 per month in August 2025, increasing to $300,000 per month by May 2027[520][760] - The company paid off and terminated its previous Business Loan Agreement and all related loan agreements in connection with the issuance of the Debentures in May 2025[522][682][765] Sources and Uses of Cash In FY2025, net cash provided by operating activities was $6.4 million, primarily from adjusting a net loss of $20.4 million for non-cash charges, while net cash used in investing activities was $3.1 million, and net cash used in financing activities totaled $6.2 million Cash Flow Summary (in thousands) | Cash Flow Activity | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :-------------------------------------- | :------------------------ | :------------------------ | | Net cash provided by operating activities | $6,368 | $6,848 | | Net cash used in investing activities | $(3,123) | $(4,046) | | Net cash used in financing activities | $(6,238) | $(4,309) | | Net change in cash and cash equivalents and restricted cash | $(2,993) | $(1,507) | - Net cash provided by operating activities in FY2025 was $6.4 million, resulting from a net loss of $20.4 million adjusted for $22.3 million in non-cash charges (depreciation, amortization, stock-based compensation, impairment)[529] - Net cash used in investing activities in FY2025 was $3.1 million, primarily for the purchase of property and equipment ($3.1 million) and intangible assets ($0.1 million)[531] - Net cash used in financing activities in FY2025 was $6.2 million, including $4.1 million in line of credit payments, $1.0 million for treasury stock, $0.7 million for Capchase loan payments, and $0.5 million in dividends[534] Market Risk Disclosures This section is not applicable to LiveOne, Inc. as it is a smaller reporting company - This item is not applicable to smaller reporting companies[536] Financial Statements and Supplementary Data This section presents LiveOne's audited consolidated financial statements for the fiscal years ended March 31, 2025 and 2024, including balance sheets, statements of operations, stockholders' deficit, and cash flows, with the independent auditor's report highlighting a going concern uncertainty - The financial statements include consolidated balance sheets, statements of operations, stockholders' equity, and cash flows for the years ended March 31, 2025 and 2024[539] - The independent auditor's report contains an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern due to recurring losses and negative cash flows[540] - Goodwill impairment assessment for the Media Group and indefinite-lived asset impairment for Slacker were identified as critical audit matters due to significant management assumptions[545][546][549][550] Consolidated Balance Sheet Highlights (in thousands) | Asset/Liability Category | March 31, 2025 | March 31, 2024 | | :----------------------- | :------------- | :------------- | | Total Current Assets | $15,246 | $24,335 | | Total Assets | $40,517 | $63,863 | | Total Current Liabilities | $36,384 | $46,842 | | Total Liabilities | $48,929 | $57,306 | | Total Equity (Deficit) | $(8,412) | $1,595 | Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :-------------------------------------- | :------------------------ | :------------------------ | | Net cash provided by operating activities | $6,368 | $6,848 | | Net cash used in investing activities | $(3,123) | $(4,046) | | Net cash used in financing activities | $(6,238) | $(4,309) | | Net change in cash, cash equivalents and restricted cash | $(2,993) | $(1,507) | Note 1 — Organization and Basis of Presentation LiveOne, Inc. is a Delaware corporation headquartered in Beverly Hills, California, operating as a creator-first music, entertainment, and technology platform, with its financial statements prepared on a going concern basis despite recurring losses and a working capital deficiency - LiveOne, Inc. is a Delaware corporation, reincorporated in 2017, and is a creator-first music, entertainment, and technology platform[568][569] - Key acquisitions include Slacker (2017), PodcastOne (2020), and Custom Personalization Solutions (2020); PodcastOne became a majority-owned subsidiary after its spin-out and direct listing in September 2023[569] - The company's financial statements are prepared on a going concern basis, but a net loss of $20.4 million and a working capital deficiency of $21.1 million as of March 31, 2025, raise substantial doubt about its ability to continue[572][573] - Future operations depend on increasing revenue, reducing costs, achieving profitability, and securing additional financing through equity and/or debt issuances, including a $150.0 million universal shelf Registration Statement[574][515] Note 2 — Summary of Significant Accounting Policies This section outlines LiveOne's