LiveOne Inc

Previous wording

As used herein,“LiveOne,”* the*“Company,”* “we,” “our” or*“us”* and similar terms include LiveOne, Inc. and its subsidiaries, unless the context indicates otherwise. The following discussion and analysis of our business and results of operations for the three and nine months ended December 31, 2023, and our financial conditions at that date, should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this*“Quarterly Report”).

Current wording

As used herein,“LiveOne,”* the*“Company,”* “we,” “our” or*“us”* and similar terms include LiveOne, Inc. and its subsidiaries, unless the context indicates otherwise. The following discussion and analysis of our business and results of operations for the three months ended June 30, 2024, and our financial conditions at that date, should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this*“Quarterly Report”).

Previous wording

We are a pioneer in the acquisition, distribution and monetization of live music, Internet radio, podcasting and music-related streaming and video content. Our principal operations and decision-making functions are located in North America. We manage and report our businesses as a single operating segment. Our senior management regularly reviews our operating results, principally to make decisions about how we allocate our resources and to measure our segment and consolidated operating performance. In prior fiscal years we generated a majority of our revenue primarily through membership services from our streaming radio and music services, and to a lesser extent through advertising and licensing across our music platform. In the fourth quarter of our fiscal year ended March 31, 2020, we began generating ticketing, sponsorship, and promotion-related revenue from live music events through our February 2020 acquisition of React Presents. In May 2020, we launched a new pay-per-view (“PPV”) offering enabling new forms of artist revenue including digital tickets, tipping, digital meet and greets, merchandise sales and sponsorship. In July 2020, we entered the podcasting business with the acquisition of PodcastOne and in December 2020, we entered the merchandising business with the acquisition of CPS. In October 2021, we entered artist and brand development and music-related press relations business through our acquisition of Gramophone.

Current wording

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

Previous wording

For the three months ended December 31, 2023 and 2022, we reported revenue of $28.5 million and $23.5 million, respectively. We have one customer that accounted for more than 10% of its revenue during the three and nine months ended December 31, 2023 and 2022. The customer is an original equipment manufacturer (the “OEM”) who provides premium Slacker service in all of their new vehicles. In the three months ended December 31, 2023 and 2022, total revenue from the OEM was $15.5 million and $11.4 million, respectively. In the nine months ended December 31, 2023 and 2022, total revenue from the OEM was $43.6 million and $32.1 million, respectively.

Current wording

For the three months ended June 30, 2024 and 2023, we reported revenue of $33.1 million and $27.8 million, respectively. We have one customer that accounted for more than 10% of its revenue during the three months ended June 30, 2024 and 2023. The customer is an original equipment manufacturer (the “OEM”) who provides premium Slacker service in all of their new vehicles. In the three months ended June 30, 2024 and 2023, total revenue from the OEM was $17.5 million and $13.3 million, respectively.

Previous wording

We ended the December 31, 2023 quarter with approximately 2,300,000 paid members on our music platform, up from approximately 1,594,000 at December 31, 2022, representing 44% annual growth. Included in the total number of paid members for the reported periods are certain members which are the subject of a contractual dispute. We are currently not recognizing revenue related to these members.

Current wording

We ended the June 30, 2024 quarter with approximately 2,900,000 paid members on our music platform, up from approximately 2,300,000 at June 30, 2023, representing 44% annual growth. Included in the total number of paid members for the reported periods are certain members which are the subject of a contractual dispute. We are currently not recognizing revenue related to these members.

Previous wording

During our fiscal year ended March 31, 2022, we derived 52% of our revenue from paid memberships and the remainder from advertising, ticketing, sponsorship, merchandising and licensing. Our revenue for the fiscal year ended March 31, 2023 was comprised of 55% from paid members, 37% from advertising, 7% from merchandise and 1% from ticketing.

Current wording

During our fiscal year ended March 31, 2024, we derived 57% of our revenue from paid memberships and the remainder from advertising, ticketing, sponsorship, merchandising and licensing. Our revenue for the fiscal year ended March 31, 2024 was comprised of 57% from paid members, 40% from advertising and 3% from merchandise.

