rtside (PODC) - 2026 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for PodcastOne, Inc., including the Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows for the periods ended June 30, 2025, and March 31, 2025 (or June 30, 2024, for comparative periods), along with detailed notes explaining the company's organization, accounting policies, and specific financial line items Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | Change | | :----------------------------- | :----------------------------- | :----------------------------- | :----- | | Cash and cash equivalents | $1,870 | $1,079 | +$791 | | Accounts receivable, net | $6,818 | $6,246 | +$572 | | Total Current Assets | $8,819 | $7,555 | +$1,264 | | Total Assets | $22,336 | $21,195 | +$1,141 | | Accounts payable and accrued liabilities | $7,125 | $5,539 | +$1,586 | | Total Current Liabilities | $7,620 | $6,053 | +$1,567 | | Total Liabilities | $7,620 | $6,053 | +$1,567 | | Total stockholders' equity | $14,716 | $15,142 | -$426 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | YoY Change | | :----------------------------- | :------------------------------------ | :------------------------------------ | :--------- | | Revenue | $14,994 | $13,159 | +14% | | Cost of sales | $13,555 | $11,709 | +16% | | Total operating expenses | $16,048 | $14,525 | +10.5% | | Loss from operations | $(1,054) | $(1,366) | -22.8% | | Net loss | $(1,054) | $(1,366) | -22.8% | | Net loss per share – basic and diluted | $(0.04) | $(0.06) | -33.3% | - Amortization of intangible assets decreased by 67% YoY to $125 thousand (from $377 thousand)[15] - Impairment of intangible assets decreased by 100% YoY to $0 (from $176 thousand)[15] Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | As of June 30, 2025 (in thousands) | As of March 31, 2025 (in thousands) | | :----------------------------- | :--------------------------------- | :--------------------------------- | | Additional Paid in Capital | $51,839 | $51,211 | | Accumulated Deficit | $(37,123) | $(36,069) | | Total Stockholders' Equity | $14,716 | $15,142 | - Net loss for the three months ended June 30, 2025, was $(1,054) thousand[18] - Stock-based compensation contributed $66 thousand to additional paid-in capital[18] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net cash provided by (used in) operating activities | $903 | $(480) | | Net cash used in investing activities | $(112) | $(74) | | Net change in cash and cash equivalents | $791 | $(554) | | Cash and cash equivalents, end of period | $1,870 | $891 | - Adjustments to reconcile net loss to net cash from operating activities included $1.5 million in stock-based compensation (up from $0.4 million in 2024) and $0.2 million in depreciation and amortization (down from $0.4 million in 2024)[21] - Changes in operating assets and liabilities provided $0.3 million in cash, compared to a use of $0.2 million in the prior year[21] Notes to the Condensed Consolidated Financial Statements Note 1 — Organization and Basis of Presentation PodcastOne, Inc. is a Delaware corporation and a leading podcast platform, majority-owned by LiveOne, Inc. The financial statements are prepared on a standalone basis, but related party transactions with LiveOne may not be at arm's length. The company has an accumulated deficit and working capital that raise substantial doubt about its ability to continue as a going concern without additional financing - PodcastOne is a leading podcast platform and publisher, a majority-owned subsidiary of LiveOne, Inc.[24][25] - The company has an accumulated deficit of $37.1 million and working capital of $1.2 million as of June 30, 2025, raising substantial doubt about its ability to continue as a going concern[29][182] - Management anticipates existing cash resources will not be sufficient beyond June 2026 without additional financing[30] Note 2 — Summary of Significant Accounting Policies This note details the company's significant accounting policies, including revenue recognition, allocation of costs from its parent company, gross versus net revenue recognition, advertising revenue, cost of sales, sales and marketing, product development, stock-based compensation, income taxes, earnings per share, segment reporting, cash and cash equivalents, accounts receivable, related party receivables and payables, property and equipment, goodwill, intangible assets, fair value measurements, concentration of credit risk, and recently adopted/issued accounting pronouncements - Revenue is recognized when