# LiveOne, Inc.: Form 10-Q for the period ended Dec 31, 2024

- Company: [LiveOne, Inc.](/companies/lvo.md) (CIK 1491419)
- Form: 10-Q
- Filed: 2025-02-14
- Accepted by EDGAR: Feb 14, 2025, 15:15 ET
- Period: 2024-12-31
- Accession: 0001437749-25-003961
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1491419/000143774925003961/lvo20241231_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1491419/000143774925003961/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-10-01 to 2024-12-31 | $29.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-04-01 to 2024-12-31 | $95.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-10-01 to 2024-12-31 | $22.3m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2024-04-01 to 2024-12-31 | $71.9m | us-gaap:CostOfRevenue |
| Research and development | 3 months, 2024-10-01 to 2024-12-31 | $1.1m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-04-01 to 2024-12-31 | $3.3m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-10-01 to 2024-12-31 | −$5.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-04-01 to 2024-12-31 | −$7.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-10-01 to 2024-12-31 | $15.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-04-01 to 2024-12-31 | $55.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-10-01 to 2024-12-31 | −$5.2m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-04-01 to 2024-12-31 | −$8.3m | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2024-10-01 to 2024-12-31 | −$0.06 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-04-01 to 2024-12-31 | −$0.10 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 9 months, 2024-04-01 to 2024-12-31 | $10.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-04-01 to 2024-12-31 | $2.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2024-04-01 to 2024-12-31 | $509.0k | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2024-04-01 to 2024-12-31 | $999.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-12-31 | $10.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-12-31 | $22.8m | us-gaap:AssetsCurrent |
| Total assets | at 2024-12-31 | $56.2m | us-gaap:Assets |
| Current liabilities | at 2024-12-31 | $40.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-12-31 | $55.1m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-12-31 | −$8.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 70,859 characters.

*As used herein, “LiveOne,” the “Company,” “we,” “our” or “us” and similar terms include LiveOne, 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 nine months ended December 31, 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 reliance on our largest OEM customer for a substantial percentage of our revenue; our ability to consummate any proposed financing, acquisition, spin-out, special dividend, distribution or transaction, including the proposed special dividend and spin-out of our pay-per-view business, the timing of the consummation of such proposed event, including the risks that a condition to consummation of such proposed event would not be satisfied within the expected timeframe or at all or that the consummation of any proposed financing, acquisition, spin-out, special dividend, distribution or transaction, the timing of the consummation of such proposed event will not occur; our ability to continue as a going concern; our reliance on one key customer for a substantial percentage of our revenue; if and when required, our ability to obtain additional capital, including to fund our current debt obligations and to fund potential acquisitions and capital expenditures; our ability to attract, maintain and increase the number of our users and paid members; 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; uncertain and unfavorable 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 and/or our ability to pay any amounts due in connection with any such legal proceedings; changes in laws or regulations that apply to us or our industry; our ability to recognize and timely implement future technologies in the music and live streaming space; our ability to capitalize on investments in developing our service offerings, including the LiveOne App to deliver and develop upon current and future technologies; significant product development expenses associated with our technology initiatives; our ability to deliver end-to-end network performance sufficient to meet increasing customer demands; our ability to timely and economically obtain necessary approval(s), releases and or licenses on a timely basis for the use of our music content on our service platform; our ability to obtain and maintain international authorizations to operate our service over the proper foreign jurisdictions our customers 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 customers will purchase and or subscribe to across our platform; general economic and technological circumstances in the music and live streaming digital markets; our ability to obtain and maintain licenses for content used on our music platforms; the loss of, or failure to realize benefits from, agreements with our music labels, publishers and partners; unfavorable economic conditions in our 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 music labels, festivals, publishers, or 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 and/or our ability to pay any amounts due in connection with any such 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 live and music streaming services and market acceptance for our products and services; our ability to generate sufficient cash flow to make payments on our indebtedness; our incurrence of additional indebtedness in the future; our ability to extend and/or refinance our indebtedness and/or repay our indebtedness when due; the effect of the conditional conversion feature of our Series A Preferred Stock; our compliance with the covenants in our debt agreements; our intent to repurchase shares of our and/or PodcastOne's common stock from time to time under our 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 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. Risk Factors of this Quarterly Report and in Part I – Item 1A. Risk Factors of our 2024 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 1, 2024 (the “2024 Form 10-K”), as well as other factors and matters described herein or in the annual, quarterly and other reports we file with the SEC. 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 of the Company

We are a pioneer in the acquisition, distribution and monetization of live music, Internet radio, podcasting and music-related streaming and video content. Our principal operations and decision-making functions are located in North America. We manage and report our businesses as a single operating segment. Our senior management regularly reviews our operating results, principally to make decisions about how we allocate our resources and to measure our segment and consolidated operating performance. In prior fiscal years we generated a majority of our revenue primarily through membership services from our streaming radio and music services and to a lesser extent, through advertising and licensing across our music platform. In the fourth quarter of our fiscal year ended March 31, 2020, we began generating ticketing, sponsorship and promotion-related revenue from live music events through our February 2020 acquisition of React Presents. In May 2020, we launched a new pay-per-view (“PPV”) offering enabling new forms of artist revenue including digital tickets, tipping, digital meet and greets, merchandise sales and sponsorship. In July 2020, we entered the podcasting business with the acquisition of PodcastOne and in December 2020, we entered the merchandising business with the acquisition of CPS. Through the operations of our DayOne Music Publishing, Drumify and Splitmind subsidiaries, we operate our music publishing and artist and brand development businesses.

For the three months ended December 31, 2024 and 2023, we reported revenue of $29.4 million and $31.2 million, respectively. We have one customer that accounted for more than 10% of its revenue during the three months ended December 31, 2024 and 2023. The customer is an original equipment manufacturer (the “OEM”) who provides premium Slacker service in all of their new vehicles. In the three months ended December 31, 2024 and 2023, total revenue from the OEM was $13.5 million and $15.5 million, respectively.

### Key Corporate Developments for the Quarter Ended December 31, 2024

In January 2025, total paid and monthly active ad-supported users exceeded 860k. Direct-billed Premium subscribers have increased by 78% and overall direct-billed subscribers have increased by 130% since October 2024, when we announced a new conversion program with Tesla.

On October 1, 2024, we announced an amended relationship with our largest OEM customer. Effective December 1, 2024, the OEM customer no longer subsidizes our products to some of its customers, however, we offer all OEM customer vehicles in North America the opportunity to convert to become direct subscribers of our LiveOne music app. The direct subscription to our LiveOne app allows such users for the first time to access their LiveOne music and LiveOne’s other service offerings directly across all of their devices. Our LiveOne 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 us monthly for qualifying grandfathered vehicles for the term of the OEM license agreement.

On January 15, 2025, PodcastOne entered into a three-year Enterprise Service and Advertising Agreement (the “Agreement”) with ART19 LLC (“ART19”), a subsidiary of Amazon.com, Inc. to move the existing network of PodcastOne programming to the ART19 hosting platform. The Agreement is expected to drive additional monetization opportunities across the PodcastOne’s vast library of popular podcasts. Pursuant to the Agreement, ART19 is required to pay the Company a minimum guarantee of $15.0 million plus over the term of the Agreement based on PodcastOne achieving certain minimum impressions amount, which guarantee is subject to adjustment as provided in the Agreement, including if PodcastOne achieves higher minimum impressions amounts. In addition, the Agreement provides for a revenue share split between the Company and ART19 based on gross sales revenue achieved by PodcastOne under the Agreement.

On January 28, 2025, we entered into the 2025 Business Loan Agreement with the Senior Lender to update certain terms of the ABL Credit Facility, including to reduce the principal amount outstanding under the Promissory Note to $3,750,000, reflecting our repayment of $3,250,000 of the principal amount of the Promissory Note as of such date, and to extend the maturity date of the Promissory Note to November 20, 2025.

### Basis of Presentation

The following discussion and analysis of our business and results of operations and our financial conditions is presented on a consolidated basis. In addition, a brief description is provided of significant transactions and events that have an impact on the comparability of the results being analyzed.

### Opportunities, Challenges and Risks

During our fiscal year ended March 31, 2024, we derived 57% of our revenue from paid memberships and the remainder from advertising, ticketing, sponsorship, merchandising and licensing. Our revenue for the nine months ended December 31, 2024, was comprised of 55% from paid members, 40% from advertising and 5% from merchandise.

We believe our operating results and performance are, and will continue to be, driven by various factors that affect the music industry. Our ability to attract, grow and retain users to our platform is highly sensitive to rapidly changing public music preferences and technology and is dependent on our ability to maintain the attractiveness of our platform, content and reputation to our customers. Beyond fiscal year 2024, the future revenue and operating growth across our music platform will rely heavily on our ability to grow our member base in a cost effective manner, continue to develop and deploy quality and innovative new music services, provide unique and attractive content to our customers, continue to grow the number of listeners on our platform and live music festivals we stream, grow and retain customers and secure sponsorships to facilitate future revenue growth from advertising and e-commerce across our platform.

As our music platform continues to evolve, we believe there are opportunities to expand our services by adding more content in a greater variety of formats such as podcasts and video podcasts, extending our distribution to include pay television, OTT and social channels, deploying new services for our members, artist merchandise and live music event ticket sales, and licensing user data across our platform. Our acquisitions of PodcastOne and CPS are reflective of our flywheel operating model. Conversely, the evolution of technology presents an inherent risk to our business. Today, we see large opportunities to expand our music services within North America and other parts of the world where we will need to make substantial investments to improve our current service offerings. As a result, and during the fiscal year ending March 31, 2025, we will continue to invest in product and engineering to further develop our future music apps and services, and we expect to continue making significant product development investments to our existing technology solutions over the next 12 to 24 months to address these opportunities.

