Annual Report for Fiscal Year Ending 03-31, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

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 our 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 stockholder value; our ability to continue as a going concern; our ability to attract, maintain and increase the number of our paid and ad-supported users; our ability to identify, acquire, secure and develop content; our ability to implement our announced digital asset treasury strategy and/or purchase digital assets from time to time pursuant to such strategy, including for the maximum announced amount, and other risks related to such strategy; 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 debt covenants; us successfully implementing 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 our legal proceedings and/or our ability to pay any amounts due in connection with any such legal proceedings; significant legal, commercial, regulatory and technical uncertainty and risks related to Bitcoin, Ethereum and other digital assets; regulatory developments related to digital assets and digital asset markets; changes in economic conditions; competition; risks and uncertainties applicable to the businesses of our subsidiaries; and other risks, uncertainties and factors including, but not limited to, those described in "Item 1A. Risk Factors" of this Annual Report and in our other filings and submissions with the SEC. 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.

The following discussion and analysis of our business and results of operations for the fiscal year ended March 31, 2026, and our financial conditions at that date, should be read in conjunction with the financial statements and the notes thereto included elsewhere in this Annual Report. As used herein, "LiveOne," the "Company," "we," "our" or "us" and similar terms refer collectively to LiveOne, Inc. and its subsidiaries, unless the context indicates otherwise.

Overview of the Company

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 paid user 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.

For the fiscal years ended March 31, 2026 and 2025, we reported revenue of $77.1 million and $114.4 million, respectively. For the years ended March 31, 2026 and 2025, one customer accounted for 7% and 45% of our consolidated revenues, respectively.

Fiscal 2026 Significant Transactions

Merlin License Agreement Extension

On March 3, 2026, we, Slacker and Music and Entertainment Rights Licensing Independent Network Limited ("Merlin") entered into a Shares Issuance Agreement (the "Agreement") pursuant to which we issued to Merlin 500,000 shares (the "Shares") of our common stock at a deemed issued price of $7.50 per share, as payment of (i) any outstanding music royalty payments due by Slacker under the Digital Music Services Agreement, dated as of February 1, 2014, entered into between Merlin and Slacker, as last amended on March 3, 2026 (the "Amendment" and the Original DMSA, as amended, the "DMSA"), and (ii) any music royalty payments due by Slacker to Merlin during the Extended Term (as defined below), unless terminated earlier as provided therein. Pursuant to the Amendment, the term of the DMSA was extended through November 30, 2026, as such maybe further extended to November 30, 2027 (the "Extended Term"). Pursuant to the Amendment, Merlin's sale proceeds of any Shares will be offset against any royalty payments or other fees due to Merlin under the DMSA, and among other things, upon any termination or expiration of the DMSA, Slacker will have the option to purchase any unsold Shares held by Merlin or to pay in immediately available funds any amount then outstanding under the DMSA (and in such event Merlin shall return for cancellation any unsold Shares). Merlin agreed not to sell the Shares in excess of more than 5% of the average daily trading volume for the common stock for the preceding 20 consecutive trading days (excluding from such average any index rebalancing days). In the event any fees remain payable to Merlin upon expiration of the Extended Term, Slacker will pay such remaining amounts to Merlin in immediately available funds.

Equity Offering

On July 15, 2025, we entered into an underwriting agreement with Lucid Capital Markets, LLC (the "Underwriter") pursuant to which we agreed to issue and sell to the Underwriter 1,360,833 shares of our common stock at an offering price of $7.50 per share and which includes the grant to the Underwriter of an option for the issuance and sales of up to 177,500 additional shares (the "Option") to be sold by us (the "Offering"). The aggregate gross proceeds to our Company from the Offering would be approximately $9.5 million (including the exercise of the Option), after deducting an underwriting discount of 7% of the price to the public, but before deducting expenses payable by us in connection with the Offering. Pursuant to the underwriting agreement, we also agreed to issue the Underwriter's common stock purchase warrants to purchase up to 4% of the securities sold in the Offering at an exercise price of $9.375. The Offering, including the Option, closed on July 17, 2025.

Series A Exchange

On July 15, 2025, we entered into letter agreements (collectively, the "Agreements") with (i) Harvest Small Cap Partners Master, Ltd. ("HSCPM"), (ii) Harvest Small Cap Partners, L.P. ("HSCP" and together with HSCPM, the "Harvest Funds" or the "Selling Stockholders"), and (iii) Trinad Capital Master Fund Ltd., a fund controlled by Mr. Ellin, our Chief Executive Officer, Chairman, director and principal stockholder ("Trinad Capital" and collectively with the Harvest Funds, the "Holders"), the holders of our Series A Preferred Stock. Pursuant to the Agreements (i) the Harvest Funds exchanged $4,500,000 worth of its shares of Series A Preferred Stock into 3,000,000 shares of common stock, at a price of $15.00 per share, and Trinad Capital exchanged $2,250,000 worth of shares of its Series A Preferred Stock into 150,000 shares of common stock at the same price, and (ii) the Selling Stockholders and Trinad Capital received 300,000 and 150,000 three-year warrants respectively, to purchase common stock exercisable at a price of $0.10 per share.

Debentures Financing

In May 2025, we and PodcastOne, entered into a Securities Purchase Agreement with certain institutional investors pursuant to which we sold to them the Debentures in an aggregate principal amount of $16,775,000 for an aggregate cash purchase price of $15,250,000. The Debentures mature on May 19, 2028, accrue interest at 11.75% per year and are subject to certain redemption rights as discussed elsewhere in this Annual Report.

Basis of Presentation

Our consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the fiscal year ended March 31, 2025, and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our consolidated financial statements for the year ended March 31, 2026.

Opportunities, Challenges and Risks

For our fiscal year ended March 31, 2026, we derived 16% of our revenue from paid users and the remainder from advertising, ticketing, sponsorship, merchandising and licensing. During fiscal year ended March 31, 2026, 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, 2026 was comprised of 16% from paid users, 80% from advertising and 4% from merchandise.

