# EDGAR Filing Document

**Accession Number:** 0001940177
**File Stem:** 0001213900-23-019632
**Filing Date:** 2023-3
**Character Count:** 1085248
**Document Hash:** d68e1e4e3e880c1031f880e95f8fc7b8
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-23-019632.hdr.sgml**: 20230313

**ACCESSION NUMBER**: 0001213900-23-019632

**CONFORMED SUBMISSION TYPE**: S-1/A

**PUBLIC DOCUMENT COUNT**: 18

**FILED AS OF DATE**: 20230313

**DATE AS OF CHANGE**: 20230313

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Courtside Group, Inc.
- **CENTRAL INDEX KEY:** 0001940177
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370]
- **IRS NUMBER:** 352503373
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** S-1/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-269028
- **FILM NUMBER:** 23728249

**BUSINESS ADDRESS:**
- **STREET 1:** 335 NORTH MAPLE DRIVE
- **STREET 2:** #127
- **CITY:** BEVERLY HILLS
- **STATE:** CA
- **ZIP:** 90210
- **BUSINESS PHONE:** 310-858-0888

**MAIL ADDRESS:**
- **STREET 1:** 335 NORTH MAPLE DRIVE
- **STREET 2:** #127
- **CITY:** BEVERLY HILLS
- **STATE:** CA
- **ZIP:** 90210

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Courtside Group, Inc
- **DATE OF NAME CHANGE:** 20220727

**As filed with the Securities and Exchange Commission on March 13, 2023.**

 **Registration No. 333-269028**

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 **AMENDMENT NO. 1 TO**

**FORM S-1**

**REGISTRATION STATEMENT**

***UNDER***

***THE SECURITIES ACT OF 1933***

**COURTSIDE GROUP, INC.**

(Exact name of registrant as specified in its charter)

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| | | |
|:---|:---|:---|
| **Delaware** | **7370** | **35-2503373** |
| (State or other jurisdiction of<br> incorporation or organization) | (Primary Standard Industrial<br> Classification Code Number) | (I.R.S. Employer<br> Identification Number) |

---

**Courtside Group, Inc.**

**335 N. Maple Drive, Suite 127**

**Beverly Hills, California 90210**

**(310) 858-0888**

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

**Kit Gray<br> President**

**Courtside Group, Inc.**

**335 N. Maple Drive, Suite 127**

**Beverly Hills, California 90210** 

**(310) 858-0888**

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 ****

***Copies to:***

**Sasha Ablovatskiy**<br> **Jonathan Shechter**<br> **Foley Shechter Ablovatskiy LLP**<br> **1180 Avenue of the Americas, 8<sup>th</sup> Floor**<br> **New York, NY 10036**<br> **(212) 335-0466**<br>

**Approximate date of commencement of proposed sale to the public:** As soon as practicable after this registration statement is declared effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Large accelerated filer | ☐ | Accelerated filer | ☐ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
|  |  | Emerging growth company | ☒ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

**The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said Section 8(a), may determine.**

**The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.** 

 **Subject to Completion, dated March 13, 2023.**

 **8,272,273 Shares**

![](image_001.jpg)

**Common Stock**

This prospectus relates to the registration of the resale of up to 8,272,273 shares of our common stock, $0.00001 par value per share (the "common stock"), by our stockholders identified in this prospectus, or their permitted transferees (and together with LiveOne, Inc., the "Registered Stockholders") in connection with our direct listing on The Nasdaq Capital Market (the "Direct Listing"), consisting of (i) 3,138,273 shares of our common stock reserved for issuance upon the conversion of $8,838,500 aggregate principal amount of our Bridge Notes (as defined in this prospectus) purchased by certain Registered Stockholders, plus the amount of accrued and unpaid interest calculated as of assumed date of March 10, 2023, if any, that is payable in shares of our common stock in connection with the conversion thereof, (ii) 2,946,167 shares of our common stock that may be issued upon exercise of the Bridge Warrants (as defined in this prospectus) that we issued to certain Registered Stockholders, (iii) 167,833 shares of our common stock that may be issued upon exercise of the Placement Agent Warrants (as defined in this prospectus) that we issued to the placement agent, a Registered Stockholder, in connection with the offering of the Bridge Notes and the Bridge Warrants, and (iv) the Distribution Shares.

This prospectus is also being furnished to the stockholders of LiveOne, Inc., a Delaware corporation and our parent (Nasdaq: LVO) (together with its subsidiaries other than us, "LiveOne"), in connection with the planned distribution at a future date (the "Distribution") by LiveOne, a Registered Stockholder, as a special dividend to its stockholders of up to 2,020,000 shares of our common stock (the "Distribution Shares") out of the 20,000,000 shares of our common stock held by LiveOne immediately prior to the Distribution, consisting of (i) 2,000,000 Distribution Shares to be distributed as a special dividend in the Distribution and (ii) up to an additional 20,000 Distribution Shares to the extent that any Distribution Shares to be issued to LiveOne's stockholders of record in the Distribution are required to be rounded up.

Unlike an initial public offering, the resale by the Registered Stockholders is not being underwritten by any investment bank. The Registered Stockholders may, or may not, elect to sell their shares of common stock covered by this prospectus, as and to the extent they may determine. Such sales, if any, will be made through brokerage transactions on The Nasdaq Capital Market at prevailing market prices. See "Plan of Distribution." If the Registered Stockholders choose to sell or distribute, as applicable, their shares of common stock, we will not receive any proceeds from the sale or distribution, as applicable, of shares of our common stock by the Registered Stockholders.

