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 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”).

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 and six months ended September 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

Certain statements contained in this Quarterly Report that are not statements of historical fact constitute “forward-looking statements” within the meaning of the Securities Litigation Reform Act of 1995, notwithstanding that such statements are not specifically identified. These forward-looking statements relate to expectations or forecasts for future events, including without limitation our earnings, revenues, expenses or other future financial or business performance or strategies, or the impact of legal or regulatory matters on our business, results of operations or financial condition. These statements may be preceded by, followed by or include the words “may,” “might,” “will,” “would,” “could,” “should,” “will likely result,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “continue,” “target” or the negative or other variations thereof or comparable terminology. These forward-looking statements are not guarantees of future performance and are based on information available to us as of the date of this Quarterly Report and on our current expectations, forecasts and assumptions, and involve substantial risks and uncertainties. Actual results may vary materially from those expressed or implied by the forward-looking statements herein due to a variety of factors, including: our reliance on one key customer for a substantial percentage of our revenue; our ability to consummate any proposed financing, acquisition, spin-out, special dividend, distribution or transaction, including the proposed special dividend and spin-out of our pay-per-view business, the timing of the consummation of such proposed event, including the risks that a condition to consummation of such proposed event would not be satisfied within the expected timeframe or at all or that the consummation of any proposed financing, acquisition, spin-out, special dividend, distribution or transaction, the timing of the consummation of such proposed event will not occur; our ability to continue as a going concern; our reliance on one key customer for a substantial percentage of our revenue; if and when required, our ability to obtain additional capital, including to fund our current debt obligations and to fund potential acquisitions and capital expenditures; our ability to attract, maintain and increase the number of our users and paid members; our ability to identify, acquire, secure and develop content; our ability to successfully implement our growth strategy, our ability to acquire and integrate our acquired businesses, the ability of the combined business to grow, including through acquisitions which we are able to successfully integrate, and the ability of our executive officers to manage growth profitably; uncertain and unfavorable outcome(s) of any legal proceedings pending or that may be instituted against us, our subsidiaries, or third parties to whom we owe indemnification obligations; changes in laws or regulations that apply …

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain statements contained in this Quarterly Report that are not statements of historical fact constitute “forward-looking statements” within the meaning of the Securities Litigation Reform Act of 1995, notwithstanding that such statements are not specifically identified. These forward-looking statements relate to expectations or forecasts for future events, including without limitation our earnings, revenues, expenses or other future financial or business performance or strategies, or the impact of legal or regulatory matters on our business, results of operations or financial condition. These statements may be preceded by, followed by or include the words “may,” “might,” “will,” “would,” “could,” “should,” “will likely result,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “continue,” “target” or the negative or other variations thereof or comparable terminology. These forward-looking statements are not guarantees of future performance and are based on information available to us as of the date of this Quarterly Report and on our current expectations, forecasts and assumptions, and involve substantial risks and uncertainties. Actual results may vary materially from those expressed or implied by the forward-looking statements herein due to a variety of factors, including: our reliance on our largest OEM customer for a substantial percentage of our revenue; our ability to consummate any proposed financing, acquisition, spin-out, special dividend, distribution or transaction, including the proposed special dividend and spin-out of our pay-per-view business, the timing of the consummation of such proposed event, including the risks that a condition to consummation of such proposed event would not be satisfied within the expected timeframe or at all or that the consummation of any proposed financing, acquisition, spin-out, special dividend, distribution or transaction, the timing of the consummation of such proposed event will not occur; our ability to continue as a going concern; our reliance on one key customer for a substantial percentage of our revenue; if and when required, our ability to obtain additional capital, including to fund our current debt obligations and to fund potential acquisitions and capital expenditures; our ability to attract, maintain and increase the number of our users and paid members; our ability to identify, acquire, secure and develop content; our ability to successfully implement our growth strategy, our ability to acquire and integrate our acquired businesses, the ability of the combined business to grow, including through acquisitions which we are able to successfully integrate, and the ability of our executive officers to manage growth profitably; uncertain and unfavorable outcome(s) of any legal proceedings pending or that may be instituted against us, our subsidiaries, or third parties to whom we owe indemnification obligations; changes in laws or regulations tha…

Excerpt shortened here; the source contains the full paragraph.

Previous 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.

Current wording

For the three months ended September 30, 2024 and 2023, we reported revenue of $32.6 million and $28.5 million, respectively. We have one customer that accounted for more than 10% of its revenue during the three months ended September 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 September 30, 2024 and 2023, total revenue from the OEM was $18.5 million and $14.8 million, respectively.