On October 1, 2024, we announced an amended relationship with our largest OEM customer. Effective December 1, 2024, the OEM customer no longer subsidizes our products to some of its customers, however, we offer all OEM customer vehicles in North America the opportunity to convert to become direct subscribers of our LiveOne music app. The direct subscription to our LiveOne app allows such users for the first time to access their LiveOne music and LiveOne’s other service offerings directly across all of their devices. Our LiveOne 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. As a result, we believe that we now have a unique opportunity to convert as many of such OEM’s drivers as possible to a higher priced LiveOne subscription service creating a meaningful upside opportunity for us, and we are working in good faith with such OEM customer to convert as many of these drivers as possible. The OEM customer will continue to pay us monthly for qualifying grandfathered vehicles for the term of the OEM license agreement.

As our platform matures, we also expect our Contribution Margins\*, adjusted earnings before income tax, depreciation and amortization (“Adjusted EBITDA”)\* and Adjusted EBITDA Margins\* to improve in the near and long term, which are non-GAAP measures as defined in section following below titled, “Non-GAAP Measures”. Historically, our live events business has not generated enough direct revenue to cover the costs to produce such events, and as a result generated negative Contribution Margins\*, Adjusted EBITDA\*, Adjusted EBITDA Margins\* and operating losses. Historically, we produced and digitally distributed the live music performances of many of these large global music events to fans all around the world.

Growth in our music services is also dependent upon our ability to convert as many of the OEM drivers as possible to become direct subscribers of our LiveOne app, the number of customers that use and pay for our services, the attractiveness of our music platform to sponsors and advertisers and our ability to negotiate favorable economic terms with music labels, publishers, artists and/or festival owners, and the number of consumers who use our services. Growth in our margins is heavily dependent on our ability to convert as many of the OEM drivers as possible to become direct subscribers of our LiveOne app and to otherwise grow our membership base in a cost-efficient manner, coupled with the managing the costs associated with implementing and operating our services, including the costs of licensing music with the music labels, producing, streaming and distributing video and audio content and sourcing and distributing personalized products and gifts. Our ability to attract and retain new and existing customers will be highly dependent on our ability to convert as many of the OEM drivers as possible to become direct subscribers of our LiveOne app and to implement and continually improve upon our technology and services on a timely basis and continually improve our network and operations as technology changes and as we experience increased network capacity constraints as we continue to grow.

For the quarter ended December 31, 2024 and 2023, all material amounts of our revenue were derived from customers located in the United States and moreover, our largest OEM customer accounted for 46% and 49% of our consolidated revenue, respectively. This significant concentration of revenue from one customer poses risks to our operating results, and any change in the means this customer utilizes our services beyond December 31, 2024 could cause our revenue to fluctuate significantly.

In the long term, we plan to expand our business internationally in places such as Europe, Asia Pacific and Latin America, and as a result will continue to incur significant incremental upfront expenses associated with these growth opportunities.

### Consolidated Results of Operations

### Three Months Ended December 31, 2024, as compared to Three Months Ended December 31, 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 December 31, 2024 | 2023 |
| --- | ---: | ---: |
| **Revenue:** | $29,445 | $31,245 |
| **Operating expenses:** |  |  |
| Cost of sales | 22,292 | 23,267 |
| Sales and marketing | 1,763 | 1,514 |
| Product development | 1,115 | 694 |
| General and administrative | 5,241 | 5,880 |
| Impairment of intangibles | 3,807 | 115 |
| Amortization of intangible assets | 340 | 528 |
| Total operating expenses | 34,558 | 31,998 |
| **Income (loss) from operations** | (5,113) | (753) |
| **Other income (expense):** |  |  |
| Interest expense, net | (544) | (1,279) |
| Other expense | 34 | (207) |
| Total other income (expense), net | (510) | (1,486) |
| **(Loss) income before income taxes** | (5,623) | (2,239) |
| Provision for (benefit from) income taxes | 15 | (15) |
| **Net loss** | (5,638) | (2,224) |
| Net loss attributable to non-controlling interest | (405) | (650) |
| Net loss attributed to LiveOne | $(5,233) | $(1,574) |
| **Net loss per share - basic and diluted** | $(0.06) | $(0.02) |
| **Weighted average common shares – basic and diluted** | 95,501,753 | 87,882,364 |

The following table sets forth the depreciation expense included in the above line items (in thousands):

| Depreciation expense | Three Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Cost of sales | $39 | $37 | 5% |
| Sales and marketing | 64 | 58 | 10% |
| Product development | 464 | 460 | 1% |
| General and administrative | 243 | 284 | -14% |
| Total depreciation expense | $810 | $839 | -3% |

5

The following table sets forth the stock-based compensation expense included in the above line items (in thousands):

| Stock-based compensation expense | Three Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Cost of sales | $269 | $289 | -7% |
| Sales and marketing | 99 | 583 | -83% |
| Product development | 16 | (238) | -107% |
| General and administrative | 991 | 1,621 | -39% |
| Total stock-based compensation expense | $1,375 | $2,255 | -39% |

The following table sets forth our results of operations, as a percentage of revenue, for the periods presented:

|  | Three Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: |
| Revenue | 100% | 100% |
| Operating expenses |  |  |
| Cost of sales | 76% | 74% |
| Sales and marketing | 6% | 5% |
| Product development | 4% | 2% |
| General and administrative | 18% | 19% |
| Impairment of intangibles | 13% | 0% |
| Amortization of intangible assets | 1% | 2% |
| Total operating expenses | 117% | 102% |
| (Loss) income from operations | -17% | -2% |
| Other income (expense), net | -2% | -5% |
| Income (loss) before income taxes | -19% | -7% |
| Income tax provision (benefit) | 0% | 0% |
| Net loss | -19% | -7% |
| Net loss attributable to non-controlling interest | -1% | -2% |
| Net loss attributed to LiveOne | -18% | -5% |

### Revenue

Revenue was as follows (in thousands):

|  | Three Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Membership services | $14,292 | $16,858 | -15% |
| Advertising | 12,851 | 10,592 | 21% |
| Merchandising | 2,302 | 3,795 | -39% |
| Total Revenue | $29,445 | $31,245 | -6% |

#### Membership Revenue

Membership revenue decreased $2.6 million, or 15%, to $14.3 million for the three months ended December 31, 2024, as compared to $16.9 million for the three months ended December 31, 2023. The decrease was primarily a result of the change in terms with our largest OEM customer. Beginning on December 1, 2024, we began converting customers directly to our LiveOne music app as our largest OEM customer no longer subsidized our product.

#### Advertising Revenue

Advertising revenue increased $2.3 million, or 21%, to $12.9 million for the three months ended December 31, 2024, as compared to $10.6 million for the three months ended December 31, 2023, which is primarily attributable to growth in our barter revenue year-over-year.

#### Merchandising

Merchandising revenue decreased $1.5 million, or 39%, to 2.3 million for the three months ended December 31, 2024, as compared to $3.8 million the three months ended December 31, 2023, which is due to a reduction in demand from both retail partners and our direct to consumer merchandising business.

### Cost of Sales

Cost of sales was as follows (in thousands):

|  | Three Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Membership | $8,244 | 11,300 | -27% |
| Advertising | 12,163 | 9,558 | 27% |
| Production and Ticketing | 90 | 171 | -47% |
| Merchandising | 1,796 | 2,238 | -20% |
| Total Cost of Sales | $22,293 | $23,267 | -4% |

#### Membership

Membership cost of sales decreased by $3.1 million, or 27%, to $8.2 million for the three months ended December 31, 2024, as compared to $11.3 million for the three months ended December 31, 2023. The decrease was in line with the lower membership revenues noted above.

#### Advertising

Advertising cost of sales increased by $2.6 million, or 27%, to $12.2 million for the three months ended December 31, 2024, as compared to $9.6 million for the three months ended December 31, 2023. The increase was primarily attributable to growth in our revenue share expense which is in line with increases noted above.

#### Production and Ticketing

Production cost of sales decreased by $0.1 million, or 47%, to $0.1 million for the three months ended December 31, 2024, as compared to $0.2 million for the three months ended December 31, 2023. The decrease can be attributed to the decrease in events year over year.

#### Merchandising

Merchandising cost of sales decreased by $0.4 million, or 20%, to $1.8 million for the three months ended December 31, 2024, as compared to $2.2 million for the three months ended December 31, 2023 due to the Company purchasing a higher amount of merchandise in the prior year for advertising.

### Other Operating Expenses

#### Other operating expenses were as follows (in thousands):

|  | Three Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Sales and marketing expenses | $1,763 | $1,514 | 16% |
| Product development | 1,115 | 694 | 61% |
| General and administrative | 5,241 | 5,880 | -11% |
| Impairment of intangible assets | 3,807 | 115 | 3210% |
| Amortization of intangible assets | 340 | 528 | -36% |
| Total Other Operating Expenses | $12,266 | $8,731 | 40% |

#### Sales and Marketing Expenses

Sales and Marketing expenses increased by $0.3 million, or 16%, to $1.8 million for the three months ended December 31, 2024, as compared to $1.5 million for the three months ended December 31, 2023, primarily driven by employee costs.

#### Product Development

Product development expenses increased by $0.4 million, or 61%, to $1.1 million for the three months ended December 31, 2024, as compared to $0.7 million for the three months ended December 31, 2023, which was driven by an increase in employee costs.