control of goods/services is transferred, primarily from advertising sales based on impressions[36][40] - Barter revenue for the three months ended June 30, 2025, was $7.0 million, up from $6.0 million in 2024[41] - The company operates as a single segment: a leading podcast platform and publisher[50] Accounts Receivable, Net (in thousands) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Accounts receivable, gross | $6,890 | $6,318 | | Less: Allowance for credit losses | $(72) | $(72) | | Accounts receivable, net | $6,818 | $6,246 | - The company adopted ASU 2023-09 (Income Taxes) on April 1, 2025, with no material impact[68] - ASU 2024-03 (Disaggregation of Income Statement Expenses) is effective for fiscal years beginning after December 15, 2026, and is currently being evaluated[69] Note 3 — Property and Equipment Net property and equipment decreased to $55 thousand as of June 30, 2025, from $59 thousand as of March 31, 2025. This was primarily due to a $0.9 million write-off of internally developed software no longer in use, offset by new purchases Total Property and Equipment, Net (in thousands) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Total property and equipment, net | $55 | $59 | - During Q2 2025, the company wrote off $0.9 million of internally developed software and corresponding accumulated depreciation[72] - Depreciation expense was $0.025 million for Q2 2025, down from $0.066 million for Q2 2024[71] Note 4 — Goodwill and Intangible Assets Goodwill remained stable at $12.0 million as of June 30, 2025, with no impairment indicators. Finite-lived intangible assets, primarily content creator relationships and brand/trade names, decreased to $1.1 million net, due to amortization and a prior year impairment charge Goodwill and Intangible Assets, Net (in thousands) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Goodwill | $12,041 | $12,041 | | Intangible assets, net | $1,061 | $1,186 | - Amortization expense on finite-lived intangible assets was $0.1 million for Q2 2025, a significant decrease from $1.1 million for Q2 2024[74] - No impairment charges were recorded for Q2 2025, compared to $0.2 million in Q2 2024 due to the winding down of a podcast show[74] Amortization Schedule for Finite-Lived Intangible Assets (in thousands) | For Years Ending March 31, | Amount (in thousands) | | :------------------------- | :-------------------- | | 2026 (remaining nine months) | $456 | | 2027 | $338 | | 2028 | $101 | | 2029 | $101 | | 2030 | $65 | | Thereafter | $- | | Total | $1,061 | Note 5 — Accounts Payable and Accrued Liabilities Total accounts payable and accrued liabilities increased to $7.1 million as of June 30, 2025, from $5.5 million as of March 31, 2025. This increase was driven by higher accounts payable and other accrued liabilities, partially offset by a decrease in accrued revenue share Accounts Payable and Accrued Liabilities (in thousands) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Accounts payable | $2,409 | $1,285 | | Accrued revenue share | $1,648 | $1,962 | | Other accrued liabilities | $3,068 | $2,292 | | Total | $7,125 | $5,539 | Note 6 — Related Party Transactions LiveOne, the parent company, owns approximately 71% of PodcastOne's common stock. PodcastOne had a net related party payable to LiveOne of $0.1 million as of June 30, 2025. LiveOne allocated $0.4 million in overhead expenses to PodcastOne for Q2 2025. PodcastOne also issued common stock to LiveOne in exchange for amounts owed under a cost sharing agreement - LiveOne owns approximately 71% of PodcastOne's common stock as of June 30, 2025[79][97] - Overhead expenses allocated from LiveOne to PodcastOne were $0.4 million for Q2 2025 (up from $0.3 million in Q2 2024)[80] - Net related party payable to LiveOne was $(0.1) million as of June 30, 2025[56] - PodcastOne issued 237,113 shares of common stock (fair value $0.5 million) to LiveOne in Q2 2025 for cost sharing[83] Note 7 — Commitments and Contingencies PodcastOne has contractual obligations for guaranteed payments to content providers totaling $1.2 million through fiscal year 2028. The company entered into new employment agreements with its President and Chief Revenue Officer, including RSU grants. A three-year Enterprise Service and Advertising Agreement with ART19 LLC is expected to drive monetization, with a minimum guarantee of $15.0 million over the term. LiveOne, as the parent, entered into a $16.8 million secured convertible debenture agreement, guaranteed by PodcastOne and secured by its assets - Contractual obligations for guaranteed payments to content providers: $1.0 million (FY2026), $0.1 million (FY2027), $0.1 million (FY2028)[84] - New employment agreements for President Kit Gray and Chief Revenue Officer Sue McNamara include annual salaries of $375,000 and $325,000, respectively, plus RSU grants[86][87] - Enterprise Service and Advertising Agreement with ART19 LLC includes a minimum guarantee of $15.0 million over three years[88] - Revenue recognized from ART19 agreement: $1.4 million for Q2 2025 (none in Q2 2024)[88] - LiveOne issued $16.8 million in Initial Debentures (convertible, 11.75% interest, maturing May 2028), guaranteed by PodcastOne and secured by a lien on all of PodcastOne's assets[91][95] Note 8 — Employee Benefit Plan PodcastOne employees participate in LiveOne's 401(k) plan, with discretionary matching contributions. Company matching contributions were not material for the three months ended June 30, 2025 and 2024 - Employees participate in LiveOne's 401(k) plan[96] - Company matching contributions were not material for Q2 2025 and Q2 2024[96] Note 9 — Stockholders' Equity LiveOne owns approximately 71% of PodcastOne's common stock. The company's authorized capital includes 100 million common shares and 10 million preferred shares. Unrecognized compensation costs for PodcastOne RSUs were $1.8 million as of June 30, 2025, to be recognized over 0.78 years - LiveOne owns approximately 71% of PodcastOne's issued and outstanding common stock as of June 30, 2025[97] - Authorized shares: 100,000,000 common stock, 10,000,000 preferred stock[98][109] - Unrecognized compensation costs for unvested PodcastOne RSUs: $1.8 million, expected to be recognized over 0.78 years[108] - Stock-based compensation expense recognized by PodcastOne for LiveOne awards was less than $0.1 million for Q2 2025 and $0.1 million for Q2 2024[101] Note 10 - Subsequent Events Subsequent to the quarter end, LiveOne completed an equity offering, raising approximately $9.5 million, with proceeds intended for cryptocurrency investments and working capital. LiveOne also amended its debenture terms to permit cryptocurrency purchases and management. Additionally, LiveOne completed a preferred stock exchange, converting Series A Preferred Stock into common stock and warrants - LiveOne completed an equity offering on July 17, 2025, raising approximately $9.5 million (gross proceeds) for cryptocurrency acquisition and treasury strategy[112][113][114] - LiveOne amended its Initial Debentures on August 5, 2025, to allow the purchase and active management of Bitcoin, Solana, or Ethereum (Crypto)[115] - LiveOne completed a preferred stock exchange on July 15, 2025, converting $6.75 million of Series A Preferred Stock into 4.5 million common shares and 4.5 million three-year warrants[116] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PodcastOne, a leading podcast platform, reported a 14% revenue increase to $15.0 million and a reduced net loss of $1.1 million for Q2 2025. The company continues to expand its content, monetize through advertising, and manage liquidity challenges, including reliance on parent company LiveOne's financing and debt covenants Overview - PodcastOne is a leading podcast platform and publisher, spun out from LiveOne on September 8, 2023, and trades on Nasdaq under "PODC"[122][123] - The company produces vodcasts, branded podcasts, merchandise, and live events, delivering millions of monthly impressions, 6.0+ million monthly unique listeners, and 17+ million IAB monthly downloads[124] - Revenue for Q2 2025 was $15.0 million, representing 14% year-over-year growth[127] Recent Developments for the Quarter Ended June 30, 2025 - Expanded programming slate to 194 shows[129] - Surpassed 3.8 billion network downloads[129] - Ranked as high as 8 on Podtrac's Top Podcast Publishers list[129] - Acquired exclusive rights to certain podcasts, including ownership and IP for true crime podcasts for potential TV/film projects[130] Our Business Model - Business model is Ad-Supported Service, providing free content and generating revenue from audio, video, and social advertising impressions[132] - Focuses on host-read embedded ads and programmatic monetization[132] - Revenue deals with new talent are based on a percentage split of advertising revenue[134] Key Factors Affecting Our Performance - Digital advertising industry is shifting to "viewable" impression standards and data-driven technologies like automated buying[136][137] - Revenue is generated by charging