significant accounting policies, including the use of estimates, revenue recognition principles, and the treatment of gross versus net revenue, along with policies for cost of sales, stock-based compensation, income taxes, business combinations, and asset impairment - The preparation of financial statements requires management to make estimates and assumptions, particularly for revenue, allowances, business combinations, asset impairment, equity-based compensation, and deferred taxes[575] - Revenue is recognized when performance obligations are satisfied, transferring control of goods or services to customers, with variable consideration estimated using the expected value method[577] - The company reports revenue on a gross or net basis based on whether it acts as a principal or agent in the transaction, acting as principal for membership, sponsorship, and merchandising streams[579] - Goodwill and indefinite-lived assets are not amortized but are subject to annual impairment testing, or more frequently if circumstances indicate impairment[618] - The company adopted ASU 2023-07 on segment reporting in April 2024 and is assessing ASU 2023-09 on income tax disclosures, effective in FY2026[636][637] Note 3 — Revenue LiveOne's total revenue for FY2025 was $114.4 million, a decrease from $118.4 million in FY2024, with membership services revenue decreasing by 14% to $56.9 million, advertising revenue increasing by 20% to $52.3 million, and merchandising revenue declining by 37% to $5.2 million Revenue Disaggregation (in thousands) | Revenue Stream | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :---------------------- | :------------------------ | :------------------------ | | Membership services | $56,939 | $66,182 | | Advertising | $52,285 | $43,729 | | Merchandising | $5,181 | $8,271 | | Sponsorship and Licensing | $- | $126 | | Ticket/Event | $- | $132 | | Total Revenue | $114,405 | $118,440 | - One customer accounted for 45% of consolidated revenues in FY2025 and 51% in FY2024[427][439][641] Changes in Contract Liabilities (Deferred Revenue) (in thousands) | Metric | Amount | | :------------------------------------------------------------------ | :----- | | Balance as of April 1, 2023 | $992 | | Revenue recognized that was included in the contract liability at beginning of the year | $(389) | | Increase due to cash received, excluding amounts recognized as revenue during the year | $125 | | Balance as of March 31, 2024 | $728 | | Revenue recognized that was included in the contract liability at beginning of the year | $(302) | | Increase due to cash received, excluding amounts recognized as revenue during the year | $1,715 | | Balance as of March 31, 2025 | $2,141 | Note 4 — Property and Equipment LiveOne's net property and equipment decreased to $0.9 million as of March 31, 2025, from $3.6 million in the prior year, primarily due to an impairment charge of $2.8 million recorded in FY2025, attributed to the Slacker and PodcastOne reporting units Property and Equipment, Net (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :------------------------------------- | :------------- | :------------- | | Computer, machinery, and software equipment | $2,597 | $6,564 | | Furniture and fixtures | $564 | $556 | | Leasehold improvements | $597 | $597 | | Capitalized internally developed software | $18,669 | $18,109 | | Total property and equipment | $22,427 | $25,826 | | Less accumulated depreciation and amortization | $(21,534) | $(22,180) | | Total property and equipment, net | $893 | $3,646 | - An impairment of $2.8 million was recorded for property and equipment in FY2025, attributed to the Slacker and PodcastOne reporting units, driven by the ART19 agreement and changes in terms with the largest OEM[643] - Depreciation and amortization expense for property and equipment was $3.4 million in FY2025, a slight increase from $3.3 million in FY2024[442][642] Note 5 — Goodwill and Intangible Assets LiveOne's goodwill balance decreased to $21.7 million as of March 31, 2025, from $23.4 million in the prior year, due to a $1.7 million impairment charge in FY2025 related to the Media Group reporting unit, while indefinite-lived intangible assets were impaired by $3.9 million Goodwill Carrying Amount (in thousands) | Metric | Amount | | :------------------------- | :----- | | Balance as of April 1, 2023 | $23,379 | | Impairment (FY2025) | $(1,667) | | Balance as of March 31, 2025 | $21,712 | - A non-cash goodwill impairment charge of $1.7 million was recorded in FY2025 for the Media Group reporting unit, driven by revised cash flow projections reflecting current market conditions[645] Indefinite-Lived Intangible Assets (Tradenames) (in thousands) | Metric | Amount | | :------------------------- | :----- | | Balance as of April 1, 2023 | $4,637 | | Impairment losses (FY2025) | $(3,863) | | Balance as of March 31, 2025 | $774 | - An impairment of $3.9 million was recorded for indefinite-lived intangible assets in FY2025 due to decreased forecasted revenues resulting from changes in terms with the largest OEM customer[646] - Total impairment charge on finite-lived intangible assets was $3.3 million in FY2025, including $2.2 million for intellectual property (patents) in Slacker and $0.9 million for customer relationships in Media reporting unit[649][650] Note 6 — Accounts Payable and Accrued Liabilities As of March 31, 2025, LiveOne's total accounts payable and accrued liabilities were $25.2 million, a decrease from $27.0 million in the prior year, with accounts payable remaining stable and accrued liabilities decreasing Accounts Payable and Accrued Liabilities (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :----------------------------- | :------------- | :------------- | | Accounts payable | $15,269 | $15,154 | | Accrued liabilities | $9,911 | $11,708 | | Lease liabilities, current | $- | $91 | | Total | $25,180 | $26,953 | Note 7 — Notes Payable LiveOne's total notes payable, net, decreased to $0.8 million as of March 31, 2025, from $1.5 million in the prior year, including an SBA loan of $0.2 million and a Capchase loan of $0.6 million Notes Payable (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :----------------------------- | :------------- | :------------- | | SBA loan | $150 | $160 | | Capchase loan | $623 | $1,303 | | Total | $773 | $1,463 | | Less: Current portion of Notes payable | $(623) | $(692) | | Notes payable - long term | $150 | $771 | - The Capchase loan, entered in August 2023, was for $1.7 million at a 9% interest rate, with monthly amortization payments of approximately $73,100 and a final payment due on February 4, 2026[658] Maturities of Notes Payable (in thousands) | For Years Ending March 31 | Amount | | :------------------------ | :----- | | 2026 | $627 | | 2027 | $4 | | 2028 | $4 | | 2029 | $4 | | 2030 | $4 | | Thereafter | $130 | | Total | $773 | Note 8 — PodcastOne Bridge Loan In July 2022, PodcastOne completed a private placement of $8.8 million in unsecured convertible notes (PC1 Notes) with a 10% original issue discount, along with warrants (PC1 Warrants), which automatically converted into PodcastOne common stock upon its direct listing in September 2023 - PodcastOne completed a private placement of $8.8 million in unsecured convertible notes (PC1 Notes) with a 10% original issue discount in July 2022[661] - The PC1 Notes automatically converted into PodcastOne common stock upon its direct listing on The NASDAQ Capital Market on September 8, 2023[664] - PC1 Warrants, initially classified as liabilities, were reclassified to equity upon the direct listing, with 3,114,001 warrants outstanding at an exercise price of $3.00 as of March 31, 2025[666][667] - Redemption features of the PC1 Bridge Loan were treated as embedded derivatives and subsequently cancelled upon the conversion of PC1 Notes into common stock[668][670] Note 9 — Senior Secured Revolving Line of Credit LiveOne's Senior Secured Revolving Line of Credit, initially $7.0 million, was converted into an asset-backed loan (ABL Credit Facility) in September 2023, with the principal reduced to $3.75 million in January 2025, and all obligations paid off and terminated in May 2025 upon issuance of new Debentures - The company's revolving credit facility was converted into an asset-backed loan (ABL Credit Facility) in September 2023, collateralized by all company assets[676] - In January 2025, the principal amount outstanding was reduced to $3.75 million, with a maturity date extended to November 20, 2025[678] - The ABL Credit Facility bore a variable interest rate, which was 10.00% as of March 31, 2025, and required maintaining a minimum cash deposit of $5.0 million[679] - All obligations under the Business Loan Agreement and related loan agreements were paid off and terminated on May 19, 2025, in connection with the issuance of new Debentures[682][765] Note 10 — Related Party Transactions Related party transactions include the conversion of Trinad Capital's unsecured notes into Series A Preferred Stock and common stock, with Trinad Capital owning 4,171.78 shares of Series A Preferred Stock as of March 31, 2025, and the CEO receiving PodcastOne common stock following its direct listing - Trinad Capital, controlled by the CEO, converted unsecured notes into Series A Preferred Stock and common stock, owning 4,171.78 shares of Series A Preferred Stock as of March 31, 2025[683] - The CEO received 147,044 shares of PodcastOne common stock as a result of his ownership of the company's preferred stock following PodcastOne's direct listing[684] - LiveOne issued 123,425 