We refer to the Direct Listing and the Distribution herein collectively as the "Spin-Out." Immediately prior to the time of the Spin-Out, LiveOne will hold 100% of the outstanding shares of our common stock. At the time of the Spin-Out, LiveOne will distribute the Distribution Shares constituting approximately 8.7% of the outstanding shares of our common stock (not including the exercise of the Bridge Warrants or the Placement Agent Warrants and assuming the conversion of all of the Bridge Notes) held by LiveOne on a pro rata basis to holders of record of LiveOne's common stock, $0.001 par value per share ("LiveOne common stock"), as of March 10, 2023, the record date set by LiveOne for purposes of such distribution (the "Record Date"), and in connection with the Distribution, we will complete the Direct Listing. Each ______ shares of LiveOne common stock outstanding as of 5:00 pm New York City, on the Record Date will entitle the holder thereof to receive one share of our common stock (the "Distribution Ratio"), with any holder of less than ______ shares of LiveOne common stock receiving one share of our common stock as result of rounding up of any fractional shares of our common stock. **If you hold shares of LiveOne common stock on the Record Date and decide to sell them on or before the Distribution Date, you will lose your entitlement to our common stock in the Distribution.** See "Questions and Answers About The Spin-Out." The Distribution will be made in book-entry form by our transfer agent. Fractional shares of our common stock will be rounded up in the Distribution. LiveOne's board of directors has determined that distributing between 5% and 10% of the outstanding shares of our common stock held by LiveOne on a pro rata basis to holders of record of LiveOne is in the best interests of LiveOne and its stockholders and will also assist our Company to comply with the initial listing requirements of The Nasdaq Capital Market. LiveOne's board of directors and management ultimately concluded that the Distribution of 2,020,000 shares, or approximately 8.7% of the outstanding shares of our common stock at the time of completion of the Spin-Out (not including the exercise of the Bridge Warrants or the exercise of the Placement Agent Warrants and assuming the conversion of all of the Bridge Notes), strikes the balance between providing LiveOne's stockholders of record an opportunity to participate in unlocking the value of our Company as a stand-alone public company, allowing our Company to comply with such initial listing requirements, and having LiveOne maintain control of our Company positions LiveOne to be able to derive the most value in the future from its then majority ownership of our Company.

After giving effect to the Spin-Out and conversion of the Bridge Notes (not including the exercise of the Bridge Warrants or the exercise of the Placement Agent Warrants and assuming the conversion of all of the Bridge Notes), LiveOne will own approximately 82.3% of the outstanding shares of our common stock and voting power, the holders of the Bridge Notes (other than LiveOne) will own approximately 8.3% of the outstanding shares of our common stock, and LiveOne's stockholders will own the remaining approximately 9.4% of outstanding shares of our common stock. Pursuant to the terms of the Bridge Notes, the Bridge Notes held by the Registered Stockholders (including LiveOne) will automatically convert into shares of our common stock as a result of the Direct Listing, subject to us satisfying the conditions set forth therein. As a result of the completion of the Spin-Out, we will be a "controlled company" within the meaning of the corporate governance standards of The Nasdaq Capital Market. See "Management — Controlled Company Exemption" and "Description of Capital Stock — General."

The Distribution will be effective as of ______, New York City time, on ______, 2023 in connection with the consummation of the Direct Listing. Immediately after the Spin-Out, we will become a publicly-traded company listed on The Nasdaq Capital Market and shall continue as a majority owned subsidiary of LiveOne.

No established public trading market for our common stock currently exists, and other than the acquisition of our Company by LiveOne on July 1, 2020 and the sale of the Bridge Notes, there have not been any private transactions of our common stock in the recent past and shares of our common stock do not have a history of trading in private transactions. The purchase prices of our common stock in any private transactions may have little or no relation to the opening public price of shares of our common stock on The Nasdaq Capital Market or the subsequent trading price of shares of our common stock on The Nasdaq Capital Market. See "Sale Price History of our Capital Stock." Further, the listing of our common stock on The Nasdaq Capital Market without underwriters is a novel method for commencing public trading in shares of our common stock and, consequently, the trading volume and price of shares of our common stock may be more volatile than if shares of our common stock were initially listed in connection with an underwritten initial public offering. There can be no guarantee that we will successfully list our common stock on The Nasdaq Capital Market or be able to complete the Spin-Out.

On the day that shares of our common stock are initially listed on The Nasdaq Capital Market, the Nasdaq Stock Market LLC ("Nasdaq") will begin accepting, but not executing, pre-opening buy and sell orders and will begin to continuously generate the indicative Current Reference Price (as defined below) on the basis of such accepted orders. During a 10-minute "Display Only" period, market participants may enter quotes and orders for shares of our common stock in Nasdaq's systems and such information is disseminated, along with other indicative imbalance information, to ______ (the "Financial Advisor") and other market participants by Nasdaq on its NOII and BookViewer tools. Following the "Display Only" period, a "Pre-Launch" period begins, during which the Financial Advisor, in its capacity as our designated financial advisor to perform the functions under Nasdaq Rule 4120(c)(8), must notify Nasdaq that our shares are "ready to trade." Once the Financial Advisor has notified Nasdaq that shares of our common stock are ready to trade, Nasdaq will calculate the Current Reference Price for shares of our common stock, in accordance with Nasdaq rules. If the Financial Advisor then approves proceeding at the Current Reference Price, Nasdaq will conduct a price validation test in accordance with Nasdaq Rule 4120(c)(8). As part of conducting such price validation test, Nasdaq may consult with the Financial Advisor, if the price bands need to be modified, to select the new price bands for purposes of applying such test iteratively until the validation tests yield a price within such bands. Upon completion of such price validation checks, the applicable orders that have been entered will then be executed at such price and regular trading of shares of our common stock on The Nasdaq Capital Market will commence. Under the Nasdaq rules, the "Current Reference Price" means: (i) the single price at which the maximum number of orders to buy or sell shares of our common stock can be matched; (ii) if more than one price exists under clause (i), then the price that minimizes the number of shares of our common stock for which orders cannot be matched; (iii) if more than one price exists under clause (ii), then the entered price (i.e. the specified price entered in an order by a customer to buy or sell) at which shares of our common stock will remain unmatched (i.e. will not be bought or sold); and (iv) if more than one price exists under clause (iii), a price determined by Nasdaq after consultation with the Financial Advisor in its capacity as financial advisor. The Financial Advisor will exercise any consultation rights only to the extent that it may do so consistent with the anti-manipulation provisions of the federal securities laws, including Regulation M (to the extent applicable), or applicable relief granted thereunder. The Registered Stockholders will not be involved in Nasdaq's price-setting mechanism, including any decision to delay or proceed with trading, nor will they control or influence the Financial Advisor in carrying out its role as financial advisor. The Financial Advisor will determine when shares of our common stock are ready to trade and approve proceeding at the Current Reference Price primarily based on consideration of volume, timing, and price. In particular, the Financial Advisor will determine, based primarily on pre-opening buy and sell orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference Price. For more information, see "Plan of Distribution."

