LiveOne, Inc.

Previous wording

We make forward-looking statements in this Annual Report and the documents incorporated by reference herein within the meaning of the Securities Litigation Reform Act of 1995. 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,” “will likely result,” “should,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “continue,” “target” or similar expressions. These forward-looking statements are based on information available to us as of the date of this Annual 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 its revenue; 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, spin-out, distribution or transaction will not occur or whether any such event will enhance shareholder value; our ability to continue as a going concern; our ability to attract, maintain and increase the number of its users and paid members; our identifying, acquiring, securing and developing content; our intent to repurchase shares of our and/or PodcastOne's common stock from time to time under our announced stock repurchase program and the timing, price, and quantity of repurchases, if any, under the program; our ability to maintain compliance with certain financial and other covenants; successfully implementing our growth strategy, including relating to our technology platforms and applications; management's relationships with Industry Stakeholders; changes in economic conditions; competition; risks and uncertainties applicable to the businesses of our subsidiaries; and other risks, uncertainties and factors set forth in “Item 1A. Risk Factors” of this Annual Report. We do not undertake any obligation to update forward-looking statements as a result of as a result of new information, future events or developments or otherwise.

Current wording

We make forward-looking statements in this Annual Report and the documents incorporated by reference herein within the meaning of the Securities Litigation Reform Act of 1995. 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,” “will likely result,” “should,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “continue,” “target” or similar expressions. These forward-looking statements are based on information available to us as of the date of this Annual 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 its revenue; our ability to consummate any proposed financing, acquisition, spin-out, special dividend, merger, distribution or transaction, the timing of the consummation of any such proposed event, including the risks that a condition to the consummation of any such event would not be satisfied within the expected timeframe or at all, or that the consummation of any proposed financing, acquisition, spin-out, merger, special dividend, distribution or transaction will not occur or whether any such event will enhance shareholder value; our ability to continue as a going concern; our ability to attract, maintain and increase the number of its users and paid members; our ability to identify, acquire, secure and develop content; our intent to repurchase shares of its and/or PodcastOne’s common stock from time to time under our announced stock repurchase program and the timing, price, and quantity of repurchases, if any, under the program; our ability to maintain compliance with certain financial and other debt covenants; our ability to successfully implement our growth strategy, including relating to our technology platforms and applications; management’s relationships with industry stakeholders; our ability to repay our indebtedness when due; our ability to satisfy the conditions for closing on our announced additional convertible debentures financing; uncertain and unfavorable outcomes in legal proceedings and/or our ability to pay any amounts due in connection with any such legal proceedings; changes in economic conditions; competition; risks and uncertainties applicable to the businesses of our subsidiaries; and other risks, uncertainties and factors and other risks, uncertainties and factors set forth in “Item 1A. Risk Factors” of this Annual Report. We do not u…

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Previous wording

We are a pioneer in the acquisition, distribution and monetization of Internet radio, podcasting and music-related streaming and live music and video content. Our principal operations and decision-making functions are located in North America. We manage and report our businesses as three operating segments: PodcastOne, Slacker and our Media Group. Our Audio Group consist of our PodcastOne and Slacker subsidiaries, and our Media Group consists of our remaining subsidiaries. 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 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.

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 three operating segments. Our senior management regularly reviews our operating results, principally to make decisions about how we allocate our resources and to measure our segments 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 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 fiscal years ended March 31, 2024 and 2023, we reported revenue of $118.4 million and $99.6 million, respectively. For the years ended March 31, 2024 and 2023, one customer accounted for 51% and 44% of our consolidated revenues, respectively.

Current wording

For the fiscal years ended March 31, 2025 and 2024, we reported revenue of $114.4 million and $118.4 million, respectively. For the years ended March 31, 2025 and 2024, one customer accounted for 45% and 51% of our consolidated revenues, respectively.

