LiveOne Inc

For the Years Ended March 31, 2024 and 2023

Note1 — Organization and Basis of Presentation

Organization

LiveOne, Inc. together with its subsidiaries (“we,” “us,” “our”, the “Company” or “LiveOne”) is a Delaware corporation headquartered in Beverly Hills, California. The Company is a creator-first, music, entertainment and technology platform focused on delivering premium experiences and content worldwide through memberships, live and virtual events.

The Company was reincorporated in the State of Delaware on* August 2, 2017,pursuant to a reincorporation merger of Loton, Corp (“Loton”) with and into LiveXLive Media, Inc., Loton’s wholly owned subsidiary at the time. As a result of the reincorporation merger, Loton ceased to exist as a separate entity, with LiveXLive Media, Inc. being the surviving entity. On December 29, 2017,the Company acquired Slacker, Inc. (“Slacker”), an Internet music and radio streaming service incorporated in the state of Delaware, and it became a wholly owned subsidiary of LiveOne. On February 5, 2020,the Company acquired (i) React Presents, LLC a Delaware limited liability company (“React Presents”), and it became a wholly owned subsidiary of LiveXLive Events, LLC, a wholly owned subsidiary of the Company and (ii) indirectly Spring Awakening, LLC, which is a wholly owned subsidiary of React Presents, a producer, promoter and manager of in person live music festivals and events. On July 1, 2020,the Company through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., acquired PodcastOne, Inc. (formerly Courtside Group, Inc.) (“PodcastOne”). On December 22, 2020,the Company through its wholly owned subsidiary LiveXLive Merchandising, Inc., acquired Custom Personalization Solutions, Inc. (“CPS”). Effective as of October 5, 2021,the Company changed its corporate name to "LiveOne, Inc." On October 17, 2021,the Company through its wholly owned subsidiary LiveXLive PR, Inc., acquired Gramophone Media, Inc. ("Gramophone"). On February 28, 2023,the Company acquired a majority interest in Splitmind LLC and Drumify LLC. On September 8,*2023, PodcastOne completed a Qualified Event (as defined below) (its spin out from the Company to become a standalone publicly trading company) as a result of its direct listing on The NASDAQ Capital Market on such date. As of the date of this Annual Report, PodcastOne continues to be a majority owned subsidiary of the Company.

Basis of Presentation

The accompanying consolidated financial statements include the Company’s results of operations and those of its wholly-owned and majority-owned subsidiaries. The Company’s accounting and financial reporting policies conform to generally accepted accounting principles in the United States of America (“U.S. GAAP”).

Reclassifications

Certain reclassifications have been made to prior-year amounts to conform to the current period presentation.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Acquisitions are included in the Company’s consolidated financial statements from the date of the acquisition. The Company uses purchase accounting for its acquisitions, which results in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. See the Company’s accounting policy “Business Combinations”* within Note2* – Summary of Significant Accounting Policies. All intercompany balances and transactions have been eliminated in consolidation.

Going Concern and Liquidity

The Company’s consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

The Company’s principal sources of liquidity have historically been its debt and equity issuances and its cash and cash equivalents (which cash, cash equivalents and restricted cash amounted to $7.1 million as of* March 31, 2024*). As reflected in its consolidated financial statements included elsewhere herein, the Company has a history of losses, incurred a net loss of $13.3 million and had a working capital deficiency of $22.5 million as of* March 31, 2024*. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern withinone year from the date that these financial statements are filed. The Company’s consolidated financial statements donot 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 the Company be unable to continue as a going concern.

F-8

The Company’s ability to continue as a going concern is dependent on its ability to execute its growth strategy and on its ability to raise additional funds. The Company filed a new universal shelf Registration Statement on Form S-3 (the “New Shelf S-3”) with the SEC, which was declared effective by the SEC on* February 17, 2022.Under the New Shelf S-3, the Company has the ability to raise up to $150.0 million in cash from the sale of its equity, debt and/or other financial instruments. In May 2024,we entered into an at-the-market agreement with Roth Capital Partners, LLC ("Roth Capital"), under which we mayoffer and sell shares of our common stock having an aggregate offering price of up to $25 million from time to time through Roth Capital acting as our sales agent. As of the filing of this Annual Report on Form10*-K, we havenot sold any shares under such agreement. The uncertain market conditions* maylimit the Company’s ability to access capital, mayreduce demand for its services and maynegatively impact its ability to retain key personnel. Management mayseek additional funds, primarily through the issuance of equity and/or debt securities for cash to operate the Company’s business.No assurance can be given that any future financing will be available or, if available, that it be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it maycontain terms that result in undue restrictions on its operations, in the case of debt financing or cause substantial dilution for its stockholders, in case of equity and/or convertible debt financing. If the Company is unable to obtain sufficient financing when needed, the Company mayalso have to reduce certain overhead costs through the reduction of salaries and other means and settle liabilities through negotiation. There can beno* assurance that management’s attempts at any or all of these endeavors will be successful.

Note2 — Summary of Significant Accounting Policies

F-9

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with the United States of America (“US”) generally accepted accounting principles (“GAAP”) requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue, allowance for doubtful accounts, the assigned value of acquired assets and assumed and contingent liabilities associated with business combinations and the related purchase price allocation, useful lives and impairment of property and equipment, intangible assets, goodwill and other assets, inventory calculations and reserves, the fair value of the Company’s equity-based compensation awards and convertible debt and debenture instruments, fair values of derivatives, and contingencies. Actual results could differ materially from those estimates. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. There is a reasonable possibility that actual results could differ from those estimates and such differences could be material to the financial position and results of operations, specifically in assessing when the collectability of revenue related consideration is probable, and the impairment assessment of goodwill, indefinite lived assets or long-lived assets that are depreciated or amortized.

Revenue Recognition Policy

The Company accounts for a contract with a customer when an approved contract exists, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of substantially all of the consideration is probable. Revenue is recognized when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company uses the expected value method to estimate the value of variable consideration on advertising and with original equipment manufacturer contracts to include in the transaction price and reflect changes to such estimates in periods in which they occur. Variable consideration for these services is allocated to and recognized over the related time period such advertising and membership services are rendered as the amounts reflect the consideration the Company is entitled to and relate specifically to the Company’s efforts to satisfy its performance obligation. The amount of variable consideration included in revenue is limited to the extent that it is probable that the amount willnot be subject to significant reversal when the uncertainty associated with the variable consideration is subsequently resolved.

Practical Expedients

The Company elected the practical expedient and recognized the incremental costs of obtaining a contract, if any, as an expense when incurred if the amortization period of the asset that would have been recognized isone year or less.

Gross Versus Net Revenue Recognition

The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction and is evaluated on a transaction by transaction basis. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service prior to transfer to the customer. Where applicable, the Company has determined that it acts as the principal in all of its membership service, sponsorship, and merchandising streams and* may*act as principal or agent for its ticketing/live events, advertising and licensing revenue streams.

F-10

The Company’s revenue is principally derived from the following services:

Membership Services

Membership services revenue substantially consist of monthly to annual recurring membership fees, which are primarily paid in advance by credit card or through direct billings arrangements. The Company defers the portions of monthly to annual recurring membership fees collected in advance and recognizes them in the period earned. Membership revenue is recognized in the period of services rendered. The Company’s membership revenue consists of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are membership based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services ornot. As a result, the Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes membership revenue straight-line through the membership period.

Membership Services consist of:

Direct member, mobile service provider and mobile app services

The Company generates revenue for membership services on both a direct basis and through memberships sold through certainthird-party mobile service providers and mobile app services (collectively the “Mobile Providers”). For memberships sold through the Mobile Providers, the member executes an on-line agreement with Slacker outlining the terms and conditions between Slacker and the member upon purchase of the membership. The Mobile Providers promote the Slacker app through their e-store, process payments for memberships, and retain a percentage of revenue as a fee. The Company reports this revenue gross of the fee retained by the Mobile Providers, as the member is Slacker’s customer in the contract and Slacker controls the service prior to the transfer to the member. Membership revenues from monthly memberships sold directly through Mobile Providers are subject to such Mobile Providers’ refund or cancellation terms. Revenues from Mobile Providers are recognized net of any such adjustments for variable consideration, including refunds and other fees. The Company’s payment terms vary based on whether the membership is sold on a direct basis or through Mobile Providers. Memberships sold on a direct basis require payment before the services are delivered to the customer. The payment terms for memberships sold through Mobile Providers vary, but are generally payable within30 days.

Third-Party Original Equipment Manufacturers

The Company generates revenue for membership services through memberships sold through athird-party Original Equipment Manufacturer (the “OEM”). For memberships sold through the OEM, the OEM executes an agreement with Slacker outlining the terms and conditions between Slacker and the OEM upon purchase of the membership. The OEM installs the Slacker app in their equipment and provides the Slacker service to the OEM’s customers. The monthly fee charged to the OEM is based upon a fixed rate per vehicle, multiplied by the variable number of total vehicles which have signed up for a paid membership. The number of customers, or the variable consideration, is reported by OEMs and resolved on a monthly basis. The Company’s payment terms with OEM are up to30 days. The OEM doesnot charge the car owners a fee for the Slacker service.

Advertising revenue primarily consist of revenues generated from the sale of audio, video, and display advertising space tothird-party advertising exchanges. Revenues are recognized based on delivery of impressions over the contract period to thethird-party exchanges, either when an ad is placed for listening or viewing by a visitor or when the visitor “clicks through” on the advertisement. The advertising exchange companies report the variable advertising revenue performed on a monthly basis which represents the Company’s efforts to satisfy the performance obligation. PodcastOne earns advertising revenues primarily for fees earned from advertisement placement purchased by the customer during the time the podcast is delivered to the viewing audience, under the terms and conditions as set forth in the applicable podcasting agreement calculated using impressions.

F-11

From time to time we enter into barter transactions involving advertising provided in exchange for goods and services. Revenue from barter transactions is recognized ratably over time based on the terms of the contract as delivery of impressions is performed on a consistent basis. Services received are charged to expense in the same manner. Total revenues related to barter transactions were $16.7 million and $8.4 million for the years ended* March 31, 2024* and* March 31, 2023*, respectively.

Licensing Revenue

Licensing revenue primarily consists of sales of licensing rights to digitally stream its live music services. Licensing revenue is recognized when the Company satisfies its performance obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, which is typically when the live event has aired. Any license fees collected in advance of an event are deferred until the event airs. We report our licensing revenue on a gross basis as we act as the principal in the underlying transactions. We report our licensing revenue on a gross basis as we act as the principal in the underlying transactions.

Sponsorship Revenue

Sponsorship revenue primarily consists of sales of sponsorship programs that provide sponsors with opportunities to reach our customers. Sponsorship revenue is recognized as the event airs. Any sponsorship fees collected in advance of the contract term (typically an event) are deferred until the event airs. The Company reports sponsorship revenue on a gross basis as the Company acts as the principal in the underlying transactions.

