PodcastOne Inc

Previous wording

We operate in a rapidly changing environment that involves a number of risks, which could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I-Item 1A under the heading “Risk Factors” in our Annual Report. During the six months ended September 30, 2024, there were no material changes to the risk factors that were disclosed in our Annual Report on Form 10-K for the year ended March 31, 2024 except as noted below.

Current wording

We operate in a rapidly changing environment that involves a number of risks, which could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I-Item 1A under the heading “Risk Factors” in our Annual Report. During the nine months ended December 31, 2024, there were no material changes to the risk factors that were disclosed in our Annual Report on Form 10-K for the year ended March 31, 2024 except as noted below.

Previous wording

As reflected in our consolidated financial statements included elsewhere herein, we have a history of losses, incurred significant operating and net losses in each year since our inception, including net losses of $14.7 million and $7.0 million for the fiscal years ended March 31, 2024 and 2023, respectively, and cash provided by(used in) operating activities of $2.2 million and $(4.7) million for the fiscal years ended March 31, 2024 and 2023, respectively, and had cash provided by operating activities of $0.1 million and $0.6 million for the six months ended September 30, 2024 and 2023, respectively. We incurred a net loss of $3.0 million and $11.1 million for the six months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $32.6 million and a working capital of $0.7 million. We anticipate incurring additional losses until such time that we can generate significant increases to our revenues, and/or reduce our operating costs and losses. To date, we have financed our operations exclusively through the sale of equity securities (including convertible securities), and after our acquisition by LiveOne on July 1, 2020, through LiveOne’s sale of its and our equity and/or debt securities (including convertible securities). The size of our future net losses will depend, in part, on the rate of future expenditures and our ability to significantly grow our business and increase our revenues. We expect to continue to incur substantial and increased expenses as we grow our business. We also expect an increase in our expenses associated with our operations as a publicly-traded company. We may incur significant losses in the future for a number of other reasons, including unsuccessful acquisitions, costs of integrating new businesses, expenses, difficulties, complications, delays and other unknown events. As a result of the foregoing, we expect to continue to incur significant losses for the foreseeable future and we may not be able to achieve or sustain profitability.

Current wording

As reflected in our consolidated financial statements included elsewhere herein, we have a history of losses, incurred significant operating and net losses in each year since our inception, including net losses of $14.7 million and $7.0 million for the fiscal years ended March 31, 2024 and 2023, respectively, and cash provided by (used in) operating activities of $2.2 million and $(4.7) million for the fiscal years ended March 31, 2024 and 2023, respectively, and had cash (used in) provided by operating activities of $(0.7) million and $1.8 million for the nine months ended December 31, 2024 and 2023, respectively. We incurred a net loss of $4.6 million and $13.7 million for the nine months ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $34.2 million and a working capital of $1.0 million. We anticipate incurring additional losses until such time that we can generate significant increases to our revenues, and/or reduce our operating costs and losses. To date, we have financed our operations exclusively through the sale of equity securities (including convertible securities), and after our acquisition by LiveOne on July 1, 2020, through LiveOne’s sale of its and our equity and/or debt securities (including convertible securities). The size of our future net losses will depend, in part, on the rate of future expenditures and our ability to significantly grow our business and increase our revenues. We expect to continue to incur substantial and increased expenses as we grow our business. We also expect an increase in our expenses associated with our operations as a publicly-traded company. We may incur significant losses in the future for a number of other reasons, including unsuccessful acquisitions, costs of integrating new businesses, expenses, difficulties, complications, delays and other unknown events. As a result of the foregoing, we expect to continue to incur significant losses for the foreseeable future and we may not be able to achieve or sustain profitability.

Previous wording

Our ability to meet our total liabilities of $7.6 million as of September 30, 2024, and to continue as a going concern, is dependent on our ability to increase revenue, reduce costs, achieve a satisfactory level of profitable operations, obtain additional sources of suitable and adequate financing and further develop and execute on our business plan. We may never achieve profitability, and even if we do, we may not be able to sustain being profitable. As a result of the going concern uncertainty, there is an increased risk that you could lose the entire amount of your investment in our company, which assumes the realization of our assets and the satisfaction of our liabilities and commitments in the normal course of business.

Current wording

Our ability to meet our total liabilities of $5.6 million as of December 31, 2024, and to continue as a going concern, is dependent on our ability to increase revenue, reduce costs, achieve a satisfactory level of profitable operations, obtain additional sources of suitable and adequate financing and further develop and execute on our business plan. We may never achieve profitability, and even if we do, we may not be able to sustain being profitable. As a result of the going concern uncertainty, there is an increased risk that you could lose the entire amount of your investment in our company, which assumes the realization of our assets and the satisfaction of our liabilities and commitments in the normal course of business.