Previous 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.

Current wording

We ended the September 30, 2024 quarter with approximately 3,100,000 paid members on our music platform, up from approximately 2,400,000 at September 30, 2023, representing 27% 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

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.

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 and CPS are reflective of our flywheel operating model. Conversely, the evolution of technology presents an inherent risk to our business. Today, we see large opportunities to expand our music services within North America and other parts of the world where we will need to make substantial investments to improve our current service offerings. As a result, and during the fiscal year ending March 31, 2025, we will continue to invest in product and engineering to further develop our future music apps and services, and we expect to continue making significant product development investments to our existing technology solutions over the next 12 to 24 months to address these opportunities.

Previous wording

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

Current wording

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

Previous 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.

Current wording

For the quarter ended September 30, 2024 and 2023, all material amounts of our revenue were derived from customers located in the United States and moreover, our largest OEM customer accounted for 57% and 51% 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 September 30, 2024 could cause our revenue to fluctuate significantly.

Previous 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.

Current wording

Membership revenue increased $3.0 million, or 19%, to $19.5 million for the three months ended September 30, 2024, as compared to $16.4 million for the months ended September 30, 2023. The increase was primarily as a result of member growth with our largest OEM customer.

Previous 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.

Current wording

Advertising revenue increased $1.6 million, or 15%, to $12.3 million for the three months ended September 30, 2024, as compared to $10.7 million for the three months ended September 30, 2023, which is primarily attributable to growth in our barter revenue of $2.4 million offset by a decrease in non-barter advertising revenue of $0.8 million at PodcastOne year-over-year.

Previous 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.

Current wording

Merchandising revenue decreased $0.5 million, or 36%, to 0.8 million for the three months ended September 30, 2024, as compared to $1.3 million the three months ended September 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 $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.

Current wording

Sponsorship and licensing revenue decreased by $97,000, or 100%, to none for the three months ended September 30, 2024, as compared to $97,000 for the three months ended September 30, 2023. The decrease was primarily due to no significant events occurring for the three months ended September 30, 2024.

Previous 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.

Current wording

Ticket/Event revenue decreased by $12,000, or 100%, to none for the three months ended September 30, 2024, as compared to $12,000 for the three months ended September 30, 2023, driven by the lack of any in-person events during the current year period.

Previous 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.

Current wording

Membership cost of sales increased by $1.8 million, or 17%, to $12.4 million for the three months ended September 30, 2024, as compared to $10.6 million for the three months ended September 30, 2023. The increase was in line with the higher membership revenues noted above.

Previous 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.

Current wording

Sales and Marketing expenses decreased by $0.8 million, or 34%, to $1.5 million for the three months ended September 30, 2024, as compared to $2.3 million for the three months ended September 30, 2023, primarily driven by reduced payroll costs.

Previous 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.

Current wording

Product development expenses decreased by $0.3 million, or 19%, to $1.2 million for the three months ended September 30, 2024, as compared to $1.4 million for the three months ended September 30, 2023, which was driven by a decrease in employees as compared to the prior year.

Previous 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.

Current wording

General and administrative expenses decreased by $0.1 million, or 1%, to $6.3 million for the three months ended September 30, 2024, as compared to $6.4 million for the three months ended September 30, 2023, largely due to an increase in share-based compensation of $0.5 million offset by a $0.6 million decrease in cost attributed to accounting, license and payroll.

Previous wording

Amortization of intangible assets increased by $0.4 million, or 141%, to $0.6 million for the three months ended June 30, 2024, as compared to $0.2 million for the three months ended June 30, 2023. The increase can be attributed to the addition of intangibles attributed to acquired podcast at PodcastOne.

Current wording

Amortization of intangible assets increased by $0.1 million, or 20%, to $0.5 million for the three months ended September 30, 2024, as compared to $0.5 million for the three months ended September 30, 2023. The increase can be attributed to the addition of intangibles attributed to acquired podcast at PodcastOne.

Previous 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.

Current wording

Net loss attributable to non-controlling interests for the three months ended September 30, 2024 was $0.5 million compared to $0.4 million for the three months ended September 30, 2023, which resulted from the Spin-Out of PodcastOne.

Previous 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.

Current wording

Operating loss increased by $0.1 million or 5%, for the three months ended September 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 $0.7 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.

Current wording

Adjusted EBITDA* decreased by $0.5 million, or 529%, to $(0.4) million for the three months ended September 30, 2024, as compared to $0.1 million for the three months ended September 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 $3.6 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.

Current wording

Revenue increased $3.2 million, or 19%, during the three months ended September 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 $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.

