PodcastOne Inc

Previous wording

As used herein,“PodcastOne,”* the*“Company,”* “we,” “our” or*“us”* and similar terms include PodcastOne, 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”).

Current wording

As used herein,“PodcastOne,”* the*“Company,”* “we,” “our” or*“us”* and similar terms include PodcastOne, Inc. and its subsidiaries, unless the context indicates otherwise. The following discussion and analysis of our business and results of operations for the three and nine months ended December 31, 2024, and our financial conditions at that date, should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this*“Quarterly Report”).

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 ability to consummate any proposed financing, acquisition, spin-out, distribution or transaction, the timing of the closing of such proposed event, including the risks that a condition to closing would not be satisfied within the expected timeframe or at all or that the closing of any proposed financing, acquisition or transaction, the timing of the closing of such proposed event will not occur or whether any such event will enhance shareholder value; our ability to continue as a going concern; if and when required, our ability to obtain additional capital, including to fund our and/or our parent's LiveOne, Inc.’s ("LiveOne") current debt obligations and to fund potential acquisitions and capital expenditures; our ability to attract, maintain and increase the number of our listeners; 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; the 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 to us or our industry; our ability to recognize and timely implement future technologies in the podcasting and digital space; our ability to capitalize on investments in developing our service offerings, including our ability to deliver and develop upon current and future…

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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 ability to consummate any proposed financing, acquisition, spin-out, distribution or transaction, the timing of the closing of such proposed event, including the risks that a condition to closing would not be satisfied within the expected timeframe or at all or that the closing of any proposed financing, acquisition or transaction, the timing of the closing of such proposed event will not occur or whether any such event will enhance shareholder value; our ability to continue as a going concern; if and when required, our ability to obtain additional capital, including to fund our and/or our parent's LiveOne, Inc.’s ("LiveOne") current debt obligations and to fund potential acquisitions and capital expenditures; our ability to attract, maintain and increase the number of our listeners; 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; the uncertain and unfavorable outcome(s) of any legal proceedings pending or that may be instituted against us and/or LiveOne, our and/or LiveOne's respective subsidiaries, and/or our or LiveOne's ability to pay any amounts due in connection with any such legal proceedings, or third parties to whom we and/or LiveOne owes indemnification obligations; changes in laws or regulations that apply to us or our industry; our ability to recognize and timely implement future technolog…

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Previous wording

We incorporated in the State of Delaware on February 5, 2014 and are a leading podcast platform and publisher that makes our content available to audiences via all podcasting distribution platforms, including our website (www.podcastone.com), our PodcastOne app, Apple Podcasts, Spotify, Amazon Music and more. We were recently ranked #12 on the September 2024 list of Top Podcast Publishers by the podcast metric company Podtrac.

Current wording

We incorporated in the State of Delaware on February 5, 2014 and are a leading podcast platform and publisher that makes our content available to audiences via all podcasting distribution platforms, including our website (www.podcastone.com), our PodcastOne app, Apple Podcasts, Spotify, Amazon Music and more. We were recently ranked #8 on the December 2024 list of Top Podcast Publishers by the podcast metric company Podtrac.

Previous wording

We also produce vodcasts (video podcasts), branded podcasts, merchandise and live events on behalf of our talent and clients. With a proven 360-degree advertiser solution for multiplatform integration opportunities and hyper-targeting, we deliver millions of monthly impressions, 5.7+ million monthly unique listeners and 19+ million IAB monthly downloads. With content covering all verticals (i.e. sports, entertainment, true-crime, business, audio dramas, self-growth, etc.), we provide a platform for brands to reach their most sought after targeted audiences.

Current wording

We also produce vodcasts (video podcasts), branded podcasts, merchandise and live events on behalf of our talent and clients. With a proven 360-degree advertiser solution for multiplatform integration opportunities and hyper-targeting, we deliver millions of monthly impressions, 5.1+ million monthly unique listeners and 16+ million IAB monthly downloads. With content covering all verticals (i.e. sports, entertainment, true-crime, business, audio dramas, self-growth, etc.), we provide a platform for brands to reach their most sought after targeted audiences.

Previous wording

We have experienced significant growth in recent years driven by increased advertising activity. Our revenue was $25.3 million and $21.2 million for the six months ended September 30, 2024 and 2023, respectively, representing year-over-year growth of 20%.