Merchandising Revenue

Revenue is recognized upon the transfer of control to the customer. The Company recognizes revenue and measures the transaction price net of taxes collected from customers and remitted to governmental authorities. Sales also include shipping and handling charges billed to customers, with the related freight costs included in cost of goods sold. Sales commissions are expensed as incurred and are recorded in sales and marketing expenses in the consolidated statements of operations. The Company's customer contracts donot have a significant financing component due to their short durations, which are typically effective forone year or less and have payment terms that are generally30 to60 days. Wholesale revenue is generally recognized when products are shipped, depending on the applicable contract terms. The Company records a refund liability for expected returns based on prior returns history, recent trends, and projections for returns on sales in the current period. The refund liability at* March 31, 2024and2023* was less than $0.1 million, respectively.

Ticket/Event Revenue

Ticket/Event revenue is primarily from the sale of tickets and promoter fees earned from venues or other co-promoters underone of several formulas, including a fixed guaranteed amount and/or a percentage of ticket sales or event profits.

Revenue from the promotion or production of an event is recognized at a point in time when the show occurs. Revenue collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue collected from sponsorship agreements, which isnot related to a single event, is classified as deferred revenue and recognized over the term of the agreement or operating season as the benefits are provided to the sponsor.

Revenue from our ticketing operations primarily consists of service fees charged at the time a ticket for an event is sold in either the primary or secondary markets, including both online pay-per-view (“PPV”) tickets as well as ticket physically purchased through a ticket sale vendor. For primary tickets sold to the Company’s PPV and festival events the revenue for the associated ticket service charges collected in advance of the event is recorded as deferred revenue until the event occurs. For PPV arrangements that include multiple performance obligations, i.e. delivery of the online stream, sponsorships, digital meet and greet, or physical merchandise, we allocate the total contract consideration to each performance obligation using the standalone selling price. If the standalone selling price isnot readily determinable, it is estimated using observable inputs including an adjusted market based approach, expected cost plus margin, or the residual approach.

F-12

Cost of Sales

Cost of Sales principally consist of royalties paid for the right to stream video, music and non-music content to the Company’s customers and the cost of securing the rights to produce and stream live events from venues and promoters. Royalties are calculated using negotiated and regulatory rates documented in content license agreements and are based on usage measures or revenue earned. Music royalties to record labels, professional rights organizations and music publishers relate to the consumption of music listened to on Slacker’s radio services. As of* March 31, 2024* and2023, the Company accrued $18.4 million and $16.6 million of royalties, respectively, due to artists from use of Slacker’s radio services.

Cost of sales for the Company’s advertising revenue primarily includes PodcastOne direct costs comprised of revenue sharing and commissions. Cost of sales for the Company’s merchandising revenue includes purchase costs and related direct costs. Direct costs include all costs for personalization, production, planning, quality control, fulfillment and inbound freight.

Sales and Marketing

Sales and Marketing include the direct and indirect costs related to the Company’s product and event advertising and marketing. Additionally, sales and marketing include merchandising advertising and royalty costs. Advertising expenses to promote the Company’s services are expensed as incurred. Advertising expenses included in sales and marketing expense were $0.2 million and $0.3 million for the years ended* March 31, 2024and2023*, respectively.

Product Development

Product development costs primarily are expenses for research and development, product and content development activities, including internal software development and improvement costs which havenot been capitalized by the Company.

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period, on an accelerated basis. The Company accounts for awards with graded vesting as if each vesting tranche is valued as a separate award. The Company uses the Black-Scholes-Merton option pricing model to determine the grant date fair value of stock options. This model requires the Company to estimate the expected volatility and the expected term of the stock options which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected employee stock option exercise behavior. The Company uses a predicted volatility of its stock price during the expected life of the options that is based on the historical performance of the Company’s stock price as well as including an estimate using guideline companies. The expected term is computed using the simplified method as the Company’s best estimate given its lack of actual exercise history. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the stock. Compensation expense resulting from granted restricted stock units and restricted stock awards is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Stock-based awards are comprised principally of stock options, restricted stock, restricted stock units (“RSUs”), and restricted stock awards (“RSAs”). Forfeitures are recognized as incurred.

Stock option awards issued to non-employees are accounted for at grant date fair value determined using the Black-Scholes-Merton option pricing model. Management believes that the fair value of the stock options is more reliably measured than the fair value of the services received. The Company records the fair value of these equity-based awards and expense at their cost ratably over related vesting periods.

F-13

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely thannot that the assets willnot be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Company’s consolidated statements of operations in the period that includes the enactment date.

Net Income (Loss) Per Share

Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted-average number of common shares and the dilutive effect of contingent shares outstanding during the period. Potentially dilutive contingent shares, which primarily consist of stock options issued to employees, directors and consultants, restricted stock units, warrants issued tothird parties and accounted for as equity instruments and convertible notes would be excluded from the diluted earnings per share calculation because their effect is anti-dilutive.

Basic and diluted net income (loss) per share attributable to common stockholders is presented in conformity with thetwo-class method required for participating securities such as our preferred stock. Under thetwo-class method, basic and diluted net income (loss) per share attributable to common stockholders is computed by dividing the basic and diluted net income (loss) attributable to common stockholders by the basic and diluted weighted-average number of shares of common stock outstanding during the period. Diluted net income per share attributable to common stockholders adjusts basic net income per share for the potentially dilutive impact of stock options and restricted stock units (RSUs).

The treasury stock method is used to calculate the potentially dilutive effect of stock options and RSUs. The if-converted method is used to calculate the potentially dilutive effect of the Preferred Stock. In both methods, diluted net income (loss) attributable to common stockholders and diluted weighted-average shares outstanding are adjusted to account for the impact of the assumed issuance of potential common shares that are dilutive, subject to dilution sequencing rules.

At* March 31, 2024and2023*, the Company had 2,266,667 and 2,416,667 options outstanding, respectively, and 1,846,245 and 1,670,975 restricted stock units outstanding, respectively.

The following table is a reconciling basic and diluted earnings per share under thetwo-class method:

Business Combinations

The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the underlying net tangible and intangible assets acquired, based on their respective fair values. The excess of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management’s judgment and often involves the use of significant estimates and assumptions, including, butnot limited to, the selection of appropriate valuation methodology, projected revenue, expenses and cash flows, weighted average cost of capital, discount rates, estimates of customer turnover rates, estimates of terminal values, and royalty rates.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with original maturities, when purchased, ofthree months or less.

F-14

The following table provides amounts included in cash, cash equivalents and restricted cash presented in the consolidated statements of cash flows for the fiscal years ended* March 31 (*in thousands):

Restricted Cash and Cash Equivalents

The Company maintains certain letters of credit agreements with its banking provider, which are secured by the Company’s cash for periods of less thanone year. As of* March 31, 2024and2023*, the Company had restricted cash of $0.2 million and $0.2 million, respectively.

Allowance for Credit Losses

The Company evaluates the collectability of its accounts receivable based on a combination of factors. Generally, it records specific reserves to reduce the amounts recorded to what it believes will be collected when a customer’s account ages beyond typical collection patterns, or the Company becomes aware of a customer’s inability to meet its financial obligations.

The Company believes that the credit risk with respect to trade receivables is limited due to the large and established nature of its largest customers and the short-term nature of its membership receivables. At* March 31, 2024and2023*, the Company hadone customer that made up 42% and 32% of the total accounts receivable balance, respectively.

The following table provides amounts included in accounts receivable, net for the fiscal years ended* March 31 (*in thousands):

Inventories

Inventories, principally raw materials awaiting final customization process, are stated at the lower of cost or net realizable value. Inventories are relieved on afirst-in,first-out basis.

The carrying value of inventories is reduced for any excess and obsolete inventory. Excess and obsolete reductions are determined based on currently available information, including the likely method of disposition, such as through sales to individual customers and liquidations, and the age of inventory.

F-15

Property and Equipment

Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve service potential are also capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal repairs and maintenance are expensed as incurred.

Depreciation is recorded using the straight-line method over the assets’ estimated useful lives, which are generally as follows: buildings and improvements (5 years), furniture and equipment (2 to 5 years) and computer equipment and software (3 to 5 years). Leasehold improvements are depreciated over the shorter of the estimated useful life, based on the estimates above, or the lease term.

The Company evaluates the carrying value of its property and equipment if there are indicators of potential impairment. If there are indicators of potential impairment, the Company performs an analysis to determine the recoverability of the asset group carrying value by comparing the expected undiscounted future cash flows to the net book value of the asset group. If it is determined that the expected undiscounted future cash flows are less than the net book value of the asset group, the excess of the net book value over the estimated fair value is recorded in the Company’s consolidated statements of operations. Fair value is generally estimated using valuation techniques that consider the discounted cash flows of the asset group using discount and capitalization rates deemed reasonable for the type of assets, as well as prevailing market conditions, appraisals, recent similar transactions in the market and, if appropriate and available, current estimated net sales proceeds from pending offers.

Capitalized Internal-Use Software

The Company capitalizes certain costs incurred to develop software for internal use. Costs incurred in the preliminary stages of development are expensed as incurred. Once software has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized costs are recorded as part of property and equipment. Costs related to minor enhancements, maintenance and training are expensed as incurred.

Capitalized internal-use software costs are amortized on a straight-line basis over their three- tofive-year estimated useful lives. The Company evaluates the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. During the years ended* March 31, 2024and2023*, the Company capitalized $3.4 million and $2.4 million of internal use software, respectively.

Goodwill and Indefinite-Lived Assets

Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is carried at cost. Acquired trademarks and trade names are assessed as indefinite lived assets if there areno foreseeable limits on the periods of time over which they are expected to contribute cash flows. Goodwill and indefinite-lived assets arenot amortized, but are subject to an annual impairment testing, as well as between annual tests when events or circumstances indicate that the carrying value* may**not* be recoverable. We perform our annual impairment testing at* January 1*of each year.

F-16

Our annual goodwill impairment test is performed at the reporting unit level. As of* March 31, 2024and2023*, our reporting unit is the same as ourthree operating segments, as described in Note21 - Subsequent Events. We generally test goodwill for possible impairment byfirst performing a qualitative assessment to determine whether it is more likely thannot that the fair value of a reporting unit is less than its carrying value. If a qualitative assessment isnot used, or if the qualitative assessment isnot conclusive, a quantitative impairment test is performed. If a quantitative test is performed, we determine the fair value of the related reporting unit and compare this value to the recorded net assets of the reporting unit, including goodwill. The fair value of our reporting unit is determined using a market approach based on quoted prices in active markets. In the event the recorded net assets of the reporting unit exceed the estimated fair value of such assets, an impairment charge is recorded. Based on our annual impairment assessment, no impairments of goodwill were identified in the fiscal years ended* March 31, 2024and2023*.

Estimations and assumptions regarding future performance, results of the Company’s operations and comparability of its market capitalization and net book value will be used.

We test our acquired trademarks and trade names for possible impairment by applying the same process as for goodwill. In the instance when a qualitative test isnot performed or is inconclusive, a quantitative test is performed by using a discounted cash flow model to estimate fair value of our acquired trademarks and trade names. Based on our annual impairment assessment, no impairments of acquired trademarks and trade names were identified in the fiscal years ended* March 31, 2024and2023*.

