LiveOne(US:LVO)2025-08-14 19:35PART I — FINANCIAL INFORMATION Financial Statements Unaudited condensed consolidated financial statements for Q1 FY2026 highlight a $3.9 million net loss and working capital deficiency, raising substantial doubt about going concern Condensed Consolidated Balance Sheets Total assets increased to $48.9 million, total liabilities rose to $61.0 million due to a new convertible note, and the stockholders' deficit widened to $12.1 million as of June 30, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $11,891 | $4,119 | | Total Current Assets | $22,946 | $15,246 | | Total Assets | $48,940 | $40,517 | | Total Current Liabilities | $33,956 | $36,384 | | Total Liabilities | $61,032 | $48,929 | | Total stockholders' deficit | ($12,092) | ($8,412) | Condensed Consolidated Statements of Operations Revenue significantly decreased to $19.2 million, loss from operations widened to $4.0 million, and net loss attributable to LiveOne increased to $3.6 million for the three months ended June 30, 2025 Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $19,207 | $33,078 | | Cost of sales | $16,825 | $25,087 | | Loss from operations | ($4,034) | ($784) | | Net loss attributed to LiveOne | ($3,593) | ($1,169) | | Net loss per share | ($0.04) | ($0.02) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $3.0 million, offset by $11.8 million provided by financing activities, resulting in a $7.8 million net increase in cash for the three months ended June 30, 2025 Cash Flow Summary (in thousands) | Activity | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($3,047) | $1,342 | | Net cash used in investing activities | ($1,020) | ($736) | | Net cash provided by (used in) financing activities | $11,839 | ($1,428) | | Net change in cash, cash equivalents and restricted cash | $7,772 | ($822) | Notes to the Condensed Consolidated Financial Statements Notes detail a history of losses, $11.0 million working capital deficiency, and $3.9 million net loss, raising going concern doubts, along with revenue disaggregation and financing activities - The company has a history of losses, incurred a net loss of $3.9 million for the quarter, used $3.0 million in cash from operating activities, and had a working capital deficiency of $11.0 million. These factors raise substantial doubt about its ability to continue as a going concern25 Revenue by Type (in thousands) | Revenue Type | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Membership Services | $3,325 | $18,850 | | Advertising | $15,093 | $13,074 | | Merchandising | $789 | $1,154 | | Total Revenue | $19,207 | $33,078 | - In May 2025, the company sold Original Issue Discount Senior Secured Convertible Debentures in an aggregate principal amount of $16,775,000 for a cash purchase price of $15,250,000. The debentures mature in May 2028 and accrue interest at 11.75% per year78 - Subsequent to the quarter end, on July 17, 2025, the company closed an equity offering with aggregate gross proceeds of approximately $9.5 million. The proceeds are intended to fund the acquisition of cryptocurrencies as part of a new treasury strategy136137 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial condition, significant revenue decline from OEM changes, user conversion efforts, and the new cryptocurrency treasury strategy, acknowledging going concern doubts Consolidated Results of Operations Total revenue decreased by 42% to $19.2 million, driven by an 82% drop in membership revenue, partially offset by a 15% increase in advertising revenue, resulting in a widened net loss of $3.9 million Revenue Comparison (in thousands) | Revenue Stream | Q1 FY2026 | Q1 FY2025 | % Change | | :--- | :--- | :--- | :--- | | Membership services | $3,325 | $18,850 | -82% | | Advertising | $15,093 | $13,074 | 15% | | Merchandising | $789 | $1,154 | -32% | | Total Revenue | $19,207 | $33,078 | -42% | - The 82% decrease in membership revenue was primarily a result of the change in terms with the company's largest OEM customer, which no longer subsidizes the product for new customers as of December 1, 2024163 - Advertising revenue increased by $2.0 million (15%), primarily attributable to a $1.0 million quarter-over-quarter growth in barter revenue164 Business Segment Results PodcastOne revenue grew 14% to $15.0 million with a narrowed operating loss, while Slacker revenue plummeted 82% to $3.4 million due to OEM changes, swinging to an operating loss PodcastOne Operations (in thousands) | Metric | Q1 FY2026 | Q1 FY2025 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $14,994 | $13,159 | 14% | | Operating Loss | ($697) | ($1,366) | -49% | | Adjusted EBITDA | $580 | ($316) | -284% | Slacker Operations (in thousands) | Metric | Q1 FY2026 | Q1 FY2025 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $3,384 | $18,704 | -82% | | Operating Income (Loss) | ($196) | $4,193 | -105% | | Adjusted EBITDA | ($191) | $5,425 | -104% | Liquidity and Capital Resources The company had $11.9 million cash but a $11.0 million working capital deficiency, raising going concern doubts, addressed by $15.25 million from convertible debentures and $9.5 million from a subsequent equity offering - The company has a history of losses, a working capital deficiency of $11.0 million as of June 30, 2025, and used $3.0 million in cash from operations, raising substantial