Current wording

We have experienced significant growth in recent years driven by increased advertising activity. Our revenue was $38.0 million and $31.6 million for the nine months ended December 31, 2024 and 2023, respectively, representing year-over-year growth of 20%.

Previous wording

As of the date of this Quarterly Report, we are actively pursuing potential other podcasts, shows and other asset acquisitions consistent with our strategy.

Current wording

We are also actively pursuing potential other podcasts, shows and other asset acquisitions consistent with our strategy.

Previous wording

Revenue increased $1.6 million, or 16%, to $12.2 million for the three months ended September 30, 2024, as compared to $10.5 million for the months ended September 30, 2023. The increase in revenue was primarily due to growth in barter revenue and advertising inventory.

Current wording

Revenue increased $2.3 million, or 22%, to $12.7 million for the three months ended December 31, 2024, as compared to $10.4 million for the months ended December 31, 2023. The increase in revenue was primarily due to growth in barter revenue and advertising inventory.

Previous wording

Cost of sales increased $2.1 million, or 23%, to $11.1 million for the three months ended September 30, 2024, as compared to $9.1 million for the months ended September 30, 2023. The increase was in line with our revenue growth as revenue share splits with our content creators remained consistent.

Current wording

Cost of sales increased $2.6 million, or 28%, to $12.0 million for the three months ended December 31, 2024, as compared to $9.4 million for the months ended December 31, 2023. The increase was in line with our revenue growth as revenue share splits with our content creators remained consistent.

Previous wording

Sales and Marketing expenses decreased by $0.6 million, or 40%, to $0.9 million for the three months ended September 30, 2024, as compared to $1.5 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in advertising spending as the amount of marketing programs was reduced.

Current wording

Sales and Marketing expenses increased by $0.2 million, or 22%, to $0.9 million for the three months ended December 31, 2024, as compared to $0.7 million for the three months ended December 31, 2023. The increase was primarily due to an increase in advertising spending as the amount of marketing programs was increased.

Previous wording

Product development expenses decreased by $15,000, or 54%, to $13,000 for the three months ended September 30, 2024, as compared to $28,000 for the three months ended September 30, 2023, as no significant projects took place during both periods.

Current wording

Product development expenses decreased by $6,000, or 40%, to $9,000 for the three months ended December 31, 2024, as compared to $15,000 for the three months ended December 31, 2023, as no significant projects took place during both periods.

Previous wording

General and administrative expenses increased by $0.2 million, or 20%, to $1.4 million for the three months ended September 30, 2024, as compared to $1.2 million for the three months ended September 30, 2023, as we incurred additional cost for stock-based compensation.

Current wording

General and administrative expenses decreased by $1.3 million, or 51%, to $1.3 million for the three months ended December 31, 2024, as compared to $2.6 million for the three months ended December 31, 2023, as we incurred additional cost for stock-based compensation in the prior year.

Previous wording

Amortization of intangible assets increased by $0.1 million, or 72%, to $0.3 million for the three months ended September 30, 2024, as compared to $0.2 million during the three months ended September 30, 2023. The increase can be attributed to the increase in content related intangibles associated with the acquisition of certain podcasts.

Current wording

Amortization of intangible assets decreased by $0.2 million, or 59%, to $0.1 million for the three months ended December 31, 2024, as compared to $0.3 million during the three months ended December 31, 2023. The decrease can be attributed to the decrease in content related amortization associated with the acquisition of certain podcasts.

Previous wording

Revenue increased $4.2 million, or 20%, to $25.3 million for the six months ended September 30, 2024, as compared to $21.2 million for the six months ended September 30, 2023. The increase in revenue was primarily due to growth in barter revenue and advertising inventory.

Current wording

Revenue increased $6.4 million, or 20%, to $38.0 million for the nine months ended December 31, 2024, as compared to $31.6 million for the nine months ended December 31, 2023. The increase in revenue was primarily due to growth in barter revenue and advertising inventory.

Previous wording

Cost of sales increased $5.6 million, or 32%, to $22.9 million for the six months ended September 30, 2024, as compared to $17.3 million for the six months ended September 30, 2023. The increase was in line with our revenue growth as revenue share splits with our content creators remained consistent.

