PodcastOne Inc

for the Years Ended March 31, 2024 and 2023

Note1 — Organization and Basis of Presentation

Organization

PodcastOne, Inc. (“we,” “us,” “our,” the “Company” or “PodcastOne”) is a Delaware corporation headquartered in Beverly Hills, California. The Company is a leading podcast platform and publisher that makes its content available to audiences via all podcasting distribution platforms, including its website (www.podcastone.com), its PodcastOne app, Apple Podcasts, Spotify, Amazon Music and more.

The Company was incorporated in the State of Delaware on* February 25, 2014,and is a majority owned subsidiary of LiveOne, Inc. (“LiveOne”), a Nasdaq listed company. On July 1, 2020,LiveOne through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., acquired the Company. Acquisitions are included in the Company’s 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. In connection with the acquisition, the accounts of the Company were adjusted using the push down basis of accounting to recognize the allocation of the net assets acquired which was determined to be $16.1 million. In accordance with the push down basis of accounting, the Company’s net assets were adjusted to their fair values as of the date of the acquisition based upon an independent appraisal. The Company hastwo* wholly owned subsidiaries, Courtside, LLC, a Delaware limited liability company, and PodcastOne Sales, LLC, a California limited liability company.

Basis of Presentation

The results of operations and financial position of the Company are consolidated with LiveOne’s financial statements and these financial statements have been derived as if the Company had operated on a standalone basis during the years ended* March 31, 2024and2023.* The amounts recorded for related party transactions with LiveOne* maynot* be considered arm’s length transactions and therefore, the financial statements* maynot* necessarily reflect the Company’s results of operations, financial position and cash flows had the Company engaged in such transactions with an unrelatedthird party during the years ended* March 31, 2024and2023.* Accordingly, the Company’s historical financial information isnot necessarily indicative of what the Company’s results of operations, financial position and cash flows will be in the future, if and when the Company contracts at arm’s length with unrelatedthird parties for services they receive from LiveOne.

The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the ASC and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Going Concern and Liquidity

The Company’s 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 issuances and its cash and cash equivalents (which cash, cash equivalents amounted to $1.4 million as of* March 31, 2024).The Company has an accumulated deficit of $29.6 million and had positive working capital of $0.9 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.

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The Company is looking for additional financing sources to attempt to secure additional interim financing, which is needed to continue its current level of business operations and satisfy its current obligations, unless such financing is provided by LiveOne, if at all. In the absence of additional sources of liquidity, management anticipates that existing cash resources willnot be sufficient to meet current operating and liquidity needs beyond* June 2025.There isno* assurance that management will be able to obtain additional liquidity or be successful in raising additional funds or that such required funds, if available, or that LiveOne will provide any financing to the Company, if at all, or that any such financing will be available on attractive terms or that it willnot have a significant dilutive effect on the Company’s existing stockholders. In addition, management is unable to determine at this time whether any of these potential sources of liquidity will be adequate to support the Company’s future business operations. While the Company doesnot currently anticipate delays or hindrances to its current business operations and initiatives schedule due to liquidity constraints, without additional funding the Company* may**not* be able to continue its current level of business operations in the future. The financial statements donot include any adjustments that might result from the outcome of this uncertainty. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

Principles of Consolidation

The 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. All intercompany balances and transactions have been eliminated in consolidation.

Note2 — Summary of Significant Accounting Policies

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with 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. 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.

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 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 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.

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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.

Allocation of Costs

The Company’s consolidated financial statements include an allocation of costs that have been incurred by LiveOne on the Company’s behalf. Such expenses incurred include, but arenot limited to, salaries, benefits, share-based compensation expense, insurance, accounting, tax and legal services. Such expenses were allocated to the Company based upon certain assumptions and estimates that were made in order to allocate a reasonable share of such expenses to the Company, so that the Company’s consolidated financial statements reflect substantially all costs of doing business. The authoritative guidance to allocate such costs is set forth in Staff Accounting Bulletin, or SAB Topic1-B “Allocations of Expenses and Related Disclosures in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity.”