a cost per thousand impressions (CPM) based on purchased digital ads[138] - PodcastOne owns one of the largest networks in North America, with over 300 exclusive shows and over 3.6 billion downloads in FY2025[139] - Operates LaunchPadOne, a self-publishing platform for independent podcasters, serving as a talent pool[140] Key Business Metric Number of Podcast Downloads | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Growth | | :-------------------------- | :------------------------------- | :------------------------------- | :--------- | | Number of podcast downloads | 51,423,500 | 55,856,000 | (8)% | - The decrease in downloads is attributed to modified download behavior by Apple iOS 17 and the departure of non-revenue generating partner networks[142] Components of Results of Operations - Revenue primarily from sale of audio, video, and display advertising space to third-party exchanges[145] - Cost of sales consists of revenue sharing expenses owed to content creators and commissions[146] - Operating expenses include personnel-related expenses, stock-based compensation, and allocated overhead[147] - Expects operating expenses to increase in dollar amount in the short term but decrease as a percentage of revenue over the longer term[147] Results of Operations Results of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | % Change | | :----------------------------- | :------------------------------------ | :------------------------------------ | :------- | | Revenue | $14,994 | $13,159 | 14% | | Cost of sales | $13,555 | $11,709 | 16% | | Sales and marketing expenses | $879 | $847 | 4% | | Product development | $12 | $18 | (33)% | | General and administrative | $1,477 | $1,398 | 6% | | Amortization of intangible assets | $125 | $377 | (67)% | | Impairment of intangible assets | $0 | $176 | (100)% | | Loss from operations | $(1,054) | $(1,366) | (23)% | - Stock-based compensation expense increased by 272% to $1.5 million in Q2 2025, primarily due to a 4082% increase in cost of sales[154] Non-GAAP Financial Measures - Contribution Margin is defined as Revenue less Cost of Sales before share-based compensation, depreciation, and amortization of developed technology[164] - Adjusted EBITDA is defined as net income (loss) before specific non-cash and non-recurring adjustments[165] Non-GAAP Financial Measures (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :----------------------------- | :------------------------------------ | :------------------------------------ | | Net loss (GAAP) | $(1,054) | $(1,366) | | Adjusted EBITDA | $580 | $(316) | | Revenue | $14,994 | $13,159 | | Contribution Margin | $2,394 | $1,509 | - Adjusted EBITDA improved from a loss of $(316) thousand in Q2 2024 to a profit of $580 thousand in Q2 2025[167] - Contribution Margin increased by 58.6% from $1.5 million in Q2 2024 to $2.4 million in Q2 2025[167] Liquidity and Capital Resources - Cash and cash equivalents: $1.9 million as of June 30, 2025[169] - Accumulated deficit: $37.1 million as of June 30, 2025[182] - Working capital: $1.2 million as of June 30, 2025[182] - Management anticipates existing cash resources will not be sufficient beyond August 2026 without additional liquidity[180] - LiveOne's total outstanding consolidated indebtedness was $15.9 million as of June 30, 2025, net of fees and discounts, consisting of Initial Debentures and the Capchase Loan[177] - PodcastOne's assets are collateral for LiveOne's debt[174] - LiveOne was in compliance with all debt covenants as of June 30, 2025[175][191] Sources and Uses of Cash Cash Flow Activities (in thousands) | Cash Flow Activity | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net cash provided by (used in) operating activities | $903 | $(480) | | Net cash used in investing activities | $(112) | $(74) | | Net cash used in financing activities | $0 | $0 | | Net change in cash, cash equivalents and restricted cash | $791 | $(554) | - Operating cash flow for Q2 2025 benefited from non-cash charges of $1.7 million (depreciation, amortization, stock-based compensation) and $0.3 million from working capital changes[185] Recent Accounting Pronouncements - Refer to Note 2 for details on recent accounting pronouncements[192] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that quantitative and qualitative disclosures about market risk are not required for smaller reporting companies - Not required for smaller reporting companies[193] Item 4. Controls and Procedures As of June 30, 2025, management, including the President