Intangible Assets with Finite Useful Lives

The Company has certain finite-lived intangible assets that were initially recorded at their fair value at the time of acquisition. These intangible assets consist of Intellectual Property, Customer Relationships, Content Creator Relationships, Wholesale Relationships, Domain Names, Customer List, Capitalized Software Development Costs, and Non-compete Agreements resulting from business combinations. Intangible assets with finite useful lives are amortized using the straight-line method over their respective estimated useful lives, which are generally as follows: Intellectual Property (15 years), Customer, Content Creator and Wholesale Relationships (1-6 years), Domain Names, Customer Lists, and Software (5 years), Patents (15 years), and Non-Compete Agreements (3 years).

The Company reviews all finite lived intangible assets for impairment when circumstances indicate that their carrying values* may**not* be recoverable. If the carrying value of an asset group isnot recoverable, the Company recognizes an impairment loss for the excess carrying value over the fair value in its consolidated statements of operations. In our assessment for potential impairment we identified triggering events due to the events resulting from the impairment of certain assets within our Media Group during fiscal2024 and the global COVID-19 pandemic which caused the temporary halting of car production of our OEM partner, as well as overall advertising spend decrease from our advertising partners during fiscal2023. The Company recorded impairment losses of $0.1 million and $1.4 million in the fiscal years ended* March 31, 2024and2023,* respectively.

Deferred Revenue and Costs

Deferred revenue consists substantially of amounts received from customers in advance of the Company’s performance service period. Deferred revenue is recognized as revenue on a systematic basis that is proportionate to the period that the underlying services are rendered, which in certain arrangements is straight line over the remaining contractual term or estimated customer life of an agreement.

In the event the Company receives cash in advance of providing its music services, the Company will also defer an amount of such future royalty and costs to3rd party music labels, publishers and other providers on its balance sheets. Deferred costs are amortized to expense concurrent with the recognition of the related revenue and the expense is included in cost of sales.

F-17

Fair Value Measurements - Valuation Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (i.e., an exit price). The Company uses thethree-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs* maybe observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company’s own assumptions about the data market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Thethree*-tier hierarchy of inputs is summarized below:

The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. Proper classification of fair value measurements within the valuation hierarchy is considered each reporting period. The use of different market assumptions or estimation methods* mayhave a material effect on the estimated fair value amounts. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The derivative liabilities are recognized at fair value on a recurring basis at March 31, 2024and2023*, respectively, and are Level3 measurements. There have beenno transfers between levels.

Debt with Warrants

In accordance with ASC Topic470-20-25, when the Company issues debt with warrants, the Company treats the warrants as a debt discount, recorded as a contra-liability against the debt, and amortizes the balance over the life of the underlying debt as interest expense in the consolidated statements of operations. The offset to the contra-liability is recorded as either a liability or within equity in the Company’s consolidated balance sheets depending on the accounting treatment of the warrants. The Company determines the value of the warrants using an appropriate valuation method, including a Black-Scholes or Monte-Carlo Simulation. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statements of operations. The debt is treated as conventional debt.

F-18

Convertible Debt–* Derivative Treatment*

When the Company issues debt with a conversion feature, we mustfirst assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: (a)one or more underlyings, typically the price of our common stock; (b)one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; (c)no initial net investment, which typically excludes the amount borrowed; and (d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative doesnot have to be separated from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuer’s own equity. The scope exception applies if the contract is both (a) indexed to its own stock; and (b) classified in stockholders’ equity in its balance sheet.

If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using the appropriate valuation model upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt.

Debt Modifications and Extinguishments

When the Company modifies or extinguishes debt, itfirst evaluates whether the modification qualifies as a troubled debt restructuring (TDR) under ASC Topic470-60, which requires debt modifications to be evaluated if (1) the borrower is experiencing financial difficulty, and (2) the lender grants the borrower a concession. If a TDR is determinednot to have occurred, the Company evaluates the modification in accordance with ASC Topic470-50-40, which requires modification to debt instruments to be evaluated to assess whether the modifications are considered “substantial modifications”. A substantial modification of terms is accounted for like an extinguishment.

If there is a conversion feature within the debt instrument, the Company evaluates whether the conversion feature should be bifurcated under ASC815 as a derivative. If the Company believes the embedded conversion feature hasno fair value on the date of issuance (measurement date) and the embedded conversion feature hasno beneficial conversion feature, the embedded conversion feature doesnot meet the criteria in ASC470-50-40-10 or470-20-25 and the issuance of the convertible debt is considered a modification, andnot an extinguishment that would require the recognition of a gain or loss. If the Company determines the change in fair value of the derivative meets the criteria for substantial modification under ASC470 it will treat the modification as extinguishment and recognize a loss from debt extinguishment.

Concentration of Credit Risk

The Company maintains cash balances at commercial banks. Cash balances commonly exceed the*$250,000* amount insured by the Federal Deposit Insurance Corporation. The Company hasnot experienced any losses in such accounts, and management believes that the Company isnot exposed to any significant credit risk with respect to such cash and cash equivalents.

Seasonality

Our CPS merchandising business is affected by seasonality, which typically results in higher sales volume during ourthird quarter, which ends* December 31.*

F-19

Recently Issued Accounting Pronouncements

In* November 2023,the FASB issued ASU2023*-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This update is effective beginning with the Company’s2024 fiscal year annual reporting period, with early adoption permitted. The Company is currently assessing the impact this standard will have on the Company’s consolidated financial statements.

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures (“ASU2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company will adopt ASU2023-09 beginning in thefirst quarter of2026. ASU2023-09 allows for adoption using either a prospective or retrospective transition method. The Company is currently assessing the impact this standard will have on the Company’s consolidated financial statements.

Recently Adopted Accounting Pronouncements

In* October 2021,the FASB issued ASU2021*-08, Business Combinations (Topic805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU2021-08 requires the recognition and measurement of contract assets and contract liabilities acquired in a business combination in accordance with ASC606, Revenue from Contracts with Customers. Considerations to determine the amount of contract assets and contract liabilities to record at the acquisition date include the terms of the acquired contract, such as timing of payment, identification of each performance obligation in the contract and allocation of the contract transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception. ASU2021-08 is effective for the Company beginning in thefirst quarter of2023. ASU2021-08 should be applied prospectively for acquisitions occurring on or after the effective date of the amendments. Early adoption of the proposed amendments would be permitted, including adoption in an interim period. The adoption of this standard didnot have an impact on the Company’s consolidated financial statements.

In* June 2016,the FASB issued ASUNo.* 2016-13, Financial Instruments-Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The guidance is effective for fiscal years beginning after* December 15, 2022for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, and interim periods within those fiscal years. The Company adopted ASU2016*-13 on* April 1, 2023on a prospective basis. The adoption of this standard didnot* have an impact on the Company’s consolidated financial statements.

F-20

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the U.S. Securities and Exchange Commission (the “SEC”) didnot or arenot believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures.

Note3 — Revenue

The following table represents a disaggregation of revenue from contracts with customers for the years ended* March 31, 2024and2023* (in thousands):

For some contracts, the Company* mayinvoice up front for services recognized over time or for contracts in which the Company has unsatisfied performance obligations. Payment terms and conditions vary by contract type, although terms generally cover monthly payments. In the circumstances where the timing of invoicing differs from the timing of revenue recognition, the Company has determined its contracts donot* include a significant financing component. The Company has elected to apply the practical expedient under ASC606-10-50-14 andnot provide disclosure of the amount and timing of performance obligations as the performance obligations are part of a contract that has an original expected duration ofone year or less.

For the years ended* March 31, 2024and2023*, one customer accounted for 51% and 44% of our consolidated revenues, respectively.

The following table summarizes the significant changes in contract liabilities (deferred revenue) balances during the years ended* March 31, 2024and2023* (in thousands):

F-21

Note4 — Business Combinations

Gramophone

On* October 17, 2021,the Company’s wholly owned subsidiary, LiveXLive PR, Inc., acquired 100% of the equity interests of Gramophone for net consideration of $0.4 million consisting of 79,365 shares of the Company’s common stock with a fair value of $0.1 million net of a 25% discount for lack of marketability described below, contingent consideration with a fair value of $0.2 million comprised of shares held in escrow and a cash earnout, and cash of $0.2 million. The shares of the Company’s common stock were subject to atwelve*-month lock-up period and remain subject to sales volume restrictions.

Contingent consideration in the form of a cash earnout of $0.3 million was to be paid to the seller of Gramophone if, during the period commencing* June 1, 2021and ending on May 31, 2022 (“First Year Target”), Gramophone reported GAAP revenues of $1.4 million and EBITDA (as defined in the purchase agreement) of $0.3 million. If the First Year Target wasnot* met, the cash earnout was to be paid to the seller of Gramophone if, during the period commencing* June 1, 2022and ending on May 31, 2023 (“Second Year Target”), Gramophone reported GAAP revenues of $2 million and EBITDA of $0.5 million. The contingent consideration liability of $0.2 million was written off as of March 31, 2024* as the earnout wasnot met (see Note14 – Other Long-Term Liabilities).

Goodwill resulted from acquisition as it is intended to augment and diversify the Company’s reportable segments. The Company accounted for the acquisition as a business combination. As a result of the acquisition of the stock of Gramophone, the goodwill isnot deductible for tax purposes.

The following table summarizes the fair value of the assets assumed in the Gramophone acquisition (in thousands):

F-22

Note5 — Property and Equipment

The Company’s property and equipment at* March 31, 2024and2023* was as follows (in thousands):

Depreciation and amortization expense was $3.3 million and $3.6 million for the years ended* March 31, 2024and2023*, respectively.

F-23

Note 6 — Goodwill and Intangible Assets

Goodwill

The Company currently hasthree reporting units. The following table presents the changes in the carrying amount of goodwill for the years ended* March 31, 2024and2023* (in thousands):

Indefinite-Lived Intangible Assets

The following table presents the changes in the carrying amount of indefinite-lived intangible assets in the Company’s reportable segment for the year ended* March 31, 2024* (in thousands):

Finite-Lived Intangible Assets

The Company’s finite-lived intangible assets were as follows as of* March 31, 2024* (in thousands):

F-24

The Company’s finite-lived intangible assets were as follows as of* March 31, 2023* (in thousands):

Intangible assets are amortized over their estimated useful lives based on the pattern in which the economic benefits associated with the asset are expected to be consumed, which to date has approximated the straight-line method of amortization. The estimated useful lives for patents, content creator relationships, domain names, tradename and customer list are generally three to 15 years, one totwo years, two tofive years, seven toten years andthree tofour years, respectively.

The Company’s amortization expense on its finite-lived intangible assets was $1.8 million and $4.3 million for the years ended* March 31, 2024and2023*, respectively. The Company recorded an impairment charge of $0.1 million and$1.4 million for the year ended* March 31, 2024* and2023, respectively. The impairment for the year ended* March 31, 2024was the result of the impairment of certain assets within our Media Group. The impairment for the year ended March 31, 2023*was the result of a reduction in the events held within React Presents, therefore the Company has stopped marketing the brand name.