Previous wording

For our fiscal year ended March 31, 2024, we derived 56% of our revenue from paid memberships and the remainder from advertising, ticketing, sponsorship, merchandising and licensing. During fiscal year ended March 31, 2024, we (i) delivered live events digitally live streamed across our platform, (ii) increased our sponsorship revenue from online events when compared to prior fiscal years and (iii) had revenue from our PPV platform for an entire year, allowing us to charge customers directly to access and watch certain live events digitally on our music platform. As a result of these actions, our revenue for the fiscal year ended March 31, 2024 was comprised of 56% from paid members, 37% from advertising and 7% from merchandise.

Current wording

For our fiscal year ended March 31, 2025, we derived 50% of our revenue from paid memberships and the remainder from advertising, ticketing, sponsorship, merchandising and licensing. During fiscal year ended March 31, 2025, we (i) delivered live events digitally live streamed across our platform, (ii) increased our sponsorship revenue from online events when compared to prior fiscal years and (iii) had revenue from our PPV platform for an entire year, allowing us to charge customers directly to access and watch certain live events digitally on our music platform. As a result of these actions, our revenue for the fiscal year ended March 31, 2025 was comprised of 50% from paid members, 46% from advertising and 4% from merchandise.

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 our on-premise live 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

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 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 Year ended March 31, 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 51% and 44% of our consolidated revenue. 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, 2024 could cause our revenue to fluctuate significantly.

Current wording

For the years ended March 31, 2025 and 2024, all material amounts of our revenue were derived from customers located in the United States and moreover, one of our customers accounted for 45% 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 March 31, 2025 could cause our revenue to fluctuate significantly.

Previous wording

Moreover, and with the addition of PodcastOne and CPS in July and December 2020, respectively, the percentage of this customer revenue concentration increased and is expected to continue in the future. In the long term, we plan to expand our business internationally in places such as Europe, Asia Pacific and Latin America, and as a result will continue to incur significant incremental upfront expenses associated with these growth opportunities.

Current wording

Moreover, and in the long term, we plan to expand our business internationally in places such as Europe, Asia Pacific and Latin America, and as a result will continue to incur significant incremental upfront expenses associated with these growth opportunities.

Previous wording

Membership revenue increased by $13.8 million, or 26%, to $66.2 million for the year ended March 31, 2024, as compared to $52.4 million for the year ended March 31, 2023. The increase was primarily as a result of member growth with our largest OEM customer.

Current wording

Membership revenue decreased by $9.2 million, or 14%, to $56.9 million for the year ended March 31, 2025, as compared to $66.2 million for the year ended March 31, 2024. The decrease was primarily as a result of a decrease in membership growth with our largest OEM customer due to our amended arrangement which was effective October 1, 2024.

Previous wording

Advertising revenue increased by $8.6 million, or 24%, to $43.7 million during the year ended March 31, 2024, as compared to $35.1 million the year ended March 31, 2023, which is primarily due to growth in advertising at PodcastOne year-over-year.

Current wording

Advertising revenue increased by $8.6 million, or 20%, to $52.3 million during the year ended March 31, 2025, as compared to $43.7 million the year ended March 31, 2024, which is primarily due to growth in advertising at PodcastOne year-over-year.

Previous wording

Merchandising revenue decreased by $2.6 million, or 24%, to $8.3 million for the year ended March 31, 2024, as compared to $10.8 million for the year ended March 31, 2023 due to a reduction in demand from both retail partners and our direct to consumer merchandising business.

Current wording

Merchandising revenue decreased by $3.1 million, or 37%, to $5.2 million for the year ended March 31, 2025, as compared to $8.3 million for the year ended March 31, 2024 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 $0.3 million, or 71%, to $0.1 million from $0.4 million for the year ended March 31, 2024 as compared to the year ended March 31, 2023. The decrease was primarily driven by the decrease in events held by us during the fiscal year ended March 31, 2023, with no comparable event held during the year ended March 31, 2024.

Current wording

Sponsorship and licensing revenue decreased by $0.1 million, or 100%, from none for the year ended March 31, 2025 as compared to $0.1 million for the year ended March 31, 2024. The decrease was primarily driven by the decrease in events held by us during the fiscal year ended March 31, 2024, with no comparable event held during the year ended March 31, 2025.