Had the Company been operating on a stand-alone basis, the cost allocated wouldnot be materially different for the years ended* March 31, 2024and2023,* respectively.

Gross Versus Net Revenue Recognition

The Company reports revenue on a gross basis for all advertising contracts 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 and gross of revenue sharing expenses owed to the content creators. 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. The gross amount of revenue recognized is equal to the amounts received from our customer, gross of revenue sharing expenses owed to the content creators.

Advertising Revenue

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. The Company 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.

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. Barter revenue for the years ended* March 31, 2024and2023* was $16.7 million and $8.3 million, respectively.

Cost of Sales

Cost of sales consists of direct costs comprised of revenue sharing expenses owed to content creators and commissions.

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Sales and Marketing

Sales and Marketing include the direct and indirect costs related to the Company’s event advertising and marketing. 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 $0.2 million for the years ended* March 31, 2024and2023,* respectively.

Product Development

Product development costsnot capitalized are primarily 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 is allocated to the Company from its parent LiveOne based on the amount of stock-based compensation granted to employees of the Company in the form of stock-based compensation of LiveOne in accordance with SAB Topic1-B “Allocations of Expenses and Related Disclosures in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity.”

LiveOne and the Company measure stock-based compensation cost 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. LiveOne and the Company account for awards with graded vesting as if each vesting tranche is valued as a separate award. LiveOne and the Company use the Black-Scholes-Merton option pricing model to determine the grant date fair value of stock options. This model requires LiveOne and 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. LiveOne and the Company use a predicted volatility of its stock price during the expected life of the options that is based on the historical performance of LiveOne’s and the Company's stock price as well as including an estimate using guideline companies. The expected term is computed using the simplified method as LiveOne’s and the Company's best estimate given its lack of actual exercise history. LiveOne and the Company have 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 option. Management believes that the fair value of the stock options is more reliably measured than the fair value of the services received. 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. LiveOne records the fair value of these equity-based awards and expense at their cost ratably over related vesting periods.

During the year ended* March 31, 2024,the Company began to issue equity awards in the form of RSUs directly to its employees under the2022* PODC Equity Incentive Plan that was approved in* December 2022.*

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.

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Earnings (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 consist of stock options issued to employees, directors, vendors and consultants, restricted stock units, and convertible notes would be excluded from the diluted earnings per share calculation because their effect is anti-dilutive.

Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.

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.

The following table provides amounts included in cash and cash equivalents presented in the Company’s consolidated statements of cash flows for the years ended* March 31, 2024and2023* (in thousands):

Accounts Receivable

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 nature of its membership receivables.

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The Company’s accounts receivable at* March 31, 2024and2023* are as follows (in thousands):

Related Party Receivable and Payables

LiveOne has historically maintained a lending relationship with the Company in order to supplement the Company’s working capital needs. As of* March 31, 2024and2023,* the net payable and receivable was $0.2 million and $1.5 million, respectively. LiveOne and the Company doesnot charge interest on these borrowings.

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. The Company capitalizes certain costs related to the development of its platform and other software applications for internal use. In accordance with authoritative guidance, the Company begins to capitalize its costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. The Company stops capitalizing these costs when the software is substantially complete and ready for its intended use, including the completion of all significant testing. These costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally estimated to betwo years. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditure will result in additional functionality and expense costs incurred for maintenance and minor upgrades and enhancements. Costs incurred prior to meeting these criteria together with costs incurred for training and maintenance are expensed as incurred and recorded within product development expenses in the Company’s consolidated statements of operations.

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

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.

Goodwill

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. Goodwill isnot amortized, but is 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.