If we do not consummate the Direct Listing by February 15, 2023, March 15, 2023 or April 15, 2023, unless in either case permitted by the written consent of the holders holding the majority of the Bridge Notes, we shall be required to redeem $1,000,000 of the then outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by the tenth calendar day of each month immediately following such respective date above (subject to any cure period), up to an aggregate redemption of $3,000,000 over the course of such three months, each of which shall be distributed to the holders of the Bridge Notes (other than LiveOne) on a prorated basis. As of March 10, 2023, we have not yet consummated the Direct Listing and accordingly, we are currently required to redeem $1,000,000 of the outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by March 10, 2023 (subject to any cure period).

We anticipate, however, that trading in our common stock may begin on a "when-issued" basis as early as two trading days prior to the Record Date for the Distribution and will continue up to and including the Distribution Date. "When-issued" trades generally settle within four trading days after the Distribution Date. On the first trading day following the Distribution Date, any "when-issued" trading of the common stock will end and "regular-way" trading will begin.

We have applied to list our common stock on The Nasdaq Capital Market under the symbol "PODC." At such time that Nasdaq approves our common stock to be listed on The Nasdaq Capital Market, we will seek clarification from Nasdaq if trading in our common stock will begin on a "when-issued" basis. We expect our common stock to begin trading on or about ______, 2023.

We are an "emerging growth company" as defined under the federal securities laws and have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See "Prospectus Summary — Implications of Being an Emerging Growth Company."

**Investing in shares of our shares of common stock involves risks. See "Risk Factors" beginning on page 25 to read about factors you should consider before buying shares of our common stock.** 

**Neither the U.S. Securities and Exchange Commission nor any other regulatory body or state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.**

Prospectus dated ______, 2023.

**TABLE OF CONTENTS**

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| | |
|:---|:---|
|  | **Page** |
| [ABOUT THIS PROSPECTUS](#a_001) | ii |
| [PROSPECTUS SUMMARY](#a_002) | 1 |
| [QUESTIONS AND ANSWERS ABOUT THE SPIN-OUT](#a_003) | 16 |
| [SUMMARY CONSOLIDATED FINANCIAL AND OPERATING INFORMATION](#a_004) | 21 |
| [RISK FACTORS](#a_005) | 25 |
| [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](#a_006) | 70 |
| [INDUSTRY, MARKET AND OTHER DATA](#a_007) | 71 |
| [TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND TRADENAMES](#a_008) | 72 |
| [THE SPIN-OUT](#a_009) | 72 |
| [MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION](#a_010) | 77 |
| [USE OF PROCEEDS](#a_011) | 82 |
| [DIVIDEND POLICY](#a_012) | 82 |
| [CAPITALIZATION](#a_013) | 82 |
| [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#a_014) | 83 |
| [BUSINESS](#a_015) | 96 |
| [MANAGEMENT](#a_016) | 109 |
| [EXECUTIVE COMPENSATION](#a_017) | 116 |
| [CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS](#a_018) | 124 |
| [PRINCIPAL AND REGISTERED STOCKHOLDERS](#a_019) | 129 |
| [DESCRIPTION OF CAPITAL STOCK](#a_020) | 135 |
| [SHARES ELIGIBLE FOR FUTURE SALE](#a_021) | 140 |
| [SALE PRICE HISTORY OF OUR CAPITAL STOCK](#a_022) | 141 |
| [PLAN OF DISTRIBUTION](#a_024) | 142 |
| [LEGAL MATTERS](#a_025) | 145 |
| [EXPERTS](#a_026) | 145 |
| [WHERE YOU CAN FIND ADDITIONAL INFORMATION](#a_027) | 145 |
| [INDEX TO FINANCIAL STATEMENTS](#a_028) | F-1 |

---

You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the U.S. Securities and Exchange Commission (the "SEC"). Neither we nor any of the Registered Stockholders have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus we have prepared or that have been prepared on our behalf or to which we have referred you. Neither we nor any of the Registered Stockholders take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The Registered Stockholders are offering to sell, and seeking offers to buy, shares of their common stock but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, and results of operations may have changed since such date.

For investors outside the United States: Neither we nor any of the Registered Stockholders have done anything that would permit the use or possession or distribution of this prospectus or any related free writing prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our common stock by the Registered Stockholders and the distribution of this prospectus outside the United States.

i

**ABOUT THIS PROSPECTUS**

This prospectus is part of a registration statement on Form S-1 that we filed with the SEC using a "shelf" registration or continuous offering process. Under this process, the Registered Stockholders may, from time to time, sell the common stock covered by this prospectus in the manner described in the section titled "Plan of Distribution." Additionally, we may provide a prospectus supplement to add information to, or update or change information contained in, this prospectus, including the section titled "Plan of Distribution." You may obtain this information without charge by following the instructions under the section titled "Where You Can Find Additional Information" appearing elsewhere in this prospectus. You should read this prospectus and any prospectus supplement before deciding to invest in our common stock.