#### General and Administrative

General and administrative expenses decreased by $0.6 million, or 11%, to $5.2 million for the three months ended December 31, 2024, as compared to $5.9 million for the three months ended December 31, 2023, largely due to a decrease in share-based compensation of $0.6 million.

#### Impairment of Intangible Assets

Impairment of intangible assets increased $3.7 million to $3.8 million for the three months ended December 31, 2024, as compared to $0.2 million for the three months ended December 31, 2023, which is attributed to the impairment of intangible assets of Slacker (see Note 5 – Goodwill and Intangible Assets to our condensed consolidated financial statements included elsewhere in this Quarterly Report).

A*mortization of Intangible Assets*

Amortization of intangible assets decreased by $0.2 million, or 36%, to $0.3 million for the three months ended December 31, 2024, as compared to $0.5 million for the three months ended December 31, 2023. The decrease can be attributed to a portion of the intangible assets reaching their full lives of amortization.

### Total Other Income (Expense)

#### Total other income (expense) was as follows (in thousands):

|  | Three Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Total other income (expense), net | $(510) | $(1,486) | -66% |

Total other expense decreased by $1.0 million, or 66%, to $0.5 million of expense for the three months ended December 31, 2024, as compared to $1.5 million of expense for the three months ended December 31, 2023. The decrease is primarily driven by a reduction of interest expense due to the pay down of the line of credit.

### Net Income (Loss) Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests for the three months ended December 31, 2024 was $0.4 million compared to $0.7 million for the three months ended December 31, 2023, which resulted from the Spin-Out of PodcastOne and DayOne Publishing.

### Business Segment Results

### Three Months Ended December 31, 2024, as compared to Three Months Ended December 31, 2023

### Audio Group - PodcastOne Operations

Our Audio Group Operations, which include our PodcastOne operating results were, and discussions of significant variances are, as follows (in thousands):

|  | Three Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Revenue | $12,710 | $10,442 | 22% |
| Cost of Sales | 11,983 | 9,387 | 28% |
| Sales & Marketing, Product Development and G&A | 1,840 | 3,385 | -46% |
| Intangible Asset Amortization | 125 | 307 | -59% |
| Operating Income (Loss) | $(1,238) | $(2,637) | -53% |
| Operating Margin | -10% | -25% | -61% |
| Adjusted EBITDA\* | $(670) | $(356) | 88% |
| Adjusted EBITDA Margin\* | -5% | -3% | 55% |

\* See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin.

#### Revenue

Revenue increased $2.2 million, or 22%, during the three months ended December 31, 2024, primarily due to increased advertising.

#### Operating Income (Loss)

Operating loss decreased by $1.4 million or 53%, for the three months ended December 31, 2024, as the increase in revenue was higher than the increase in operating expenses due to growing the business.

#### Adjusted EBITDA

Adjusted EBITDA\* decreased by $0.3 million, or 88%, to $(0.7) million for the three months ended December 31, 2024, as compared to $(0.4) million for the three months ended December 31, 2023. This was largely due to an increase in general and administrative cost associated with operating as a public company.

### Audio Group - Slacker Operations

Our Audio Group Operations, which include our Slacker operating results were, and discussions of significant variances are, as follows (in thousands):

|  | Three Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Revenue | $14,355 | $16,838 | -15% |
| Cost of Sales | 8,419 | 11,124 | -24% |
| Sales & Marketing, Product Development and G&A | 2,492 | 1,498 | 66% |
| Intangible Asset Amortization | 3,896 | 89 | 4278% |
| Operating Income (Loss) | $(452) | $4,127 | -111% |
| Operating Margin | -3% | 25% | -113% |
| Adjusted EBITDA\* | $4,272 | $6,786 | -37% |
| Adjusted EBITDA Margin\* | 30% | 40% | -26% |

\* See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin.

#### Revenue

Revenue decreased $2.5 million, or 15%, during the three months ended December 31, 2024, primarily due to a change in revenue model with our largest OEM customer.

#### Operating Income

Operating income decreased by $4.6 million, or 111%, for the three months ended December 31, 2024, driven by the decrease in revenue along with an impairment of $3.8 million in the period.

#### Adjusted EBITDA

Adjusted EBITDA\* decreased by $2.5 million, or 37%, to $4.3 million for the three months ended December 31, 2024, as compared to $6.8 million for the three months ended December 31, 2023. This was largely due to lower revenue achieved for the three months ended December 31, 2024, which resulted in a lower Contribution Margin in the current period.

### Media Group Operations

Our Media Group Operations which consist of all of our other operating subsidiaries outside of PodcastOne and Slacker operating results were, and discussions of significant variances are, as follows (in thousands):

|  | Three Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Revenue | $2,381 | $3,965 | -40% |
| Cost of Sales | 1,890 | 2,756 | -31% |
| Sales & Marketing, Product Development and G&A | 1,241 | 2,075 | -40% |
| Intangible Asset Amortization | 126 | 247 | -49% |
| Operating Income (Loss) | $(876) | $(1,113) | -21% |
| Operating Margin | -37% | -28% | 31% |
| Adjusted EBITDA\* | $(526) | $(2,366) | -78% |
| Adjusted EBITDA Margin\* | -22% | -60% | -63% |

\* See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin.

#### Revenue

Revenue decreased $1.6 million, or 40%, to $2.4 million during the three months ended December 31, 2024, as compared to $4.0 million for the three months December 31, 2023, primarily due to decrease in merchandising revenue due to a reduction in demand from both retail partners and our direct to consumer business.

#### Operating Income (Loss)

Operating loss decreased by $0.2 million, or 21%, to $0.9 million for the three months ended December 31, 2024 from $1.1 million for the three months ended December 31, 2023, as a result of an increase in Contribution Margin coupled with the decrease in expenses due to a decrease in general and administrative expenses.

#### Adjusted EBITDA

Adjusted EBITDA\* loss decreased by $1.9 million, or 78%, to a $(0.5) million loss for the three months ended December 31, 2024, as compared to a $(2.4) million loss for the three months December 31, 2023. This was largely due to the decrease in revenue compared to the prior year.

### Corporate expense

Our Corporate operating results and discussions of significant variances are, as follows (in thousands):

|  | Three months ended December 31, 2024 | 2023 | % Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: |
| Sales & Marketing, Product Development, and G&A | $2,546 | $1,130 | 125% |
| Operating Loss | $(2,546) | $(1,130) | 125% |
| Operating Margin | N/A | N/A | -% |
| Adjusted EBITDA\* | $(1,535) | $(751) | 104% |

\* See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA.

#### Operating Loss

Operating loss increased by $1.4 million, or 125%, to $2.5 million for the three months ended December 31, 2024, as compared to $1.1 million for the three months ended December 31, 2023, largely due to an increase in employee costs.

#### Adjusted EBITDA

Corporate Adjusted EBITDA\* loss decreased $0.7 million, or 104%, to $(1.5) million for the three months ended December 31, 2024 as compared to $(0.8) million for the three months ended December 31, 2023. The decrease was largely due to the increase in costs noted above.

### Nine Months Ended December 31, 2024, as compared to Nine Months Ended December 31, 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):

|  | Nine Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: |
| **Revenue:** | $95,117 | $87,541 |
| **Operating expenses:** |  |  |
| Cost of sales | 71,897 | 63,015 |
| Sales and marketing | 4,685 | 5,671 |
| Product development | 3,346 | 3,379 |
| General and administrative | 17,031 | 17,641 |
| Impairment of intangible assets | 3,983 | 115 |
| Amortization of intangible assets | 1,474 | 1,227 |
| Total operating expenses | 102,416 | 91,048 |
| **Loss from operations** | (7,299) | (3,507) |
| **Other income (expense):** |  |  |
| Interest expense, net | (2,211) | (3,477) |
| Other income (expense) | 52 | (3,639) |
| Total other expense, net | (2,159) | (7,116) |
| **Loss before provision for income taxes** | (9,458) | (10,623) |
| Provision for income taxes | 55 | 43 |
| **Net loss** | (9,513) | (10,666) |
| Net loss attributable to non-controlling interest | (1,251) | (997) |
| **Net loss attributed to LiveOne** | $(8,262) | $(9,669) |
| **Net loss per share – basic and diluted** | $(0.10) | $(0.13) |
| **Weighted average common shares – basic and diluted** | 94,858,531 | 87,477,623 |

The following table sets forth the depreciation expense included in the above line items (in thousands):

| Depreciation expense | Nine Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Cost of sales | $114 | $108 | 6% |
| Sales and marketing | 199 | 145 | 37% |
| Product development | 1,433 | 1,327 | 8% |
| General and administrative | 746 | 859 | -13% |
| Total depreciation expense | $2,492 | $2,439 | 2% |

12

The following table sets forth the stock-based compensation expense included in the above line items (in thousands):

| Stock-based compensation expense | Nine Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Cost of sales | $919 | $1,229 | -25% |
| Sales and marketing | 161 | 803 | -80% |
| Product development | 277 | 409 | -32% |
| General and administrative | 4,009 | 3,408 | 18% |
| Total stock-based compensation expense | $5,366 | $5,849 | -8% |

The following table sets forth our results of operations, as a percentage of revenue, for the periods presented:

|  | Nine Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: |
| Revenue | 100% | 100% |
| Operating expenses |  |  |
| Cost of sales | 76% | 72% |
| Sales and marketing | 5% | 6% |
| Product development | 4% | 4% |
| General and administrative | 18% | 20% |
| Impairment of intangible assets | 4% | 0% |
| Amortization of intangible assets | 2% | 1% |
| Total operating expenses | 108% | 104% |
| Loss from operations | -8% | -4% |
| Other income (expense) | 0% | -4% |
| Loss before income taxes | -10% | -12% |
| Income tax provision | 0% | 0% |
| Net loss | -10% | -12% |
| Net loss attributable to non-controlling interest | -1% | -1% |
| Net loss attributed to LiveOne | -9% | -11% |

### Revenue

Revenue was as follows (in thousands):

|  | Nine Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Membership services | $52,618 | $48,498 | 8% |
| Advertising | 38,234 | 32,108 | 19% |
| Merchandising | 4,265 | 6,794 | -37% |
| Sponsorship and licensing | - | 126 | -100% |
| Ticket/Event | - | 15 | -100% |
| Total Revenue | $95,117 | $87,541 | 9% |

#### Membership Revenue

Membership revenue increased $4.8 million, or 8%, to $52.6 million for the nine months ended December 31, 2024, as compared to $48.5 million for the months ended December 31, 2023. The increase was primarily as a result of member growth with our largest OEM customer.