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The Company’s annual goodwill impairment test is performed at the reporting unit level. The Company generally tests 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, the Company determines the fair value of the related reporting unit and compares this value to the recorded net assets of the reporting unit, including goodwill. The fair value of the Company’s 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 the Company’s annual impairment assessment,no impairments of goodwill were identified during the years ended* March 31, 2024and2023,* respectively.

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.

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 and Content Creator Relationships 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: Brand and Trade Names (10 years) and Content Creator relationships (2 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. No impairment losses have been recorded during the years ended* March 31, 2024and2023,* respectively.

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:

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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, 2023and are Level3* measurements. There have beenno transfers between levels.

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.

Debt with Warrants

In accordance with ASC Topic470-20-25, when the Company issues debt with warrants, the Company treats the fair value of 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 amortization of debt discount expense in the consolidated statements of operations using the straight-line method. The offset to the contra-liability is recorded as either equity or liability in the Company’s consolidated balance sheets depending on the accounting treatment of the warrants. 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.

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 a Monte Carlo simulation 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 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 using the straight-line method.

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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.

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.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and 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.

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Note3 — Property and Equipment

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

Depreciation expense was $0.3 million and $0.2 million for the years ended* March 31, 2024and2023,* respectively.

Note4 — Goodwill and Intangible Assets

Goodwill

The Company currently hasone reporting unit. The following table presents the changes in the carrying amount of goodwill 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):

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

The Company’s amortization expense on its finite-lived intangible assets was $0.9 million and $0.1 million for the years ended* March 31, 2024and2023,* respectively.

The Company expects to record amortization of intangible assets for fiscal years ending* March 31, 2024*and future fiscal years as follows (in thousands):

Note5 — Accounts Payable and Accrued Liabilities

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

Accrued revenue share can be attributed to monies owed to content creators who contribute their podcast or other media content for the Company to sell to consumers. The Company accrues a liability based on the percentage of revenue owed to each content creator at the time of sale.

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Note6 — Bridge Loan

Private Placement

On* July 15, 2022 (the “Closing Date”), the Company completed a private placement offering (the“PC1* Bridge Loan”) of its unsecured convertible notes with an original issue discount of 10% (the “OID”) in the aggregate principal amount of $8.8 million (the*“PC1* Notes”) to certain accredited investors and institutional investors (collectively, the “Purchasers”), for cash proceeds of $7.4 million, net of placement agent fees of $0.7 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 the Company’s common stock. ThePC1 Notes mature on* July 15, 2023,subject to aone*-timethree-month extension at the Company’s election (the “Maturity Date”). The Company elected the extension and extended the maturity date to* October 15, 2023.ThePC1* Notes bear interest at a rate of 10% per annum payable on maturity. ThePC1 Notes shall automatically convert into the securities of the Company sold in a Qualified Financing (an initial public offering of the Company’s securities from which the Company’s trading market at the closing of such offering is a national securities exchange) or Qualified Event (a direct listing of the Company’s securities on a national securities exchange (the “Direct Listing”)), 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 the Company’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 the Company 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 LiveOne)* mayat such holder’s option require the Company 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 LiveOne), immediately prior to the completion of a Qualified Financing or a Qualified Event, as applicable, with such redemption to be made pro rata to the redeeming holders of thePC1 Notes (the “Optional Redemption”). Upon a Purchaser’s redemption of anyPC1 Notes pursuant to the Optional Redemption right, then a portion of such Purchaser’sPC1 Warrants shall be forfeited and cancelled in accordance with the following formula: for each*$0.001* million of the principal amount of thePC1 Notes redeemed,PC1 Warrants to purchase 100% of the Warrant Shares issued per*$0.001* million of the principal amount of thePC1 Notes shall be immediately forfeited and cancelled.