We believe our operating results and performance are, and will continue to be, driven by various factors that affect the music industry. Our ability to attract, grow and retain users to our platform is highly sensitive to rapidly changing public music preferences and technology and is dependent on our ability to maintain the attractiveness of our platform, content and reputation to our customers. Beyond fiscal year 2025, the future revenue and operating growth across our music platform will rely heavily on our ability to grow our user base in a cost effective manner, continue to develop and deploy quality and innovative new music services, provide unique and attractive content to our customers, continue to grow the number of listeners on our platform and live music festivals we stream, grow and retain customers and secure sponsorships to facilitate future revenue growth from advertising and e-commerce across our platform.

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

On October 1, 2024, we announced an amended relationship with our largest OEM customer. Effective December 1, 2024, the OEM customer no longer subsidizes our products to some of its customers, however, we offer all OEM customer vehicles in North America the opportunity to convert to become direct subscribers of our LiveOne music app. The direct subscription to our LiveOne app allows such users for the first time to access their LiveOne music and LiveOne's other service offerings directly across all of their devices. Our LiveOne 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. As a result, we believe that we now have a unique opportunity to convert as many of such OEM's drivers as possible to a higher priced LiveOne subscription service creating a meaningful upside opportunity for us, and we are working in good faith with such OEM customer to convert as many of these drivers as possible. The OEM customer will continue to pay us monthly for qualifying grandfathered vehicles for the term of the OEM license agreement.

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.

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 user 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.

For the years ended March 31, 2026 and 2025, all material amounts of our revenue were derived from customers located in the United States and moreover, one of our customers accounted for 7% and 45% 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, 2026 could cause our revenue to fluctuate significantly.

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.

Consolidated Results of Operations

The following tables set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results (in thousands):

		Year Ended				Year Ended
		March 31,				March 31,
		2026				2025
Revenue:		$	77,144			$	114,405
Operating expenses:
Cost of sales			64,865				85,241
Sales and marketing			4,040				6,396
Product development			2,402				4,475
General and administrative			20,664				22,746
Impairment of fixed assets, intangible assets and goodwill			-				11,657
Amortization of intangible assets			653				1,947
Total operating expenses			92,624				132,462
Loss from operations			(15,480	)			(18,057	)
Other income (expense):
Interest expense, net			(3,894	)			(2,712	)
Change in fair value of digital assets			(2,057	)			-
Other income			208				214
Total other expense, net			(5,743	)			(2,498	)
Loss before income taxes			(21,223	)			(20,555	)
Income tax provision (benefit)			30				(185	)
Net loss		$	(21,253	)		$	(20,370	)
Net loss per share - basic and diluted		$	(2.02	)		$	(2.14	)
Weighted average common shares - basic and diluted			10,983,850				9,504,124

The following table provides the depreciation expense included in the above line items (in thousands):

										% Change
		Year Ended March 31,								2026 vs.
		2026				2025				2025
Depreciation expense
Cost of sales		$	32			$	146				-78	%
Sales and marketing			128				266				-52	%
Product development			1,064				1,970				-46	%
General and administrative			(251	)			996				-125	%
Total depreciation expense		$	973			$	3,378				-71	%

The following table provides the stock-based compensation expense included in the above line items (in thousands):

										% Change
		Year Ended March 31,								2026 vs.
		2026				2025				2025
Stock-based compensation expense:
Cost of sales		$	4,998			$	1,042				380	%
Sales and marketing			264				797				-67	%
Product development			152				375				-59	%
General and administrative			5,738				5,429				6	%
Total stock-based compensation expense		$	11,152			$	7,643				46	%

The following table provides our results of operations, as a percentage of revenue, for the periods presented:

		Year Ended March 31,
		2026				2025
Revenue			100	%			100	%
Operating expenses
Cost of sales			84	%			75	%
Sales and marketing			5	%			6	%
Product development			3	%			4	%
General and administrative			27	%			20	%
Impairment of fixed assets, intangible assets and goodwill			0	%			10	%
Amortization of intangible assets			1	%			2	%
Total operating expenses			120	%			116	%
Loss from operations			-20	%			-16	%
Other expense			-7	%			-2	%
Loss before income taxes			-28	%			-18	%
Income tax provision (benefit)			-	%			-	%
Net loss			-28	%			-18	%

Revenue

Revenue was as follows (in thousands):

										% Change
		Year Ended March 31,								2026 vs.
		2026				2025				2025
Paid user services		$	11,972			$	56,939				-79	%
Advertising			61,616				52,285				18	%
Merchandising			3,556				5,181				-31	%
Total Revenue		$	77,144			$	114,405				-33	%

Paid User Services

Paid user services revenue decreased by $45.0 million, or 79%, to $12.0 million for the year ended March 31, 2026, as compared to $56.9 million for the year ended March 31, 2025. The decrease was primarily as a result of a decrease in user growth with our largest OEM customer due to our amended arrangement which was effective October 1, 2024.

Advertising Revenue

Advertising revenue increased by $9.3 million, or 18%, to $61.6 million during the year ended March 31, 2026, as compared to $52.3 million the year ended March 31, 2025, which is primarily due to growth in advertising at PodcastOne year-over-year as it experienced an increase in the number of impressions year-over-year. In addition, $3.0 million of the increase is attributed to an increase in our barter revenue at PodcastOne.

Merchandising

Merchandising revenue decreased by $1.6 million, or 31%, to $3.6 million for the year ended March 31, 2026, as compared to $5.2 million for the year ended March 31, 2025 due to a reduction in demand from both retail partners and our direct to consumer merchandising business.

Cost of Sales

Cost of sales was as follows (in thousands):

										% Change
		Year Ended March 31,								2026 vs.
		2026				2025				2025
Paid user services		$	7,785			$	32,089				-76	%
Advertising			55,403				48,300				15	%
Production			1,582				322				391	%
Merchandising			95				4,530				-98	%
Total Cost of Sales		$	64,865			$	85,241				-24	%

Paid User Services

Paid user services cost of sales decreased by $24.3 million, or 76%, to $7.8 million for the year ended March 31, 2026, as compared to $32.1 million for the year ended March 31, 2025. The decrease was in line with the lower user revenues noted above.