#### Advertising Revenue

Advertising revenue increased $6.1 million, or 19%, to $38.2 million for the nine months ended December 31, 2024, as compared to $32.1 million for the nine months ended December 31, 2023, which is primarily attributable to growth in revenue at PodcastOne year-over-year.

#### Merchandising

Merchandising revenue decreased $2.5 million, or 37%, to $4.3 million for the nine months ended December 31, 2024, as compared to $6.8 million the nine months ended December 31, 2023, which is due to a reduction in demand from both retail partners and our direct to consumer merchandising business.

#### Sponsorship and Licensing

Sponsorship and licensing revenue decreased by $0.1 million, or 100%, to none for the nine months ended December 31, 2024, as compared to $0.1 million for the nine months ended December 31, 2023. The decrease was primarily due to no significant events occurring for the nine months ended December 31, 2024.

#### Ticket/Event

Ticket/Event revenue decreased by $15,000, or 100%, to none for the nine months ended December 31, 2024, as compared to $15,000 for the nine months ended December 31, 2023, driven by the lack of any in-person events during the current year period.

### Cost of Sales

Cost of sales was as follows (in thousands):

|  | Nine Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Membership | $32,806 | $31,382 | 5% |
| Advertising | 35,377 | 27,035 | 31% |
| Production and Ticketing | 202 | (311) | -165% |
| Merchandising | 3,512 | 4,909 | -28% |
| Total Cost of Sales | $71,897 | $63,015 | 14% |

#### Membership

Membership cost of sales increased by $1.4 million, or 5%, to $32.8 million for the nine months ended December 31, 2024, as compared to $31.4 million for the nine months ended December 31, 2023. The increase was in line with the higher membership revenues noted above.

#### Advertising

Advertising cost of sales increased by $8.3 million, or 31%, to $35.4 million for the nine months ended December 31, 2024, as compared to $27.0 million for the nine months ended December 31, 2023. The increase was primarily attributable to growth in revenue share expense year-over-year.

#### Production and Ticketing

Production and ticketing cost of sales increased by $0.5 million, or 165%, to $0.2 million for the nine months ended December 31, 2024, as compared to a credit of $0.3 million for the nine months ended December 31, 2023. The Company started to reduce the number of events held beginning with the nine months ended December 31, 2023. In addition, the Company negotiated reduction on past payables owed with vendors in the prior year.

#### Merchandising

Merchandising cost of sales decreased by $1.4 million, or 28%, to $3.5 million for the nine months ended December 31, 2024, as compared to $4.9 million credit for the nine months ended December 31, 2023 due to lower merchandising revenues noted above and a write off of merchandise during the nine months ended December 31, 2023.

### Other Operating Expenses

#### Other operating expenses were as follows (in thousands):

|  | Nine Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Sales and marketing expenses | $4,685 | $5,671 | -17% |
| Product development | 3,346 | 3,379 | -1% |
| General and administrative | 17,031 | 17,641 | -3% |
| Impairment of intangible assets | 3,983 | 115 | 3363% |
| Amortization of intangible assets | 1,474 | 1,227 | 20% |
| Total Other Operating Expenses | $30,519 | $28,033 | 9% |

#### Sales and Marketing Expenses

Sales and Marketing expenses decreased by $1.0 million, or 17%, to $4.7 million for the nine months ended December 31, 2024, as compared to $5.7 million for the nine months ended December 31, 2023, primarily driven by reduced employee costs.

#### Product Development

Product development expenses decreased by $0.1 million, or 1%, to $3.3 million for the nine months ended December 31, 2024, as compared to $3.4 million for the nine months ended December 31, 2023, which was driven by a decrease in employee costs as compared to the prior year.

#### General and Administrative

General and administrative expenses increased by $0.3 million, or 20%, to $1.5 million for the nine months ended December 31, 2024, as compared to $1.2 million for the nine months ended December 31, 2023, largely due to an increase in share-based compensation of $0.6 million offset by a $0.3 million decrease in cost attributed to accounting, licenses and payroll.

#### Impairment of Intangible Assets

Impairment of intangible assets increased $4.0 million, to $3.6 million for the nine months ended December 31, 2024, as compared to $0.1 million for the nine months ended December 31, 2023, which is attributed to the impairment of intangible assets of Slacker in the period, see (Note 5 – Goodwill and Intangible Assets to our condensed consolidated financial statements included elsewhere in this Quarterly Report).

A*mortization of Intangible Assets*

Amortization of intangible assets increased by $0.3 million, or 20%, to $1.5 million for the nine months ended December 31, 2024, as compared to $0.2 million for the nine months ended December 31, 2023. The increase can be attributed to the addition of intangibles attributed to acquired podcast at PodcastOne.

### Total Other Income (Expense)

#### Total other income (expense) was as follows (in thousands):

|  | Nine Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Total other expense, net | $(2,159) | $(7,116) | -70% |

Total other income (expense) decreased by $5.6 million, or 70%, to $2.2 million of expense for the nine months ended December 31, 2024, as compared to $7.1 million of expense for the nine months ended December 31, 2023. The increase is primarily driven by a reduction of the gain from changes in derivative liabilities of $4.1 million in the prior year and a decrease in interest expense of $1.9 million due to the conversion of the Bridge Loan.

### Net Income (Loss) Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests for the nine months ended December 31, 2024 was $1.8 million, compared to $1.0 million for the nine months ended December 31, 2023, which resulted from the Spin-Out of PodcastOne and DayOne Publishing.

### Business Segment Results

### Nine Months Ended December 31, 2024, as compared to Nine Months Ended December 31, 2023

### Audio Group - PodcastOne Operations

Our Audio Group Operations, which include our PodcastOne operating results were, and discussions of significant variances are, as follows (in thousands):

|  | Nine Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Revenue | $38,022 | $31,595 | 20% |
| Cost of Sales | 34,834 | 26,666 | 31% |
| Sales & Marketing, Product Development and G&A | 6,099 | 8,239 | -26% |
| Intangible Asset Amortization | 1,006 | 523 | 92% |
| Operating Loss | $(3,917) | $(3,833) | 2% |
| Operating Margin | -10% | -12% | -15% |
| Adjusted EBITDA\* | $(1,389) | $405 | -443% |
| Adjusted EBITDA Margin\* | -4% | 1% | -385% |

\* See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin.

#### Revenue

Revenue increased $6.4 million, or 20%, during the nine months ended December 31, 2024, primarily due to increased advertising.

#### Operating Income (Loss)

Operating loss increased by $0.1 million or 2%, for the nine months ended December 31, 2024, as the increase in revenue was lower than the increase in operating expenses due to growing the business.

#### Adjusted EBITDA

Adjusted EBITDA\* decreased by $1.8 million, or 443%, to $(1.4) million for the nine months ended December 31, 2024, as compared to $0.4 million for the nine months ended December 31, 2023. This was largely due to an increase in general and administrative cost associated with operating as a public company.

### Audio Group - Slacker Operations

Our Audio Group Operations, which include our Slacker operating results were, and discussions of significant variances are, as follows (in thousands):

|  | Nine Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Revenue | $52,617 | $48,331 | 9% |
| Cost of Sales | 33,343 | 31,751 | 5% |
| Sales & Marketing, Product Development and G&A | 6,799 | 6,679 | 2% |
| Intangible Asset Amortization | 4,081 | 268 | 1423% |
| Operating Income | $8,394 | $9,633 | -13% |
| Operating Margin | 16% | 20% | -20% |
| Adjusted EBITDA\* | $15,504 | $12,551 | 24% |
| Adjusted EBITDA Margin\* | 29% | 26% | 13% |

\* See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin.

#### Revenue

Revenue increased $4.3 million, or 9%, during the nine months ended December 31, 2024, primarily due to increased membership revenue as a result of increased membership growth with our largest OEM customer.

#### Operating Income

Operating income decreased by $1.2 million or 13%, for the nine months ended December 31, 2024, as the increase in revenue of $4.3 million was lower than the increase in operating expenses of $5.5 million primarily due to the $3.8 million impairment charge.

#### Adjusted EBITDA

Adjusted EBITDA\* increased by $3.1 million, or 24%, to $15.5 million for the nine months ended December 31, 2024, as compared to $12.6 million for the nine months ended December 31, 2023. This was largely due to additional Contribution Margin in the current period.