LiveOne also agreed (i)not to effect a Qualified Financing or a Qualified Event, as applicable, unless immediately following such event LiveOne ownsno less than 66% of the Company’s equity, unless in either case otherwise permitted by the written consent of the holders of the majority of thePC1 Notes (excluding LiveOne) (the “Majority Noteholders”) and LiveOne’s senior lender, as applicable, (ii) that until a Qualified Financing or a Qualified Event, as applicable, is consummated, LiveOne 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 the Company hasnot consummated a Qualified Financing or a Qualified Event, as applicable, by* February 15, 2023,** March 15, 2023or April 15, 2023,as applicable, unless in either case permitted by the written consent of the Majority Noteholders, the Company shall be required to redeem $1,000,000 of the then outstandingPC1* Notes pro rata from thePC1 Notes holders (other than thePC1 Notes issued to LiveOne) 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 shall be distributed to the holders of thePC1 Notes (other than LiveOne) on a prorated basis (the “Early Redemption”).

The Company 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 the Company didnot file such registration statement on or prior to* April 15, 2023,the Company was required to prepay $1,000,000 of thePC1* Notes pro rata to thePC1 Notes holders (other than LiveOne), and if the Company didnot file such registration statement on or prior to* July 15, 2023,the Company was required to prepay $2,000,000 of thePC1* Notes pro rata to thePC1 Notes holders (other than LiveOne) (the “Reg St Redemption”). The Company isnot be 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.

F-18

During the year ended* March 31, 2024the Company redeemed $3.0 million of principal on thePC1* Notes.

On* September 8, 2023,the Company completed a Qualified Event (its direct listing on The Nasdaq Capital Market (the "Spin-Out")) as a result of its direct listing on The NASDAQ Capital Market on such date. 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 the Company’s common stock.

Warrants

ThePC1 Warrants are classified as liabilities at inception of thePC1 Bridge Loan as they represent an obligation to deliver a variable number of shares of the Company’s 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 $2.6 million (and reduced the proceeds allocated to thePC1 Notes accordingly). The fair value of thePC1 Warrant liability is remeasured each reporting period using a Monte Carlo simulation 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 Spin-Out, the number of shares of PodcastOne's common stock into whichPC1* Warrants were exercisable was fixed based on the exercise price of $3.00 per share. As a result, the Company reclassed its $9.1 million warrant liability as of* September 8, 2023to equity within additional paid in capital. As of March 31, 2024*there were 3,114,000 common stock warrants issued and outstanding.

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 change in fair value of a loss of $6.3 million for warrant liabilities accounted for as derivatives have been recorded in other expense for the year ended* March 31, 2024in the accompanying consolidated statements of operations. Total unrealized gains of $0.2 million for warrant liabilities accounted for as derivatives have been recorded in other expense for the year ended March 31, 2023*in the accompanying consolidated statements of operations.

F-19

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. On* September 8, 2023,the Company completed its Spin-Out, therefore the redemption feature was cancelled andnot* exercised by the holder. Based on the fair value of the shares traded on* September 8, 2023,*the Company valued the derivative at $3.4 million.

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

The fair value of the Redemption Liability of $1.7 million at* July 15, 2022was recorded as a derivative liability in the consolidated balance sheets. The fair value of the Redemption Liability at March 31, 2024wasnone* as a result of thePC1 Bridge Loan converting to common stock. The $1.3 million change in the fair value of the Redemption Liability derivative is recorded as an expense and included in other expenses in the accompanying consolidated statements of operations for the year ended* March 31, 2024.The fair value of the Redemption Liability at March 31, 2023was $2.0 million. The $0.3 million change in the fair value of the Redemption Liability derivative for the year ended March 31, 2023was recorded as a loss and included in other expenses in the accompanying consolidated statements of operations at March 31, 2023.*

The resulting discount from the OID, placement agent fees,PC1 Warrants, and embedded Redemption Liability derivative of $5.8 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, 2024and2023* was $1.6 million and $4.1 million, respectively.

Interest expense with respect to thePC1 Bridge Loan for the year ended* March 31, 2024and2023* was $0.1 million and $0.6 million, respectively. There areno covenants associated with thePC1 Notes.