and CFO, concluded that the company's disclosure controls and procedures were effective. The report acknowledges inherent limitations in any control system, such as human error or circumvention. No material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were effective as of June 30, 2025[195] - No material changes in internal control over financial reporting during Q2 2025[197] PART II — OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings arising from its business activities. Management believes, after consulting legal counsel, that routine claims and lawsuits are not significant and are not expected to have a material adverse effect, except as discussed in Note 7 - Company is involved in various legal proceedings[200] - Routine claims and lawsuits are not expected to have a material adverse effect, except as discussed in Note 7[200] Item 1A. Risk Factors The company operates in a rapidly changing environment with significant risks, including a history of operating and net losses, substantial indebtedness of its parent LiveOne (guaranteed by PodcastOne and secured by its assets), and reliance on key management. These factors raise substantial doubt about the company's ability to continue as a going concern - PodcastOne has incurred significant operating and net losses since inception, with a net loss of $1.1 million for Q2 2025 and an accumulated deficit of $37.1 million as of June 30, 2025[202] - The company's ability to continue as a going concern is dependent on increasing revenue, reducing costs, achieving profitability, and obtaining additional financing[205][183] - Reliance on key management, including Executive Chairman Robert Ellin, President Kit Gray, Chief Revenue Officer Sue McNamara, and CFO Ryan Carhart[206][207] - LiveOne's substantial indebtedness ($15.9 million as of June 30, 2025) is guaranteed by PodcastOne and secured by a lien on all of PodcastOne's assets[209][213] - LiveOne's debt agreements contain restrictive covenants that may limit PodcastOne's operating flexibility and cash flow[213] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, PodcastOne issued 63,542 shares of common stock valued at $0.1 million to consultants and 237,113 shares valued at $0.5 million to LiveOne. These issuances were made in reliance on exemptions from registration under the Securities Act. LiveOne also repurchased 291,459 shares of its and/or PodcastOne's common stock during the quarter - Issued 63,542 common shares ($0.1 million) to various consultants in Q2 2025[216] - Issued 237,113 common shares ($0.5 million) to LiveOne in Q2 2025[216] Share Repurchases by LiveOne (or PodcastOne) | Period | Total number of shares (or units) purchased | Average price paid per share (or unit) | Total number of shares (or units) purchased as part of publicly announced plans or programs | Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs* | | :----------------------------- | :---------------------------------------- | :------------------------------------- | :---------------------------------------------------------------------------------------- | :-------------------------------------------------------------------------------------------------------------------- | | April 1, 2025 – April 30, 2025 | - | $- | - | $6,500,000 | | May 1, 2025 – May 31, 2025 | 24,056 | $0.74 | 24,056 | $6,500,000 | | June 1, 2025 – June 30, 2025 | 267,403 | $0.81 | 291,459 | $6,500,000 | | Total (April 1, 2025 – June 30, 2025) | 291,459 | $- | 291,459 | $6,500,000 | Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported for the period - None[220] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[220] Item 5. Other Information No other information was reported for the period - None[221] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the company's organizational documents, equity incentive plans, employment agreements, indemnification agreements, and certifications required by the Sarbanes-Oxley Act - Includes Amended and Restated Certificate of Incorporation and Bylaws[224] - Lists the Company's 2022 Equity Incentive Plan and employment agreements for key executives[224] - Contains certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 and 906 of the Sarbanes-Oxley Act[224] Signatures The report is signed by Kit Gray, President (Principal Executive Officer), and Ryan Carhart, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), on August 14, 2025 - Signed by Kit Gray, President, and Ryan Carhart, Chief Financial Officer[229][230] - Date: August 14, 2025[230]