Current wording

Operating income increased by $2.1 million or 79%, for the three months ended September 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 $0.9 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.

Current wording

Adjusted EBITDA* increased by $0.8 million, or 15%, to $5.8 million for the three months ended September 30, 2024, as compared to $5.0 million for the three months ended September 30, 2023. This was largely due to additional Contribution Margin in the current period.

Previous 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.

Current wording

Revenue decreased $0.7 million, or 45%, to $0.9 million during the three months ended September 30, 2024, as compared to $1.6 million for the three months September 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 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.

Current wording

Operating loss increased by $0.5 million, or 45%, to $1.7 million for the three months ended September 30, 2024 from $1.1 million for the three months ended September 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

Adjusted EBITDA loss decreased by $0.6 million, or 47%, to a $(0.6) million loss for the three months ended June 30, 2024, as compared to a $(1.2) million loss for the three months June 30, 2023. This was largely due to the decrease in operating loss compared to the prior year.

Current wording

Adjusted EBITDA* loss increased by $0.3 million, or 50%, to a $(0.8) million loss for the three months ended September 30, 2024, as compared to a $(0.6) million loss for the three months September 30, 2023. This was largely due to the decrease in revenues compared to the prior year.

Previous 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.

Current wording

Operating loss increased by $0.3 million, or 14%, to $2.9 million for the three months ended September 30, 2024, as compared to $2.6 million for the three months ended September 30, 2023, largely due to an increase in legal and accounting costs.

Previous 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.

Current wording

Corporate Adjusted EBITDA* loss decreased $0.1 million, or 6%, to $(1.7) million for the three months ended September 30, 2024 as compared to $(1.8) million for the year ended September 30, 2023. The increase was largely due to the increase in costs noted above.

Previous 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.

Current wording

Advertising cost of sales increased by $5.6 million, or 31%, to $23.2 million for the six months ended September 30, 2024, as compared to $17.7 million for the six months ended September 30, 2023. The increase was primarily attributable to growth in our barter expense of $5.5 million and an increase in revenue share expense of $0.1 million year-over-year.

Previous 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.

Current wording

Merchandising cost of sales increased by $1.5 million, or 319%, to $1.1 million for the six months ended September 30, 2024, as compared to $0.5 million credit for the six months ended September 30, 2023 due to lower merchandising revenues noted above and a write off of merchandise during the six months ended September 30, 2023.

Previous 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.

Current wording

Impairment of intangible assets increased $0.2 million, or 100%, to $0.2 million for the six months ended September 30, 2024, as compared to none for the six months ended September 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) 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.

Current wording

Total other income (expense) decreased by $4.0 million, or 71%, to $1.6 million of expense for the six months ended September 30, 2024, as compared to $5.6 million of expense for the six months ended September 30, 2023. The increase is primarily driven by a reduction of the gain from changes in derivative liabilities of $3.0 million in the prior year period offset by a decrease in interest expense of $1.0 million due to the conversion of the Bridge Loan.

Previous 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):

Current wording

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

Previous 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.

Current wording

As of September 30, 2024, our principal sources of liquidity were our cash and cash equivalents, including restricted cash balances in the amount of $11.1 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 September 30, 2024, we have a senior secured line of credit of $7.0 million, the Capchase Loan (as defined below) of $1.0 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 $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.

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 $3.4 million for the six months ended September 30, 2024, and cash provided by operating activities of $7.1 million for the six months ended September 30, 2024 and had a working capital deficiency of $22.3 million as of September 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 three months ended June 30, 2024 and 2023 (in thousands):

Current wording

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

Previous 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.

Current wording

Net cash provided by operating activities of $7.1 million primarily resulted from our net loss during the period of $3.9 million, which included non-cash charges of $5.6 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 $5.4 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 $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.

Current wording

Net cash used in operating activities of $0.1 million primarily resulted from our net loss during the period of $8.4 million, which included non-cash charges of $11.6 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 $(3.2) million was from changes in our working capital, primarily from timing of accounts receivable, accounts payable and accrued liabilities, accrued royalties and deferred revenue.

Previous 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.

Current wording

Net cash used in investing activities of $1.3 million was primarily due to the purchase of equipment during the six months ended September 30, 2024.

Previous wording

Net cash used in investing activities of $0.6 million was due to the purchase of equipment during the three months ended June 30, 2023.

Current wording

Net cash used in investing activities of $1.8 million was due to the purchase of equipment of $1.3 million and the purchase of intangibles of $0.5 million during the six months ended September 30, 2023.