Advertising

Advertising cost of sales increased by $7.1 million, or 15%, to $55.4 million for the year ended March 31, 2026, as compared to $48.3 million for the year ended March 31, 2025. 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.

Production

Production cost of sales increased by $1.3 million, or 391%, to $1.6 million for the year ended March 31, 2026, as compared to a credit of $0.3 million for the year ended March 31, 2025. The increase was primarily due to us settling past amounts owed for vendors, therefore credits were recorded during the prior period.

Merchandising

Merchandising cost of sales decreased by $4.4 million, or 98%, to $0.1 million for the year ended March 31, 2026, as compared to $4.5 million for the year ended March 31, 2025. The decrease was due to the corresponding decrease in revenue noted above along with less events taking place in the year ended March 31, 2026.

Other Operating Expenses

Other operating expenses were as follows (in thousands):

										% Change
		Year Ended March 31,								2026 vs.
		2026				2025				2025
Sales and marketing expenses		$	4,040			$	6,396				-37	%
Product development			2,402				4,475				-46	%
General and administrative			20,664				22,746				-9	%
Amortization of intangible assets			653				1,947				-66	%
Impairment of fixed assets, intangible assets and goodwill			-				11,657				-100	%
Total Other Operating Expenses		$	27,759			$	47,221				-41	%

Sales and Marketing Expenses

Sales and marketing expenses decreased by $2.4 million, or 37%, to $4.0 million for the year ended March 31, 2026, as compared to $6.4 million for the year ended March 31, 2025. The decrease was largely due to lower salaries and wages and stock compensation of $0.5 million along with a decrease of $1.9 million in merchandising marketing spend due to a reduction in trade shows and other marketing spend.

Product Development

Product development expenses decreased by $2.1 million, or 46%, to $2.4 million for the year ended March 31, 2026, as compared to $4.5 million for the year ended March 31, 2025. The decrease was primarily due to headcount reductions in the year ended March 31, 2026.

General and Administrative

General and administrative expenses decreased by $2.1 million, or 9%, to $20.7 million for the year ended March 31, 2026, as compared to $22.7 million for the year ended March 31, 2025. The decrease was largely due to a decrease of professional services.

Amortization of Intangible Assets

Amortization of intangible assets decreased by $1.3 million, or 66%, to $0.7 million for the year ended March 31, 2026, as compared to $1.9 million for the year ended March 31, 2025. The decrease was primarily due to the decrease in intangibles capitalized at PodcastOne.

Impairment of Fixed Assets, Intangible Assets and Goodwill

Impairment of intangible assets decreased $11.7 million, to none for the year ended March 31, 2026, as compared to $11.7 million for the year ended March 31, 2025, which is attributed to the impairments within our Media Group, PodcastOne and Slacker reporting units for the year ended March 31, 2025 (see Note 4 - Property and Equipment and Note 5 - Goodwill and Intangible Assets).

Total Other Expense, Net

										% Change
		Year Ended March 31,								2026 vs.
		2026				2025				2025
Total other expense, net		$	(5,743	)		$	(2,498	)			130	%

Total other expense, net increased by $3.2 million, or 130%, to $5.7 million for the year ended March 31, 2026, as compared to $2.5 million for the year ended March 31, 2025. The increase can be attributed to a $2.1 million increase as a result of the change in fair value of digital assets and a $0.4 million increase in interest expense as a result of our new convertible debentures.

Business Segment Results

Year Ended March 31, 2026, as compared to Year Ended March 31, 2025

Audio Group - PodcastOne Operations

Our Audio Group Operations, which include our PodcastOne operating results were, and discussions of significant variances are, as follows (in thousands):

		Year Ended March 31,
		2026				2025				% Change
Revenue		$	61,671			$	52,119				18	%
Cost of Sales			54,101				47,394				14	%
Sales & Marketing, Product Development and G&A			9,639				9,736				-1	%
Intangible Asset Amortization and Impairment			573				1,423				-60	%
Operating Loss		$	(2,642	)		$	(6,434	)			-59	%
Operating Margin			(4	)%			-12	%			8	%
Adjusted EBITDA*		$	6,305			$	(501	)			1358	%
Adjusted EBITDA Margin*			10	%			-1	%			11	%

*	See "-Non-GAAP Measures" below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin.

Revenue

Revenue increased $9.6 million, or 18%, during the year ended March 31, 2026, primarily due to an increase in advertising.

Operating Loss

Operating loss decreased by $3.8 million or 59%, for the year ended March 31, 2026, as the increase in revenue was higher than the increase in our operating expenses due to the growth of our business.

Adjusted EBITDA

Adjusted EBITDA* increased by $6.8 million, or 1,358%, to $6.3 million for the year ended March 31, 2026, as compared to a loss of $0.5 million for the year ended March 31, 2025. This was largely due to an increase in our revenue and the increase of stock-based compensation when compared to the prior year.

Audio Group - Slacker Operations

Our Audio Group Operations, which include our Slacker operating results were, and discussions of significant variances are, as follows (in thousands):

		Year Ended March 31,
		2026				2025				% Change
Revenue		$	11,830			$	56,787				-79	%
Cost of Sales			9,087				32,997				-72	%
Sales & Marketing, Product Development and G&A			3,490				8,844				-61	%
Intangible Asset Amortization and Impairment			71				9,070				-99	%
Operating Income (Loss)		$	(818	)		$	5,876				-114	%
Operating Margin			(7	)%			10	%			-17	%
Adjusted EBITDA*		$	(179	)		$	18,679				-101	%
Adjusted EBITDA Margin*			(2	)%			33	%			-34	%

Revenue

Revenue decreased $45.0 million, or 79%, during the year ended March 31, 2026, primarily due to our decreased paid user revenue as a result of the change in the terms of the agreement with our largest OEM customer.

Operating Income

Operating income decreased by $6.7 million, or 114%, for the year ended March 31, 2026, as the decrease in our revenue noted above was higher than the decrease in our operating expenses as the decrease in revenue resulted in our lower operating income.

Adjusted EBITDA

Adjusted EBITDA* decreased by $18.9 million, or 101%, to a loss of $0.2 million for the year ended March 31, 2026, as compared to $18.7 million for the year ended March 31, 2025. This was largely due to the decrease in our revenue compared to the prior year.