Previous wording

At maturity, the entire outstanding principal amount of LiveOne’s senior secured ABL Credit Facility, will become due and payable by LiveOne. As of September 30, 2024, $8.1 million of LiveOne’s total indebtedness is due in fiscal 2025. LiveOne’s failure to repay any outstanding amount of its ABL Credit Facility would constitute a default under such facility. A default would increase the interest rate to the default rate under the ABL Credit Facility or the maximum rate permitted by applicable law until such amount is paid in full and may materially adversely impact our business, operating results and financial condition. In addition, pursuant to the terms of the SX Settlement Agreement, LiveOne and Slacker are required to pay SX the amount of $9,765,396.70 in equal monthly payments, subject to increase in the event LiveOne or Slacker complete certain future financings, with a final payment of $2,189,775.08 on or before February 1, 2025, unless the parties agree to further extend the timing of such payment. If for any reason LiveOne or Slacker fail to comply with the terms of the SX settlement agreement, the final payment will increase by $925,391.40, and SX will have the right to declare a default under the SX Settlement Agreement and at its option require LiveOne and Slacker to repay all outstanding amounts owed thereunder and/or enforce its consent judgment and/or pursue a new judgment against LiveOne and Slacker, which may materially adversely impact our business, operating results and financial condition. As of September 30, 2024, LiveOne and Slacker owed $4.9 million to SX under the SX Settlement Agreement.

Current wording

In addition, pursuant to the terms of the SX Settlement Agreement, LiveOne and Slacker was required to pay SX the amount of $9,765,397 in equal monthly payments, subject to increase in the event LiveOne or Slacker complete certain future financings. As of December 31, 2024, LiveOne and Slacker owed $4.1 million to SX under the SX Settlement Agreement. The SX Settlement Agreement, as amended in January 2025, requires LiveOne and Slacker to pay SX the remaining sum on or before February 1, 2027 in 24 equal monthly payments (excluding the January 2024 payment paid by LiveOne and Slacker as of the date of this Quarterly Report). If for any reason LiveOne or Slacker fail to comply with the terms of the SX Settlement Agreement, SX will have the right to declare a default under the SX Settlement Agreement and at its option require LiveOne and/or Slacker to repay all outstanding amounts owed thereunder and/or enforce its consent judgment and/or pursue a new judgment against LiveOne and Slacker, which may materially adversely impact our business, operating results and financial condition. As of December 31, 2024, LiveOne and Slacker owed $4.9 million to SX under the SX Settlement Agreement.

Previous wording

LiveOne has a significant amount of indebtedness. Its total outstanding consolidated indebtedness as of September 30, 2024 was $8.1 million, net of fees and discounts. In addition, while LiveOne has certain restrictions and covenants with its current indebtedness, LiveOne could in the future incur additional indebtedness beyond such amount. LiveOne’s existing debt agreements with the senior lenders contain certain restrictive covenants that limit our ability to merge with other companies or consummate certain changes of control, make certain investments, pay dividends or repurchase shares of our common stock, transfer or dispose of assets, or enter into various specified transactions. We therefore may not be able to engage in any of the foregoing transactions unless we obtain the consent of LiveOne’s senior secured lenders or terminate our existing debt agreements. LiveOne’s debt agreements under the ABL Credit Facility also contain certain financial covenants, including maintaining a minimum cash amount at all times and are secured by substantially all of our assets. There is no guarantee that LiveOne, our Company and LiveOne’s other subsidiaries will be able to generate sufficient cash flow or sales to meet the financial covenants or pay the principal and interest under our debt agreements or to satisfy all of the financial covenants. We may also incur significant additional indebtedness in the future.

Current wording

LiveOne has a significant amount of indebtedness. Its total outstanding consolidated indebtedness as of December 31, 2024 was $5.2 million, net of fees and discounts. In addition, while LiveOne has certain restrictions and covenants with its current indebtedness, LiveOne could in the future incur additional indebtedness beyond such amount. LiveOne’s existing debt agreements with the senior lenders contain certain restrictive covenants that limit our ability to merge with other companies or consummate certain changes of control, make certain investments, pay dividends or repurchase shares of our common stock, transfer or dispose of assets, or enter into various specified transactions. We therefore may not be able to engage in any of the foregoing transactions unless we obtain the consent of LiveOne’s senior secured lenders or terminate our existing debt agreements. LiveOne’s debt agreements under the ABL Credit Facility also contain certain financial covenants, including maintaining a minimum cash amount at all times and are secured by substantially all of our assets. There is no guarantee that LiveOne, our Company and LiveOne’s other subsidiaries will be able to generate sufficient cash flow or sales to meet the financial covenants or pay the principal and interest under our debt agreements or to satisfy all of the financial covenants. We may also incur significant additional indebtedness in the future.

Previous wording

During the six months ended September 30, 2024, we issued 234,428 shares of our common stock valued at $0.4 million to various consultants. We valued these shares at prices between $0.96 and $2.22 per share, the market price of our common stock on the date of issuance.

Current wording

During the nine months ended December 31, 2024, we issued 294,575 shares of our common stock valued at $0.5 million to various consultants. We valued these shares at prices between $0.96 and $2.22 per share, the market price of our common stock on the date of issuance.

Previous wording

During the six months ended September 30, 2024, we issued 137,710 shares of our common stock valued at $0.2 million to employees. We valued these shares at prices between $0.89 and $4.39 per share, the market price of our common stock on the date of issuance.

Current wording

During the nine months ended December 31, 2024, we issued 178,335 shares of our common stock valued at $0.3 million to employees. We valued these shares at prices between $0.89 and $4.39 per share, the market price of our common stock on the date of issuance.

Previous wording

During the six months ended September 30, 2024, we issued 424,000 shares of our common stock valued at $0.7 million to Live One, Inc. We valued these share prices between $1.50 and $2.00 per share.

Current wording

During the nine months ended December 31, 2024, we issued 765,880 shares of our common stock valued at $1.5 million to Live One, Inc. We valued these share prices between $1.50 and $2.00 per share.