Previous wording

As our music platform continues to evolve, we believe there are opportunities to expand our services by adding more content in a greater variety of formats such as podcasts and video podcasts (“vodcasts”), extending our distribution to include pay television, OTT and social channels, deploying new services for our members, artist merchandise and live music event ticket sales, and licensing user data across our platform. Our acquisitions of PodcastOne, CPS and Gramophone are reflective of our flywheel operating model. Conversely, the evolution of technology presents an inherent risk to our business. Today, we see large opportunities to expand our music services within North America and other parts of the world where we will need to make substantial investments to improve our current service offerings. As a result, and during the fiscal year ending March 31, 2024, we will continue to invest in product and engineering to further develop our future music apps and services, and we expect to continue making significant product development investments to our existing technology solutions over the next 12 to 24 months to address these opportunities.

Current wording

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

Previous wording

As our platform matures, we also expect our Contribution Margins*, adjusted earnings before income tax, depreciation and amortization (“Adjusted EBITDA”)* and Adjusted EBITDA Margins* to improve in the near and long term, which are non-GAAP measures as defined in section following below titled, “Non-GAAP Measures”. Historically, our live events business has not generated enough direct revenue to cover the costs to produce such events, and as a result generated negative Contribution Margins*, Adjusted EBITDA*, Adjusted EBITDA Margins* and operating losses. Historically, we produced and digitally distributed the live music performances of many of these large global music events to fans all around the world. Beginning in late March 2020, the COVID-19 pandemic had an adverse impact on on-premise live music events and festivals. With the elimination of any fan-attended music events, festivals and concerts, we shifted our operating model beginning in April 2020 towards self-producing live music events that were 100% digital (e.g., artists not performing in front of live fans and solely for digital distribution).

Current wording

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

Previous wording

For the majority of our agreements with festival owners, we acquire the global broadcast rights. Moreover, the digital rights we acquire principally include any format and screen, and where applicable, future rights to VR and AR. For the quarter ended December 31, 2023 and 2022, all material amounts of our revenue were derived from customers located in the United States and moreover, one of our customers accounted for 49% and 42% of our consolidated revenue, respectively. This significant concentration of revenue from one customer poses risks to our operating results, and any change in the means this customer utilizes our services beyond March 31, 2023 could cause our revenue to fluctuate significantly.

Current wording

For the quarter ended June 30, 2024 and 2023, all material amounts of our revenue were derived from customers located in the United States and moreover, one of our customers accounted for 49% and 42% of our consolidated revenue, respectively. This significant concentration of revenue from one customer poses risks to our operating results, and any change in the means this customer utilizes our services beyond June 30, 2024 could cause our revenue to fluctuate significantly.

Previous wording

Membership revenue increased $3.5 million, or 26%, to $16.9 million for the three months ended December 31, 2023, as compared to $13.4 million for the months ended December 31, 2022. The increase was primarily as a result of member growth with our largest OEM customer.

Current wording

Membership revenue increased $3.6 million, or 24%, to $18.9 million for the three months ended June 30, 2024, as compared to $15.2 million for the months ended June 30, 2023. The increase was primarily as a result of member growth with our largest OEM customer.

Previous wording

Advertising revenue increased $2.1 million, or 25%, to $10.6 million for the three months ended December 31, 2023, as compared to $8.5 million for the three months ended December 31, 2022, which is primarily attributable to growth in advertising at PodcastOne year-over-year.

Current wording

Advertising revenue increased $2.3 million, or 21%, to $13.1 million for the three months ended June 30, 2024, as compared to $10.8 million for the three months ended June 30, 2023, which is primarily attributable to growth in advertising at PodcastOne year-over-year.

Previous wording

Merchandising revenue decreased $1.0 million, or 21%, to $3.8 million for the three months ended December 31, 2023, as compared to $4.8 million the three months ended December 31, 2022, which is due to a reduction in demand from both retail partners and our direct to consumer merchandising business.