### Media Group Operations

Our Media Group Operations which consist of all of our other operating subsidiaries outside of PodcastOne and Slacker operating results were, and discussions of significant variances are, as follows (in thousands):

|  | Nine Months Ended December 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Revenue | $4,478 | $7,615 | -41% |
| Cost of Sales | 3,720 | 4,598 | -19% |
| Sales & Marketing, Product Development and G&A | 4,364 | 5,572 | -22% |
| Intangible Asset Amortization | 370 | 551 | -33% |
| Operating Loss | $(3,976) | $(3,106) | 28% |
| Operating Margin | -89% | -41% | 118% |
| Adjusted EBITDA\* | $(1,993) | $(836) | 138% |
| Adjusted EBITDA Margin\* | -45% | -11% | 305% |

\* See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin.

#### Revenue

Revenue decreased $3.1 million, or 41%, to $4.5 million during the nine months ended December 31, 2024, as compared to $7.6 million for the nine months December 31, 2023, primarily due to decrease in merchandising revenue due to a reduction in demand from both retail partners and our direct to consumer business.

#### Operating Income (Loss)

Operating loss increased by $0.9 million, or 28%, to $4.0 million for the nine months ended December 31, 2024 from $3.1 million for the nine months ended December 31, 2023, as a result of a decrease in Contribution Margin coupled with the increase in expenses due to an increase in general and administrative expenses.

#### Adjusted EBITDA

Adjusted EBITDA\* loss increased by $1.1 million, or 138%, to a $(2.0) million loss for the nine months ended December 31, 2024, as compared to a $(0.8) million loss for the nine months December 31, 2023. This was largely due to the increase in operating loss compared to the prior year.

### Corporate expense

Our Corporate operating results and discussions of significant variances are, as follows (in thousands):

|  | Nine months ended December 31, 2024 | 2023 | % Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: |
| Sales & Marketing, Product Development, and G&A | $7,800 | $6,201 | 26% |
| Operating Loss | $(7,800) | $(6,201) | 26% |
| Operating Margin | N/A | N/A | -% |
| Adjusted EBITDA\* | $(4,794) | $(3,928) | 22% |

\* See “—Non-GAAP Measures” below for the definition and reconciliation of Adjusted EBITDA.

#### Operating Loss

Operating loss increased by $1.6 million, or 26%, to $7.8 million for the nine months ended December 31, 2024, as compared to $6.2 million for the nine months ended December 31, 2023, largely due to an increase in employee costs, legal and accounting costs.

#### Adjusted EBITDA

Corporate Adjusted EBITDA\* loss increased $0.9 million, or 22%, to $(4.8) million for the nine months ended December 31, 2024 as compared to $(3.9) million for the year ended December 31, 2023. The increase was largely due to the increase in costs noted above.

### Non-GAAP Measures

#### 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 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 nine months ended December 31, 2024 and 2023 (in thousands):

| Three Months Ended December 31, 2024 | Net Income (Loss) | Depreciation and Amortization | Stock-Based Compensation | Non- Recurring Acquisition and Realignment Costs | Other (Income) Expense | (Benefit) Provision for Taxes | Adjusted EBITDA |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Operations – PodcastOne | $(1,583) | $188 | $718 | $6 | $- | $1 | $(670) |
| Operations – Slacker | (862) | 4,621 | 228 | 23 | 262 | - | 4,272 |
| Operations – Other | (995) | 197 | 222 | 21 | 29 | - | (526) |
| Corporate | (2,198) | 1 | 207 | 222 | 219 | 14 | (1,535) |
| Total | $(5,638) | $5,007 | $1,375 | $272 | $510 | $15 | $1,541 |
| **Three Months Ended December 31, 2023** |  |  |  |  |  |  |  |
| Operations – PodcastOne | $(2,600) | $372 | $1,786 | $86 | $- | $- | $(356) |
| Operations – Slacker | 5,127 | 749 | (178) | 116 | 972 | - | 6,786 |
| Operations – Other | (3,148) | 361 | 266 | 129 | 26 | - | (2,366) |
| Corporate | (1,603) | 3 | 381 | (5) | 488 | (15) | (751) |
| Total | $(2,224) | $1,485 | $2,255 | $326 | $1,486 | $(15) | $3,313 |

| Nine Months Ended December 31, 2024 | Net Income (Loss) | Depreciation and Amortization | Stock-Based Compensation | Non- Recurring Acquisition and Realignment Costs | Other (Income) Expense | (Benefit) Provision for Taxes | Adjusted EBITDA |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Operations – PodcastOne | $(4,618) | $1,201 | $1,972 | $44 | $- | $12 | $(1,389) |
| Operations – Slacker | 6,356 | 6,114 | 1,260 | 199 | 1,575 | - | 15,504 |
| Operations - Other | (4,072) | 628 | 739 | 622 | 90 | - | (1,993) |
| Corporate | (7,179) | 5 | 1,395 | 448 | 494 | 43 | (4,794) |
| Total | $(9,513) | $7,948 | $5,366 | $1,313 | $2,159 | $55 | $7,328 |
| **Nine Months Ended December 31, 2023** |  |  |  |  |  |  |  |
| Operations – PodcastOne | $(13,683) | $710 | $2,724 | $804 | $9,850 | $- | $405 |
| Operations – Slacker | 7,377 | 2,156 | 1,036 | 989 | 993 | - | 12,551 |
| Operations - Other | 136 | 789 | 478 | 394 | (2,633) | - | (836) |
| Corporate | (4,496) | 13 | 1,611 | (5) | (1,094) | 43 | (3,928) |
| Total | $(10,666) | $3,668 | $5,849 | $2,182 | $7,116 | $43 | $8,192 |

19

The following table sets forth the reconciliation of Contribution Margin to Revenue, the most comparable GAAP financial measure (in thousands):

|  | Three Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: |
| **Revenue:** | $29,445 | $31,245 |
| Less: |  |  |
| Cost of sales | (22,292) | (23,267) |
| Amortization of developed technology | (787) | (775) |
| **Gross Profit** | **6,366** | **7,203** |
| **Add back amortization of developed technology:** | 787 | 775 |
| **Contribution Margin** | $7,153 | $7,978 |

|  | Nine Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: |
| **Revenue:** | $95,117 | $87,541 |
| Less: |  |  |
| Cost of sales | (71,897) | (63,015) |
| Amortization of developed technology | (2,253) | (2,248) |
| **Gross Profit** | **20,967** | **22,278** |
| **Add back amortization of developed technology:** | 2,253 | 2,248 |
| **Contribution Margin** | $23,220 | $24,526 |

### Liquidity and Capital Resources

### Current Financial Condition

As of December 31, 2024, our principal sources of liquidity were our cash and cash equivalents, including restricted cash balances in the amount of $11.0 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, incurrence of debt, the issuance of convertible notes and public offerings of our common shares. As of December 31, 2024, we have a senior secured line of credit of $4.3 million, the Capchase Loan (as defined below) of $0.8 million and an SBA loan balance of $0.2 million.

As reflected in our condensed consolidated financial statements included elsewhere in this Quarterly Report, we have a history of losses and incurred a net loss of $9.5 million for the nine months ended December 31, 2024, and cash provided by operating activities of $10.6 million for the nine months ended December 31, 2024 and had a working capital deficiency of $18.1 million as of December 31, 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. Our condensed 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.

On October 1, 2024, we announced an amended relationship with our largest OEM customer. Effective December 1, 2024, the OEM customer no longer subsidizes our products to some of its customers, however, we offer all OEM customer vehicles in North America the opportunity to convert to become direct subscribers of our LiveOne music app. The direct subscription to our LiveOne app allows such users for the first time to access their LiveOne music and LiveOne’s other service offerings directly across all of their devices. Our LiveOne 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 us monthly for grandfathered vehicles for the term of the OEM license agreement. Accordingly, the change in our relationship with the OEM customer in October 2024 is likely to cause our liquidity and cash flows to fluctuate significantly beyond December 31, 2024. Our liquidity will depend upon our ability to convert as many of the OEM drivers as possible to become direct subscribers of our LiveOne app and the OEM customer continuing to pay for any grandfather users, as well as our ability to enter into new B2B agreements to provide our services that could materially contribute to our liquidity and cash flows. In addition, our liquidity will depend on our ability to negotiate with our music labels, publishers and other partners to achieve flexibility in the terms of our license agreements to match our OEM driver conversions. Furthermore, our liquidity will be dependent on our ability to extend and/or refinance the terms of our senior secured line of credit and/or our ability to pay any amounts that we have agreed to pay under the SX Settlement Agreement.

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 of Liquidity

On June 2, 2021, we entered into a Business Loan Agreement (the "Original Business Loan Agreement") with East West Bank (the “Senior Lender”), which provided for a revolving credit facility collateralized by all of the assets of our Company and our subsidiaries. In connection with the Original Business Loan Agreement, we issued a promissory note, dated as of June 2, 2021, to the Senior Lender in the principal amount of $7,000,000 (the “Promissory Note”) and established the revolving line of credit in the amount of $7.0 million (the “Revolving Credit Facility”), maturing on June 2, 2023. In July 2022, we extended the maturity date of our revolving credit facility to June 2024 and its variable interest rate was increased to 2.5%. On September 8, 2023 and effective as of August 22, 2023, we entered into a new Business Loan Agreement (the “2023 Business Loan Agreement”) with the Senior Lender, to convert our revolving credit facility with the Senior Lender into an assets backed loan credit facility with the Senior Lender, which continued to be collateralized by a first lien on all of the assets of our Company and our subsidiaries (the “ABL Credit Facility”). The 2023 Business Loan Agreement provided us with borrowing capacity of up to the Borrowing Base (as defined in the 2023 Business Loan Agreement). On January 28, 2025, we entered into the 2025 Business Loan Agreement with the Senior Lender to update certain terms of the ABL Credit Facility, including to reduce the principal amount outstanding under the Promissory Note to $3,750,000, reflecting the Company’s repayment of $3,250,000 of the principal amount of the Promissory Note as of such date, and to extend the maturity date of the Promissory Note to November 20, 2025. Pursuant to the 2025 Change in Terms Agreement entered into in connection with the 2025 Business Loan Agreement, we agreed to repay the remaining outstanding principal amount of the Promissory Note in 9 equal monthly payments of $400,000 each beginning February 20, 2025, and the final 10th payment of $151,291.67 on November 20, 2025. Pursuant to the 2025 Business Loan Agreement, the requirement that we and our related entities shall at all times maintain a certain minimum cash deposit with the Senior Lender is maintained at $5,000,000. The ABL Credit Facility continues to be collateralized by a first lien on all of the assets of the Company and its subsidiaries.