Note7 — Related Party Transactions

As of* March 31, 2024,*the Company’s parent, LiveOne, holds approximately 15.7 million shares of the Company's common stock and 1,100,000 common stock warrants to purchase shares of the Company. In addition, directors and management affiliated with LiveOne hold approximately 887,995 shares of the Company's common stock.

During the years ended* March 31, 2024and2023,* the Company was allocated expenses by LiveOne attributed to the overhead expenses incurred on behalf of the Company. The amount allocated to the Company from LiveOne for the years ended* March 31, 2024and2023,* was $0.7 million and $0.6 million, respectively.

F-20

Effective as of* July 1, 2020,*LiveOne was deemed to have made a contribution of $16.1 million via shares of LiveOne’s common stock to the Company to acquire the Company.

As of* March 31, 2024and2023,* the Company had a related party payable owed to LiveOne of $0.3 million and $2.3 million, respectively which primarily consisted of expenses related to overhead expenses paid on behalf of the Company (See Note2 – Summary of Significant Accounting Policies). As of* March 31, 2024and2023,* the Company had a related party receivable from LiveOne of $0.1 million and $3.8 million, respectively which primarily consisted of cash allocated to LiveOne.

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

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

Note8 — Commitments and Contingencies

Contractual Obligations

As of* March 31, 2024,the Company is obligated under agreements with its 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* August 28, 2023,the Company entered into a newtwo*-year employment contract with its Chief Executive Officer for $0.4 million per year effective* January 1, 2023.*

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.

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, except as set forth below, 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.

On* February 23, 2023,Cherri Bell filed a complaint in the Superior Court of the State of California, County of Los Angeles against the PodcastOne Sales, LiveOne and Mr. Kit Gray, the Company’s President. The complaint alleges several causes of action allegedly arising out of plaintiff’s employment with PodcastOne Sales, including claims for retaliation in violation of California Labor Code§1102.5,* wrongful termination in violation of public policy and intentional infliction of emotional distress. Plaintiff is seeking damages, which shall be determined at trial, if any, plus interest, attorneys’ fees and costs and other such relief as the court* mayaward. The defendants have denied plaintiffs’ claims, and the Company believes that the allegations are without merit and that the defendants have strong defenses. The Company intends to vigorously defend all defendants against any liability to the plaintiff. The defendants have also filed a motion to compel arbitration in this matter. As of the date of this report, while the Company has assessed that the likelihood of a loss, if any, isnot* probable, the outcome of this lawsuit is inherently uncertain and the potential range of loss could have a material adverse effect on the Company’s business, financial condition and results of operations.

F-21

Parent Company Debt

The senior credit facility held by the Company’s parent, LiveOne, contains provisions that limit the Company’s operating activities, including covenant relating to the requirement to maintain a certain amount cash at LiveOne of $7.0 million (as was subsequently reduced and maybe adjusted from time to time). If an event of default occurs and is continuing, the senior lender* mayamong other things, terminate its obligations thereunder, accelerate its debt and require LiveOne and/or the Company to repay all amounts thereunder. For example, on October 13, 2022,a judgement was entered in favor of SoundExchange, Inc. (“SX”) against LiveOne and Slacker in the United States District Court Central District of California in the amount of approximately $9.8 million. In February 2023,the parties settled the dispute. LiveOne’s debt agreements with the provider of its senior credit facility contains a covenant that if a material adverse change occurs in its financial condition, or such lender reasonably believes the prospect of payment or performance of their loan is materially impaired, the lender at its option mayimmediately accelerate its debt and require LiveOne and the Company to repay all outstanding amounts owed thereunder. If for any reason LiveOne fails to comply with the terms of its settlement agreement with SX, its senior credit facility provider maydeclare an event of default and at its option mayimmediately accelerate its debt and require LiveOne and the Company to repay all outstanding amounts owed under the senior credit facility, which would materially adversely impact the Company’s business, operating results and financial condition. On September 8, 2023and effective as of August 22, 2023,LiveOne entered into a new Business Loan Agreement with the senior credit facility provider to convert the senior credit facility into an assets backed loan credit facility, which shall continue to be collateralized by afirst* lien on all of the assets of LiveOne and its subsidiaries (the “ABL Credit Facility”). The Business Loan Agreement provides LiveOne with borrowing capacity of up to the Borrowing Base (as defined in the Business Loan Agreement). Pursuant to the Business Loan Agreement, the requirement that LiveOne and its related entities shall at all times maintain a certain minimum deposit with the senior credit facility provider was reduced from $7,000,000 to $5,000,000. In* August 2023,LiveOne entered into a $1.7 million secured loan with Capchase which accrues interest at 8% and matures 30 months form issuance (the “Capchase Loan”). As of March 31, 2024,*LiveOne was in compliance with all covenants under the Capchase Loan and the ABL Credit Facility.