Media Group Operations

Our Media Group Operations which consist of all of our other operating subsidiaries outside of PodcastOne and Slacker operating results were, and discussions of significant variances are, as follows (in thousands):

		Year Ended March 31,
		2026				2025				% Change
Revenue		$	3,643			$	5,499				-34	%
Cost of Sales			1,677				4,850				-65	%
Sales & Marketing, Product Development and G&A			4,694				4,589				2	%
Intangible Asset Amortization and Impairment			9				3,110				-100	%
Operating Loss		$	(2,737	)		$	(7,050	)			-61	%
Operating Margin			-75	%			-128	%			53	%
Adjusted EBITDA*		$	(2,482	)		$	(3,085	)			-20	%
Adjusted EBITDA Margin*			-68	%			-56	%			-12	%

*	See "-Non-GAAP Measures" below for the definition and reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin.

Revenue

Revenue decreased $1.9 million, or 34%, to $3.6 million during the year ended March 31, 2026, as compared to $5.5 million for the year ended March 31, 2025, 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.

Operating Loss

Operating loss decreased by $4.3 million, or 61%, to $2.7 million for the year ended March 31, 2026 from $7.1 million for the year ended March 31, 2025, as a result of an increase in our contribution margin coupled with the decrease in our expenses due to a decrease in our general and administrative expenses.

Adjusted EBITDA

Adjusted EBITDA* loss decreased by $0.6 million, or 20%, to $2.5 million loss for the year ended March 31, 2026, as compared to a $3.1 million loss for the year ended March 31, 2025. This was largely due to the decrease in our revenue compared to the prior year offset by a decrease in our expenses.

Corporate expense

Our Corporate operating results and discussions of significant variances are, as follows (in thousands):

										% Change
		Year Ended March 31,								2026 vs.
		2026				2025				2025
Sales & Marketing, Product Development, and G&A		$	9,283			$	10,448				-11	%
Operating Loss		$	(9,283	)		$	(10,448	)			-11	%
Operating Margin			N/A				N/A				-	%
Adjusted EBITDA*		$	(4,567	)		$	(6,709	)			32	%

*	See "-Non-GAAP Measures" below for the definition and reconciliation of Adjusted EBITDA

Operating Loss

Operating loss decreased by $1.2 million, or 11%, to $9.3 million for the year ended March 31, 2026, as compared to $10.4 million for the year ended March 31, 2025, largely due to a decrease in our legal and accounting costs.

Adjusted EBITDA

Corporate Adjusted EBITDA* loss decreased $2.1 million, or 32%, to a $4.6 million loss for the year ended March 31, 2026 as compared to $6.7 million loss for the year ended March 31, 2025. The decrease was largely due to the decrease of our employee and employee-related expenses, and a decrease in our legal and accounting costs.

Non-GAAP Measures

Contribution margin

Contribution Margin is a non-GAAP financial measure that we define as Revenue less Cost of Sales.

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA") is a non-GAAP financial measure that we define as net income (loss) before (a) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (b) legal, accounting and other professional fees directly attributable to acquisition activity, (c) employee severance payments and third party professional fees directly attributable to acquisition or corporate realignment activities, (d) certain non-recurring expenses associated with legal settlements or reserves for legal settlements in the period that pertain to historical matters that existed at acquired companies prior to their purchase date, (e) depreciation and amortization (including goodwill impairment, if any), and (f) certain stock-based compensation expense. We use Adjusted EBITDA to evaluate the performance of our operating segment. We believe that information about Adjusted EBITDA assists investors by allowing them to evaluate changes in the operating results of our business separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results. Adjusted EBITDA is not calculated or presented in accordance with GAAP. A limitation of the use of Adjusted EBITDA as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, Adjusted EBITDA should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, Adjusted EBITDA as presented herein may not be comparable to similarly titled measures of other companies.

Adjusted EBITDA Margin

Adjusted EBITDA Margin is a non-GAAP financial measure that we define as the ratio of Adjusted EBITDA to Revenue.

The following table sets forth the reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure for the year ended March 31 (in thousands):

																		Non-
																		Recurring
		Net				Depreciation				Stock-Based				Stock-Based				Acquisition and				Other
		Income				Impairment and				Compensation				Compensation				Realignment				(Income)				Provision				Adjusted
		(Loss)				Amortization				Employees & Directors				Third Party Service				Costs				Expense				for Taxes				EBITDA
Year Ended March 31, 2026
Operations - PodcastOne		$	(2,644	)		$	616			$	1,654			$	6,557			$	120			$	2			$	-			$	6,305
Operations - Slacker			(3,063	)			767				(126	)			560				(8	)			1,691				-				(179	)
Operations - Media			(3,787	)			242				176				1,108				35				(256	)			-				(2,482	)
Corporate			(11,759	)			1				1,273				(680	)			2,262				4,306				30				(4,567	)
Total		$	(21,253	)		$	1,626			$	2,977			$	7,545			$	2,409			$	5,743			$	30			$	(923	)
Year Ended March 31, 2025
Operations - PodcastOne		$	(6,458	)		$	1,671			$	2,671			$	1,544			$	47			$	-			$	24			$	(501	)
Operations - Slacker			3,570				11,875				561				722				244				1,707				-				18,679
Operations - Media			(8,166	)			3,430				512				375				640				123				1				(3,085	)
Corporate			(9,316	)			5				254				1,004				886				668				(210	)			(6,709	)
Total		$	(20,370	)		$	16,981			$	3,998			$	3,645			$	1,817			$	2,498			$	(185	)		$	8,384

The following table sets forth the reconciliation of gross profit, the most comparable GAAP financial measure to Contribution Margin for the years ended March 31, 2026 and 2025 (in thousands):

		Year Ended
		March 31,
		2026				2025
Revenue:		$	77,144			$	114,405
Less:
Cost of sales			(64,865	)			(85,241	)
Amortization of developed technology			(1,014	)			(3,087	)
Gross Profit			11,265				26,077
Share-based compensation			4,998				1,042
Depreciation			32				146
Developed technology			1,014				3,087
Contribution Margin		$	17,309			$	30,352

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. We believe that the assumptions and estimates associated with our revenue recognition, allowance for doubtful accounts, the assigned value of acquired tangible and intangible assets and assumed and contingent liabilities associated with business combinations, provision for legal settlements, useful lives and impairment of property and equipment, intangible assets, goodwill and other assets, the fair value of our equity-based compensation awards and convertible debt instruments, and valuation of deferred income tax assets and liabilities, have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

Revenue Recognition

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 user 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 will not be subject to significant reversal when the uncertainty associated with the variable consideration is subsequently resolved.