Except as otherwise indicated, all information in this prospectus assumes:

● Exclusion of the 2,000,000 shares of our common stock authorized for issuance under our 2022 Equity Incentive Plan (as amended, the "2022 Plan"), which was adopted by our sole stockholder and our board of directors on December 15, 2022, as well as any future increases in the number of shares of our common stock reserved for issuance under the 2022 Plan. As of ______, 2023, ______ shares of our common stock were reserved for issuance pursuant to awards made under our 2022 Plan, which awards will become effective on the day of the effectiveness of the registration statement of which this prospectus forms a part. See "Description of Capital Stock — 2022 Equity Incentive Plan";

● the amendment of our Certificate of Incorporation to decrease the number of our shares of common stock and authorize the issuance of "blank check" preferred stock;

● the conversion of our Bridge Notes into 3,138,273 shares of our common stock as of March 10, 2023, which will occur in connection with the effectiveness of the registration statement of which this prospectus forms a part, and automatically convert upon the effectiveness of the Direct Listing (the "Bridge Notes Conversion");

● the exclusion of 2,946,167 shares of our common stock issuable upon exercise of our warrants outstanding as of the date of this prospectus, which warrants were issued to the holders of the Bridge Notes (the "Bridge Warrants");

● the exclusion of 167,833 shares of our common stock issuable upon exercise of our placement agent warrants outstanding as of the date of this prospectus, which warrants were issued to the placement agent in connection with our sale of the Bridge Notes (the "Placement Agent Warrants"); and

● the filing and effectiveness of our Amended and Restated Certificate of Incorporation and the adoption of our Amended and Restated Bylaws, each of which will occur in connection with the effectiveness of the registration statement of which this prospectus forms a part.

After giving effect to the Bridge Notes Conversion and assuming no exercise of the Bridge Warrants or the exercise of the Placement Agent Warrants, as of March 10, 2023, we would have a total of 23,300,611 shares of our common stock issued and outstanding.

Certain amounts, percentages, and other figures presented in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals, dollars, or percentage amounts of changes may not represent the arithmetic summation or calculation of the figures that precede them.

ii

**PROSPECTUS SUMMARY** 

*This summary highlights select information contained elsewhere in this prospectus and does not contain all the information you should consider before making an investment decision. You should read the entire prospectus carefully, including the sections entitled "Risk Factors," "Cautionary Note Regarding Forward-Looking Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the accompanying notes included elsewhere in this prospectus before making an investment decision. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to "we," "us," "our," the "Company," "Courtside Group" and similar terms refer to Courtside Group, Inc. and its consolidated subsidiaries.* 

 

**Overview** 

PodcastOne (the "Company," "PodcastOne," "we," "us" or "our") is a leading podcast platform and publisher that makes its content available to audiences via all podcasting distribution platforms, including PodcastOne's website (www.podcastone.com), Apple Podcasts, Spotify, Amazon Music and more. We are a majority owned subsidiary of LiveOne, Inc., a Delaware corporation and a Nasdaq-listed company ("LiveOne"). We have recently been ranked #14 on the list of Top Podcast Publishers by the podcast metric company, Podtrac.

We also produce vodcasts (video podcasts), branded podcasts, merchandise and live events on behalf of our talent and clients. With a proven 360-degree advertiser solution for multiplatform integration opportunities and hyper-targeting, we deliver millions of monthly impressions, 14+ million monthly unique listeners, and 60+ million Interactive Advertising Bureau monthly downloads. With content covering all verticals (i.e., sports, entertainment, true-crime, business, society & culture, self-help, etc.), we provide a platform for brands to reach their most sought after targeted audiences.

Our operating model is focused on offering white glove service to our shows, talent and advertising clients. With an in-house sales, production, marketing and tech team, we believe PodcastOne delivers more to clients and talent than any other publisher in the marketplace. This allows us to scale our operations while attracting talent who in turn, will bring in additional brand advertisers and revenue. We earn revenue through the sale of embedded host-read ads, dynamic ads (host-read and otherwise), segment sponsorships and programmatic monetization channels. We also provide the opportunity for clients to have 100% share of voice with branded podcast episodes or series as well as live tours, merch and IP ownership for original programming.

In addition to our core business, we also built, own and operate a solution for the growing number of independent podcasters: LaunchPadOne. LaunchPadOne is our owned self-publishing podcast platform, created to provide a low or no cost tool for independent podcasters without access to parent podcasting networks or state of the art equipment to create and publish shows. LaunchPadOne serves as a talent pool for us to find new podcasts and talent.

For the fiscal years ended March 31, 2022 and 2021, we generated $32.3 million and $23.8 million in revenue, respectively, representing a compound annual growth rate ("CAGR") of 36%. For the nine months ended December 31, 2022 and 2021, we generated $25.8 million and $24.1 million in revenue, respectively, representing a CAGR of 7%. For the fiscal years ended March 31, 2022 and 2021, we incurred net losses $3.6 million and $2.1 million, respectively. For the nine months ended December 31, 2022 and 2021, we had net loss of $3.0 million and $2.9 million, respectively.

We are more than a podcast company. We are in the relationship business. Every day, brands and creators partner with us to reach consumers who will purchase, listen and subscribe to their favorite PodcastOne podcasts across the audio landscape. We offer content across verticals so there is truly something for consumers who have varied preferences (reality TV, sports, true crime self-help, business, etc.). The power of our network and love of our brands is evident through our shows which consistently rank in the top 100 on the Apple Charts.

**Recent Developments**

● Completed the $8.8 million Bridge Notes financing at a valuation of $68.1 million and announced LiveOne's intention to spin-out our Company as a separate public company before year end. We agreed not to effect any Qualified Financing or Qualified Event (each as defined below), as applicable, unless our post-money valuation at the time of the Qualified Financing or Qualified Event, as applicable, is at least $150 million. In February 2023, in connection with the Direct Listing, LiveOne obtained a valuation report from an independent, third party valuation firm, which indicates that the fair market value range of our Company's equity as a wholly-owned subsidiary of LiveOne, on a controlling, marketable interest basis, as of December 31, 2022, is reasonably stated as between $230 million and $274 million.

● Our President, Kit Gray, has been recently named one of the 22 most influential people in podcasting, and our Vice President of Brand and Talent Partnerships, Eli Dvorkin, has been named to this year's Top 40 Under 40 in podcasting as chosen by Podcast Magazine. Our Chief Marketing Officer, Jacqueline Stone, recently received the Cynopsis 2022 Top Women in Media award.