Current wording

Merchandising revenue decreased $0.6 million, or 34%, to $1.2 million for the three months ended June 30, 2024, as compared to $1.7 million the three months ended June 30, 2023, which is due to a reduction in demand from both retail partners and our direct to consumer merchandising business.

Previous wording

Sponsorship and licensing revenue decreased by $0.1 million, or 100%, to none for the three months ended December 31, 2023, as compared to $0.1 million for the three months ended December 31, 2022. The decrease was primarily due to no significant events occurring for the three months ended December 31, 2023.

Current wording

Sponsorship and licensing revenue decreased by $29,000, or 100%, to none for the three months ended June 30, 2024, as compared to $29,000 for the three months ended June 30, 2023. The decrease was primarily due to no significant events occurring for the three months ended June 30, 2024.

Previous wording

Ticket/Event revenue decreased by $0.6 million, or 100%, to $0.6 million for the three months ended December 31, 2023, as compared to $0.6 million for the three months ended December 31, 2022, driven by the lack of any in-person events during the current year period.

Current wording

Ticket/Event revenue decreased by $3,000, or 100%, to none for the three months ended June 30, 2024, as compared to $3,000 for the three months ended June 30, 2023, driven by the lack of any in-person events during the current year period.

Previous wording

Membership cost of sales increased by $3.1 million, or 38%, to $11.3 million for the three months ended December 31, 2023, as compared to $8.2 million for the three months ended December 31, 2022. The increase was in line with the higher membership revenues noted above.

Current wording

Membership cost of sales increased by $2.8 million, or 30%, to $12.2 million for the three months ended June 30, 2024, as compared to $9.3 million for the three months ended June 30, 2023. The increase was in line with the higher membership revenues noted above.

Previous wording

Advertising cost of sales increased by $1.8 million, or 23%, to $9.6 million for the three months ended December 31, 2023, as compared to $7.8 million for the three months ended December 31, 2022. The increase was primarily due to an increase in revenue share expense compared to the prior year period and is line with the increase in revenue for the period.

Current wording

Advertising cost of sales increased by $2.8 million, or 31%, to $11.8 million for the three months ended June 30, 2024, as compared to $9.0 million for the three months ended June 30, 2023. The increase was primarily due to an increase in revenue share expense compared to the prior year period and is line with the increase in revenue for the period.

Previous wording

Production cost of sales increased by $0.2 million, or 758%, to $0.2 million for the three months ended December 31, 2023, as compared to a credit of $26,000 for the three months ended December 31, 2022. The Company was able to negotiate credits with some vendors on amounts previously owed during the three months ended December 31, 2023 and 2022.

Current wording

Production cost of sales increased by $0.3 million, or 131%, to $0.1 million for the three months ended June 30, 2024, as compared to a credit of $0.2 million for the three months ended June 30, 2023. The Company was able to negotiate credits with some vendors on amounts previously owed during the three months ended June 30, 2023.

Previous wording

Merchandising cost of sales decreased by $0.9 million, or 25%, to $2.6 million for the three months ended December 31, 2023, as compared to $3.5 million for the three months ended December 31, 2022 due to lower merchandising revenues noted above.

Current wording

Merchandising cost of sales decreased by $0.4 million, or 28%, to $1.0 million for the three months ended June 30, 2024, as compared to $1.4 million for the three months ended June 30, 2023 due to lower merchandising revenues noted above.

Previous wording

Sales and Marketing expenses decreased by $0.1 million, or 6%, to $1.5 million for the three months ended December 31, 2023, as compared to $1.6 million for the three months ended December 31, 2022, primarily driven by reduced payroll costs.

Current wording

Sales and Marketing expenses decreased by $0.5 million, or 25%, to $1.4 million for the three months ended June 30, 2024, as compared to $1.9 million for the three months ended June 30, 2023, primarily driven by reduced payroll costs.

Previous wording

Product development expenses decreased by $0.3 million, or 33%, to $0.7 million for the three months ended December 31, 2023, as compared to $1.0 million for the three months ended December 31, 2022, which was driven by a decrease in employees as compared to the prior year.