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 and may act as principal or agent for our ticketing/live events, advertising and licensing revenue streams.

Our revenue is principally derived from the following services:

Paid User Services

Paid user services revenue substantially consist of monthly to annual recurring user fees, which are primarily paid in advance by credit card or through direct billings arrangements. We defer the portion of monthly to annual recurring user fees collected in advance and recognize them in the period earned. Paid user revenue is recognized in the period of services rendered. Our paid user revenue consists of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are user based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. As a result, we have concluded that the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. We recognize paid user revenue straight-line through the user period.

Paid User Services consist of:

Direct users, mobile service provider and mobile app services

We generate revenue for paid user services on both a direct basis and through memberships sold through certain third-party mobile service providers and mobile app services (collectively the "Mobile Providers"). For memberships sold through the Mobile Providers, the user executes an on-line agreement with Slacker outlining the terms and conditions between Slacker and the user upon purchase of the membership. The Mobile Providers promote the Slacker app through their e-store, process payments for memberships, and retain a percentage of revenue as a fee. We report this revenue gross of the fee retained by the Mobile Providers, as the user is Slacker's customer in the contract and Slacker controls the service prior to the transfer to the user. Paid user revenues from monthly memberships sold directly through Mobile Providers are subject to such Mobile Providers' refund or cancellation terms. Revenues from Mobile Providers are recognized net of any such adjustments for variable consideration, including refunds and other fees. Our payment terms vary based on whether the membership is sold on a direct basis or through Mobile Providers. Memberships sold on a direct basis require payment before the services are delivered to the customer. The payment terms for memberships sold through Mobile Providers vary, but are generally payable within 30 days.

Third-Party Original Equipment Manufacturers

We generate revenue for paid user services through memberships sold through a third-party OEM. For memberships sold through the OEM, the OEM executes an agreement with Slacker outlining the terms and conditions between Slacker and the OEM upon purchase of the membership. The OEM installs the Slacker app in their equipment and provides the Slacker service to the OEM's customers. The monthly fee charged to the OEM is based upon a fixed rate per vehicle, multiplied by the variable number of total vehicles which have the Slacker application installed. The number of customers, or the variable consideration, is reported by OEMs and resolved on a monthly basis. Our payment terms with OEM are up to 30 days. The OEM does not charge the car owners a fee for the Slacker service.

Advertising Revenue

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 performed on a monthly basis which represents the Company's efforts to satisfy the performance obligation. 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.

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.

Merchandise Revenue

Revenue is recognized upon the transfer of control to the customer. We recognize revenue and measure the transaction price net of taxes collected from customers and remitted to governmental authorities. Sales commissions are expensed as incurred and are recorded in sales and marketing expenses in the consolidated statements of operations. Our customer contracts do not have a significant financing component due to their short durations, which are typically effective for one year or less and have payment terms that are generally 30-60 days. Wholesale revenue is generally recognized when products are shipped, depending on the applicable contract terms. We record a refund liability for expected returns based on prior returns history, recent trends, and projections for returns on sales in the current period. The refund liability at March 31, 2026 and 2025, was less than $0.1 million, respectively.

Licensing Revenue

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.

Ticket/Event Revenue

Ticket/Event revenue is primarily from the sale of tickets and promoter fees earned from venues or other co-promoters under one of several formulas, including a fixed guaranteed amount and/or a percentage of ticket sales or event profits.

Revenue from the promotion or production of an event is recognized when the show occurs. Revenue collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue collected from sponsorship agreements, which is not related to a single event, is classified as deferred revenue and recognized over the term of the agreement or operating season as the benefits are provided to the sponsor.

Revenue from our ticketing operations primarily consists of service fees charged at the time a ticket for an event is sold. For tickets sold to our festival events the revenue for the tickets and associated ticket service charges collected in advance of the event is recorded as deferred revenue until the event occurs. For PPV arrangements that include multiple performance obligations, i.e. delivery of the online stream, sponsorships, digital meet and greet, or physical merchandise, we allocate the total contract consideration to each performance obligation using the standalone selling price. If the standalone selling price is not readily determinable, it is estimated using observable inputs including an adjusted market based approach, expected cost plus margin, or the residual approach.

Stock-Based Compensation

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.

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.

Digital Assets

The Company accounts for qualifying crypto assets in accordance with ASC 350-60, Intangibles, Goodwill and Other, Crypto Assets. The Company's digital assets consist primarily of Bitcoin.

Digital assets are initially recognized at cost upon acquisition or receipt. Transaction costs incurred to acquire digital assets are expensed as incurred unless otherwise required by applicable accounting guidance. Digital assets are subsequently measured at fair value at each reporting date, with changes in fair value recognized in earnings within change in fair value of digital assets in the consolidated statements of operations and comprehensive loss.

Fair value is determined using quoted market prices in the Company's principal market, when available. For Bitcoin, the Company determines fair value using observable conversion characteristics applicable to the underlying Bitcoin instrument and quoted market prices for the underlying Bitcoin token as of the measurement date. The Company's treasury reporting tool supports custody tracking, wallet reconciliation, and conversion-rate documentation but is not the primary pricing source for fair value measurement.