● We have an arrangement that allows us and our roster of top performing hosts to integrate unique visual elements into the podcasts they produce and distribute them via YouTube, becoming the first podcast network to utilize Adori, a pioneering interface technology. Adori's unique YouTube integration technology allows podcast hosts and networks to seamlessly import episodes from RSS feeds, enhance them with visual elements and upload enriched assets directly to YouTube. Adori's patented technology embeds contextual visuals, multi-format ads, AR experiences, buy buttons, polls, and other "call to action" features in the audio creating a more enhanced and richer listener experience. In creating visually enhanced podcasts, Adori's YouTube product provides additional monetization avenues for our slate of original programming, increased discoverability and SEO presence.

● Several of our shows have hit recent milestones: *Trust Me* released its 100<sup>th</sup> episode in November 2022 and was featured in *Harper's BAZAAR's* "20 of the Best Podcasts to Download Now." In October 2022, *Coffee Convos* was named by Edison Research as the top show delivering women listeners for advertisers. Co-Hosts Kailyn Lowry and Vee Rivera won the 2022 People's Choice Podcast Award for Influencer of the Year and Podcast Listener Influencer of Year for their podcast, *Baby Mama's No Drama*. The show also brought home the Rob Has a Podcast Entertainment award. *Southern Tea*, hosted by Lindsie Chrisley received a People's Choice Award in the Kids & Family category.

● PodcastOne also has a very successful vertical featuring Kail Lowry's shows *Baby Mamas No Drama*, *Barely Famous* and *Vibin'* and *Kinda' Thrivin*.

● We also partnered with Hyundai to produce live events with our hosts that provide multiple revenue streams for our Company and our talent while giving Hyundai a platform to promote their new vehicle launches. Two live shows, including one with *The LadyGang* and one with Jordan Harbinger, were be captured as vodcasts and later streamed on LiveOne's streaming platform. As part of the branded content partnership, we are also developing an always-on audio plan to further drive promotion for Hyundai. In November 2022, we announced that Hyundai will have share of voice in the first four episodes of our new *Friday Night Lights* re-watch podcast It's Not Only Football: Friday Night Lights and Beyond, starring *Friday Night Lights* stars Scott Porter and Zach Gilford and their celebrity friend, Mae Whitman.

● In the quarter ended September 30, 2022, we and Action Park Media ("APM") forged a partnership that added 11 podcasts to the LiveOne portfolio, including shows from Emmy Award-Winning *Entourage* creator Doug Ellin, Emmy-nominated star Kevin Dillon, retired NHL star Sean Avery, former NFL quarterback Ryan Leaf, as well as Kelly Stafford, Ted Foxman and more. This partnership gave PodcastOne exclusive distribution and advertising sales rights for APM's current slate of podcast and vodcast programming. In addition, it also allows for the two media companies to co-develop future podcast/vodcast based IP, produce advertiser-sponsored live streaming and touring opportunities for hosts/talent and create exclusive licensing for podcast-specific branded merchandise.

● In the fourth fiscal quarter ended March 31, 2022, we partnered with MotorTrend to produce a 12-part series around their InEVitable campaign, a new multi-platform initiative giving consumers a source for information, in-depth reporting, research/testing, predictions and entertainment devoted entirely to the future of mobility. The InEVitable is a podcast and vodcast series hosted by MotorTrend Head of Editorial, Ed Loh and MotorTrend editor and automotive personality Jonny Lieberman. The series provides in-depth discussion on the greatest challenges and changes coming for the future of transportation. Subsequently, we and MotorTrend have renewed this partnership for an extended 20+ episodes podcast and vodcast series. Production began in the first half of the fiscal year ending March 31, 2023.

● We further strengthened our relationship with Hubbard's WTOP with the launch of American Nightmare Season 3: UNKNOWN SUBJECT. We have partnered with them for all three seasons and are looking forward to continued Apple rankings and download success. We continue to see success in the sale of this show and anticipate the relationship continuing for additional seasons.

**Industry Trends in Our Favor**

***The Podcast Industry Keeps Growing While Radio is Shrinking* ⸺** For the first time ever, the podcast advertising marketing grew beyond $1B in FY 2021 and are expected to exceed $2B in 2022 and reach $4B by 2024. The audio industry has shifted share of voice significantly from 74% radio/12% podcasts/14% other in 2014 to 39% radio/41% podcasts/20% other.

***High Growth of Podcasts Audience* ⸺** In the United States, podcasts have historically been and are expected to continue to develop as a high growth segment within the next five years. An estimated 177 million Americans have listened to a podcast at some point in their life, with "superfans" consuming over 11 hours of content per week in 2021. Driven by product innovations and content accessibility, the podcast market represents significant growth and monetization potential in the long-term.

***Launch of New Distribution Platforms ⸺*** Being on the ground floor of a developing platform is another key to our growth strategy. This allows for more discoverability and exclusive feature opportunities. We are currently in beta with YouTube, which announced earlier this year that they are launching their own podcast platform. Approximately 18% of podcasts are consumed on YouTube and that number is quickly growing. When Facebook launched their audio platform, similarly, our shows were a part of their press plan, received exclusive boosting opportunities and were among the first podcasts to streaming on their platform.

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***Spoken Word is Increasing Among Gen Z*** ⸺ There has been a 214% increase in spoken word consumption since 2014 among the 13-24 year-old demographic, with 21% of that being podcast usage. We deliver content that spans various verticals, preferences and ages, positioning us to be part of that 21% and we expect to see that percentage grow as Gen Z continues to shift their listening habits to podcasts.

***Increasing Penetration of Established Marketing*** ⸺ we have a strong opportunity for high growth, even in more in established markets. According to eMarketer, the number of podcast listeners is anticipated to grow to 126 million in 2022 and nearly 145 million listeners are expected to make podcasts a part of their media diet by 2026. Growth is projected to remain in double digits with an average podcast listening time per day topping 25 minutes by 2023.