Previous wording

Ticket/Event revenue decreased by $0.7 million, or 84%, to $0.1 million for the year ended March 31, 2024, as compared to $0.8 million for the year ended March 31, 2023. The decrease was driven by the lack of in-person events during the current year.

Current wording

Ticket/Event revenue decreased by $0.1 million, or 100%, to none for the year ended March 31, 2025, as compared to $0.1 million for the year ended March 31, 2024. The decrease was driven by the lack of in-person events during the current year.

Previous wording

Membership cost of sales increased by $12.6 million, or 43%, to $42.1 million for the year ended March 31, 2024, as compared to $29.6 million for the year ended March 31, 2023. The increase was in line with the higher membership revenues noted above.

Current wording

Membership services cost of sales decreased by $10.0 million, or 24%, to $32.1 million for the year ended March 31, 2025, as compared to $42.1 million for the year ended March 31, 2024. The decrease was in line with the lower membership revenues noted above.

Previous wording

Advertising cost of sales increased by $7.9 million, or 26%, to $38.1 million for the year ended March 31, 2024, as compared to $30.1 million for the year ended March 31, 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 $10.2 million, or 27%, to $48.3 million for the year ended March 31, 2025, as compared to $38.1 million for the year ended March 31, 2024. 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 34%, to a credit of $0.3 million for the year ended March 31, 2024, as compared to a credit of $0.4 million for the year ended March 31, 2023. The increase was primarily due to us settling past amounts owed for vendors, therefore credits were recorded during the prior period.

Current wording

Production cost of sales increased by $0.6 million, or 212%, to $0.3 million for the year ended March 31, 2025, as compared to a credit of $0.3 million for the year ended March 31, 2024. The increase was primarily due to us settling past amounts owed for vendors, therefore credits were recorded during the prior period.

Previous wording

Merchandising cost of sales decreased by $1.0 million, or 14%, to $6.5 million for the year ended March 31, 2024, as compared to $7.5 million for the year ended March 31, 2023. The decrease was due to the corresponding decrease in revenue noted above.

Current wording

Merchandising cost of sales decreased by $2.0 million, or 30%, to $4.5 million for the year ended March 31, 2025, as compared to $6.5 million for the year ended March 31, 2024. The decrease was due to the corresponding decrease in revenue noted above along with less events taking place in the year ended March 31, 2025.

Previous wording

Sales and marketing expenses decreased by $0.5 million, or 6%, to $7.8 million for the year ended March 31, 2024, as compared to $8.3 million for the year ended March 31, 2023. The decrease was largely due to lower salaries and wages of $0.5 million.

Current wording

Sales and marketing expenses decreased by $1.4 million, or 18%, to $6.4 million for the year ended March 31, 2025, as compared to $7.8 million for the year ended March 31, 2024. The decrease was largely due to lower salaries and wages and stock compensation of $0.9 million along with a decrease of $0.5 million in merchandising marketing spend due to a reduction in trade shows and other marketing spend.

Previous wording

Product development expenses decreased by $0.5 million, or 9%, to $4.7 million for the year ended March 31, 2024, as compared to $5.1 million for the year ended March 31, 2023. The decrease was primarily due to headcount reductions in the year ended March 31, 2024.

Current wording

Product development expenses decreased by $0.2 million, or 4%, to $4.5 million for the year ended March 31, 2025, as compared to $4.7 million for the year ended March 31, 2024. The decrease was primarily due to headcount reductions in the year ended March 31, 2025.

Previous wording

General and administrative expenses increased by $6.4 million, or 40%, to $22.3 million for the year ended March 31, 2024, as compared to $15.9 million for the year ended March 31, 2023. The increase was largely due to an increase in share-based compensation of $1.7 million, an increase of $1.0 million in bad debt expense attributed to the bankruptcy of a merchandise retail partner and a $3.7 million increase primarily driven by the increase of professional services as a result of completing the spin-off of PodcastOne in September 2023.