Commitments and Contingencies

From time to time, we are involved in legal proceedings and other matters arising in connection with the conduct of our business activities. Many of these proceedings may be at preliminary stages and/or seek an indeterminate amount of damages. We regularly evaluate the status of our commitments and contingencies in which we are involved to (i) assess whether a material loss is probable or there is at least a reasonable possibility that a material loss or an additional material loss in excess of a recorded accrual may have been incurred and (ii) determine if financial accruals are required when appropriate. We record an expense accrual for any commitments and loss contingency when we determine that a loss is probable and the amount of the loss can be reasonably estimated. If an expense accrual is not appropriate, we further evaluate each matter to assess whether an estimate of possible loss or range of loss can be made and whether or not any such matter requires additional disclosure. There can be no assurance that any proceeding against us will be resolved in amounts that will not differ from the amounts of estimated exposures. Legal fees and other costs of defending litigation are expensed as incurred.

Non-Income Tax Contingencies

We do not collect and remit sales and use or similar taxes in all jurisdictions in which we have sales, based on our belief that such taxes are not applicable or legally required.

The June 2018 U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc., No. 17-494, along with the application of existing, new or future rulings and laws, could have adverse effects on our business, prospects and operating results.

Long-lived Assets, Goodwill and Intangible Assets with Finite Lives

We perform valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination, and allocate the purchase price of each acquired business to its respective net tangible and intangible assets. Acquired intangible assets principally comprise of customer relationships and technology. We determine the appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses. Intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the pattern in which the majority of the economic benefits is expected to be consumed.

Goodwill represents the excess of the purchase consideration of an acquired entity over the fair value of the acquired net assets. Goodwill is tested for impairment annually or when events or circumstances change that would indicate that goodwill might be impaired. Events or circumstances that could trigger an impairment review include, but are not limited to, a significant adverse change in legal factors or in the business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends or significant under-performance relative to expected historical or projected future results of operations.

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.

Goodwill is tested for impairment at the reporting unit level, which is the same or one level below an operating segment. In any year we may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If we cannot determine qualitatively that the fair value is in excess of the carrying value, or we decide to bypass the qualitative assessment, we perform a quantitative analysis. The quantitative analysis is used to identify both the existence of impairment and the amount of the impairment loss by comparing the estimated fair value of a reporting unit with its carrying value, including goodwill. The estimated fair value is based on internal projections of expected future cash flows and operating plans, as well as market conditions relative to the operations of our reporting units. If the estimated fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired; otherwise, an impairment loss is recognized within our consolidated statements of operations in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

Liquidity and Capital Resources

Current Financial Condition

As of March 31, 2026, our principal sources of liquidity were our cash and cash equivalents, including restricted cash balances in the amount of $5.4 million, which primarily are invested in Bitcoin and cash in banking institutions in the U.S. The vast majority of our cash proceeds were received as a result of our operations, incurrence of debt, the issuance of convertible notes and public offerings of our common shares. In July 16, 2025, in connection with the closing of our July 2025 public offering, we announced our intent to launch our bitcoin yield treasury strategy, as part of our board of directors' approval of our up to $500 million digital asset treasury strategy. As of March 31, 2026, we have purchased a total of approximately 43.15 Bitcoins at an aggregate purchase price of approximately $5.0 million for an average purchase price of approximately $115,875 per Bitcoin, inclusive of fees and expenses, which constitutes 100% of our treasury that was then invested in Bitcoin. As of the date of this Annua Report, we have not sold any of our Bitcoins, and we do not own any other forms of cryptocurrency. As of March 31, 2026, we have a convertible note balance of $14.6 million and an SBA loan balance of $0.1 million.

As reflected in our consolidated financial statements included elsewhere in this Annual Report, we have a history of losses and incurred a net loss of $20.5 million and had a working capital deficiency of $17.8 million as of March 31, 2026. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year from the date that the financial statements are issued. Our 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.

On October 1, 2024, we announced an amended relationship with our largest OEM customer. Effective December 1, 2024, the OEM customer no longer subsidizes our products to some of its customers, however, we offer all OEM customer vehicles in North America the opportunity to convert to become direct subscribers of our LiveOne music app. The direct subscription to our LiveOne app allows such users for the first time to access their LiveOne music and LiveOne's other service offerings directly across all of their devices. Our LiveOne 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 us monthly for grandfathered vehicles for the term of the OEM license agreement. Accordingly, the change in our relationship with the OEM customer in October 2024 is likely to cause our liquidity and cash flows to fluctuate significantly beyond March 31, 2025. Our liquidity will depend upon our ability to convert as many of the OEM drivers as possible to become direct subscribers of our LiveOne app and the OEM customer continuing to pay for any grandfather users, as well as our ability to enter into new B2B agreements to provide our services that could materially contribute to our liquidity and cash flows. In addition, our liquidity will depend on our ability to negotiate with our music labels, publishers and other partners to achieve flexibility in the terms of our license agreements to match our OEM driver conversions. Furthermore, our liquidity will be dependent on our ability to extend and/or refinance the terms of our senior secured line of credit and/or our ability to pay any amounts that we have agreed to pay under the SX Settlement Agreement.

On May 19, 2025, we and PodcastOne entered into the SPA (as defined below) with the Purchasers (as defined below), pursuant to which (i) we sold to the Purchasers the Initial Debentures (as defined below) in an aggregate principal amount of $16,775,000 for an aggregate cash purchase price of $15,250,000, in a private placement transaction. In connection with the issuance of the Debentures, we paid off all obligations owing under, and terminated, the 2025 Business Loan Agreement (as defined below) and all related loan agreements.

Our long-term ability to continue as a going concern is dependent upon our ability to increase revenue, reduce costs, achieve a satisfactory level of profitable operations, and obtain additional sources of suitable and adequate financing. Our ability to continue as a going concern is also dependent its ability to further develop and execute on our business plan. We may also have to reduce certain overhead costs through the reduction of salaries and other means and settle liabilities through negotiation. There can be no assurance that management's attempts at any or all of these endeavors will be successful.

Sources of Liquidity

In July 2022, PodcastOne completed a private placement offering (the "PC1 Bridge Loan") of its unsecured convertible notes with an original issue discount of 10% (the "OID") in the aggregate principal amount of $8.8 million (the "PC1 Notes") to certain accredited investors and institutional investors, for gross proceeds of $8,035,000 pursuant to the Subscription Agreements entered into with the Purchasers. In connection with the sale of the PC1 Notes, the Purchasers received warrants (the "PC1 Warrants") to purchase a number of shares of PodcastOne's common stock exercisable at $3.00 per share. As part of the PC1 Bridge Loan, we purchased $3,000,000 (excluding the OID) worth of PC1 Notes.