**Key Benefits to Our Listeners** 

***Our Value Propositions***

In addition to the highly favorable industry trends set forth above, the following elements denote the fundamental values of our PodcastOne community:

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**Easy audio making for everyone** ⸺ We are one of the first online audio communities to provide a one-stop destination for creators to produce, edit, host and distribute audio content to consumer's mobile and desktop devices. The turnkey production, sales and marketing services we offer make it possible for our partners to create high-quality, original podcasts. The monthly average number of podcasts downloaded from us increased from approximately 41.3 million in the second quarter of 2021 to approximately 58.4 million in the same period in 2022.

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**Reaching audience and getting paid** ⸺ A host who makes such host's podcasts, live streaming or interactive audio products available via PodcastOne gains access to one of the largest online audio communities. Our podcasts on publicly available platforms (Apple Podcasts, Spotify, Amazon Music, etc.) can be shared, further amplifying their reach. Leveraging our data-driven marketing strategies and best-in-class sales organization, we help increase the value of one's original work, and motivate content creators to continue to create and share more content on our platform. Our data analytics also provide useful feedback to our hosts to help them create and distribute more unique and high-quality content that truly resonates with their audience and invites new listeners in.

 **"White Glove" Offerings** ⸺ We differentiate ourselves from our competitors through deeply integrated sales, marketing, production and distribution services that are offered to creators once onboarded with PodcastOne. Our data driven marketing function range across in network cross promotion, social media best practices, video asset creation and off-network trade opportunities. As a result, we have cultivated a highly engaged listener community across a variety of verticals (true crime, Sports, TV & film, etc.). In the quarter ended December 31, 2022, we had recorded a total of 14.8 million average monthly listeners. We have an in-depth relationship with our creators on all levels as we are accessible and exude a work ethic incomparable to the other podcast networks in our industry.

**Podcast Services** ⸺ Listeners can access our podcasts on their mobile devices and desktops across all major distribution platforms (Apple Podcasts, Spotify, Amazon Music, etc.). We offer all of our podcasts for free to cultivate a broad and loyal user base and generate organic traffic to our audio entertainment which has attractive monetization potential. As we build and scale loyal listeners for our shows, we are also building listeners for our other shows, due to our internal cross promotional network. As shows increase in listenership, their value also increases to advertisers, often times resulting in higher cost per thousand impressions ("CPM"), in renewals and ultimately more revenue.

**Our Market Opportunity**

***PodcastOne is a Leading Podcasting Company***

PodcastOne is a leading advertiser-supported, on-demand digital audio network. With a 360-degree solution, including content creation, brand integration and distribution, PodcastOne sees more than 2.1 billion downloads annually, across 350 episodes produced weekly. Today, millions of people around the world have access to over 200 podcasts distributed by PodcastOne whenever and wherever they want. We were one of the first podcast companies and transformed the podcast industry by allowing users to stream audio content (podcasts) on demand. In contrast, traditional radio relies on a linear distribution model in which stations and channels are programmed to deliver a limited programming options with little freedom of choice.

We are one of the largest independent podcast publishers with deep routed relationships with our creators, advertisers and distribution platforms. With over 3.6M unique downloads a month in the US and 21.4M global streams and downloads, PodcastOne's portfolio continues to grow with engaged listeners and top tier talent. As illustrated below, we have been recently ranked #13 on the list of Top Podcast Publishers by the podcast metric company, Podtrac, as a leading podcast publisher.

We are more than a podcast company. We are in the relationship business. Every day, brands and creators partner with us to reach consumers who will purchase, listen and subscribe to their favorite PodcastOne podcasts across the audio landscape. We offer content across verticals so there is truly something for consumers who have varied preferences (reality TV, sports, true crime self-help, business, etc.). The power of our network and love of our brands is evident through our shows which consistently rank in the top 100 on the Apple Charts. Furthermore, we have built a promotional strategy that enables discoverability of PodcastOne shows just by being a listener of a show in the same vertical. For example, if you are listening to a PodcastOne true crime show, you will likely hear a promo about another true crime show from PodcastOne.

PodcastOne wins and so do our listeners as we are the most partner friendly network out there. Our brand reflects culture by turning a vast line-up (or slate) of compelling personalities and stories into entertaining and engaging listening experiences which connect our large audience to the world around them and expands into the lives of the listeners, well outside the podcast itself.

 ***Podtrac Ranker January 2023***

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**What Sets Us Apart**

***How is PodcastOne Different?***

We are a leading US podcast network with nearly 270 podcasts/vodcasts, which have generated more than 2.381 billion downloads to date. We accomplish this through several unique approaches including:

**Best In Class Content Portfolio with Deep Talent Relationships** ⸺ PodcastOne publishes many of the biggest podcasts, including The Adam Carolla Show, Off the Vine with Kaitlyn Bristowe, Coffee Convos, The LadyGang, Nappy Boy Radio with T-Pain, and The Jordan Harbinger Show, spanning all major genres. We have personal relationships with each and every talent, which affords us the opportunity to build extensive multi-year agreements. These agreements provide exclusive rights to their podcasting content and derivative rights to new shows. Additionally, these value-added relationships with talent allow us to negotiate industry-leading participation splits.

**Full Ownership of Technology Platform, with Proprietary Data and Insights** ⸺ We are one of the few podcast networks with proprietary Content Management System ("CMS")/Content Delivery Network ("CDN") that allows for optimized programmatic capabilities and improved audience analytics. Our hosts/talent are also able to view their download numbers, trends and analytics on this proprietary software, something many competitors don't provide. This fully owned and operated enterprise CMS rivals other paid platforms such as Megaphone (Spotify-owned), Art19 (Amazon-owned) and SimpleCast (SiriusXM/Pandora-owned). The CMS day to day operation and maintenance is managed by a vendor we contract with and is constantly being updated to be a best-in-class system. The CMS is the platform where podcast episodes are uploaded, RSS feeds are created and distributed to listening platforms, and the listening data is analyzed and displayed in a dashboard for the hosts / producers to see.