Current wording

General and administrative expenses increased by $0.4 million, or 2%, to $22.7 million for the year ended March 31, 2025, as compared to $22.3 million for the year ended March 31, 2024. The increase was largely due to an increase in share-based compensation of $0.8 million, offset by a decrease of professional services as a result of completing the Spin-Out of PodcastOne in September 2023.

Previous wording

Amortization of intangible assets decreased by $2.5 million, or 58%, to $1.8 million for the year ended March 31, 2024, as compared to $4.3 million for the year ended March 31, 2023. The decrease was primarily due to intangible assets becoming fully amortized in the prior year.

Current wording

Amortization of intangible assets increased by $0.1 million, or 7%, to $1.9 million for the year ended March 31, 2025, as compared to $1.8 million for the year ended March 31, 2024. The increase was primarily due to the increase in intangibles capitalized at PodcastOne.

Previous wording

Impairment of intangible assets decreased $1.2 million, or 92%, to $0.1 million for the year ended March 31, 2024, as compared to $1.4 million for the year ended March 31, 2023, which is attributed to the impairment within our Media Group for the year ended March 31, 2024 and React Presents acquisition for the year ended March 31, 2023 (see Note 6 – Goodwill and Intangible Assets).

Current wording

Impairment of intangible assets increased $11.5 million, to $11.5 million for the year ended March 31, 2025, as compared to $0.1 million for the year ended March 31, 2024, which is attributed to the impairments within our Media Group, PodcastOne and Slacker reporting units for the year ended March 31, 2025 and React Presents acquisition for the year ended March 31, 2024 (see Note 4 – Property and Equipment and Note 5 – Goodwill and Intangible Assets).

Previous wording

Total other expense, net increased by $0.8 million, or 10%, to $8.5 million for the year ended March 31, 2024, as compared to $7.8 million for the year ended March 31, 2023. The decrease was due to an increase in other income of $1.6 million from the prior year period as a result of the settlement of an acquisition earnout in the prior period partially offset by increased interest expense primarily attributable to accretion of interest on our debt discounts related to the PC1 Bridge loan in the prior period. The increase can also be attributed to $4.5 million change in the fair value of derivatives.

Current wording

Total other expense, net decreased by $6.0 million, or 71%, to $2.5 million for the year ended March 31, 2025, as compared to $8.5 million for the year ended March 31, 2024. The decrease can be attributed to $4.5 million change in the fair value of derivatives in the prior year and a decrease in interest expense of $1.7 million due to the pay down of our debt.

Previous wording

Revenue increased $8.7 million, or 25%, during the year ended March 31, 2024, primarily due to increased advertising.

Current wording

Revenue increased $8.8 million, or 20%, during the year ended March 31, 2025, primarily due to increased advertising.

Previous wording

Operating loss increased by $3.1 million or 252%, for the year ended March 31, 2024, as the increase in revenue was lower than the increase in operating expenses due to growing the business and the Spin-Out costs.

Current wording

Operating loss increased by $2.0 million or 46%, for the year ended March 31, 2025, as the increase in revenue was lower than the increase in our operating expenses due to growing our business.

Previous wording

Adjusted EBITDA increased by $0.1 million, or 17%, to $0.5 million for the year ended March 31, 2024, as compared to $0.4 million for the year ended March 31, 2023. This was largely due to a decrease in general and administrative costs.

Current wording

Adjusted EBITDA* decreased by $1.0 million, or 200%, to a loss of $(0.5) million for the year ended March 31, 2025, as compared to $0.5 million for the year ended March 31, 2024. This was largely due to an increase in our cost of sales to support sales.

Previous wording

Revenue decreased $3.6 million, or 28%, to $9.2 million during the year ended March 31, 2024, as compared to $12.8 million for the year ended March 31, 2023, primarily due to a decrease in merchandising revenue due to a reduction in demand from both retail partners and our direct to consumer business.

Current wording

Revenue decreased $3.7 million, or 40%, to $5.5 million during the year ended March 31, 2025, as compared to $9.2 million for the year ended March 31, 2024, primarily due to a decrease in our merchandising revenue due to a reduction in demand from both our retail partners and our direct to consumer business.