On September 8 2023, we entered into a Business Loan Agreement (the "2023 Business Loan Agreement") with our then senior lender, to convert our then existing revolving credit facility into an assets backed loan credit facility, which is continued to be collateralized by a first lien on all of the assets of our Company and our subsidiaries (the "ABL Credit Facility"). The 2023 Business Loan Agreement provided us with borrowing capacity of up to the Borrowing Base (as defined in the 2023 Business Loan Agreement). On May 31, 2024, we extended the maturity date of the ABL Credit Facility to September 2, 2024. On January 28, 2025, we entered into a new Business Loan Agreement (the "2025 Business Loan Agreement") with such lender to update certain terms of the ABL Credit Facility, including to reduce the principal amount outstanding under the Promissory Note to $3,750,000, reflected in our repayment of $3,250,000 of the principal amount of the Promissory Note as of such date, and to extend the maturity date of the Promissory Note to November 20, 2025.

On May 19, 2025 (the "Closing Date"), we and PodcastOne entered into a Securities Purchase Agreement (the "SPA") with certain institutional investors (each, a "Purchaser" and collectively, the "Purchasers"), pursuant to which (i) we sold to the Purchasers our Original Issue Discount Senior Secured Convertible Debentures (the "Initial Debentures") in an aggregate principal amount of $16,775,000 for an aggregate cash purchase price of $15.25 million, and (ii) if certain conditions are satisfied as set forth in the SPA, including at least one of the Conditions (as defined below), we may sell at its option to the Purchasers our additional Original Issue Discount Senior Secured Convertible Debentures in an aggregate principal amount of $11,000,000 on substantially the same terms as the Initial Debentures (the "Additional Debentures" and collectively with the Initial Debentures, the "Debentures"), in a private placement transaction. The Debentures are convertible into shares of our common stock at the holder's option at a conversion price of $21.00 per share, subject to certain customary adjustments such as stock splits, stock dividends and stock combinations. We may sell to the Purchasers the Additional Debentures if within 15 months of the Closing Date either of the following conditions have been satisfied during such 15-month period (the "Conditions"): (x) the VWAP (as defined in the SPA) of the common stock has been equal to or greater than $4.20 per share (subject to certain customary adjustments such as stock splits, stock dividends and stock combinations) for 30 consecutive trading days, or (y) Free Cash Flow (as defined in the SPA) has been equal to or greater to $3,000,000 for three consecutive fiscal quarters, and has increased in each of the foregoing quarters from the immediately preceding fiscal quarter. The Initial Debentures mature on May 19, 2028 and accrue interest at 11.75% per year. Commencing with the calendar month of August 2025 (subject to the following sentence), the holders of the Initial Debentures will have the right, at their option, to require us to redeem an aggregate of up to $100,000 of the outstanding principal amount of the Debentures per month. For the month of August 2025, the holders may not submit a redemption notice for such a redemption prior to August 18, 2025. Commencing from November 18, 2025, May 18, 2026 and May 18, 2027, the holders of the Initial Debentures will have the right, at their option, to require us to redeem an aggregate of up to $150,000, $250,000 and $300,000, respectively, of the outstanding principal amount of the Initial Debentures per month.

Subject to the satisfaction of certain conditions, including applicable prior notice to the holders of the Initial Debentures, at any time after May 19, 2026, we may elect to prepay all, but not less than all, of the then outstanding Initial Debentures for a prepayment amount equal to the outstanding principal balance of then outstanding Initial Debentures plus all accrued and unpaid interest thereon, together with a prepayment premium equal to the following (the "Prepayment Premium"): (a) if the Initial Debentures are prepaid after May 19, 2026, but on or prior to May 19, 2027, 5% of the entire outstanding principal balance of the outstanding Initial Debentures (or the applicable portion thereof required to be prepaid by us); and (c) if the Initial Debentures are prepaid on or after May 19, 2027, but prior to the maturity date of the Initial Debentures, 4% of the entire outstanding principal balance of then outstanding Initial Debentures (or the applicable portion thereof required to be prepaid by us). Subject to the satisfaction of certain conditions, we shall be required to prepay the entire outstanding principal amount of all of then outstanding Initial Debentures in connection with a Change of Control Transaction (as defined in the Initial Debentures) for a prepayment amount equal to the outstanding principal balance of then outstanding Initial Debentures, plus all accrued and unpaid interest thereon, plus the applicable Prepayment Premium based on when such Change of Control Transaction occurs within the period set forth above applicable to such Prepayment Premium; provided, that (x) if a Change of Control Transaction occurs on or prior to May 19, 2026, plus 10% of the entire outstanding principal balance of then outstanding Initial Debentures; (y) if the Specified Carve-Out Transaction (as defined in the Debentures) in consummated, the Company shall be required to prepay the Initial Debentures, in an aggregate amount equal to the lower of the outstanding principal balance of then outstanding Initial Debentures and $7,500,000, in each case, plus the applicable Prepayment Premium, and (z) if a Permitted Disposition (as defined in the Debentures) pursuant to clause (g) of the definition thereof is consummated, the Company shall be required to prepay the Initial Debentures in an aggregate amount equal to the lower of the outstanding principal balance of then outstanding Initial Debentures and 50% of the first $1,000,000 of net proceeds resulting from such Permitted Disposition up to $1,000,000 and 25% of such net proceeds in excess of $1,000,000, in each case, plus the applicable Prepayment Premium. Our obligations under the Debentures can be accelerated upon the occurrence of certain customary events of default. In the event of default and acceleration of our obligations, we would be required to pay the applicable prepayment amount described above.

In connection with the issuance of the Debentures, we paid off all obligations owing under, and terminated, the 2025 Business Loan Agreement and all related loan agreements.

On July 16, 2025, in connection with the anticipated closing of the public offering discussed below, we announced our intent to launch our bitcoin yield treasury strategy, as part of our board of directors' approval of our up to $500 million digital asset treasury strategy. During the fiscal year ended March 31, 2026 we purchased $5.0 million of Bitcoin.