In July 2022, PodcastOne completed a private placement offering (the “PC1 Bridge Loan”) of its unsecured convertible notes with an original issue discount of 10% (the “OID”) in the aggregate principal amount of $8.8 million (the “PC1 Notes”) to certain accredited investors and institutional investors (collectively, the “Purchasers”), for gross proceeds of $8,035,000 pursuant to the Subscription Agreements entered into with the Purchasers. In connection with the sale of the PC1 Notes, the Purchasers received warrants (the “PC1 Warrants”) to purchase a number of shares of PodcastOne’s common stock, par value $0.00001 per share (See Note 8 – PodcastOne Bridge Loan). As part of the PC1 Bridge Loan, we purchased $3,000,000 (excluding the OID) worth of PC1 Notes. As of December 31, 2024 all of the PC1 Bridge Loan has been converted into common stock of PodcastOne.

In August 2023, we entered into a Loan and Security Agreement with Capchase Inc. (“Capchase”) pursuant to which we borrowed $1.7 million to further develop and acquire certain podcasts acquired by PodcastOne and for general working capital (the "Capchase Loan"). The Capchase Loan is subordinated to the ABL Credit Facility and bears an interest rate of 9%, which is included in the monthly amortization payments of approximately $73,100, with the final amortization payment due on February 4, 2026. (See Note 7 – Notes Payable).

Our cash flows from operating activities are significantly affected by our cash-based investments in our operations, including acquiring live music events and festivals rights, our working capital, and corporate infrastructure to support our ability to generate revenue and conduct operations through cost of services, product development, sales and marketing and general and administrative activities. Cash used in investing activities has historically been, and is expected to be, impacted significantly by our investments in business combinations, our platform, and our infrastructure and equipment for our business offerings, and sale of our investments. We expect to make additional strategic acquisitions to further grow our business, which may require significant investments, capital raising and/or acquisition of additional debt in the near and long term. Over the next twelve to eighteen months, our net use of our working capital could be substantially higher or lower depending on the number and timing of new live festivals and paid members that we add to our businesses.

Subject to applicable limitations in the instruments governing our outstanding indebtedness, we may from time to time repurchase our debt, including the unsecured convertible notes, in the open market, through tender offers, through exchanges for debt or equity securities, in privately negotiated transactions or otherwise.

In the future, we may utilize additional commercial financings, bonds, notes, debentures, lines of credit and term loans with a syndicate of commercial banks or other bank syndicates and/or issue equity securities (publicly or privately) for general corporate purposes, including acquisitions and investing in our intangible assets, music equipment, platform and technologies. We may also use our current cash and cash equivalents to repurchase some or all of our unsecured convertible notes, and pay down our debt, in part or in full, subject to repayment limitation set forth in the credit agreement. Management plans to fund its operations over the next twelve months through the combination of improved operating results, spending rationalization, and the ability to access sources of capital such as through the issuance of equity and/or debt securities. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. We filed a universal shelf Registration Statement on Form S-3 (the “Shelf S-3”) with the SEC, which was declared effective by the SEC on February 17, 2022. Under the Shelf S-3, we have the ability to raise up to $150.0 million in cash from the sale of our equity, debt and/or other financial instruments. The Shelf S-3 will expire on February 17, 2025, subject to an extended period during which we may continue utilize the Shelf S-3 as permitted by applicable SEC rules. We filed a new universal shelf Registration Statement on Form S-3 (the “New Shelf S-3”) with the SEC on February 13, 2025, which has not yet been declared effective by the SEC as of the date of this Quarterly Report. Under the New Shelf S-3, we will have the ability to raise up to $150.0 million in cash from the sale of our equity, debt and/or other financial instruments. In May 2024, we entered into a Sales Agreement with Roth Capital Partners, LLC ("Roth"), pursuant to which we may, while the Shelf S-3 continues to be effective (or during the Extended Period) or if the New Shelf S-3 is declared effective by the SEC, offer and sell shares of our common stock having an aggregate offering price of up to $25 million from time to time through Roth acting as our sales agent. As of the filing of this Quarterly Report, we have not sold any shares under such agreement.

### Sources and Uses of Cash

The following table provides information regarding our cash flows for the nine months ended December 31, 2024 and 2023 (in thousands):

|  | Nine Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $10,638 | $3,804 |
| Net cash used in investing activities | (2,128) | (2,780) |
| Net cash used in financing activities | (4,768) | (3,220) |
| Net change in cash, cash equivalents and restricted cash | $3,742 | $(2,196) |

### Cash Flows Provided by Operating Activities

#### For the nine months ended December 31, 2024

Net cash provided by operating activities of $10.6 million primarily resulted from our net loss during the period of $9.5 million, which included non-cash charges of $11.9 million largely comprised of depreciation and amortization, stock-based compensation, change in fair value of derivatives and impairment of intangibles. The remainder of our sources of cash used in operating activities of $8.2 million was from changes in our working capital, primarily from timing of accounts receivable, accounts payable and accrued liabilities, accrued royalties, and deferred revenue.

#### For the nine months ended December 31, 2023

Net cash provided by operating activities of $3.8 million primarily resulted from our net loss during the period of $10.7 million, which included non-cash charges of $15.5 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 $1.0 million was from changes in our working capital, primarily from timing of accounts receivable, accounts payable and accrued liabilities, accrued royalties, and deferred revenue.

### Cash Flows Used In Investing Activities

#### For the nine months ended December 31, 2024

Net cash used in investing activities of $2.1 million was primarily due to the purchase of equipment during the nine months ended December 31, 2024.

#### For the nine months ended December 31, 2023

Net cash used in investing activities of $2.8 million was due to the purchase of equipment of $2.1 million and the purchase of intangibles of $0.7 million during the nine months ended December 31, 2023.

### Cash Flows Provided by Financing Activities

#### For the nine months ended December 31, 2024

Net cash used in financing activities of $4.8 million was due to the repayment on our line of credit of $2.8 million, payment of dividends of $0.5 million, repayment of our Capchase Loan of $0.5 million and repurchase of common stock under the Company’s share repurchase program of $1.0 million.

#### For the nine months ended December 31, 2023

Net cash used in financing activities of $3.2 million was due to the repayment of PodcastOne's Bridge Loan of $3.0 million and repurchase of common stock under our share repurchase program of $1.7 million and notes payable of $0.2 million offset by $1.7 million form the proceeds on the Cap Chase loan.

### Debt Covenants

As of December 31, 2024 we were in compliance under the Capchase Loan and the ABL Credit Facility.

## Controls and procedures

As filed, 3,409 characters.

### 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 Chief 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 Chief Executive Officer 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, our Chief 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 December 31, 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 Chief 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.

## Risk factors

As filed, 41,946 characters.

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 nine months ended December 31, 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 rely on our largest OEM customer for a substantial percentage of our revenue. The loss of our largest OEM customer or the significant reduction of business or growth of business from such customer could significantly adversely affect our business, financial condition and results of operations.***

Our business is dependent, and we believe that it will continue to depend on our customer relationship with Tesla, which accounted for 52% of our consolidated revenue for the nine months ended December 31, 2024, and 52% of our consolidated revenue for the nine months ended December 31, 2023. Our existing agreement with Tesla governs our music services to certain of its car user base in North America, including our audio music streaming services. As of October 2024, Tesla has extended the term of our license agreement (the “license agreement”) until at least May 2026, and the license agreement is expected to continue to be renewed thereafter on its terms. Tesla has agreed to pay us for any grandfathered users for the term of the license agreement, however Tesla will no longer pay us for any other users beginning in December 2024. If we fail to maintain certain minimum service level requirements related to our service with Tesla or other obligations related to our technology or services, Tesla may terminate the license agreement to provide them with such service. Tesla may also terminate our license agreement for convenience at any time with prior notice to us. If Tesla terminates our license agreement, further modifies the services that we provide to Tesla under such agreement, requires us to renegotiate the terms of such agreement or we are unable to renew such agreement on mutually agreeable terms, no longer pays for and/or makes our music services available to Tesla’s paid grandfathered car user base, no longer makes an option for its car users to sign up for LiveOne, becomes a native music service provider, replaces our music services with one or more of our competitors and/or we experience a significant further reduction of business from Tesla, our business, financial condition and results of operations would be materially adversely affected.

In addition, membership revenue we generate from Tesla from grandfathered car users is indirectly subsidized by Tesla to its customers, which Tesla plans to carry indefinitely but is not obligated to do so, including the ability to make available, terminate and/or change our music services for convenience at any time with prior notice to us. Should our membership revenue services no longer be subsidized by and/or made available by Tesla to its grandfathered customers or if Tesla reclassifies or renegotiates with us the definition of a paid grandfathered member or demands credit for past members that no longer meet such requirement, there can be no assurance that we will continue to maintain the same number of paid grandfathered members or receive the same levels of membership service revenue from such members. There is no assurance that we would be able to replace Tesla or lost business with Tesla with one or more customers that generate comparable revenue. Furthermore, there could be no assurance that Tesla will continue indefinitely to pay us for grandfathered car users.