Previous wording

Operating loss increased by $2.4 million, or 61%, to $6.3 million for the year ended March 31, 2024 from $3.9 million for the year ended March 31, 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 $0.8 million, or 12%, to $7.1 million for the year ended March 31, 2025 from $6.3 million for the year ended March 31, 2024, as a result of a decrease in our contribution margin coupled with the increase in our expenses due to an increase in our general and administrative expenses.

Previous wording

Adjusted EBITDA loss increased by $3.7 million, or 1,636%, to $3.9 million loss for the year ended March 31, 2024, as compared to a $0.2 million loss for the year ended March 31, 2023. This was largely due to the decrease in revenue compared to the prior year.

Current wording

Adjusted EBITDA* loss decreased by $0.8 million, or 21%, to $3.1 million loss for the year ended March 31, 2025, as compared to a $3.9 million loss for the year ended March 31, 2024. This was largely due to the decrease in our revenue compared to the prior year offset by a decrease in our expenses.

Previous wording

Operating loss increased by $1.9 million, or 29%, to $8.3 million for the year ended March 31, 2024, as compared to $6.5 million for the year ended March 31, 2023, largely due to an increase in legal and accounting costs.

Current wording

Operating loss increased by $2.1 million, or 26%, to $10.4 million for the year ended March 31, 2025, as compared to $8.3 million for the year ended March 31, 2024, largely due to an increase in our legal and accounting costs.

Previous wording

Corporate Adjusted EBITDA loss decreased $0.8 million, or 12%, to a $6.2 million loss for the year ended March 31, 2024 as compared to $7.0 million loss for the year ended March 31, 2023. The decrease was largely due to the reduction of employee and employee-related expenses.

Current wording

Corporate Adjusted EBITDA* loss increased $0.5 million, or 8%, to a $6.7 million loss for the year ended March 31, 2025 as compared to $6.2 million loss for the year ended March 31, 2024. The increase was largely due to the slight increase of our employee and employee-related expenses.

Previous wording

We account for a contract with a customer when an approved contract exists, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of substantially all of the consideration is probable. Revenue is recognized when we satisfy our obligation by transferring control of the goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We use the expected value method to estimate the value of variable consideration on advertising and with original equipment manufacturer contracts to include in the transaction price and reflect changes to such estimates in periods in which they occur. Variable consideration for these services is allocated to and recognized over the related time period such advertising and membership services are rendered as the amounts reflect the consideration we are entitled to and relate specifically to our efforts to satisfy our performance obligation. The amount of variable consideration included in revenue is limited to the extent that it is probable that the amount will not be subject to significant reversal when the uncertainty associated with the variable consideration is subsequently resolved.

Current wording

We account for a contract with a customer when an approved contract exists, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of substantially all of the consideration is probable. Revenue is recognized when we satisfy our obligation by transferring control of the goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We use the expected value method to estimate the value of variable consideration on advertising and with original equipment manufacturer contracts to include in the transaction price and reflect changes to such estimates in periods in which they occur. Variable consideration for these services is allocated to and recognized over the related time period such advertising and membership services are rendered as the amounts reflect the consideration we are entitled to and relate specifically to our efforts to satisfy our performance obligations. The amount of variable consideration included in revenue is limited to the extent that it is probable that the amount willnot be subject to significant reversal when the uncertainty associated with the variable consideration is subsequently resolved.

Previous wording

We report revenue on a gross or net basis based on management’s assessment of whether we act as a principal or agent in the transaction. To the extent we act as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we control the good or service prior to transfer to the customer. Where applicable, we have determined that we act as the principal in all of its membership service streams and may act as principal or agent for our advertising and licensing revenue streams.

Current wording

We report revenue on a gross or net basis based on management’s assessment of whether we act as a principal or agent in the transaction and is evaluated on a transaction by transaction basis. To the extent we act as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we control the good or service prior to transfer to the customer. Where applicable, we have determined that we act as the principal in all of our subscription service, sponsorship, and merchandising streams andmay act as principal or agent for our ticketing/live events, advertising and licensing revenue streams.