 **Blue Chip Advertiser Relationships with Targeted Measurable Campaigns and Value-Added Opportunities** ⸺ We offer and book competitive campaigns with new and legacy brands by: (1) using measurement tools and partners to deploy leading podcast measurement solutions that are tailored to our clients key performance indicators, including brand impact and sales lift; (2) engaging with third party attribution partners to provide greater insight for our clients into the effectiveness of their campaigns across multiple publishers and hosting providers; and (3) conducting brand lift studies that allow us to demonstrate and validate campaign impacts.

In addition, because of our deep-rooted relationships with talent we are able to engage them in host-read embedded spots and coach them through voice-over delivery to increase direct response sales and advertiser satisfaction. Furthermore, these relationships allow us to create value-added opportunities with brands through talent socials, YouTube and other influencer marketing tools.

Advertisers also have the opportunity to brand entire podcast series, as executed by Microsoft and MotorTrend most recently. This would allow advertisers to enter into content development deals for their brand with us, where we would we produce and distribute an entire podcast series for the specific brand. Advertisers benefit from branding a podcast series by getting 100% share of voice ads, which in our experience significantly helps them launch a new product, service or offering. Two podcast series examples that we have recently put together in a similar format are The Inevitable podcast and On the Edge with Microsoft Edge podcast.

**White Glove Services for Our Partners** ⸺ PodcastOne is more than just a hosting platform. Our hands-on approach to launching original content and growing existing shows enables us to support our talent with production, editing, marketing and sales capabilities. We are a one-stop shop for everything creators need for their podcasts to be successful. When it comes to the sales and marketing, we are here to share best practices, allocate in-network promo inventory to their shows and engage in 360-degree sales efforts on their behalf.

**LaunchPadOne** ⸺ LaunchPadOne is a free innovative podcast hosting, distribution, and monetization platform that provides an end-to-end podcast solution. With over 1,000 available podcasts, LaunchPadOne offers creators a 360-degree podcasting ecosystem - a cutting-edge technology hosting platform, customizable design elements, a podcast player, distribution tools to publish on all major listening apps, including Apple Podcasts, Spotify, Google Podcasts, Overcast and Pocket Casts and others, and a deep network of shows. LaunchPadOne's robust platform technology, promotion and monetization opportunities will allow podcast creators to leverage unique opportunities from PodcastOne, such as the ability to accumulate new listeners, get discovered, and collaborate with the established podcast network. PodcastOne will monetize the audience of the LaunchPadOne network through ad insertion technology platform, which generates revenue for PodcastOne. Simultaneously, LaunchPadOne creators will receive free hosting and also have the opportunity to generate revenue for their own podcasts by embedding any ads they sell on their own.

**Best-In-Class Management Team with a Track Record of Execution and Growth** ⸺ we have an unparalleled management team with expertise and resources to produce and manage our podcasts in a turnkey manner. Our list of services include Production studios, Producers, Editors, Social Media, Marketing, Public Relations, Guest Booking, Content Hosting, Nationwide Sales, Host Read Executions, Dynamic Ad Insertion, Programmatic Ads, Vodcasts, Live Events, and Merchandising.

Our best-in-class management team is comprised of the following executives who have scaled PodcastOne to position us as a competitive network in the industry that talent and advertisers want to be a part of:

 *Kit Gray: Co-Founder & President, PodcastOne* ⸺ Mr. Gray co-founded PodcastOne in 2012 and attracted high impact podcast talent including Adam Carolla, *The LadyGang* and Kaitlyn Bristowe. Mr. Gray has been recently named a "Top Influencer in Podcasting" by *Podcast Magazine*.

*Sue McNamara: Head of Sales* ⸺ Ms. McNamara has 20 plus years of radio and podcast sales experience. Ms. McNamara is a former CBS radio sales management executive who was responsible for 35% PodcastOne revenue growth in fiscal year ended March 31, 2022.

 *Jacqueline Stone: Chief Marketing Officer* ⸺ Ms. Stone has more than 31 years of marketing leadership at diverse companies such as MiMedia, WebMD, Digitas/Publicis, About.com and AOL, where she spurred $65 million in revenue and led marketing for major advertising clients, AOL Studio Music Sessions and promotional events including the Super Bowl, US Open Tennis, and The Masters golf tournament. Ms. Stone also helped launch The Food Network and The Daily Meal and was integral to the creation of the American Express Centurion Lounge and American Express Small Business Saturday. Described by Adweek as a "marketing maverick," Stone is a Top 50 OnCon ICON Marketer Award winner, and recently received the Cynopsis 2022 Top Women in Media award as well as being named a member of the Cynopsis Digital "It List."

 *Eli Dvorkin: VP, Talent and Brand Partnerships* ⸺ Mr. Dvorkin was our first hired employee and joined our Company shortly after our inception. With over 15 years of audio experience, Mr. Dvorkin was recently named one of Podcast Magazine's 40 Under 40 in podcasting for his ability to create profitable brand partnerships and his ability to grow new and existing talent.

*Stacie Parra & Alistair Walford, Co-Heads of Production* – with 20+ years of radio and podcast production experience, Ms. Parra has helped us scale a production team that provides a one-stop shop for talent that need production and editing resources for their podcasts.

**Benefits for Creators** 

We provide a large but exclusive stage for creators to connect with existing fans and to be discovered by new fans. In addition to providing creators with access to a free, ad supported podcast marketplace. We also provide creators with a full stack of tools and services, enabling them to grow their podcasts in a turnkey manner.

***Creator Services*** ⸺ Our in-house marketing and production teams are responsible for enhancing the growth and success of our talent/creators through various functions by focusing on brand building, audience development, strategy, talent, live events and sweepstakes. At the core of our shows are fundamental and trusted relationships with the hosts which collectively give us the ability to bring their vision to life. The multiple functions of creator services align cross-functionally and throughout PodcastOne to support creators on the platform while attracting new creators to our network.

 ***Monetization*** ⸺ Between July 2020 and December 31, 2022, we have paid more than $30 million in minimum guarantee payments ("MGs") and advertiser revenue shares to creators. We do not pay to distribute our content and we monetize across all listener platforms.

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***Discovery*** ⸺ We not only help creators connect with existing fans, but we also support creators in connecting with the listeners who are most likely to become fans of their podcasts by running promos for all PodcastOne shows across respective verticals. From our data driven marketing approach that surface new podcasts to Users we offer creators the tools to reach their fans, new and old.