Tesla has also integrated Spotify Premium to the car’s in-dash touchscreen for its Model S, Model X and Model 3 vehicles. Tesla owners now have access to our music streaming services, as well as those of Spotify and TuneIn natively. There is no assurance that our music streaming services will be available in every current and/or future Tesla model. Furthermore, our current and future competitors like Spotify, Apple Music, Tesla (if it becomes a native music service provider) and others may have more well-established brand recognition, more established relationships with, and superior access to content providers and other industry stakeholders, greater financial, technical and other resources, more sophisticated technologies or more experience in the markets in which we compete. If we are unable to compete successfully for users against our competitors by maintaining and increasing our presence and visibility, the number of users of our network may fail to increase as expected or decline and our advertising sales, membership fees and other revenue streams will suffer.

***We rely on our relationship with our largest OEM customer for a substantial percentage of our potential subscribers who are now eligible to convert to become direct customers of LiveOne. Our inability to convert a significant number of these subscribers could cause a significant reduction of our business and could significantly adversely affect our business, financial condition and results of operations.***

Our business is dependent, and we believe that it will continue to depend on our customer relationship with Tesla, our largest OEM customer. Commencing in October 2024, we began working with Tesla to convert Tesla’s connectivity package users to become direct subscribers (members) of our Premium or Plus service. The direct subscription to LiveOne allows 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 Tesla s music streaming services dashboard in perpetuity. As a result, we believe we now have a unique opportunity to convert as many of Tesla’s drivers as possible to a higher priced LiveOne subscription service creating a meaningful upside opportunity for our Company, and we are working in good faith with Tesla to convert as many of these drivers as possible.

We believe that with the full cooperation from Tesla, we can convert a substantial number of such users to become direct subscribers of LiveOne. However, there is no assurance that we would be able to convert a substantial number of such users to become direct subscribers of LiveOne and/or replace Tesla or lost business with Tesla with one or more other B2B customers that generate comparable revenue. If we fail to convert a significant number of these drivers as direct subscribers of LiveOne that could cause a significant reduction of our business and could significantly adversely affect our business, financial condition and results of operations. In addition, even such drivers elect to directly pay for their subscription to LiveOne services, there can be no assurance that we will continue to maintain the same number of paid subscribers or receive the same levels of subscription service revenue and subscription revenue may substantially fluctuate accordingly. Accordingly, there could be no assurance that our revenue and/or EBITDA continues to grow at the same rate of growth as in 2024 calendar year or at all.

***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 $9.5 million and $13.3 million for the nine months ended December 31, 2024 and fiscal year ended March 31, 2024, respectively, and cash provided by operating activities of $10.57 million and $3.8 million for the nine months ended December 31, 2024 and fiscal year ended March 31, 2024, respectively. As of December 31, 2024, we had an accumulated deficit of $254.3 million and a working capital deficit of $18.1 million.

We expect to continue to incur substantial and increased expenses as we continue to execute our business approach, including expanding and developing our content and platform and potentially making other accretive acquisitions, and 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 and/or securities (including convertible securities), and after PodcastOne’s acquisition by us on July 1, 2020, through our sale of PodcastOne’s 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 a continued 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.

The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a growing company, the difficulties that may be encountered with integrating acquired companies and the highly competitive environment in which we operate. For example, while several companies have been successful in the digital music streaming industry and the online video streaming industry, companies have had no or limited success in operating a premium Internet network devoted to live music and music-related video content. We cannot assure you that our business will be profitable or that we will ever generate sufficient revenue to fully meet our expenses and support our anticipated activities.

Our ability to meet our total liabilities of $55.1 million as of December 31, 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.

### 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.

***Advancements in AI technology may adversely affect our business model and competitive position.***

The rapid development and adoption of AI technologies pose risks to our operations, user engagement, and revenue generation. AI tools may enable the creation of high-quality synthetic music that could compete with licensed content from our platform, reducing demand for traditional music streaming services. Additionally, the use of AI by competitors to enhance user personalization, recommend content, or improve discovery may surpass our technological capabilities, potentially diminishing our market share.

Further, our reliance on AI for functions such as recommendation algorithms, fraud detection, and content moderation introduces operational risks. Errors or biases in our AI systems could result in a poor user experience, reduced engagement, or potential reputational harm. If we fail to maintain or advance our AI capabilities or if we are perceived as lagging behind in AI innovation, our business, financial condition, and results of operations could be adversely affected.

Moreover, as regulators worldwide consider new policies regarding AI development, use, and intellectual property rights, our business may face increased compliance costs or limitations on our ability to use AI tools effectively. Such regulations could impact the availability or cost of AI technologies and hinder our ability to innovate, further exacerbating competitive pressures.

***Wildfires and other natural disasters in and around Los Angeles may disrupt our operations and adversely impact our business.***

Our headquarters and a significant portion of our operations are located in Los Angeles, a region prone to wildfires and other natural disasters such as earthquakes and power outages. Wildfires, in particular, pose a material risk to our physical infrastructure, employee safety, and overall business continuity.

In the event of a wildfire, our offices or facilities may suffer physical damage or experience operational interruptions due to evacuations, smoke contamination, or power grid failures. Such disruptions could impede our ability to maintain service availability, impacting user experience and leading to potential revenue loss. Additionally, prolonged wildfires may affect our employees’ ability to work safely, either in-office or remotely, further affecting productivity and operations.

We may also incur significant costs related to disaster recovery efforts, relocation of personnel, or investments in infrastructure to mitigate future risks. While we maintain disaster recovery and business continuity plans, these measures may not fully protect against the adverse effects of natural disasters.

***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, and 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

***We may not have the ability to repay the amounts then due under our senior ABL Credit Facility at maturity.***

Over the term of the loan and at maturity, the outstanding principal amount of our ABL Credit Facility and the Capchase Loan, will become due and payable by us in installments. As of December 31, 2024, $1.4 million is due in fiscal 2025 and $3.7 million due in fiscal 2026.

Our failure to repay any outstanding amount under our 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. A default under the ABL Credit Facility could also lead to a default under agreements governing our future indebtedness, including the Capchase Loan. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay our ABL Credit Facility or make cash payments thereon. Furthermore, upon the occurrence and during the continuation of any event of default, the senior lender shall have the right to, among other things, take possession of our and our 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.

***If we do not comply with the provisions of the ABL Credit Facility, the Capchase Loan and/or the SX Settlement, such parties may terminate their obligations to us, accelerate our debt and/or require us to repay all outstanding amounts owed thereunder.***

The ABL Credit Facility and the Capchase Loan contain provisions that limit our operating activities, including covenant relating to the requirement to maintain a certain amount cash (as provided in the senior credit facility loan agreement). If an event of default occurs and is continuing, the applicable lender may among other things, terminate its obligations thereunder, accelerate its debt and require us to repay all amounts thereunder. For example, on October 13, 2022, a judgement was ordered in favor of SoundExchange, Inc. (“SX”) against us and Slacker in the United States District Court Central District of California in the amount of approximately $9.8 million. On October 13, 2022, the court entered a judgment against the defendants for the amount of $9,765,397. In February 2023, we settled the dispute (the “SX Settlement Agreement”) to pay the outstanding amount in equal monthly payments subject to increase in the event we complete certain future financings. As of December 31, 2024, we owed $4.1 million to SX under the SX Settlement Agreement. The SX Settlement Agreement, as amended in January 2025, requires us and Slacker to pay SX the remaining sum on or before February 1, 2027, in 24 equal monthly payments (excluding the January 2024 payment paid by us as of the date of this Quarterly Report). If for any reason we and Slacker fail to comply with the terms of the SX Settlement Agreement, SX will have the right to declare a default under the SX Settlement Agreement and at its option require us to repay all outstanding amounts owed thereunder and/or enforce its consent judgment and/or pursue a new judgment against us and/or Slacker, which would materially adversely impact our business, operating results and financial condition. Our debt agreements with the ABL Credit Facility and Capchase Loan lenders contain a covenant that if a material adverse change occurs in our financial condition, or if such senior secured lender reasonably believes the prospect of payment or performance of their loan is materially impaired, the lender at its option may immediately accelerate its debt and require us to repay all outstanding amounts owed thereunder. If for any reason we and Slacker fail to comply with the terms of the SX Settlement Agreement, our senior credit facility provider, and which would then also allow Capchase to declare a default under their loan agreement with us, may declare an event of default and at its option may immediately accelerate its debt and require us to repay all outstanding amounts owed under the senior credit facility provider, which would materially adversely impact our business, operating results and financial condition. As of December 31, 2024 we were in compliance with covenants under the ABL Credit Facility and the Capchase Loan.

***Our debt agreements contain restrictive and financial covenants that may limit our operating flexibility, and our substantial indebtedness may limit cash flow available to invest in the ongoing needs of our business.***

We have a significant amount of indebtedness. Our total outstanding consolidated indebtedness as of December 31, 2024 was $5.2 million, net of fees and discounts. While we have certain restrictions and covenants with our current indebtedness, we could in the future incur additional indebtedness beyond such amount. Our existing debt agreements with ABL Credit Facility lender and the Capchase Loan 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 our senior secured lenders, terminate our existing debt agreements and/or repay the amount owed to such lenders. Our debt agreements also contain certain covenants, including maintaining a minimum cash amount at all times and are secured by substantially all of our assets. There is no guarantee that we will be able to generate sufficient cash flow or sales to pay the principal and interest owed under our debt agreements or to satisfy all of the covenants. We and/or our subsidiaries may also incur significant additional indebtedness in the future.