shares of common stock (valued at $0.1 million) to relatives of the CEO for services in FY2025[685] - The company received 1,315,880 shares of PodcastOne Common stock (fair value $2.5 million) in FY2025 for services provided to PodcastOne and cost-sharing[686] Note 11 — Leases LiveOne leases office locations, with most terms being less than 12 months or month-to-month, incurring $0.5 million in rent expense for short-term leases in FY2025, and capitalizing operating leases with terms greater than 12 months - LiveOne leases office locations, with most lease terms being less than 12 months or on a month-to-month basis[688] Operating Lease Costs (in thousands) | Category | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :------------------ | :------------------------ | :------------------------ | | Fixed rent cost | $456 | $324 | | Short term lease cost | $88 | $596 | | Total operating lease cost | $544 | $920 | Operating Lease Liabilities (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :------------------------------ | :------------- | :------------- | | Operating lease right-of-use assets | $97 | $88 | | Operating lease liability, current | $- | $91 | | Operating lease liability, noncurrent | $99 | $- | | Total operating lease liabilities | $99 | $91 | - PodcastOne leases premises under a month-to-month operating lease, with rent expense of $0.3 million in FY2025[693] Note 12 — Other Long-Term Liabilities LiveOne's other long-term liabilities increased to $12.2 million as of March 31, 2025, from $9.4 million in the prior year, including $7.4 million in accrued royalties, $1.6 million in accrued legal expenses, and $2.4 million in accrued sales tax Other Long-Term Liabilities (in thousands) | Category | March 31, 2025 | March 31, 2024 | | :----------------------- | :------------- | :------------- | | Accrued royalties | $7,392 | $7,508 | | Accrued legal | $1,606 | $- | | Accrued sales tax | $2,375 | $1,706 | | Other | $863 | $140 | | Total other long-term liabilities | $12,236 | $9,354 | - Accrued legal liabilities increased to $1.6 million in FY2025, primarily due to the Sound Exchange settlement[695] Note 13 — Commitments and Contingencies LiveOne has contractual obligations for guaranteed payments to Content Providers totaling $11.4 million for FY2026, and is involved in legal proceedings, including a $2.6 million claim from Sony Music Entertainment against Slacker and LiveOne, which the company intends to vigorously defend Contractual Obligations (Guaranteed Payments to Content Providers) (in thousands) | Fiscal Year Ending March 31 | Amount | | :-------------------------- | :----- | | 2026 | $11,400 | | 2027 | $4,500 | | 2028 | $500 | | 2029 | $400 | | Thereafter | $400 | - PodcastOne entered a three-year Enterprise Service and Advertising Agreement with ART19 LLC in January 2025, requiring a minimum guarantee of $15.0 million based on achieving certain impression amounts[700] - The company has employment agreements with two named executive officers, providing annual salary payments of $0.7 million and target bonus compensation of up to $0.3 million, plus potential severance[703] - Sony Music Entertainment filed a complaint in June 2025 alleging Slacker owes $2.6 million in unpaid licensing fees, with LiveOne's guarantee limited to $250,000[707][768] Note 14 — Employee Benefit Plan LiveOne sponsors a 401(k) plan for all eligible employees, making discretionary matching contributions up to 100% of participant deferrals, capped at 5% of annual compensation, and contributed $0.2 million to the plan in both FY2025 and FY2024 - LiveOne sponsors a 401(k) plan for all employees, with discretionary matching contributions up to 100% of deferrals, capped at 5% of annual compensation[710] 401(k) Plan Contributions (in thousands) | Fiscal Year Ended March 31 | Contribution Amount | | :------------------------- | :------------------ | | 2025 | $200 | | 2024 | $200 | Note 15 — Stockholders' Equity LiveOne is authorized to issue up to 500 million shares of common stock and 10 million shares of preferred stock, with a stock repurchase program of up to $12.0 million authorized, and Series A Preferred Stock convertible into common stock at $2.10 per share - The company is authorized to issue up to 500 million shares of common stock and 10 million shares of preferred stock[711] - A stock repurchase program of up to $12.0 million has been authorized, with $1.0 million repurchased in FY2025 and $2.6 million in FY2024[714] - Series A Preferred Stock bears a 12% annual dividend, is perpetual, and is convertible into common stock at $2.10 per share; 14,002 shares were outstanding as of March 31, 2025[715][722] - The 2016 Equity Incentive Plan has 17.6 million shares reserved, with 2.3 million shares available for future issuance as of March 