F-22

Note9 — Employee Benefit Plan

The Company’s parent LiveOne sponsors a401(k) plan (the*“401*(k) Plan”) covering all of the Company’s employees. 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’s matching contributions werenot material to the financial statements for the years ended* March 31, 2024and2023,* respectively.

Note10 — Stockholders’** Equity**

Prior to the Spin-Out, LiveOne, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., canceled 127,984,230 shares of the Company’s common stock. As of* March 31, 2024,LiveOne, Inc. owned approximately 17.0 million shares of the Company’s common stock (not including any shares of common stock underlying thePC1* Warrants held by LiveOne), which constituted approximately 74% of the Company’s issued and outstanding shares of common stock as of such date.

Pursuant to the Company’s Amended and Restated Certificate of Incorporation which was approved by the Company’s board of directors and LiveOne as the sole stockholder on* December 15, 2022,which became effective on September 12, 2023,*in connection with the completion of the Spin-Out, the Company is authorized to issue up to 110,000,000 shares, consisting of 100,000,000 shares of the Company’s common stock and 10,000,000 shares of the Company’s preferred stock, $0.00001 par value per share (the "preferred stock").

On* September 8, 2023,the Company completed the Spin-Out and converted the outstandingPC1* Bridge Loan into 2,340,707 shares of common stock based on a fair value of $4.39 per share, which was the closing price of the stock on the date of conversion. The book value of thePC1 Bridge Loan and the bifurcated embedded derivative were converted into additional paid in capital, which equaled the fair value of the 2,340,707 shares issued for the conversion of thePC1 Bridge Loan. As a result of the completion of the Spin-Out and the PodcastOne shares becoming publicly traded, the Company reclassified its warrant liability to equity as a result of the strike price and number of warrants becoming fixed at $3.00 per share, which resulted in a $9.1 million increase to additional paid in capital. In addition, the Company's derivative liability was written tozero as the redemption feature was unexercised.

Finder's Agreement

In* September 2023,the Company entered into a finder's fee arrangement pursuant to which the Company agreed to issue shares of its 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 podcast content creators of such platform entered into new podcasting agreements with the Company, with the amount of the fee to be based on the amount of revenues actually derived by the Company from such podcasts during a predetermined period. Payments made to suchthird party attributed to the Company entering into new podcast contracts were capitalized to content creator relationship intangibles. As of* March 31, 2024,the Company has capitalized $3.3 million of payments made to suchthird* party.

LiveOne2016* Equity Incentive Plan*

LiveOne’s board of directors and stockholders approved its2016 Equity Incentive Plan, as amended (the*“2016* Plan”) which reserved a total of 12,600,000 shares of LiveOne’s common stock for issuance. On* September 17, 2020,LiveOne’s stockholders approved the amendment to the2016* Plan to increase the number of shares available for issuance under the2016 Plan by 5,000,000 shares increasing the total up to 17,600,000 shares, which increase was formally adopted by LiveOne on* June 29, 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 LiveOne 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.