Our substantial debt combined with our other financial obligations and contractual commitments could have other significant adverse consequences, including:

- requiring us to dedicate a substantial portion of cash flow from operations to the payment of interest on, and principal of, our debt, which will reduce the amounts available to fund working capital, capital expenditures, product development efforts and other general corporate purposes;
- increasing our vulnerability to adverse changes in general economic, industry and market conditions;
- obligating us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity financing;
- limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and
- placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.

We intend to satisfy our current and future debt service obligations with our existing cash and cash equivalents and funds from external sources, including equity and/or debt financing. However, we 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, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments.

***We depend upon third-party licenses for sound recordings and musical compositions and other content and an adverse change to, loss of, or claim that we do not hold any necessary licenses may materially adversely affect our business, operating results and financial condition.***

To secure the rights to stream sound recordings and the musical compositions embodied therein, we enter into license agreements to obtain licenses from rights holders such as record labels, aggregators, artists, music publishers, performing rights organizations, collecting societies and other copyright owners or their agents, and pay substantial royalties or other consideration to such parties or their agents around the world. Though we work diligently in our efforts to obtain all necessary licenses to stream sound recordings and the musical compositions embodied therein, there is no guarantee that the licenses available to us now will continue to be available in the future at rates and on terms that are favorable or commercially reasonable or at all. The terms of these licenses, including the royalty rates that we are required to pay pursuant to them, may change as a result of changes in our bargaining power, changes in the industry, changes in the laws and regulations, or for other reasons. Increases in royalty rates or changes to other terms of these licenses may materially impact our business, operating results, and financial condition.

We enter into license agreements to obtain rights to stream sound recordings, including from the major record labels that hold the rights to stream a significant number of sound recordings, such as Universal Music Group, Sony Music Entertainment, Warner Music Group and SX, as well as others. If we fail to obtain these licenses or if any of such licenses are terminated or suspended, the size and quality of our catalog may be materially impacted and our business, operating results and financial condition could be materially harmed.

We generally obtain licenses for two types of rights with respect to musical compositions: mechanical rights and public performance rights. With respect to mechanical rights, for example, in the United States, the rates we pay are, to a significant degree, a function of a ratemaking proceeding conducted by an administrative agency called the Copyright Royalty Board. The rates that the Copyright Royalty Board set apply both to compositions that we license under the compulsory license in Section 115 of the Copyright Act of 1976 (the “Copyright Act”), and to a number of direct licenses that we have with music publishers for U.S. rights, in which the applicable rate is generally pegged to the statutory rate set by the Copyright Royalty Board. The most recent proceeding before the Copyright Royalty Board (the “Phonorecords III Proceedings”) set the rates for the Section 115 compulsory license for calendar years 2018 to 2022. The Copyright Royalty Board issued its initial written determination on January 26, 2018. The rates set by the Copyright Royalty Board may still be modified if a party appeals the determination and are also subject to further change as part of future Copyright Royalty Board proceedings. If any such rate change increases, our sound recordings and musical compositions license costs may substantially increase and impact our ability to obtain content on pricing terms favorable to us, and it could negatively harm our business, operating results and financial condition and hinder our ability to provide interactive features in our services or cause one or more of our services not to be economically viable. Based on management’s estimates and forecasts for the next two fiscal years, we currently believe that the proposed rates will not materially impact our business, operating results, and financial condition. However, the proposed rates are based on a variety of factors and inputs which are difficult to predict in the long-term. If Slacker’s business does not perform as expected or if the rates are modified to be higher than the proposed rates, its content acquisition costs could increase and impact its ability to obtain content on pricing terms favorable to us, which could negatively harm Slacker’s business, operating results and financial condition and hinder its ability to provide interactive features in its services, or cause one or more of Slacker’s services not to be economically viable.

In the United States, public performance rights are generally obtained through intermediaries known as performing rights organizations (“PROs”), which negotiate blanket licenses with copyright users for the public performance of compositions in their repertory, collect royalties under such licenses, and distribute those royalties to copyright owners. The royalty rates available to Slacker today may not be available to it in the future. Licenses provided by two of these PROs, the American Society of Composers, Authors and Publishers (“ASCAP”) and Broadcast Music, Inc. (“BMI”), cover the majority of the music we stream and are governed by consent decrees relating to decades old litigations. In 2019, the U.S. Department of Justice indicated that it was formally reviewing the relevance and need of these consent decrees. Changes to the terms of or interpretation of these consent decrees up to and including the dissolution of the consent decrees, could affect our ability to obtain licenses from these PROs on reasonable terms, which could harm its business, operating results, and financial condition. In addition, an increase in the number of compositions that must be licensed from PROs that are not subject to the consent decrees, or from copyright owners that have withdrawn public performance rights from the PROs, could likewise impede Slacker’s ability to license public performance rights on favorable terms. As of December 31, 2024, we owed $17.5 million in aggregate royalty payments to such PROs.

In other parts of the world, including Europe, Asia, and Latin America, we obtain mechanical and performance licenses for musical compositions either through local collecting societies representing publishers or from publishers directly, or a combination thereof. We cannot guarantee that its licenses with collecting societies and its direct licenses with publishers provide full coverage for all of the musical compositions we make available to our users in such countries. In Asia and Latin America, we are seeing a trend of movement away from blanket licenses from copyright collectives, which is leading to a fragmented copyright licensing landscape. Publishers, songwriters, and other rights holders choosing not to be represented by collecting societies could adversely impact our ability to secure favorable licensing arrangements in connection with musical compositions that such rights holders own or control, including increasing the costs of licensing such musical compositions, or subjecting us to significant liability for copyright infringement.

With respect to podcasts and other non-music content, we produce or commission the content itself or obtain distribution rights directly from rights holders. In the former scenario, we employ various business models to create original content. In the latter scenario, we and/or PodcastOne negotiates licenses directly with individuals that enable creators to post content directly to our service after agreeing to comply with the applicable terms and conditions. We are dependent on those who provide content on our service complying with the terms and conditions of our license agreements as well as the PodcastOne Terms and Conditions of Use. However, we cannot guarantee that rights holders or content providers will comply with their obligations, and such failure to do so may materially impact our business, operating results, and financial condition.

There also is no guarantee that we have all of the licenses we need to stream content, as the process of obtaining such licenses involves many rights holders, some of whom are unknown, and myriad complex legal issues across many jurisdictions, including open questions of law as to when and whether particular licenses are needed. Additionally, there is a risk that rights holders, creators, performers, writers and their agents, or societies, unions, guilds, or legislative or regulatory bodies will create or attempt to create new rights that could require us to enter into license agreements with, and pay royalties to, newly defined groups of rights holders, some of which may be difficult or impossible to identify.

Even when we can enter into license agreements with rights holders, we cannot guarantee that such agreements will continue to be renewed indefinitely. For example, from time to time, our license agreements with certain rights holders and/or their agents may expire while we negotiate their renewals and, per industry custom and practice, we may enter into brief (for example, month-, week-, or even days-long) extensions of those agreements or provisional licenses and/or continue to operate on an at will basis as if the license agreement had been extended, including by our continuing to make music available. During these periods, we may not have assurance of long-term access to such rights holders’ content, which could have a material adverse effect on its business and could lead to potential copyright infringement claims. Furthermore, if we fail to timely make any royalty or license payments to such rights holders, they may elect to terminate or suspend our license agreements with them.

It also is possible that such agreements will never be renewed at all. The lack of renewal, or suspension or termination, of one or more of our license agreements, or the renewal of a license agreement on less favorable terms, also could have a material adverse effect on its business, financial condition, and results of operations.

***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 weaknesses in our internal control over financial reporting during such periods. If we are unable to establish and 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. 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.

In connection with the preparation of our consolidated financial statements for the year ended March 31, 2024, our management identified a material weaknesses as follows: our management’s identification of and accounting for significant and unusual transactions, specifically accounting for debt. This material weakness was remediated during the nine months ended December 31, 2024.

In connection with preparation of our consolidated financial statements for the year ended March 31, 2023, our management identified material weaknesses in the following: our controls related to the preparation of the financial statements were not adequately designed to ensure the accuracy and completeness of amounts and disclosures and the classification between current and noncurrent liabilities; and our management’s identification of and accounting for significant and unusual transactions, specifically accounting for business combinations, including push down accounting. This material weakness was remediated during the year ended March 31, 2024.

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 the Ownership of Our Common Stock

***Conversion of our Series A Preferred Stock will dilute the ownership interest of our existing stockholders, including holders who had previously converted their convertible notes, or may otherwise depress the price of our common stock.***

As of December 31, 2024, the shares of our Series A Preferred Stock are convertible into approximately 6.47 million shares of our common stock at a price of $2.10 per share of common stock. The conversion of some or all of the shares of our Series A Preferred Stock into shares of our common stock will dilute the ownership interests of our existing stockholders. In addition, any sales in the public market of the shares of our common stock issuable upon such conversion and/or any anticipated conversion of the Series A Preferred Stock into shares of our common stock could adversely affect prevailing market prices of our common stock.

Filed Feb 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001437749-25-003961. Last ingested by Listed: Nov 4, 2026, 18:43 ET. No prices; not investment advice.