Finder's Agreement

In* September 2023,PodcastOne entered into a finder's fee arrangement pursuant to which it agreed to issue shares of PodcastOne common stock at a price of $8.00 per share (subject to adjustment in certain limited circumstances) as a finder’s fee to a certainthird* party podcast platform in the event certain former and/or current podcasts creators of such platform entered into new podcasting agreements with PodcastOne, with the amount of the fee to be based on the amount of revenues actually derived by PodcastOne from such podcasts during a predetermined period. Payments made to suchthird party attributed to PodcastOne entering into new podcast contracts were capitalized to content creator relationship intangibles. As of* March 31, 2024the Company has capitalized $3.2 million of payments made to suchthird* party. $1.8 million of the $3.2 million capitalized of payments made to suchthird party was paid with PodcastOne common stock and the remaining was paid for in cash or accrued.

The Company estimated future amortization expense on its finite-lived intangible assets as of* March 31, 2024* to be as follows (in thousands):

Note7 — Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities at* March 31, 2024and2023* were as follows (in thousands):

F-25

Note8 — Notes Payable

The Company’s notes payable at* March 31, 2024and2023* were as follows (in thousands):

SBA Loan

On* June 17, 2020,the Company received the proceeds from a loan in the amount of less than $0.2 million from the United States Small Business Administration (the “SBA”). Installment payments, including principal and interest, begin12*-months from the date of the promissory note. The balance is payable 30-years from the date of the promissory note, and bears interest at a rate of 3.75% per annum. The areno covenants associated with the SBA loan.

Loan and Security Agreement

In* August 2023,the Company entered into a Loan and Security Agreement with Capchase Inc. (“Capchase”) pursuant to which the Company borrowed $1.7 million to further develop and acquire certain podcasts acquired by PodcastOne and for general working capital. The debt is subordinated to the ABL Credit Facility (as defined below) 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.*

Maturities of notes payables as of* March 31, 2024*were as follows (in thousands):

F-26

Note9 — PodcastOne Bridge Loan

PodcastOne’s Private Placement

On* July 15, 2022 (the “Closing Date”), PodcastOne completed a private placement offering (the“PC1* Bridge Loan”) of PodcastOne’s 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 $8.0 million pursuant to the Subscription Agreements entered into with the Purchasers (the “Subscription Agreements”). In connection with the sale of thePC1 Notes, the Purchasers received warrants (the*“PC1* Warrants”) to purchase a number of shares (the*“PC1* Warrant Shares”) of PodcastOne’s common stock, par value $0.00001 per share. ThePC1 Notes matureone year from the Closing Date, subject to aone-timethree-month extension at PodcastOne’s election (the “Maturity Date”). ThePC1 Notes bear interest at a rate of 10% per annum payable on maturity. ThePC1 Notes would automatically convert into the securities of PodcastOne sold in a Qualified Financing (an initial public offering of PodcastOne’s securities from which PodcastOne’s trading market at the closing of such offering is a national securities exchange) or Qualified Event (a direct listing of PodcastOne’s securities on a national securities exchange), as applicable, upon the closing of a Qualified Financing or Qualified Event, as applicable, at a price per share equal to the lesser of (i) the price equal to $60.0 million divided by the aggregate number of shares of PodcastOne’s common stock outstanding immediately prior to the closing of a Qualified Financing or Qualified Event, as applicable (assuming full conversion or exercise of all convertible and exercisable securities of PodcastOne then outstanding, subject to certain exceptions), and (ii)70% of the offering price of the shares (or whole units, as applicable) in the Qualified Financing or 70% of the initial listing price of the shares on a national securities exchange in the Qualified Event, as applicable. Each holder of thePC1 Notes (other than the Company) could have at such holder’s option require PodcastOne to redeem up to 45% of the principal amount of such holder’sPC1 Notes (together with accrued interest thereon, but excluding the OID), in aggregate up to $3,000,000 for all of thePC1 Notes (other than those held by the Company), immediately prior to the completion of a Qualified Financing or a Qualified Event, as applicable, with such redemption to have been made pro rata to the redeeming holders of thePC1 Notes (the “Optional Redemption”).

The Company also agreed (i)not to effect a Qualified Financing or a Qualified Event, as applicable, unless immediately following such event the Company ownsno less than 66% of PodcastOne’s equity, unless in either case otherwise permitted by the written consent of the holders of the majority of thePC1 Notes (excluding the Company) (the “Majority Noteholders”) and the senior lender, as applicable, (ii) that until a Qualified Financing or a Qualified Event, as applicable, is consummated, the Company guaranteed the repayment of thePC1 Notes when due (other than the Bridge Notes issued to LiveOne) and any interest or other fees due thereunder, and (iii) that if PodcastOne hadnot consummated a Qualified Financing or a Qualified Event, as applicable, by* February 15, 2023,** March 15, 2023or April 15, 2023,unless in either case permitted by the written consent of the Majority Noteholders, PodcastOne was required to redeem $1,000,000 of the then outstandingPC1* Notes (other than thePC1 Notes issued to the Company) by thetenth calendar day of each month immediately following such respective date, up to an aggregate redemption of $3,000,000 over the course of suchthree months, each of which was to be distributed to the holders of the Bridge Notes (other than the Company) on a prorated basis (the “Early Redemption”).

PodcastOne further agreed to register the shares of its common stock issuable upon conversion of thePC1 Notes and exercise of thePC1 Warrants in connection with a Qualified Financing or a Qualified Event. If PodcastOne didnot file such registration statement on or prior to* April 15, 2023,PodcastOne was required to prepay $1,000,000 of thePC1* Notes pro rata to thePC1 Notes holders (other than the Company), and if PodcastOne didnot file such registration statement on or prior to* July 15, 2023,PodcastOne was required to prepay $2,000,000 of thePC1* Notes pro rata to thePC1 Notes holders (other than the Company) (the “Reg St Redemption”). PodcastOne wasnot required to redeem or repay more than a total of $3,000,000 of the principal amount of thePC1 Notes as a result of the Optional Redemption, the Early Redemption and/or the Reg St Redemption. As a result ofnot completing the Qualified Event, as of* April 15, 2023,PodcastOne purchased $3.0 million (excluding the OID) worth ofPC1* Notes which have been eliminated in the consolidation presentation, but otherwise remain issued and outstanding.

On* September 8,*2023, PodcastOne completed a Qualified Event (its spin out from the Company to become a standard publicly trading company (the “Spin-Out”)) as a result of its direct listing on The NASDAQ Capital Market on such date (the "Direct Listing"). In connection with such completed Qualified Event, all of the remainingPC1 Notes (including interest thereunder) in the aggregate amount of approximately $7.02 million converted into approximately 2,341,000 shares of PodcastOne’s common stock.

Warrants

ThePC1 Warrants were classified as liabilities as they represent an obligation to deliver a variable number of shares of common stock in the future and are therefore required to be initially and subsequently measured at fair value each reporting period. The Company recorded a warrant liability in the amount of $1.7 million (and reduced the proceeds allocated to thePC1 Notes accordingly). The fair value of thePC1 Warrant liability is remeasured each reporting period using a Black Scholes model, and the change in fair value is recorded as an adjustment to thePC1 Warrant liability with the unrealized gains or losses reflected in other income (expense). On* September 8, 2023,*as a result of the Direct Listing and PodcastOne's shares of common stock becoming publicly traded, the warrant liability was reclassified to equity as the number and exercise price of the warrants was settled at 3,114,000 warrants with an exercise price of $3.00 per warrant per the warrant agreement.

F-27

The fair value of thePC1 Warrants is measured in accordance with ASC820 “Fair Value Measurement”, using “Monte Carlo simulation” modeling, incorporating the following inputs at issuance:

The fair value of thePC1 Warrants is measured in accordance with ASC820 “Fair Value Measurement”, using “Monte Carlo simulation” modeling, incorporating the following inputs:

Total loss of $4.0 million and unrealized gain of $1.1 million for warrant liabilities accounted for as derivatives have been recorded in other expense for the year ended* March 31, 2024and2023,* respectively. The fair value of the warrants as of* September 8, 2023was $5.9 million and was classified as equity as the warrants were exercisable for a fixed price of $3.00. The fair value of the warrant liability as of March 31, 2023was $1.9 million. As of March 31, 2024,3,114,000 warrants of PodcastOne remain outstanding andnone* have been exercised.

Redemption Features

The Company determined that the redemption features associated with thePC1 Bridge Loan meet the accounting definition of an embedded derivative that must be separated from thePC1 Bridge Loan and initially and subsequently be reported as a liability (“the Redemption Liability”) and measured at fair value. The fair value of the Redemption Liability was determined using a Monte Carlo simulation model usingthree scenarios (1) redemption prior to the initial maturity date (65% weighted), (2) redemption at the initial maturity date (25% weighted) and (3) redemption after the initial maturity date (10% weighted).

F-28

The fair value of the redemption features are measured in accordance with ASC820 “Fair Value Measurement”, using “Monte Carlo simulation” modeling, incorporating the following inputs:

The fair value of the Redemption Liability wasnone at* March 31, 2024and was eliminated as thePC1* Notes were converted into PodcastOne's common stock, and therefore the derivative component was cancelled. The $0.2 million change in the fair value of the Redemption Liability derivative as of* September 8, 2023was recorded as an unrealized loss and included in other income for the year ended March 31, 2024.*

The fair value of the Redemption Liability of $1.1 million at* July 15, 2022was recorded as a derivative liability and included in other liabilities in the consolidated balance sheet. The fair value of the Redemption Liability at March 31, 2023was $1.2 million. The $0.1 million change in the fair value of the Redemption Liability derivative is recorded as an unrealized gain and included in other income in the accompanying consolidated statements of operations for the year ended March 31, 2023.*

The resulting discount from the OID, underwriting fees,PC1 Warrants, and embedded Redemption Liability derivative of $2.8 million is being amortized to interest expense through* July 15, 2023,the expected term of the Bridge Loan, using the effective interest method. Interest expense resulting from the amortization of the discount for the year ended March 31, 2024* and2023 was $1.1 million and $1.7 million, respectively.

Interest expense with respect to thePC1 Notes for the year ended* March 31, 2024* and2023 was $0.2 million and $0.4 million, respectively. There areno restrictive operational covenants associated with thePC1 Notes.

F-29

Note10 — Senior Secured Revolving Line of Credit

On* June 2, 2021,the Company entered into a Business Loan Agreement with East West Bank (the “Senior Lender”), which provided for a revolving credit facility collateralized by all the assets of the Company and its subsidiaries. In connection with the Business Loan Agreement, the Company entered into a Promissory Note with the Senior Lender 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,the Company extended the maturity date of its revolving credit facility to June 2024and its variable interest rate was increased to 2.5%. The Revolving Credit Facility bears interest at a variable rate equal to the Wall Street Journal Prime Rate, plus 2.5%. The interest rate for the period ended March 31, 2024* was 11.00%.

On* September 8, 2023and effective as of August 22, 2023,the Company entered into a new Business Loan Agreement (the “New Business Loan Agreement”) with the Senior Lender, to convert the Company’s revolving credit facility with the Senior Lender into an assets backed loan credit facility with the Senior Lender, which shall continue to be collateralized by afirst* lien on all of the assets of the Company and its subsidiaries (the “ABL Credit Facility”). The New Business Loan Agreement provides the Company with borrowing capacity of up to the Borrowing Base (as defined in the Business Loan Agreement). Pursuant to the New Business Loan Agreement, the requirement that the Company and its related entities shall at all times maintain a certain minimum deposit with the Senior Lender was reduced from $8,000,000 to $5,000,000.