Previous wording

Advertising revenue primarily consist of revenues generated from the sale of audio, video, and display advertising space to third-party advertising exchanges. Revenues are recognized based on delivery of impressions over the contract period to the third-party exchanges, either when an ad is placed for listening or viewing by a visitor or when the visitor “clicks through” on the advertisement. The advertising exchange companies report the variable advertising revenue on a monthly basis. PodcastOne earns advertising revenues primarily for fees earned from advertisement placement purchased by the customer during the time the podcast is delivered to the viewing audience, under the terms and conditions as set forth in the applicable podcasting agreement calculated using impressions.

Current wording

Advertising revenue primarily consist of revenues generated from the sale of audio, video, and display advertising space to third-party advertising exchanges. Revenues are recognized based on delivery of impressions over the contract period to the third-party exchanges, either when an ad is placed for listening or viewing by a visitor or when the visitor “clicks through” on the advertisement. The advertising exchange companies report the variable advertising revenue on a monthly basis which represents our efforts to satisfy the performance obligation. We earn advertising revenues primarily for fees earned from advertisement placement purchased by the customer during the time the podcast is delivered to the viewing audience, under the terms and conditions as set forth in the applicable podcasting agreement calculated using impressions.

Previous wording

From time to time we enter into barter transactions involving advertising provided in exchange for goods and services. Revenue from barter transactions is recognized ratably over time based on the terms of the contract as delivery of impressions is performed on a consistent basis. Services received are charged to expense in the same manner.

Current wording

From time to time we enter into barter transactions involving advertising provided in exchange for goods and services. Revenue from barter transactions is recognized ratably over time based on the terms of the contract as delivery of impressions is performed on a consistent basis. The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the advertising spots promised or delivered to the customer. Services received are charged to expense in the same manner.

Previous wording

Licensing revenue primarily consists of sales of licensing rights to digitally stream its live music services in certain geographies (e.g. China). Licensing revenue is recognized when we satisfy our performance obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services, which is typically when the live event has aired. Any license fees collected in advance of an event are deferred until the event airs. We report our licensing revenue on a gross basis as we act as the principal in the underlying transactions. We report our licensing revenue on a gross basis as we act as the principal in the underlying transactions.

Current wording

Licensing revenue primarily consists of sales of licensing rights to digitally stream our live music services in certain geographies (e.g. China). Licensing revenue is recognized when we satisfy our performance obligation by transferring control of the goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services, which is typically when the live event has aired. Any license fees collected in advance of an event are deferred until the event airs. We report our licensing revenue on a gross basis as we act as the principal in the underlying transactions.

Previous wording

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period, on a straight-line basis. We use the Black-Scholes-Merton option pricing model to determine the grant date fair value of stock options. This model requires us to estimate the expected volatility and the expected term of the stock options which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected employee stock option exercise behavior. We use a predicted volatility of its stock price during the expected life of the options that is based on the historical performance of our stock price as well as including an estimate using guideline companies. Expected term is computed using the simplified method as the Company’s best estimate given its lack of actual exercise history. We have selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the stock. Stock-based awards are comprised principally of stock options, restricted stock and restricted stock units (“RSUs”). Forfeitures are recognized as incurred.

Current wording

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period, on a straight-line basis. We use the Black-Scholes-Merton option pricing model to determine the grant date fair value of stock options. This model requires us to estimate the expected volatility and the expected term of the stock options which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected employee stock option exercise behavior. We use a predicted volatility of our stock price during the expected life of the options that is based on the historical performance of our stock price as well as including an estimate using guideline companies. Expected term is computed using the simplified method as the Company’s best estimate given our lack of actual exercise history. We have selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the stock. Stock-based awards are comprised principally of stock options, restricted stock and restricted stock units (“RSUs”). Forfeitures are recognized as incurred.

Previous wording

Stock option awards issued to non-employees are accounted for at the grant date fair value determined using the Black-Scholes-Merton option pricing model. Management believes that the fair value of the stock options is more reliably measured than the fair value of the services received. We record the fair value of these equity-based awards and expense at their cost ratably over related vesting periods.