On July 17, 2025, we completed an underwritten public offering of shares of our common stock for aggregate gross proceeds to us of approximately $9.5 million (including the exercise of the underwriter's option), after deducting an underwriting discount, but before other offering expenses. We used the net proceeds from the public offering to fund the acquisition of cryptocurrencies, the development and implementation of our digital asset treasury strategy and for working capital and general corporate purposes.

As of the date of this Annual Report, holders of 1,243,998 PC1 Warrants (other than our Company) exercised their warrants for cash at an exercise price of $3.00 per share resulting in proceeds to PodcastOne of approximately $3.73 million. We also exercised all of our 1.1 million PC1 Warrants.

Our cash flows from operating activities are significantly affected by our cash-based investments in our operations, including acquiring live music events and festivals rights, our working capital, corporate infrastructure to support our ability to generate revenue and conduct operations through cost of services, product development, sales and marketing and general and administrative activities, and to further implement our digital asset treasury strategy. Cash used in investing activities has historically been, and is expected to be, impacted significantly by our investments in business combinations, our platform, our infrastructure and equipment for our business offerings, and sale of our investments, and to further implement our digital asset treasury strategy. We expect to make additional strategic acquisitions to further grow our business and continue to implement our digital asset treasury strategy, which may require significant investments, capital raising and/or acquisition of additional debt in the near and long term. Over the next twelve to eighteen months, our net use of our working capital could be substantially higher or lower depending on the number and timing of new live festivals and paid users that we add to our businesses and capital resources needed to further implement our digital asset treasury strategy, including for up to the maximum announced amount.

Subject to applicable limitations in the instruments governing our outstanding indebtedness, we may from time to time repurchase our debt, including the unsecured convertible notes, in the open market, through tender offers, through exchanges for debt or equity securities, in privately negotiated transactions or otherwise.

In the future, we may utilize additional commercial financings, bonds, notes, debentures, lines of credit and term loans with a syndicate of commercial banks or other bank syndicates and/or issue equity securities (publicly or privately) for general corporate purposes, including acquisitions and investing in our intangible assets, music equipment, platform and technologies, and to further implement our digital asset treasury strategy. We may also use our current cash and cash equivalents to repurchase some or all of our outstanding Debentures, and pay down our debt, in part or in full, subject to repayment limitation set forth in the applicable debt agreements. Management plans to fund our operations over the next twelve months through the combination of improved operating results, spending rationalization, and the ability to access sources of capital such as through the issuance of our equity and/or debt securities. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. We filed a new universal shelf Registration Statement on Form S-3 (the "Shelf S-3") with the SEC on February 4, 2025, which was declared effective by the SEC on February 17, 2025. Under the Shelf S-3, we have the ability to raise up to $150.0 million in cash from the sale of our equity, debt and/or other financial instruments, net of any subsequent takedowns of such Shelf S-3. In May 2024, we entered into an at-the-market agreement with Roth Capital Partners, LLC ("Roth"), pursuant to which we may, while the Shelf S-3 continues to be effective, offer and sell shares of our common stock having an aggregate offering price of up to $25 million from time to time through Roth acting as our sales agent. As of the filing of this Annual Report, we have not sold any shares under such at-the-market agreement.

Credit Agreement and Other Debt

For additional information regarding our credit agreement, Debentures and other debt, see "Contractual Obligations" in Notes 8, 9,10 and 19 to our consolidated financial statements included elsewhere in this Annual Report.

Sources and Uses of Cash

The following table provides information regarding our cash flows for the fiscal years ended March 31, 2026 and 2025 (in thousands):

		Year Ended March 31,
		2026				2025
Net cash (used in) provided by operating activities		$	(10,545	)		$	6,368
Net cash used in investing activities			(8,176	)			(3,123	)
Net cash provided by (used in) financing activities			19,955				(6,238	)
Net change in cash and cash equivalents and restricted cash		$	1,234			$	(2,993	)

Cash Provided By Operating Activities

Net cash used in operating activities for the year ended March 31, 2026 of $10.5 million primarily resulted from our net loss during such period of $21.3 million, which included non-cash charges of $14.8 million largely comprised of depreciation and amortization, stock-based compensation and change in fair value of digital assets. The remainder of our sources of cash used in operating activities of $4.1 million was from changes in our working capital, including $5.7 million from timing of accounts payable, accrued expenses and royalty liabilities offset by a change in inventories of $0.9 million.

Net cash provided by our operating activities for the year ended March 31, 2025 of $6.4 million primarily resulted from our net loss during such period of $20.4 million, which included non-cash charges of $22.3 million largely comprised of depreciation and amortization, stock-based compensation and impairment of goodwill, fixed assets and intangibles. The remainder of our sources of cash used in operating activities of $4.1 million was from changes in our working capital, including $5.0 million from timing of accounts payable, accrued expenses and royalty liabilities offset by a change in inventory of $0.9 million.

Cash Flows Used In Investing Activities

Net cash used in investing activities for the year ended March 31, 2026 of $8.2 million was principally due to the $3.2 million cash used for the purchase of our property and equipment and $5.0 million for the purchase of our digital assets during such period.

Net cash used in investing activities for the year ended March 31, 2025 of $3.1 million was principally due to the $3.1 million cash used for the purchase of our property and equipment and $0.1 million for the purchase of our intangible assets during such period.

Cash Flows Used In Financing Activities

Net cash provided financing activities for the year ended March 31, 2026 of $20.0 million was primarily due to proceeds of $15.2 million from issuance of the Initial Debentures, and proceeds of $9.4 from the issuance of shares of our common stock in the July 2025 public offering, offset by a payment of $3.0 million to repay in full our line of credit, $0.6 million for the purchase of our shares and/or shares of PodcastOne as part of our buyback program, repayment of our Capchase loan of $0.6 million and repayment of $0.5 million on our outstanding Debentures.

Net cash used in financing activities for the year ended March 31, 2025 of $6.2 million was primarily due to payment of $4.1 million on our line of credit, $1.0 million for the purchase of treasury stock, payment of our Capchase loan of $0.7 million and payment of $0.5 million of dividends.