On* May 31, 2024the Company was granted an extension of90* days on the maturity date, therefore the Revolving Credit Facility will mature in* September 2024,see Note20.*

Borrowings under the ABL Credit Facility are subject to certain covenants as set forth in the New Business Loan Agreement and bear interest at a rate equal to the prime rate plus 2.50%, provided that it shallnot be less than 7.00%. The Company* may*prepay at any time without penalty all or a portion of the amount owed to the Senior Lender. The Business Loan Agreement includes various financial and other covenants with which the Company has to comply in order to maintain borrowing availability, including maintaining required minimum liquidity amount and Borrowing Base capacity.

In connection with the New Business Loan Agreement, the Company’s current Promissory Note, dated as of* June 2, 2021,issued to the Senior Lender in the principal amount of $7,000,000 (the “Promissory Note”) continues in effect except as modified by the New Business Loan Agreement and the Change in Terms Agreement, dated as of August 22, 2023,*entered into by the Company and the Senior Lender in connection with the New Business Loan Agreement.

The principal balance under the ABL Credit Facility as of* March 31, 2024and2023* was $7.0 million, respectively. The Company recorded interest expense of $0.6 million and $0.6 million for the year ended* March 31, 2024and2023*, respectively. The Company was in compliance with all debt covenants associated with the ABL Credit Facility as of* March 31, 2024*.

Note 11 —** Unsecured Convertible Notes**

As of* March 31, 2022,*the Company had outstanding 8.5% unsecured convertible notes payable (the “Trinad Notes”) issued to Trinad Capital Master Fund Ltd. (“Trinad Capital”), a fund controlled by Mr. Ellin, the Company’s Chief Executive Officer, Chairman, director and principal stockholder, as discussed below. The Trinad Notes were convertible into shares of the Company’s common stock at a fixed conversion price of $3.00 per share.

Thefirst Trinad Note was issued on* February 21, 2017,to convert aggregate principal and interest of $3.6 million under thefirst* senior promissory note andsecond senior promissory note with Trinad Capital previously issued on* March 31, 2014and April 8, 2015,respectively. Thefirst* Trinad Note was due on* March 31, 2018and was extended to May 31, 2023 (*as discussed below).

Between* October 27, 2017and December 18, 2017,the Company issuedsix* unsecured convertible notes payable to Trinad Capital for aggregate total principal amount of $1.1 million. The notes were due on various dates through* March 31, 2018and were extended to May 31, 2023 (as discussed below). As of March 31, 2023and2022,* $0.3 million and $0.3 million of accrued interest was included in the principal balance, respectively.

On* August 11, 2021,the Company entered into an Amendment of Notes Agreement (the “Amendment Agreement”) with Trinad Capital pursuant to which the maturity date of all of the Trinad Notes was extended to May 31, 2023,and in consideration of such extension, the Company issued to Trinad Capital 33,654 shares of its common stock. The Company evaluated the Amendment Agreement and the amendment was required to be accounted for as an extinguishment under ASC470*-50, Debt – Modifications and Extinguishment. As a result, the Company determined that the amendment should be accounted for as an extinguishment and we recorded the amended debt instrument at fair value which included the consideration in common stock transferred. The resulting loss on extinguishment recorded of $4.3 million is included in loss on extinguishment of debt in the accompanying consolidated statement of operations for the year ended* March 31, 2023.*In addition, the Company recorded a $4.2 million benefit to additional paid in capital as a result of the excess of the deemed fair value of the Trinad Notes over the principal and accrued interest outstanding at the time of extinguishment.

F-30

In* July 2022,the Company entered into an amendment with Trinad Capital pursuant to which the maturity date of all of the Trinad Notes was extended to July 1, 2024,and in consideration of such extension, the Company issued to Trinad Capital 500,000 shares of the Company’s restricted common stock. The Company evaluated the Amendment Agreement and the amendment wasnot* required to be accounted for as a TDR under ASC470-60 asno concession was granted to the Company. The Company then evaluated the Amendment Agreement and the amendment wasnot required to be accounted for as an extinguishment under ASC470-50, Debt – Modifications and Extinguishment. The Company recorded the debt as a modification and recorded the derivative associated with the conversion feature as a debt discount. The Company determined the value of the derivative to be $0.2 million using the Black-Scholes option pricing model based on the following assumptions: common share price of $0.71 per share; expected exercise price of $3.00 per share; volatility of 84.8%; expected dividend yield of zero; and annual risk-free interest rate of 4.09%.

The Company* may**not* redeem any of the Trinad Notes prior to maturity without Trinad Capital’s consent.

On* February 3, 2023 (the “Effective Date”), the “Company entered into an exchange agreement (collectively, the “Exchange Agreements”) with (i) Harvest Small Cap Partners Master, Ltd. (“HSCPM”) in regard to that certain 8.5% Senior Secured Convertible Note in the aggregate amount of $10,503,965 issued by the Company on September 15, 2020,as amended on June 3, 2021and July 6, 2022,to HSCPM (the “HSCPM Note”), (ii) Harvest Small Cap Partners, L.P. (“HSCP”) in regard to that certain 8.5% Senior Secured Convertible Note in the aggregate amount of $4,496,035 issued by the Company on September 15, 2020,as amended on June 3, 2021and July 6, 2022,to HSCP (the “HSCP Note”); and (iii) Trinad Capital (and collectively with HSCPM and HSCP, the “Holders”) in regard to all promissory notes in the aggregate principal and interest amount of $6,177,218 issued by the Company to Trinad Capital (the “Trinad Notes” and collectively with the HSCPM Note and the HSCP Note, the “Notes”). Pursuant to the Exchange Agreements, the Holders exchanged the Notes, and with respect to Trinad Capital, together with interest, due and payable thereon, and relinquished any and all rights thereunder, for 21,177 shares of the Company’s newly designated and issued Series A Perpetual Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), with a stated value of$1,000* per share (the “Stated Value”), having the terms as set forth in the Company’s Certificate of Designation of Preferences, Rights and Limitations of Series A Perpetual Convertible Preferred Stock (the “Certificate of Designation”) filed by the Company on* February 2, 2023*with the Secretary of State of the State of Delaware.

In consideration for entry into the Exchange Agreements and the Holders’ willingness to forego certain rights to common stock of the Company previously agreed by the parties, the Company issued to the Harvest Funds an aggregate of 625,000 shares of its common stock (the “Harvest Shares”) and to Trinad Capital 200,000 shares of its common stock. In connection with the entry of the Exchange Agreements, unless otherwise agreed to by the Harvest Funds, Mr. Ellin agreed to (i) to serve as the Company’s Chief Executive Officer and (ii) extend the period during which he cannot dispose of any equity or convertible securities of the Company owned by him or any entity of which he is the beneficial owner andnot to cease to be the beneficial owner of any other equity or convertible securities of the Company of which Mr. Ellin is the beneficial owner (subject to certain exceptions), in each case until the time that the Harvest Fundsno longer own any shares of the Series A Preferred Stock.

The Company evaluated the Amendment Agreement and the settlement was required to be accounted for as an extinguishment under ASC470-50, Debt – Modifications and Extinguishment, with loss on extinguishment recognized for the difference in the fair value of the equity securities issued and the carrying value of the debt. As the Trinad Notes were with a related party, the Company recorded the loss on extinguishment as a capital transaction and recorded $0.5 million within additional paid in capital in the Statement of Stockholder’s Equity for the year ended* March 31, 2023.*

F-31

Note12 — Related Party Transactions

As of* March 31, 2022,the Company had unsecured 8.5% Senior Secured Convertible Notes previously issued to Trinad Capital (as defined below). In February 2023,the Trinad Notes along with accrued interest thereunder were converted into 6,177 shares of Series A Preferred Stock and Trinad Capital also received 200,000 shares of the Company's common stock.6,177 shares of Series A Preferred Stock were outstanding as of December 31, 2023.In April 2023and July 2023,*the Company issued 116 and 192 shares of its Series A Preferred Stock, respectively, to Trinad Capital as dividend payments required by the terms of the Series A Preferred Stock.

On* September 8, 2023,PodcastOne completed its Direct Listing on the Nasdaq Capital Market which resulted in the Company owning 15,672,186 shares of common stock in PodcastOne along with 1,100,000 common stock warrants to purchase shares of PodcastOne's common stock as of December 31, 2023.*Also, on this date, PodcastOne issued 147,044 shares of PodcastOne common stock to the Company's CEO as a result of his ownership of the Company's preferred stock.

During the years ended* March 31, 2024and2023,* the Company is participating in a production agreement for a podcast and related show with an affiliate of Mr. Wachsberger, the Company’s director. The Company incurred cost ofnone and $0.1 million for the years ended* March 31, 2024and2023,* respectively, attributed to the arrangement.

During the years ended* March 31, 2024and2023,* the Company issue or reserved 123,425 and 150,593 shares of common stock with a value of $0.1 million and $0.2 million to a relative of the CEO for services performed, respectively.

During the year ended* March 31, 2024,*the Company received 159,333 shared of PodcastOne Common stock with a fair value of $0.3 million in exchange for amounts owed under a cost sharing agreement between PodcastOne and the Company.

Note13 — Leases

On* December 22, 2020,the Company acquired CPS which included the assumption of an operating lease for a 55,120 square foot light manufacturing facility located in Addison Illinois, expiring June**30,* 2024.

The Company leases several office locations with lease terms that are less than12 months or are on month to month terms. Rent expense is recognized over the term of the lease on a straight-line basis. Rent expense for these leases totaled $0.5 million and$0.2 million for the year ended* March 31, 2024and2023,* respectively. Operating leases with lease terms of greater than12 months are capitalized in Operating lease right-of-use assets and Operating lease liabilities in the consolidated balance sheet. Rent expense for these operating leases totaled $0.4 million and $0.4 million the years ended* March 31, 2024and2023*, respectively, which is included in general and administrative expenses in the consolidated statement of operations.

Operating lease costs for the years ended* March 31, 2024and2023* consisted of the following (in thousands):

Supplemental balance sheet information related to leases was as follows (in thousands):

The operating lease right-of-use assets are included in other assets in the* March 31, 2024and2023* consolidated balance sheets, and operating lease liabilities are included in accounts payable and accrued liabilities and lease liabilities non-current in the* March 31, 2024and2023* consolidated balance sheets.

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Future maturities of operating lease liabilities as of* March 31, 2024* were as follows (in thousands):

Significant determinations

Discount rate – the Company’s lease is discounted using the Company’s incremental borrowing rate of 8.5% as the rate implicit in the lease isnot readily determinable.

Options – the lease term is the minimum noncancelable period of the lease. The Company doesnot include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

Lease and non-lease components – Non lease components were considered and determinednot to be material.

PodcastOne arrangement

PodcastOne leases certain premises under a month-to-month operating lease. Rent expense for the operating lease totaled $0.3 million and $0.3 million for the year ended* March 31, 2024* and* March 31, 2023*, respectively.