F-23

The Company’s employees were awarded options and restricted stock awards under the2016 Plan, therefore an allocation of the share-based compensation was made to the Company from LiveOne. The Company recognized stock-based compensation expense of $3.5 million and $1.0 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,* respectively.

Options Grants to the Company’s Employees

Stock option awards are granted with an exercise price equal to the fair market value of LiveOne’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 overtwo tofour 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 1.63 years.

The following table provides information about LiveOne’s option grants made to the Company’s employees during the lasttwo fiscal years:

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

The following table summarizes the activity of LiveOne’s options issued to the Company’s employees during the years ended* March 31, 2024and2023:*

F-24

The weighted-average remaining contractual term for options to employees outstanding and options to employees exercisable as of* March 31, 2024was 7.68 years and 7.72 years, respectively. The intrinsic value of options to employees outstanding and options to employees exercisable wasnone andnone, respectively, at March 31, 2024and2023,* respectively. The intrinsic value of options exercised wasnone andnone, respectively, at* March 31, 2024and2023.*

The fair value of stock options outstanding and exercisable at* March 31, 2024was $0.3 million and $0.2 million, respectively. The fair value of stock options outstanding and exercisable at March 31, 2023was$0.7* million and $0.3 million, respectively.

Restricted Stock Units Grants

As of* March 31, 2024,unrecognized compensation costs for unvested awards to employees was$0.2* million, which is expected to be recognized over a weighted-average service period of 0.93 years.

The following table provides information about LiveOne’s restricted stock units grants made to the Company’s employees during the lasttwo fiscal years:

The following table summarizes the activity of LiveOne’s restricted stock units issued to the Company’s employees during the year ended* March 31, 2024and2023:*

The fair value of restricted stock units that vested during the years ended* March 31, 2024and2023* was $0.6 million and $1.3 million, respectively.

PodcastOne2022* Equity Plan*

On* December 15, 2022,the Company’s board of directors and LiveOne as the sole stockholder, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., approved the Company’s2022* Equity Incentive Plan (the*“2022* Plan”) which reserved a total of 2,000,000 shares of the Company’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 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 the2022 Plan.

F-25

The following table summarizes the activity of the Company's restricted stock units issued to employees under the2022 Plan during the years ended* March 31, 2024:*

As of* March 31, 2024,the Company 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.

Authorized Common Stock and Authority to Create Preferred Stock

Pursuant to the Company’s Amended and Restated Certificate of Incorporation which was approved by the Company’s board of directors and LiveOne as the sole stockholder on* December 15, 2023,*became effective in connection with the completion of the Spin-Out, the Company is authorized to issue up to 110,000,000 shares, consisting of 100,000,000 shares of the Company’s common stock and 10,000,000 shares of the Company’s 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.

While the Company doesnot currently have any plans for the issuance of preferred stock, the issuance of such preferred stock could adversely affect the rights of the holders of common stock and, therefore, reduce the value of the common 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.

F-26

Note11 — 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 as of* March 31, 2023 (*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).

Due to their short maturity, the carrying amounts of the Company’s accounts receivable, accounts payable, accrued liabilities and other long-term liabilities approximated their fair values as of* March 31, 2024and2023,* respectively.

Note12 — 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.

F-27

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

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 $9.9 million and $17.1 million, respectively. The federal and state net operating loss carryforwards begin to expire on various dates beginning in2034.* Of the $9.9 million of federal net operating loss carryforwards, $3.5 million was generated in tax years beginning before* March 31, 2018and is subject to the20*-year carryforward period (“pre-Tax Act losses”), the remaining $8.8 million can be carried forward indefinitely but is subject to the80% taxable income limitation.

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 for 2017 and forward are subject to examination by the federal tax authorities and tax years for 2014 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.

F-28

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 $3.8 million and$3.5 million for the years ended* March 31, 2024and2023,* respectively. The valuation allowance increased by $0.3 million for the year ended* March 31, 2024.*

Note13 — Subsequent Events

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