doubt about its ability to continue as a going concern202 - In May 2025, the company raised $15.25 million in cash through the sale of Original Issue Discount Senior Secured Convertible Debentures208 - In July 2025, after the quarter's end, the company completed an underwritten public offering for gross proceeds of approximately $9.5 million, with proceeds intended for its cryptocurrency treasury strategy and working capital212 Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required as the company qualifies as a smaller reporting company - This section is not required for smaller reporting companies225 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective227 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting229 PART II — OTHER INFORMATION Legal Proceedings A complaint filed by Sony Music Entertainment on June 6, 2025, alleges $2.6 million in unpaid licensing fees against Slacker and LiveOne, with LiveOne's guarantee limited to $250,000 - On June 6, 2025, Sony Music Entertainment filed a complaint against Slacker and the Company for an alleged breach of contract, claiming $2.6 million in unpaid licensing fees. LiveOne's guarantee is limited to $250,000110 Risk Factors Key risks include heavy reliance on its largest OEM customer, challenges in converting users, significant operating losses raising going concern doubts, substantial debt, and new risks from its cryptocurrency assets treasury strategy Risks Related to Our Business and Industry Significant reliance on Tesla, with revenue dropping from 53% to 9%, poses a major risk, as future success depends on converting subsidized users to direct subscribers, alongside ongoing going concern doubts - The company's business is highly dependent on its relationship with Tesla, which accounted for 9% of consolidated revenue for the three months ended June 30, 2025, a sharp decrease from 53% for the same period in 2024236 - The company's ability to convert a significant number of former subsidized Tesla drivers to direct subscribers of the LiveOne app is a major uncertainty and risk to its future business and financial condition239240 - The company has a history of significant losses, with a net loss of $3.9 million for the quarter, an accumulated deficit of $269.1 million, and a working capital deficit of $11.0 million as of June 30, 2025241 Risks Related to Our Company Financial and operational risks include the ability to repay $15.9 million in outstanding debt, restrictive covenants, dependence on third-party music licenses, and potential Nasdaq delisting due to minimum bid price non-compliance - The company has significant indebtedness, with $15.9 million outstanding as of June 30, 2025, and may not have the ability to repay the amounts due at maturity246251 - The company depends on third-party licenses for sound recordings and musical compositions. An adverse change to, loss of, or claim that it does not hold necessary licenses could materially harm the business254 - In March 2025, the company received a notice from Nasdaq for failing to meet the $1.00 minimum bid price requirement, creating a risk of delisting if not resolved264 Risks Related to Our Cryptocurrency Assets Treasury Strategy New risks from the $500 million cryptocurrency assets treasury strategy include the novelty, volatility, and regulatory uncertainty of digital assets, custody risks like private key loss, and potential classification as an investment company - The company has announced a new cryptocurrency assets treasury strategy with board authorization up to $500 million, an initiative that is nascent, unproven, and subject to significant risks269 - Bitcoin and other digital assets are subject to significant legal, commercial, regulatory, and technical uncertainty, which could adversely impact their price and the company's investment271272273 - The company faces risks related to the custody of its crypto assets, including the loss or destruction of private keys and cyberattacks. Insurance coverage for such losses may be insufficient278 Unregistered Sales of Equity Securities and Use of Proceeds The company issued 175,649 shares to consultants and 35,763 shares to employees in unregistered transactions, and repurchased 291,459 shares as part of its publicly announced program during the quarter - During the quarter, the company issued 175,649 shares of its common stock to various consultants and 35,763 shares to employees, relying on exemptions from registration under the Securities Act288289 Issuer Purchases of Equity Securities (April 1, 2025 – June 30, 2025) | Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | | :--- | :--- | :--- | :--- | | April 2025 | - | - | - | | May 2025 | 24,056 | $0.74 | 24,056 | | June 2025 | 267,403 | $0.81 | 291,459 | | Total | 291,459 | $0.79 | 291,459 | Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None292 Mine Safety Disclosures This item is not applicable - Not applicable293 Other Information There is no other information to disclose for this period - None294 Exhibits A list of all exhibits filed with the Form 10-Q includes corporate governance documents, financing agreements, and required CEO and CFO certifications - The report lists numerous exhibits filed, including corporate governance documents, debt and equity financing agreements, and required CEO/CFO certifications296298