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Note14 — Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in thousands):

The Company classified $7.5 million and $3.8 million of accrued royalties into long term based on contractual arrangements with the royalty holders for the year ended* March 31, 2024and2023,* respectively. In addition, the Company accrued $5.6 million into long term liabilities as a result of the Sound Exchange settlement, (Note15 – Commitments and Contingencies) as of* March 31, 2023.As of March 31, 2024there wasno* long term liability associated with the Sound Exchange settlement. The amount previously included in Other long-term liabilities includes a contingent consideration liability resulting from the business combination of Gramophone which expired withno payment made during the year ended* March 31, 2024.*

Note15 — Commitments and Contingencies

Contractual Obligations

As of* March 31, 2024*, the Company is obligated under agreements with Content Providers and other contractual obligations to make guaranteed payments as follows: $6.6 million, $0.6 million, $0.5 million and $0.5 million for the fiscal year ending* March 31, 2025,*2026, 2027 and2028, respectively.

On a quarterly basis, the Company records the greater of the cumulative actual content acquisition costs incurred or the cumulative minimum guarantee based on forecasted usage for the minimum guarantee period. The minimum guarantee period of time is the period that the minimum guarantee relates to, as specified in each agreement, which* may*be annual or a longer period. The cumulative minimum guarantee, based on forecasted usage, considers factors such as listening hours, revenue, members, and other terms of each agreement that impact the Company’s expected attainment or recoupment of the minimum guarantees based on the relative attribution method.

Several of the Company’s content acquisition agreements also include provisions related to the royalty payments and structures of those agreements relative to other content licensing arrangements, which, if triggered, could cause the Company’s payments under those agreements to escalate, which included payments to be made in common stock. In addition, record labels, publishers and performing rights organizations with whom the Company has entered into direct license agreements have the right to audit the Company’s content acquisition payments, and any such audit could result in disputes over whether the Company has paid the proper content acquisition costs. However, as of* March 31, 2024*, the Company doesnot believe it is probable that these provisions of its agreements discussed above will, individually or in the aggregate, have a material adverse effect on its business, financial position, results of operations or cash flows.

On* August 4, 2022,the Company entered into a settlement agreement with a certain music partner attributed to past royalties owed. The Company issued 800,000 shares of its common stock to the music partner and settled $0.4 million of accounts payable with the remaining value of the shares attributed to prepayment for future royalties. The fair value of the shares was determined to be $1.0 million based on the Company’s share price at the date the shares were issued. As of March 31, 2024*,no amount was recorded as a prepaid asset related to this transaction in order to fund future amounts owed for royalties. As required by the agreement, because the agreement wasnot terminated by the music partner afterone year, the Company issued an additional 200,000 shares to the music partner as prepayment of future royalties.

In addition, the Company entered into additional arrangements with vendors to settle outstanding amounts owed in exchange for a cumulative amount of 597,918 shares of common stock with a fair value of $0.4 million. The fair value of the shares was determined to be $0.4 million based on the Company’s share price at the date the shares were issued.

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Employment Arrangements

As of* March 31, 2024*, the Company has an employment agreement and employment arrangement withtwo named executive officers (“Section16 Officers”) that provide salary payments of $0.7 million and target bonus compensation of up to $0.3 million on an annual basis. Furthermore, such employment agreement and employment arrangement contains a severance clause that could require severance payments in the aggregate amount of $0.3 million (excluding the value of potential payouts of discretionary bonuses, pro-rata bonuses, and potential accelerated vesting of equity awards granted to such executive officer).

The Company’s CEO agreed to forgive his salary of $0.5 million per annum for the period from* August 2021until December 31, 2022in exchange for shares of the Company’s common stock and/or restricted stock units to be issued in the future. As of March 31, 2024,the Company’s board of directors hasnot* yet determined the number of shares of the Company’s common stock and/or restricted stock units to be issued to the CEO as such compensation.

On* April 10, 2018,Joseph Schnaier, Danco Enterprises, LLC (an entity solely owned by Mr. Schnaier, “Danco”), Wantmcs Holdings, LLC (Mr. Schnaier is the managing member) and Wantickets (Mr. Schnaier is the 90% beneficial owner) filed a complaint in the Supreme Court of the State of New York, County of New York against the Company, LiveXLive Tickets, Inc. (“LXL Tickets”), Robert S. Ellin and certain other defendants. Plaintiffs subsequently voluntarily dismissed all claims against the other defendants. The complaint alleged multiple causes of action arising out of Schnaier’s investment (through Danco) into the Company in2016,* LXL Tickets’ purchase of certain operating assets of Wantickets pursuant to the Asset Purchase Agreement, dated as of* May 5, 2017 (the "APA"), and Mr. Schnaier’s employment with LXL Tickets. The Company denied plaintiffs’ claims. The Company believed that the complaint was an intentional act by the plaintiffs to publicly tarnish the Company’s and its senior management’s reputations through the public domain in an effort to obtain by threat of litigation certain results for Mr. Schnaier’s self-serving and improper purposes. The Company vigorously defended this lawsuit and believed that the allegations are without merit and that it has strong defenses. On June 26, 2018,the Company and LXL Tickets, filed counterclaims against the plaintiffs for breach of contract (including under the APA), fraudulent inducement, and other causes of action, seeking injunctive relief, damages, attorneys’ fees and expenses and such other relief as the court mayaward. As of December 31, 2022,all of plaintiffs’ claims were dismissed or addressed by the parties or the court other than plaintiffs’ claims for fraudulent inducement related to payment of Wantickets’ audit costs, breach of contract based on Mr. Schnaier’s employment agreement with LXL Tickets, and fraudulent inducement due to plaintiffs alleged inability to sell their shares of Company’s common stock acquired pursuant to the APA. The trial was held in late Apriland early May 2023.In May 2023,the Company achieved a favorable outcome in this lawsuit, as the jury awarded damages to LXL Tickets in the amount of $0.23 million, together with costs and disbursements as taxed by the clerk and with statutory interest at 9% per annum from November 22, 2018,versus damages in the amount of $0.15 million, together with costs and disbursements as taxed by the clerk and with statutory interest at 9% per annum from June 29, 2018awarded to the plaintiffs. Neither amount is material to the Company. The plaintiffs appealed certain rulings in this matter, and in February 2024,*the court of appeals denied the appeal. Accordingly, other than the payment of damages awarded by the court to each party as provided above, this lawsuit has been concluded.

During each of the quarters ended* March 31, 2024and2023*, the Company recorded legal settlement expenses relating to potential claims arising in connection with litigation brought against the Company by certainthird parties werenot material and were included in general and administrative expenses in the accompanying consolidated statements of operations.

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From time to time, the Company is involved in legal proceedings and other matters arising in connection with the conduct of its business activities. Many of these proceedings* maybe at preliminary stages and/or seek an indeterminate amount of damages. In the opinion of management, after consultation with legal counsel, such routine claims and lawsuits arenot* significant and we donot currently expect them to have a material adverse effect on our business, financial condition, results of operations, or liquidity.

Note16 — Employee Benefit Plan

The Company sponsors a401(k) plan (the*“401*(k) Plan”) covering all employees. Prior to* March 31, 2019,only Slacker employees were eligible to participate in the401*(k) Plan. Employees are eligible to participate in the401(k) Plan thefirst day of the calendar month following their date of hire. The Company* maymake discretionary matching contributions to the401*(k) Plan on behalf of its employees up to a maximum of 100% of the participant’s elective deferral up to a maximum of 5% of the employees’ annual compensation. The Company provided a contribution of $0.2 million and $0.1 million, to its employees for the years ended* March 31, 2024and2023*, respectively.

Note17 — Stockholders’** Equity**

Authorized Common Stock and Authority to Create Preferred Stock

The Company has the authority to issue up to 510,000,000 shares, consisting of 500,000,000 shares of the Company’s common stock, $0.001 par value per share, and 10,000,000 shares of the Company’s preferred stock, $0.001 par value per share (the “preferred stock”).

The Company* mayissue shares of preferred stock from time to time inone* or more series, each of which will have such distinctive designation or title as shall be determined by the Company’s board of directors and will have such voting powers, full or limited, orno voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issue of such class or series of preferred stock as* maybe adopted from time to time by the Company’s board of directors. The Company’s board of directors will have the power to increase or decrease the number of shares of preferred stock of any series after the issuance of shares of that series, butnot* below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased, the shares constituting such decrease will resume the status of authorized but unissued shares of preferred stock.

It isnot possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the common stock until and unless the Company’s board of directors determines the specific rights of the holders of the preferred stock; however, these effects* may*include: restricting dividends on the common stock, diluting the voting power of the common stock, impairing the liquidation rights of the common stock, or delaying or preventing a change in control of the Company without further action by the stockholders.

Stock Repurchase Program

In* December 2020,the Company announced that its board of directors has authorized the repurchase of up totwo million shares of its outstanding common stock from time to time. In November 2022,the Company announced that its board of directors has authorized it to expand its stock repurchase program by up to an additional $2,000,000 worth of shares of its common stock to be repurchased from time to time. The timing, price, and quantity of purchases under the program will be at the discretion of our management and will depend upon a variety of factors including share price, general and business market conditions, compliance with applicable laws and regulations, corporate and regulatory requirements, and alternative uses of capital. The program maybe expanded, suspended, or discontinued by our board of directors at any time. Although our board of directors has authorized this stock repurchase program, there isno* guarantee as to the exact number of shares, if any, that will be repurchased by us, and we* maydiscontinue purchases at any time that management determines additional purchases arenot* warranted. We cannot guarantee that the program will be consummated, fully or all, or that it will enhance long-term stockholder value. The program could affect the trading price of our common stock and increase volatility, and any announcement of a termination of this program* mayresult in a decrease in the trading price of our common stock. In addition, this program could diminish our cash reserves. The Company purchased 1,639,125 and 2,220,914 shares of its common stock under the stock repurchase program for the year ended March 31, 2024and2023*, for a total of $2.6 million and $2.2 million, respectively. As of* March 31, 2024,*the Company has up to $1.1 million remaining to repurchase shares of its and/or PodcastOne’s outstanding common stock under the stock repurchase program, provided, that the Company’s management has authorized the repurchase of up to an additional $2.5 million worth of shares of the Company’s and/or PodcastOne’s outstanding common stock from time to time stock under the stock repurchase program, which $2.5 million is subject to approval of the Company’s board of directors.

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Series A Preferred Stock

The Series A Preferred Stock is convertible at any time at a Holder’s option into shares of the Company’s common stock, at a price of $2.10 per share of common stock, bears a dividend of 12% per annum, is perpetual and hasno maturity date. At the option of the Company, the dividend was to be paid in-kind until* February 3, 2024,and thereafter, the Holders had the option to select whether subsequent dividend payments shall be paid in kind or in cash; provided, that as long as any Series A Preferred Stock is held by the Harvest Funds (as defined below), Trinad Capital shall receive the dividend solely in kind. The Series A Preferred Stock shall haveno* voting rights, except as set forth in the Certificate of Designation or as otherwise required by law.