Current wording

Cost of sales increased $8.2 million, or 31%, to $34.8 million for the nine months ended December 31, 2024, as compared to $26.7 million for the nine months ended December 31, 2023. The increase was in line with our revenue growth as revenue share splits with our content creators remained consistent.

Previous wording

Sales and Marketing expenses decreased by $1.0 million, or 36%, to $1.7 million for the six months ended September 30, 2024, as compared to $2.7 million for the six months ended September 30, 2023. The decrease was primarily due to a decrease in advertising spending as the amount of marketing programs was reduced.

Current wording

Sales and Marketing expenses decreased by $0.8 million, or 24%, to $2.6 million for the nine months ended December 31, 2024, as compared to $3.4 million for the nine months ended December 31, 2023. The decrease was primarily due to reduced spending on marketing programs.

Previous wording

Product development expenses decreased by $24,000, or 44%, to $31,000 for the six months ended September 30, 2024, as compared to $55,000 for the six months ended September 30, 2023, as no significant projects took place during the period.

Current wording

Product development expenses decreased by $30,000, or 43%, to $40,000 for the nine months ended December 31, 2024, as compared to $70,000 for the nine months ended December 31, 2023, as no significant projects took place during the period.

Previous wording

General and administrative expenses increased by $0.7 million, or 33%, to $2.9 million for the six months ended September 30, 2024, as compared to $2.1 million for the six months ended September 30, 2023, as we incurred additional cost for stock-based compensation.

Current wording

General and administrative expenses decreased by $0.6 million, or 13%, to $4.1 million for the nine months ended December 31, 2024, as compared to $4.7 million for the nine months ended December 31, 2023, as we incurred additional cost for stock-based compensation in the prior year.

Previous wording

Amortization of intangible assets increased by $0.5 million, or 226%, to $0.7 million for the six months ended September 30, 2024, as compared to $0.2 million during the six months ended September 30, 2023. The increase can be attributed to the increase in content related intangibles associated with the acquisition of certain podcasts.

Current wording

Amortization of intangible assets increased by $0.3 million, or 59%, to $0.8 million for the nine months ended December 31, 2024, as compared to $0.5 million during the nine months ended December 31, 2023. The increase can be attributed to the increase in content related intangibles associated with the acquisition of certain podcasts.

Previous 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 cancellation of a show previously acquired (see Note 4 – Goodwill and Intangible Assets).

Current wording

Impairment of intangible assets increased $0.2 million, or 100%, to $0.2 million for the nine months ended December 31, 2024, as compared to none for the nine months ended December 31, 2023, which is attributed to the cancellation of a show previously acquired (see Note 4 – Goodwill and Intangible Assets).

Previous wording

Total other expense decreased by $9.9 million, or 100%, to none for the six months ended September 30, 2024, as compared to $9.9 million for the six months ended September 30, 2023. The decrease is due to a decrease of $7.6 million of gain attributed to our warrant liability and derivative liability associated with the Bridge Loan and a decrease of $2.2 million in interest expense attributed to our Bridge Loan which was converted in September of 2023.

Current wording

Total other expense decreased by $9.9 million, or 100%, to none for the nine months ended December 31, 2024, as compared to $9.9 million for the nine months ended December 31, 2023. The decrease is due to a decrease of $7.6 million of gain attributed to our warrant liability and derivative liability associated with the Bridge Loan and a decrease of $2.2 million in interest expense attributed to our Bridge Loan which was converted in September of 2023.

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 six months ended September 30, 2024 (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 nine months ended December 31, 2024 (in thousands):

Previous wording

As of September 30, 2024, our principal sources of liquidity were our cash and cash equivalents in the amount of $1.4 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, completed private placement offering (the “Bridge Loan”) of our unsecured convertible notes with an original issue discount of 10% (the “OID”) in the aggregate principal amount of $8.8 million (the “Bridge Notes”), which were converted in full in September 2023, and intercompany loans from our parent, LiveOne. As of September 30, 2024, we had a related party payable balance of $0.7 million. Our parent is required to maintain a minimum cash balance as a result of debt covenants on its debt.

Current wording

As of December 31, 2024, our principal sources of liquidity were our cash and cash equivalents in the amount of $0.6 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, completed private placement offering (the “Bridge Loan”) of our unsecured convertible notes with an original issue discount of 10% (the “OID”) in the aggregate principal amount of $8.8 million (the “Bridge Notes”), which were converted in full in September 2023, and intercompany loans from our parent, LiveOne. As of December 31, 2024, we had a related party payable balance of $0.8 million. Our parent is required to maintain a minimum cash balance as a result of debt covenants on its debt.