31, 2025[725][728] - PodcastOne's 2022 Equity Incentive Plan reserved 2.0 million shares, with incentive awards underlying 1.4 million shares granted and 232,350 nonvested as of March 31, 2025[729][730] - Non-controlling interest in PodcastOne was 29.18% as of March 31, 2025, following its spin-out in September 2023[731] Note 16 — Income Tax Provision LiveOne reported a total income tax benefit of $0.2 million in FY2025, compared to a provision of $0.1 million in FY2024, on pre-tax losses of $20.6 million and $13.2 million, respectively, with federal net operating loss (NOL) carryforwards of $148.7 million and state NOLs of $85.8 million Pretax Loss and Income Tax (Benefit) Expense (in thousands) | Metric | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :-------------------------- | :------------------------ | :------------------------ | | Loss before income taxes | $(20,555) | $(13,193) | | Total provision for income taxes | $(185) | $118 | - As of March 31, 2025, the company had federal NOL carryforwards of approximately $148.7 million and state NOLs of $85.8 million, subject to Section 382 and 383 limitations[742][744] - A valuation allowance of $45.8 million was recorded against deferred tax assets in FY2025, reflecting management's assessment that the ultimate realization of potential tax benefits is unlikely[748] - PodcastOne ceased to be a member of LiveOne's federal consolidated tax group after its spin-out in FY2024, now filing a separate federal income tax return[743] Note 17 — Business Segments and Geographic Reporting LiveOne operates and reports its business in three segments: PodcastOne, Slacker, and Media Group, with all material revenues and long-lived assets derived from and located in the United States, and one external OEM customer accounting for 45% of total revenues in FY2025 - LiveOne has three operating segments: PodcastOne, Slacker, and Media Group, which align with how the Chief Executive Officer (CODM) manages the business[750][751] - All material revenues and long-lived assets are derived from and located in the United States[753] - One external OEM customer accounted for 45% of total revenues in FY2025 and 51% in FY2024, and 10% of total accounts receivable in FY2025[752] Segment Revenue and Net Income (Loss) (in thousands) | Segment | Year Ended March 31, 2025 Revenue | Year Ended March 31, 2025 Net Income (Loss) | Year Ended March 31, 2024 Revenue | Year Ended March 31, 2024 Net Income (Loss) | | :----------- | :-------------------------------- | :------------------------------------------ | :-------------------------------- | :------------------------------------------ | | PodcastOne | $52,119 | $(6,458) | $43,302 | $(14,732) | | Slacker | $56,787 | $3,570 | $65,959 | $13,382 | | Media | $5,499 | $(8,166) | $9,179 | $(1,397) | | Corporate expenses | $- | $(9,316) | $- | $(10,564) | | Total | $114,405 | $(20,370) | $118,440 | $(13,311) | Note 18 — Fair Value Measurements LiveOne's financial liabilities measured at fair value on a recurring basis include a bifurcated embedded derivative on Series A Preferred Stock, which was $0.6 million as of March 31, 2024, and was reduced to zero by March 31, 2025, due to changes in fair value reported in earnings Fair Value of Financial Liabilities (in thousands) | Liability Category | March 31, 2024 Fair Value | Hierarchy Level | | :----------------------------------------------- | :------------------------ | :-------------- | | Bifurcated embedded derivative on Series A Preferred Stock | $607 | Level 3 | Reconciliation of Level 3 Financial Liabilities (in thousands) | Metric | Amount | | :------------------------------------------------------------------ | :----- | | Balance as of April 1, 2023 | $3,698 | | Change in fair value of bifurcated embedded derivatives, reported in earnings | $4,460 | | Conversion of embedded derivatives to equity | $(1,481) | | Conversion of warrant liability to non-controlling interest | $(5,896) | | Change in fair value of contingent consideration liabilities, reported in earnings | $(174) | | Balance as of March 31, 2024 | $607 | | Change in fair value of bifurcated embedded derivatives, reported in earnings | $(607) | | Balance as of March 31, 2025 | $- | - The fair values of cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses are estimated to equal their carrying values due to short maturities[757] Note 19 — Subsequent Events Subsequent to March 31, 2025, LiveOne issued $16.8 million in Original Issue Discount Senior Secured Convertible Debentures in May 2025, with an option for an additional $11.0 million, and PodcastOne entered new two-year employment agreements with its President and Chief Revenue Officer - On May 19, 2025, LiveOne sold $16.8 million in Initial Debentures, with an option for an additional $11.0 