Current wording

Stock option awards issued to non-employees are accounted for at the grant date fair value determined using the Black-Scholes-Merton option pricing model. Management believes that the fair value of the stock options is more reliably measured than the fair value of the services received. We record the fair value of these equity-based awards as an expense over the related vesting period of the option awarded to the non-employee.

Previous wording

When the Company issues debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: (a) one or more underlyings, typically the price of our common stock; (b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; (c) no initial net investment, which typically excludes the amount borrowed; and (d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuer’s own equity. The scope exception applies if the contract is both (a) indexed to its own stock; and (b) classified in stockholders’ equity in its balance sheet.

Current wording

When we issue debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: (a) one or more underlyings, typically the price of our common stock; (b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; (c) no initial net investment, which typically excludes the amount borrowed; and (d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuer’s own equity. The scope exception applies if the contract is both (a) indexed to its own stock; and (b) classified in stockholders’ equity in its balance sheet.

Previous wording

We evaluate the recoverability of our intangible assets, and other long-lived assets with finite useful lives for impairment when events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. These trigger events or changes in circumstances include, but are not limited to a significant decrease in the market price of a long-lived asset, a significant adverse change in the extent or manner in which a long-lived asset is being used, significant adverse changes in legal factors, including changes that could result from our inability to renew or replace material agreements with certain of our partners such as Tesla Motors on favorable terms, significant adverse changes in the business climate including changes which may result from adverse shifts in technology in our industry and the impact of competition, a significant adverse deterioration in the amount of revenue or cash flows we expect to generate from an asset group, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development of a long-lived asset, current or future operating or cash flow losses that demonstrate continuing losses associated with the use of our long-lived asset, or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. We perform impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. In making this determination, we consider the specific operating characteristics of the relevant long-lived assets, including (i) the nature of the direct and any indirect revenues generated by the assets; (ii) the interdependency of the revenues generated by the assets; and (iii) the nature and extent of any shared costs necessary to operate the assets in their intended use. An impairment test would be performed when the estimated undiscounted future cash flows expected to result from the use of the asset group is less than its carrying amount. Impairment is measured by assessing the usefulness of an asset by comparing its carrying value to its fair value. If an asset is considered impaired, the impairment loss is measured as the amount by which the carrying value of the asset group exceeds its estimated fair value. Fair value is determined based upon estimated discounted future cash flows. The key estimates applied when preparing cash flow projections relate to revenue, operating margins, economic lives of assets, overheads, taxation and discount rates. To date, we have not recognized any material impairment losses associated with our long-lived assets.

Current wording

We evaluate the recoverability of our intangible assets, and other long-lived assets with finite useful lives for impairment when events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. These trigger events or changes in circumstances include, but are not limited to a significant decrease in the market price of a long-lived asset, a significant adverse change in the extent or manner in which a long-lived asset is being used, significant adverse changes in legal factors, including changes that could result from our inability to renew or replace material agreements with certain of our partners such as Tesla Motors on favorable terms, significant adverse changes in the business climate including changes which may result from adverse shifts in technology in our industry and the impact of competition, a significant adverse deterioration in the amount of revenue or cash flows we expect to generate from an asset group, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development of a long-lived asset, current or future operating or cash flow losses that demonstrate continuing losses associated with the use of our long-lived asset, or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. We perform impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. In making this determination, we consider the specific operating characteristics of the relevant long-lived assets, including (i) the nature of the direct and any indirect revenues generated by the assets; (ii) the interdependency of the revenues generated by the assets; and (iii) the nature and extent of any shared costs necessary to operate the assets in their intended use. An impairment test would be performed when the estimated undiscounted future cash flows expected to result from the use of the asset group is less than its carrying amount. Impairment is measured by assessing the usefulness of an asset by comparing its carrying value to its fair value. If an asset is considered impaired, the impairment loss is measured as the amount by which the carrying value of the asset group exceeds its estimated fair value. Fair value is determined based upon estimated discounted future cash flows. The key estimates applied when preparing cash flow projections relate to revenue, operating margins, economic lives of assets, overheads, taxation and discount rates.