The Company* may,at its option (the “Optional Redemption Right”), on or before the Redemption Date (as defined herein), purchase up to $5,000,000 in aggregate of the then outstanding shares of Series A Preferred Stock held by the Harvest Funds at a cash redemption price per share of Series A Preferred Stock equal to the Stated Value (the “Redemption Price”). The Company is required on or before August 3, 2024 (the "Redemption Date”), and in any event if prior to the Redemption Date the Company consummated any financing transaction in which the Company, directly or indirectly, raised, in aggregate, gross proceeds of more than $20,000,000 of new capital, to purchase $5,000,000 in aggregate of the then outstanding shares of Series A Preferred Stock held by the Harvest Funds (the “Mandatory Redemption Amount”) at the Redemption Price (the “Mandatory Redemption”). If the Optional Redemption Right is exercised up to the full $5,000,000 amount, the Mandatory Redemption requirement was to be terminated; provided, that if the Optional Redemption Right is exercised in any amount less than $5,000,000, the Mandatory Redemption Amount was to be reduced by the amount that the Optional Redemption Right has been elected and exercised. Without the prior express consent of the majority of the votes entitled to be cast by the holders of Series A Preferred Stock outstanding at the time of such vote (the “Majority Holders”), the Company shallnot* authorize or issue any additional or other shares of its capital stock that are (i) of senior rank to the Series A Preferred Stock or (ii) of pari passu rank to the Series A Preferred Stock, in each case in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation. Pursuant to the Letter Agreements (as defined below), the Harvest Funds agreed (x) that any future dividends payable on the Series A Preferred Stock shall be paid in-kind or in cash at the option of the Company; provided, that as long as any Series A Preferred Stock is held by the Harvest Funds, Trinad Capital shall receive the dividend solely in kind, (y) to delete the Mandatory Redemption requirement.

Pursuant to the Exchange Agreements, the Company agreed that at any time that any of the shares of Series A Preferred Stock issued to the Harvest Funds are outstanding, (i) to directly or through its100% owned subsidiaries (as applicable), to own on a fully diluted basis at least66% of the total equity and voting rights of any and all classes of securities of each of PodcastOne, Slacker, PPV One, Inc., and LiveXLive Events, LLC subsidiaries of the Company, (ii)not to issue shares of its common stock or convertible equity securities at a price less than $2.10 per share (subject to certain exceptions), provided, that such consent shallnot be required in connection with any merger, acquisition or other business combinations of the Company and/or any of its subsidiaries with any unaffiliatedthird party, (iii)not to raise more than an aggregate of $20,000,000 of capital inone or more offerings, including without limitation,one or more equity or debt offerings or a combination thereof, on an accumulated basis commencing after* February 3, 2023 (the “Qualified Offering”); provided, that such consent shallnot* be required for any equity financing of the Company at a price of $2.25 per share or above, and (iv) if after* February 3, 2023the Company distributes any of its assets or any shares of its common stock or Common Stock Equivalents (as defined in the Exchange agreements) of any of its subsidiaries pro rata to the record holders of any class of shares of its common stock, the Company shall distribute to the Holders its pro rata portion of any such distribution (calculated on an as-converted basis with respect to the then outstanding Series A Preferred Stock) concurrently with the distribution to the then record holders of any class of its common stock (including an applicable distribution of shares of PodcastOne’s common stock to the Harvest Funds in connection with the Spin-Out and special dividend of PodcastOne’s common stock to the Company’s stockholders of record), in each case without the Majority Holders’ prior written consent. Any breach of the aforementioned covenants shall constitute a material breach, which if uncured, shall result in the issuance of an aggregate of 56,473 shares of the Company’s restricted common stock (the “Default Shares”) to the Holders for eachfive* trading days (or pro rata thereof) after the date of the breach; provided, that if such breach is cured within the applicable cure period,no Default Shares shall be issued.

In accordance with ASC480, the Company classified $5.0 million of its Series A Preferred Stock as temporary equity due to the Company’s obligation to redeem $5.0 million of the Series A Preferred Stock on or before18 months after issuance for cash, which also contains a substantive conversion feature. The redemption feature wasnot deemed to be closely and clearly related to the equity-type host instrument. Accordingly, it was accounted for as a liability at inception based on its fair value of $0.2 million with subsequent changes in fair value included in earnings. The change in fair value of the embedded derivative included in the statement of earnings was a loss of $0.2 million and a gain of $0.2 million for the year ended* March 31, 2024and2023,* respectively.

In accordance with ASC480, the Company classified $16.2 million of the Series A Preferred Stock as permanent equity in the financial statements as it wasnot subject to mandatory redemption at the option of the holder. The Company concluded that the Series A Preferred Stock is more akin to an equity-type instrument than a debt-type instrument, therefore the conversion features associated with the Series A preferred stock classified as permanent equity were deemed to be clearly and closely related to the host instrument andnot a derivative under ASC815. Accordingly the Series A Preferred Stock wasnot accreted to the redemption amount in effect on the balance sheet date.

Each share of Series A Preferred Stock is entitled to receive cumulative dividends payable at a rate per annum of 12% of the Stated Value.

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Issuance of Restricted Shares of Common Stock for Services to Consultants and Vendors

During the year ended* March 31, 2024and2023,* the Company incurred $0.9 million and $0.7 million, respectively, in accounts payable and accrued liabilities for stock earned by its consultants, butnot yet issued. The remaining unrecognized compensation cost of less than $0.1 million is expected to be recorded over the next year as the shares vest.

2016 Equity Incentive Plan

The Company’s board of directors and stockholders approved the Company’s2016 Equity Incentive Plan, as amended (the*“2016* Plan”) which reserved a total of 12,600,000 shares of the Company’s common stock for issuance. On* September 17, 2020,the Company's stockholders approved the amendment to the2016* Plan to increase the number of shares available for issuance under the plan by 5,000,000 shares increasing the total up to 17,600,000 shares which the Company formally increased on* June 30, 2021.Incentive awards authorized under the2016* Plan include, but arenot limited to, nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section162(m) of the Internal Revenue Code of1986, as amended (the “Code”), and stock appreciation rights. If an incentive award granted under the2016 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to the Company in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the2016 Plan.

The Company recognized share-based compensation expense of $7.9 million and $3.0 million during the years ended* March 31, 2024and2023*, respectively. The total tax benefit recognized related to share-based compensation expense wasnone for the years ended* March 31, 2024and2023*.

Share-based compensation expense during the year ended* March 31, 2024and2023* includes the impact from differences in the timing of expense recognized in the statement of operations and the share issuances recorded in additional paid in capital, capitalization of internally developed software costs, and the benefit from the reversal of a previously accrued discretionary share-based award bonus of $1.1 million during the year ended* March 31, 2022.*

The maximum contractual term for awards is 10 years. As of* March 31, 2024*, there were 3,269,910 shares of common stock available for future issuance under the2016 Plan.

PodcastOne2022* Equity Plan*

On* December**15,* 2022, PodcastOne’s board of directors and the Company as the sole stockholder, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., approved PodcastOne’s2022 Equity Incentive Plan (the*“2022* Plan”) which reserved a total of 2,000,000 shares of PodcastOne’s common stock for issuance. Incentive awards authorized under the2022 Plan include, but arenot limited to, nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section162(m) of the Code and stock appreciation rights. If an incentive award granted under the2022 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to PodcastOne in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the2022 Plan.

As of* March 31, 2024,PodcastOne has granted incentive awards underlying 879,060 shares of PodcastOne's common stock under the2022* Plan with a fair value of $3.64 per share.287,500 of the awards had vested andnone have been forfeited as of* March 31, 2024.As of March 31, 2024,*PodcastOne recognized $1.3 million of stock compensation for vested restricted stock units. Unrecognized compensation costs for unvested PodcastOne restricted stock units issued to employees was $1.9 million, which is expected to be recognized over a weighted-average service period of 0.97 years.

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Non-Controlling Interest

On* September 8, 2023,the Company completed its Spin-Out of its PodcastOne subsidiary, and as a result 4.3 million shares of PodcastOne's common stock were issued to holders outside of the Company resulting in a non-controlling interest in PodcastOne of 21.64%. The stock dividend of 4.3 million shares was a non-reciprocal transfer between PodcastOne and non-LiveOne shareholders. As a result, the transaction was recorded as a change in non-controlling interest under ASC810,* which resulted in an increase to non-controlling interest of $1.5 million for the year ended* March 31, 2024.Subsequent to the Spin-Out, PodcastOne issued an additional 3.2 million shares of its common stock to non-Company holders as a result of the conversion of the then remainingPC1* Notes in full, which resulted in an aggregate non-controlling interest of 26.50%, resulting in an increase of $2.5 million to non-controlling interest within the accompanying consolidated statement of stockholders' deficit and mezzanine equity. In addition, as a result of the completion of the Spin-Out and PodcastOne’s shares of common stock being publicly traded, the variability in the terms of PodcastOne’s warrants issued as part of thePC1 Bridge Loan was resolved so that such warrants were reclassified to equity and classified within non-controlling interest in the amount of $5.9 million.

Options Grants to Employees

Stock option awards are granted with an exercise price equal to the fair market value of the Company’s common stock at the date of grant based on the closing market price of its common stock as reported on The Nasdaq Capital Market. The option awards generally vest over four years and are exercisable any time after vesting. The stock options expireten years after the date of grant.

As of* March 31, 2024*, unrecognized compensation costs for unvested awards to employees was $0.1 million, which is expected to be recognized over a weighted-average service period of 0.89 years.

The following table provides information about our option grants made to employees during the lasttwo fiscal years under the Company's2016 Equity Plan:

The grant date fair value of each of these option grants to employees was determined using the Black-Sholes-Merton option-pricing model with the following assumptions:

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The following table summarizes the activity of our options issued under the2016 Equity Plan to employees during the years ended* March 31, 2024and2023*

The weighted-average remaining contractual term for options to employees outstanding and options to employees exercisable as of* March 31, 2024* was 4.13 years and 4.07 years, respectively. The intrinsic value of options to employees outstanding and options to employees exercisable was $0.1 million andnone, respectively, at* March 31, 2024*. The intrinsic value of options exercised wasnone andnone, respectively, at* March 31, 2024and2023*.

The fair value of stock options that were exercised during the year ended* March 31, 2024and2023* was immaterial. The fair value of stock options that were forfeited during the year ended* March 31, 2024and2023* was $0.6 million and$4.0 million, respectively. The fair value of stock options outstanding and exercisable at* March 31, 2024* was $8.3 million and $8.5 million, respectively. The fair value of stock options outstanding and exercisable at* March 31, 2023* was $9.1 million and $8.6 million, respectively.

Options Grants to Non-Employees

As of* March 31, 2024*, there wereno unrecognized compensation costs for unvested awards to non-employees. There wereno option grants to non-employees for the lasttwo fiscal years.

The following table summarizes the activity of our options issued to non-employees under the2016 Equity Plan during the years ended* March 31, 2024and2023*:

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The weighted average remaining contractual term for options to non-employees outstanding as of* March 31, 2024* was 3.9 years. The intrinsic value of options to non-employees outstanding and options to non-employees exercisable wasnone at* March 31, 2024*.