Current wording

Product development expenses decreased by $0.2 million, or 14%, to $1.1 million for the three months ended June 30, 2024, as compared to $1.2 million for the three months ended June 30, 2023, which was driven by a decrease in employees as compared to the prior year.

Previous wording

General and administrative expenses increased by $1.3 million, or 30%, to $5.9 million for the three months ended December 31, 2023, as compared to $4.5 million for the three months ended December 31, 2022, largely due to an increase in share-based compensation of $1.2 million and a $1.3 million in bad debt expense offset by a $1.2 million decrease in cost attributed to accounting, license and payroll.

Current wording

General and administrative expenses increased by $0.4 million, or 9%, to $5.5 million for the three months ended June 30, 2024, as compared to $5.1 million for the three months ended June 30, 2023, largely due to an increase in share-based compensation of $0.7 million offset by a $0.3 million decrease in cost attributed to accounting, license and payroll.

Previous wording

Impairment of intangible assets increased $0.1 million, or 100%, to $0.1 million for the three months ended December 31, 2023, as compared to none for the three months ended December 31, 2022, which is attributed to the impairment of intangible assets of Gramophone, see Note 5 – Goodwill and Intangible Assets to our condensed consolidated financial statements included elsewhere in this Quarterly Report.

Current wording

Impairment of intangible assets increased $0.2 million, or 100%, to $0.2 million for the three months ended June 30, 2024, as compared to none for the three months ended June 30, 2023, which is attributed to the impairment of intangible assets of PodcastOne, see Note 5 – Goodwill and Intangible Assets to our condensed consolidated financial statements included elsewhere in this Quarterly Report.

Previous wording

Total other income (expense) decreased by $0.5 million, or 24%, to $1.5 million of expense for the three months ended December 31, 2023, as compared to $2.0 million of expense for the three months ended December 31, 2022. The increase is primarily driven by a decrease in expense of $0.6 million increase in interest expense attributed to our PC1 Bridge Loan (as defined below).

Current wording

Total other income (expense) increased by $0.5 million, or 300%, to $0.7 million of expense for the three months ended June 30, 2024, as compared to $0.2 million of expense for the three months ended June 30, 2023. The increase is primarily driven by a reduction of the gain from changes in derivative liabilities of $1.1 million in the prior year period offset by a decrease in interest expense of $0.6 million due to the conversion of the Bridge Loan.

Previous wording

Net income attributable to non-controlling interests for the three months ended December 31, 2023 was $0.7 million, which resulted from the Spin-Out of PodcastOne.

Current wording

Net loss attributable to non-controlling interests for the three months ended June 30, 2024 was $0.4 million, which resulted from the Spin-Out of PodcastOne.

Previous wording

Operating loss increased by $1.9 million or 259%, for the three months ended December 31, 2023, as the increase in revenue was lower than the increase in operating expenses due to growing the business and Spin-Out costs.

Current wording

Operating loss increased by $1.6 million or 808%, for the three months ended June 30, 2024, as the increase in revenue was lower than the increase in operating expenses due to growing the business.

Previous wording

Adjusted EBITDA decreased by $0.1 million, or 26%, to $(0.4) million for the three months ended December 31, 2023, as compared to $(0.5) million for the three months ended December 31, 2022. This was largely due to a decrease in general and administrative cost associated with the Spin-Out.

Current wording

Adjusted EBITDA decreased by $0.7 million, or 187%, to $(0.3) million for the three months ended June 30, 2024, as compared to $0.4 million for the three months ended June 30, 2023. This was largely due to an increase in general and administrative cost associated with operating as a public company.

Previous wording

Revenue increased $3.5 million, or 26%, during the three months ended December 31, 2023, primarily due to increased membership revenue as a result of increased membership growth with our largest OEM customer.

Current wording

Revenue increased $3.6 million, or 24%, during the three months ended June 30, 2024, primarily due to increased membership revenue as a result of increased membership growth with our largest OEM customer.