million, convertible into common stock at $2.10 per share[759] - The Initial Debentures mature on May 19, 2028, and accrue interest at 11.75% per year, with holders having monthly redemption rights starting August 2025[760] - The company paid off and terminated its previous Business Loan Agreement and all related loan agreements using proceeds from the Debentures[765] - PodcastOne entered new two-year employment agreements with its President and Chief Revenue Officer in June 2025, including grants of restricted stock units[766][767] - Sony Music Entertainment filed a complaint on June 6, 2025, against Slacker and LiveOne, alleging $2.6 million in unpaid licensing fees, with LiveOne's guarantee limited to $250,000[768] Changes in Accountants There have been no changes in or disagreements with accountants on accounting and financial disclosure - There have been no changes in or disagreements with accountants on accounting and financial disclosure[770] Controls and Procedures LiveOne's management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective as of March 31, 2025, and the internal control over financial reporting was also assessed as effective for the same period, based on the COSO framework - LiveOne's CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[771] - Management assessed the effectiveness of internal control over financial reporting as of March 31, 2025, based on the COSO framework, and concluded it was effective[775][776] - Controls and procedures, regardless of design, can only provide reasonable assurance and are subject to inherent limitations[772][774] - As a smaller reporting company and non-accelerated filer, LiveOne's independent auditor is not required to attest to the effectiveness of its internal control over financial reporting[777] Other Information During the three-month period ended March 31, 2025, no officer or director adopted any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No officer or director adopted any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three-month period ended March 31, 2025[780] Foreign Jurisdictions Inspection Disclosure This item is not applicable to LiveOne, Inc - This item is not applicable[781] PART III Directors, Executive Officers and Corporate Governance The information required for this item is incorporated by reference from the company's definitive Proxy Statement for its 2025 Annual Meeting of Stockholders - Information for this item is incorporated by reference from the 2025 Proxy Statement[783] Executive Compensation The information required for this item is incorporated by reference from the company's definitive Proxy Statement for its 2025 Annual Meeting of Stockholders - Information for this item is incorporated by reference from the 2025 Proxy Statement[784] Security Ownership and Related Matters The information required for this item is incorporated by reference from the company's definitive Proxy Statement for its 2025 Annual Meeting of Stockholders - Information for this item is incorporated by reference from the 2025 Proxy Statement[785] Related Transactions and Director Independence The information required for this item is incorporated by reference from the company's definitive Proxy Statement for its 2025 Annual Meeting of Stockholders - Information for this item is incorporated by reference from the 2025 Proxy Statement[786] Principal Accounting Fees and Services The information required for this item is incorporated by reference from the company's definitive Proxy Statement for its 2025 Annual Meeting of Stockholders - Information for this item is incorporated by reference from the 2025 Proxy Statement[787] PART IV Exhibits and Financial Statement Schedules This section lists the financial statements included in the Annual Report, such as Consolidated Balance Sheets, Statements of Operations, Stockholders' Deficit, and Cash Flows, along with their accompanying notes, and provides a comprehensive list of exhibits filed with the report - The financial statements included in this Annual Report are the Consolidated Balance Sheets, Statements of Operations, Statements of Stockholders' (Deficit) Equity, and Statements of Cash Flows for the years ended March 31, 2025 and 2024, along with their notes[789][790] - All financial statement schedules have been omitted as they are either not applicable or the information is contained elsewhere in the Annual Report[789] - A comprehensive list of exhibits is provided, including corporate governance documents, various warrants, debt agreements (e.g., Debentures, Capchase Loan), employment agreements, and certifications[791][794] Form 10-K Summary LiveOne has elected not to include summary information for its Form 10-K - The company has elected not to include summary information for its Form 10-K[793]