Previous wording

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”). On September 8, 2023 and 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 a first 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 November 2024, LiveOne repaid $1.0 million of the principal amount underlying the ABL Credit Facility and accordingly decreased the size of the facility to $6.0 million. As of September 30, 2024, LiveOne was in compliance with all covenants under the Capchase Loan and the ABL Credit Facility.

Current wording

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”). On September 8, 2023 and 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 a first 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. On January 28, 2025, LiveOne entered into a new Business Loan Agreement (the “2025 Business Loan Agreement”) with the senior lender to update certain terms of the ABL Credit Facility, including to reduce the principal amount outstanding under the promissory note underlying the ABL Credit Facility (the “Promissory Note”) to $3,750,000, reflecting LiveOne’s repayment of the ABL Credit Facility as of such date, and to extend the maturity date of the Promissory Note to November 20, 2025. Pursuant to the Change in Terms Agreement, dated as of January 28, 2025 (the “2025 Change in Terms Agreement”), entered into between LiveOne and the senior lender in connection with the 2025 Business Loan Agreement, LiveOne agreed to repay the remaining outstanding principal amount of the Promissory Note in 9 equal monthly payments of $400,000 each beginning February 20, 2025, and the final 10th payment of $151,291.67 on November 20, 2025. Pursuant to the 2025 Business Loan Agreement, the requirement that LiveOne and its related entities shall at all times maintain a certain minimum cash deposit with the senior lender is maintained at $5,000,000. The ABL Credit Facility continues to be collateralized by a first lien on all of the assets of LiveOne and its subsidiaries, including the Company. In November and December 2024 and in January 2025, LiveOne repaid a total of $3.25 million of the principal amount underlying the ABL Credit Facility and accordingly decreased the size of the facility to $3.75 million. As of December 31, 2024, LiveOne was in compliance with all covenants under the Capchase Loan and the ABL Credit Facility.

Previous wording

As of September 30, 2024, LiveOne’s total outstanding consolidated indebtedness was $8.1 million, net of fees and discounts, which consisted of ABL Credit Facility and the Capchase Loan. The ABL Credit Facility documents contain 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 may immediately accelerate their debt and require LiveOne to repay all outstanding amounts owed thereunder. For example, if for any reason LiveOne fails to comply with the terms of its settlement agreement with SoundExchange, its senior credit facility provider may declare an event of default and at its option may immediately accelerate its debt and require LiveOne and/or us to repay all outstanding amounts owed under the senior credit facility, which would materially adversely impact our business, operating results and financial condition.

Current wording

As of December 31, 2024, LiveOne’s total outstanding consolidated indebtedness was $5.2 million, net of fees and discounts, which consisted of ABL Credit Facility and the Capchase Loan. The ABL Credit Facility documents contain 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 may immediately accelerate their debt and require LiveOne to repay all outstanding amounts owed thereunder. For example, if for any reason LiveOne fails to comply with the terms of its settlement agreement with SoundExchange, its senior credit facility provider may declare an event of default and at its option may immediately accelerate its debt and require LiveOne and/or us to repay all outstanding amounts owed under the senior credit facility, which would materially adversely impact our business, operating results and financial condition.