Restricted Stock Units Grants

As of* March 31, 2024*, unrecognized compensation costs for unvested awards to employees was $1.2 million, which is expected to be recognized over a weighted-average service period of 0.70 years.

The following table provides information about our restricted stock units grants made to employees during the lasttwo fiscal years:

The following table summarizes the activity of our restricted stock units under the2016 Equity Plan issued to employees during the years ended* March 31, 2024and2023*:

The fair value of restricted stock units that vested during the year ended* March 31, 2024and2023* was $4.0 million and $2.3 million, respectively. The fair value of restricted stock units that were forfeited during the year ended* March 31, 2024and2023* was $0.1 million and $1.1 million, respectively.

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Note18 — Income Tax Provision

The Company’s income tax provision can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items.

The components of pretax loss and income tax (benefit) expense are as follows (in thousands):

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The differences between income taxes expected at U.S. statutory income tax rates and the income tax provision are as follows (in thousands):

At* March 31, 2024*, the Company had available federal and state net operating loss carryforwards to reduce future taxable income of approximately $147.9 million and $84.3 million, respectively. The federal and state net operating loss carryforwards begin to expire on various dates beginning in2028. Of the $147.9 million of federal net operating loss carryforwards, $66.0 million was generated in tax years beginning before* March 31, 2018and is subject to the20*-year carryforward period (“pre-Tax Act losses”), the remaining $81.9 million (“post-Tax Act losses”) can be carried forward indefinitely but is subject to the80% taxable income limitation.

The Company obtained $133.9 million and $1.5 million of federal net operating loss and credit carryforwards, respectively, and $104.2 million and $1.7 million of state net operating loss and credit carryforwards, respectively, through the acquisition of Slacker, Inc. in* December 2017.Utilization of these losses is limited by Section382* and383 of the Code in fiscal year end* March 31, 2018and each taxable year thereafter. The Company updated its382* study during the year ended* March 31, 2024to determine the applicable limitations. Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize the appropriate deferred tax asset at that time. The Company has estimated a limitation of the federal and state NOL of $96.8 million and $80.6, respectively. It is possible that the utilization of these NOL carryforwards and tax credits may*be further limited.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by the federal and state jurisdictions where applicable. There are currentlyno pending income tax examinations. The Company’s tax years for2018 and forward are subject to examination by the federal tax authorities and tax years for2017 and forward are subject to examination by California tax authorities due to the carryforward of unutilized net operating losses.

The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of* March 31, 2024and2023*, the Company hasnot accrued interest or penalties related to uncertain tax positions.

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Significant components of the Company’s deferred income tax assets and (liabilities) are as follows as of (in thousands):

As the ultimate realization of the potential benefits of a portion of the Company’s deferred tax assets is considered unlikely by management, the Company has offset the deferred tax assets attributable to those potential benefits through valuation allowances. Accordingly, the Company didnot recognize any benefit from income taxes in the accompanying consolidated statements of operations to offset its pre-tax losses. The valuation allowance against deferred tax assets is $41.8 million and $40.0 million for the years ended* March 31, 2024and2023*, respectively. The valuation allowance increased by $1.8 million for the year ended* March 31, 2024*.

Note19 — Business Segments and Geographic Reporting

The Company determined its operating segments in accordance with ASC280, “Segment Reporting” (“ASC280”).

Beginning in thesecond quarter of fiscal2024, management has determined that the Company hasthree operating segments (PodcastOne, Slacker and Media Group). The Audio Group consist of the Company's PodcastOne and Slacker subsidiaries and the Media Group consist of the Company's remaining subsidiaries. As a result of the Spin-Out of PodcastOne, the Company’s chief operating decision maker (“CODM”) began to make decisions and allocate resources based onthree operating segments of the business (PodcastOne, Slacker and Media group). The Company’s reporting segments reflects the manner in which its CODM reviews results and allocates resources. The CODM reviews operating segment performance exclusive of share-based compensation expense, amortization of intangible assets, depreciation, and other expenses (including legal fees, expenses, and accruals) related to acquisitions, associated integration activities, and certain other non-cash charges. As a result, the segment information for the prior periods has been recast to conform with the current period presentation.

The Company’sthree operating segments are also consistent with its internal organizational structure, which is the way the Company assesses operating performance and allocates resources.

Customers

The Company hasone external customer that accounts for more than10% of its revenue and accounts receivable. Such original equipment manufacturer (the “OEM”) provides premium Slacker service in its new vehicles. Total revenues from the OEM were $59.9 million and $44.3 million for the years ended* March 31, 2024and2023*, respectively. Total receivables from the OEM were 42% and 32% of total accounts receivable as of* March 31, 2024and2023*, respectively.

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Segment and Geographic Information

The Company’s operations are based in the United States. All material revenues of the Company are derived from the United States. All long-lived assets of the Company are located in the United States, of which $0.3 million resides in PodcastOne, $2.9 million in Slacker and $0.4 million is attributed to our Media Group.

The Company manages its working capital on a consolidated basis. Accordingly, segment assets arenot reported to, or used by, our management to allocate resources to or assess performance of our segments, and therefore, total segment assets and related depreciation and amortization havenot been presented.

The following table presents the results of operations for the Company's reportable segments for the years ended* March 31, 2024and2023*:

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Note20 — Fair Value Measurements

The following table presents the fair value of the Company’s financial liabilities that are measured at fair value on a recurring basis (in thousands):

The following table presents a reconciliation of the Company’s financial liabilities that are measured at Level3 within the fair value hierarchy (in thousands):

The settlement of the PodcastOne contingent consideration of $3.0 million consisted of 414,137 shares of the Company's common stock issued to the Company with a fair value of $0.5 million, cash payment of $0.3 million and a gain of $2.2 million attributed to the former owners of PodcastOne forgiving the remaining balance of $2.2 million.

The Company didnot elect the fair value measurement option for the following financial assets or liabilities. The fair values of certain financial instruments measured at amortized cost and the hierarchy level the Company used to estimate the fair values are shown below (in thousands):

The fair values of financial instrumentsnot included in these tables are estimated to be equal to their carrying values as of* March 31, 2024* and* March 31, 2023*. The Company’s estimates of the fair values were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values.

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Cash equivalents and restricted cash equivalents primarily consisted of short-term interest-bearing money market funds with maturities of less than90 days and time deposits. The estimated fair values were based on available market pricing information of similar financial instruments.

Due to their short maturity, the carrying amounts of the Company’s accounts receivable, accounts payable and accrued expenses approximated their fair values as of* March 31, 2024* and* March 31, 2023*.

The Company’s notes payable and senior secured line of credit arenot publicly traded and fair value is estimated to equal carrying value.

Note21 — Subsequent Events

Subsequent to* March 31, 2024* and as ofJuly1, 2024, the Company repurchased 402,593 shares of its common stock at an average price of $1.86 per share.

On* April 1, 2024 (*the “Effective Date”), the Company entered into Letter Agreements (collectively, the “Letter Agreements”) with (i) Harvest Small Cap Partners Master, Ltd. (“HSCPM”), (ii) Harvest Small Cap Partners, L.P. (“HSCP” and together with HSCPM, the “Harvest Funds”), and (iii) Trinad Capital Master Fund Ltd., a fund controlled by Mr. Ellin, the Company’s Chief Executive Officer, Chairman, director and principal stockholder (“Trinad Capital” and collectively with the Harvest Funds, the “Holders”), the holders of the Company’s Series A Perpetual Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), with a stated value of $1,000 per share. Pursuant to the Agreements (i) the Holders converted approximately $11.4 million worth of shares of Series A Preferred Stock into shares of the Company’s common stock, at a price of $2.10 per share, as follows: HSCPM converted 5,602.09 shares of Series A Preferred Stock into 2,667,664 shares of the Company’s common stock, HSCP converted 2,397.91 shares of Series A Preferred Stock into 1,141,860 shares of the Company’s common stock, and Trinad Capital converted 3,395.09 shares of Series A Preferred Stock into 1,616,709 shares of the Company’s common stock, and (ii) HSCPM, HSCP and Trinad Capital received 910,340,389,660 and 535,399 three-year warrants to purchase the Company’s common stock exercisable at a price of $2.10 per share (collectively, the “Warrants”).

In addition, pursuant to the Agreements, the Harvest Funds agreed (x) that any future dividends payable on the Series A Preferred Stock shall be paid in-kind or in cash at the option of the Company; provided, that as long as any Series A Preferred Stock is held by the Harvest Funds, Trinad Capital shall receive the dividend solely in kind, (y) to delete the requirement for the Company to purchase from the Harvest Funds $5,000,000 in aggregate of the then outstanding shares of Series A Preferred Stock held by the Harvest Funds on or before* August 3, 2024.*

The Company further agreed, on or prior to the date that is45 days after the Effective Date, which was subsequently changed to* July 1, 2024,to prepare and file with the SEC a Registration Statement on Form S-3 (or such other form as applicable) covering the resale under the Securities Act of the Warrants and the Warrant Shares. The Company agreed to use its commercially reasonable best efforts to cause such registration statement to be declared effective promptly thereafter on or before45* days after the filing of such registration statement (or if the SEC issues any comments with respect to such registration statement, on or before90 days after the filing of such registration statement). Upon effectiveness of such Registration Statement, the Company agreed to use its reasonable best efforts to keep the Registration Statement effective with the SEC for a period equal tothree years from the Effective Date for the Warrants, and with respect to the Warrant Shares, so long as any Warrants are outstanding, and to supplement, amend and/or re-file such Registration Statement to comply with such effectiveness requirement.

On* May 14, 2024,the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital as sales agent, pursuant to which the Company maysell, from time to time, at its sole discretion an aggregate of up to $25,000,000 of its shares of common stock, (the “Shares”). The Company intends to use the net proceeds, if any, from the sale of the Shares under the Sales Agreement for working capital and other general corporate purposes, which mayinclude future acquisitions of businesses and content and strengthening its balance sheet. The Company’s management doesnot* currently intend to sell the Shares under the Sales Agreement at a price lower than $5.00 per share. The Shares* may*be issued and sold from time to time through or to Roth Capital acting as sales agent or principal pursuant to the Company’s shelf Registration Statement on Form S-3 (Reg.No. 333-262549) and the related prospectus filed by the Company.

The Company agreed to pay Roth Capital a commission equal to 3.0% of the gross sales price per share for any Shares sold through Roth Capital under the Sales Agreement and reimburse Roth Capital’s fees and expenses up to $50,000 in connection with entering into the Sales Agreement, in addition to certain ongoing disbursements of their legal counsel. The Company has provided Roth Capital with customary indemnification and contribution rights. The Sales Agreement* may*be terminated by Roth Capital or the Company at any time upon notice to the other party as provided in the Sales Agreement, or by Roth Capital at any time in certain circumstances, including the occurrence of a material and adverse change in the Company’s business or financial condition that makes it impractical or inadvisable to market the Shares or to enforce contracts for the sale of the Shares.

On* May 31, 2024,the Company extended the maturity date of its promissory note issued to the Senior Lender, underlying the ABL Credit Facility, from June**2,* 2024 to* September 2, 2024.*

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