Previous wording

Operating income increased by $2.7 million or 187%, for the three months ended December 31, 2023, as the increase in revenue was higher than the increase in operating expenses as no significant increases in cost were noted.

Current wording

Operating income increased by $0.9 million or 26%, for the three months ended June 30, 2024, as the increase in revenue was higher than the increase in operating expenses as no significant increases in cost were noted.

Previous wording

Adjusted EBITDA increased by $0.4 million, or 1,788%, to $0.4 million for the nine months ended December 31, 2023, as compared to $(0.1) million for the nine months ended December 31, 2022. This was largely due to an increase in revenues.

Current wording

Adjusted EBITDA increased by $0.9 million, or 20%, to $5.4 million for the three months ended June 30, 2024, as compared to $4.5 million for the three months ended June 30, 2023. This was largely due to additional Contribution Margin in the current period.

Previous wording

Revenue decreased $1.4 million, or 26%, to $4.0 million during the three months ended December 31, 2023, as compared to $5.4 million for the three months December 31, 2022, primarily due to decrease in merchandising revenue due to a reduction in demand from both retail partners and our direct to consumer business.

Current wording

Revenue decreased $0.8 million, or 41%, to $1.2 million during the three months ended June 30, 2024, as compared to $2.1 million for the three months June 30, 2023, primarily due to decrease in merchandising revenue due to a reduction in demand from both retail partners and our direct to consumer business.

Previous wording

Operating income (loss) decreased by $1.5 million, or 367%, to a loss of $1.1 million for the three months ended December 31, 2023 from income of $0.4 million for the three months ended December 31, 2022, as a result of a decrease in contribution margin coupled with the increase in expenses due to an increase in general and administrative expenses.

Current wording

Operating loss decreased by $0.4 million, or 26%, to $1.2 million for the three months ended June 30, 2024 from $1.6 million for the three months ended June 30, 2023, as a result of a decrease in Contribution Margin coupled with the increase in expenses due to an increase in general and administrative expenses.

Previous wording

Operating loss decreased by $0.6 million, or 33%, to $1.1 million for the three months ended December 31, 2023, as compared to $1.7 million for the three months ended December 31, 2022, largely due to a decrease in legal and accounting costs.

Current wording

Operating loss increased by $0.2 million, or 12%, to $2.4 million for the three months ended June 30, 2024, as compared to $2.2 million for the three months ended June 30, 2023, largely due to an increase in legal and accounting costs.

Previous wording

Corporate Adjusted EBITDA loss decreased $0.2 million, or 24%, to $(0.8) million for the three months ended December 31, 2023 as compared to $(1.0) million for the year ended December 31, 2022. The increase was largely due to the decrease in costs noted above.

Current wording

Corporate Adjusted EBITDA loss decreased $0.1 million, or 6%, to $(1.6) million for the three months ended June 30, 2024 as compared to $(1.5) million for the year ended June 30, 2023. The increase was largely due to the increase in costs noted above.

Previous wording

The following table sets forth the reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure for the three and nine months ended December 31, 2023 and 2022 (in thousands):

Current wording

The following table sets forth the reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure for the three months ended June 30, 2024 and 2023 (in thousands):

Previous wording

As of December 31, 2023, our principal sources of liquidity were our cash and cash equivalents, including restricted cash balances in the amount of $6.5 million, which primarily are invested in cash in banking institutions in the U.S. The vast majority of our cash proceeds were received as a result of our operations, incurrence of debt, the issuance of convertible notes and public offerings of our common shares. As of December 31, 2023, we have a senior secured line of credit of $7.0 million, the Capchase Loan (as defined below) of $1.6 million and an SBA loan balance of $0.1 million.

Current wording

As of June 30, 2024, our principal sources of liquidity were our cash and cash equivalents, including restricted cash balances in the amount of $6.3 million, which primarily are invested in cash in banking institutions in the U.S. The vast majority of our cash proceeds were received as a result of our operations, incurrence of debt, the issuance of convertible notes and public offerings of our common shares. As of June 30, 2024, we have a senior secured line of credit of $7.0 million, the Capchase Loan (as defined below) of $1.2 million and an SBA loan balance of $0.1 million.