Previous wording

On October 1, 2024, LiveOne announced an amended relationship with our largest OEM customer. The OEM customer will no longer subsidize our products to some of its customers, however, LiveOne will offer all OEM customer vehicles in North America the opportunity to convert to become direct subscribers of LiveOne’s LiveOne music app. The direct subscription to the LiveOne app will allow such users for the first time to access their LiveOne music and LiveOne’s other service offerings directly across all of their devices. LiveOne’s music streaming button/icon, which allows users to directly connect their subscription to LiveOne, is expected to remain in the OEM customer’s music streaming services dashboard in perpetuity. The OEM customer will continue to pay LiveOne monthly for grandfathered vehicles for the term of the OEM license agreement. Accordingly, the change in LiveOne’s relationship with the OEM customer in October 2024 is likely to cause its liquidity and cash flows to fluctuate significantly beyond September 30, 2024, which may then have an impact on our liquidity and potentially cause our liquidity to fluctuate significantly beyond September 30, 2024. LiveOne’s liquidity will depend upon its ability to convert as many of the OEM drivers as possible to become direct subscribers of its LiveOne app and the OEM customer continuing to pay for any grandfather users, as well as LiveOne’s ability to enter into new B2B agreements to provide its services that could materially contribute its our liquidity and cash flows, which may then have an impact on our liquidity and potentially cause our liquidity to fluctuate significantly. In addition, LiveOne’s liquidity will depend on its ability to negotiate with its music labels, publishers and other partners to achieve flexibility in the terms of its license agreements to match our OEM driver conversions, which may then have an impact on our liquidity and potentially cause our liquidity to fluctuate significantly. Furthermore, LiveOne’s liquidity will be dependent on its ability to extend and/or refinance the terms of its senior secured line of credit and/or its ability to pay any amounts that LiveOne has agreed to pay under the SX Settlement Agreement, which may then have an impact on our liquidity and potentially cause our liquidity to fluctuate significantly.

Current wording

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

Previous wording

As reflected in our consolidated financial statements included elsewhere in this Quarterly Report, we have a history of losses and had working capital of $0.7 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. In addition, our independent registered public accounting firm in their audit report to our financial statements for the fiscal year ended March 31, 2024 expressed substantial doubt about our ability to continue as a going concern. Our 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 consolidated financial statements included elsewhere in this Quarterly Report, we have a history of losses and had working capital of $0.4 million as of December 31, 2024. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year from the date that the financial statements are issued. In addition, our independent registered public accounting firm in their audit report to our financial statements for the fiscal year ended March 31, 2024 expressed substantial doubt about our ability to continue as a going concern. Our 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 six months ended September 30, 2024 and 2023 (in thousands):

Current wording

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

Previous wording

Net cash provided by our operating activities of $45,000 for the six months ended September 30, 2024 primarily resulted from our net loss during the period of $3.0 million, which included non-cash charges of $2.3 million largely comprised of depreciation and amortization, stock-based compensation and impairment of intangibles. In addition, $0.8 million of the change for the six months ended September 30, 2024 was from changes in our working capital, primarily from timing of accounts receivable, accounts payable and accrued liabilities and related party payables.

Current wording

Net cash used in our operating activities of $0.7 million for the nine months ended December 31, 2024 primarily resulted from our net loss during the period of $4.6 million, which included non-cash charges of $3.1 million largely comprised of depreciation and amortization, stock-based compensation and impairment of intangibles. In addition, $0.8 million of the change for the nine months ended December 31, 2024 was from changes in our working capital, primarily from timing of accounts receivable, accounts payable and accrued liabilities and related party payables.

Previous wording

Net cash used in operating activities of $0.6 million for the six months ended September 30, 2023 primarily resulted from our net loss during the period of $11.1 million, which included non-cash charges of $10.9 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 $0.7 million for the six months ended September 30, 2023 was from changes in our working capital, primarily from timing of accounts receivable, accounts payable, and related party receivables/payables.

Current wording

Net cash provided by operating activities of $1.8 million for the nine months ended December 31, 2023 primarily resulted from our net loss during the period of $13.7 million, which included non-cash charges of $12.9 million largely comprised of depreciation and amortization, stock-based compensation, change in fair value of derivatives, amortization of debt discount and non-cash interest. The remainder of our sources of cash provided by operating activities of $2.6 million for the nine months ended December 31, 2023 was from changes in our working capital, primarily from timing of accounts receivable, accounts payable and accrued liabilities and deferred revenue.

Previous wording

Net cash used in investing activities of $0.1 million for the six months ended September 30, 2024 was for the purchase of fixed assets.

Current wording

Net cash used in investing activities of $0.2 million for the nine months ended December 31, 2024 was for the purchase of fixed assets.

Previous wording

No cash was used in or provided by financing activities for the six months ended September 30, 2024

Current wording

No cash was used in or provided by financing activities for the nine months ended December 31, 2024.

Previous wording

Net cash used in financing activities of $0.3 million for the six months ended September 30, 2023 attributed to repayments on the Bridge Loan.

Current wording

Net cash used in financing activities of $3.0 million for the nine months ended December 31, 2023 attributed to repayments on the Bridge Loan.