Previous wording

As reflected in our condensed consolidated financial statements included elsewhere in this Quarterly Report, we have a history of losses and incurred a net loss of $10.7 million for the nine months ended December 31, 2023, and cash provided by operating activities of $3.8 million for the nine months ended December 31, 2023 and had a working capital deficiency of $21.5 million as of December 31, 2023. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year from the date that the financial statements are issued. Our condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to execute our strategy and on our ability to raise additional funds through the sale of equity and/or debt securities via public and/or private offerings.

Current wording

As reflected in our condensed consolidated financial statements included elsewhere in this Quarterly Report, we have a history of losses and incurred a net loss of $1.6 million for the three months ended June 30, 2024, and cash provided by operating activities of $1.3 million for the three months ended June 30, 2024 and had a working capital deficiency of $22.5 million as of June 30, 2024. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year from the date that the financial statements are issued. Our condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to execute our strategy and on our ability to raise additional funds through the sale of equity and/or debt securities via public and/or private offerings.

Previous wording

The following table provides information regarding our cash flows for the nine months ended December 31, 2023 and 2022 (in thousands):

Current wording

The following table provides information regarding our cash flows for the three months ended June 30, 2024 and 2023 (in thousands):

Previous wording

Net cash used in our operating activities of $4.6 million primarily resulted from our net loss during the period of $4.6 million, which included non-cash charges of $3.4 million largely comprised of depreciation and amortization, stock-based compensation, write-off of accrued expenses, impairment charges and changes in fair values of derivatives. The remainder of our sources of cash used in operating activities of $(3.5) million was from changes in our working capital, primarily from timing of accounts receivable, accounts payable, and deferred revenue.

Current wording

Net cash provided by operating activities of $1.3 million primarily resulted from our net loss during the period of $1.6 million, which included non-cash charges of $2.5 million largely comprised of depreciation and amortization, stock-based compensation, change in fair value of derivatives and impairment of intangibles. The remainder of our sources of cash used in operating activities of $0.4 million was from changes in our working capital, primarily from timing of accounts receivable, accounts payable and accrued liabilities, accrued royalties, and deferred revenue.

Previous wording

Net cash provided by operating activities of $3.8 million primarily resulted from our net loss during the period of $10.7 million, which included non-cash charges of $15.5 million largely comprised of depreciation and amortization, stock-based compensation, change in fair value of derivatives and amortization of debt discount. The remainder of our sources of cash used in operating activities of $1.0 million was from changes in our working capital, primarily from timing of accounts receivable, accounts payable and accrued liabilities, accrued royalties, and deferred revenue.

Current wording

Net cash provided by operating activities of $1.2 million primarily resulted from our net loss during the period of $0.5 million, which included non-cash charges of $2.1 million largely comprised of depreciation and amortization, stock-based compensation, change in fair value of derivatives and amortization of debt discount. The remainder of our sources of cash used in operating activities of $(0.4) million was from changes in our working capital, primarily from timing of accounts receivable, accounts payable and accrued liabilities, accrued royalties and deferred revenue.

Previous wording

Net cash used in investing activities of $2.0 million was primarily due to the $2.0 million cash used for the purchase of capitalized internally developed software costs during the nine months ended December 31, 2022.

Current wording

Net cash used in investing activities of $0.7 million was primarily due to the purchase of equipment during the three months ended June 30, 2024.

Previous wording

Net cash used in financing activities of $3.2 million was due to the repayment of our PC1 Bridge Loan of $3.0 million and repurchase of common stock under the Company’s share repurchase program of $1.7 million offset by proceeds from notes payable of $1.7 million, offset by repayments of $0.2 million for the nine months ended December 31, 2023.

Current wording

Net cash used in financing activities of $1.4 million was due to the payment of dividends of $0.5 million, repayment of our Capchase Loan of $0.2 million and repurchase of common stock under the Company’s share repurchase program of $0.7 million.