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***Distribution*** ⸺ A creator who makes their podcasts available on PodcastOne gains access to one of the largest publishing and distribution platforms based on our relationships with the top tier podcast apps and platforms. We enable creators to distribute their unique podcasts to this audience. We also pitch creator content for feature opportunities on Apple Podcasts, Spotify, Amazon Music, Stitcher, and iHeart to broaden their reach and discoverability. Additionally we promote our creator content across our social footprint and through email marketing to podcast fans.

***Promotion*** ⸺ We empower creators and their managers to personalize and create unique profiles by providing them with best practices to develop their creator image, including featuring podcasts on their profiles and creating podcast playlists. On top of these standard services, we also offer creators specific promotional tools, designed to target specific Users and broad audiences in order to drive engagement.

***Analytics*** ⸺ We provide numerous analytics for creators through our service. Analytics that creators can access include the demographics of their audience, users' anonymized geographical locations, top listening platforms, and podcast performance data such as number of downloads and weekly listening trends. We provide analytical support that creators need to optimize their performance and focus on doing what they do best—creating unique, entertaining experiences to share with fans around the world. For example, many creators have used our analytics to inform tour locations by citing the geographical audience insights provided in the CMS that would otherwise not have been known.

**Our Business Model**

We are an Ad-Supported Service that provides free content to listeners via their mobile and desktop devices. We generate revenue from the sale of audio, video and social advertising delivered through advertising impressions. We generally enter into arrangements with advertising agencies that purchase advertising on our platform on behalf of the agencies' clients. These advertising arrangements typically specify the type of advertising product, pricing, insertion dates, and number of impressions in a stated period. Revenue for our Ad-Supported segment is affected primarily by the number of a show's listeners and our ability to provide innovative advertising products that are relevant to our Ad-Supported Users and enhance returns for our advertising partners. Our advertising strategy centers on the belief that advertising products that are based on content and are relevant to the Ad-Supported User can enhance Ad-Supported Users' experiences and provide even greater returns for advertisers through the strength of our host-read embedded promos. According to a Super Listener Survey in 2021, an estimated 49% of listeners believe the hosts actually use the products and services they recommend and 60% of podcast listeners say they have bought something from hearing a podcast ad. Offering advertisers additional ways to purchase advertising on a programmatic basis is another key way that we expand our portfolio of advertising products and enhance advertising revenue. Furthermore, we continue to focus on analytics and measurement tools to evaluate, demonstrate, and improve the effectiveness of advertising campaigns on our platform.

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When we are onboard new talent both parties have the common interest of creating content that advertisers want to purchase. We craft our deals with a percentage split of the advertising revenue (host-read embedded ads, DAI and programmatic) which strengthens our partnerships because when advertisers spend, we all win.

**Our Growth Strategies**

We believe we are still in the early stages of realizing our goal to connect creators and audiences around the world. Our growth strategies are focused on continuously improving our technology and attracting more listeners in current and new markets in order to collect more behavioral data, which we use to offer our Users, advertisers, and creators to achieve more targeted results. The key elements of our growth strategy are:

***Strategically Launch New Podcasts with Culturally Relevant Creators*** ⸺ A creator with an engaged fanbase can strengthen our network and along with it, the PodcastOne brand. There is a lot of strategy that comes from onboarding new creators. Most importantly is how they will impact audience growth across their vertical within the PodcastOne ecosystem. We have seen success in this manner with the *Kail Lowry* vertical and our *Real Housewife-*hosted shows.

***Acquire Existing Podcasts that will Thrive on Our Network*** ⸺ With the data we collect on show performance and show growth through our in-network promotional strategy we know what shows we can grow on our network. Additionally, this data can guide what is missing and why we may want to acquire a show with large numbers that will provide us with a jumping off point for growing our other shows.

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***Continue to Invest In Our Advertising Business*** ⸺ We will continue to invest in our advertising products in order to create more value for advertisers and our Ad-Supported Users by enhancing our ability to make advertising content more relevant for our Ad-Supported Users. Our advertising strategy centers on the belief that advertising products that are based in podcasts and are relevant to the Ad-Supported User can enhance Ad-Supported Users' experiences and provide even greater returns for advertisers. We have introduced a number of new advertising products, including sponsored playlists, a self-serve audio advertising platform, and are testing skippable audio advertising. Offering advertisers additional ways to purchase advertising on a programmatic basis is one example of how we continue to expand our portfolio of advertising products. We also are focused on third party agency relationships and their development of analytics and measurement tools to evaluate, demonstrate, and improve the effectiveness of advertising campaigns on our platform.

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***Partner with New Distribution Platforms from Day One*** ⸺ Being on the ground floor of a developing platform is another key to our growth strategy. This allows for more discoverability and exclusive feature opportunities. When Facebook launched their audio platform, PodcastOne shows were a part of the press plan, received exclusive boosting opportunities and were among the first podcasts to streaming on their platform. Similarly, we are currently in beta with YouTube, who announced earlier this year that they are launching a podcast platform of their own. Approximately 18% of podcasts are consumed on YouTube and that number is quickly growing.

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***Advertising Solutions for Partners*** ⸺ Our Ad-Supported Service has grown from $23.8 million in revenue for the year ended March 31, 2021 to $32.3 million in revenue for the year ended March 31, 2022, representing an increase of 36%. As more audio content is created and converting listeners to buyers, brands and advertisers are continuing to shift their marketing spends from traditional mediums to podcasting. A March 2022 survey by Advertiser Perceptions shows that "while 31% of agencies and brands have dedicated podcast ad budgets, more than half (54%) are taking the money out of their overall digital allocation including 49% that said it comes from their digital audio budget line."

Technology innovation and data mining are at the heart of our Ad-Supported Service. From a technology perspective, we continue to adapt to what consumers want and the tools that agencies and partners are building to support these needs. We create content that resonates with listeners and that brands want to be aligned with.

PodcastOne has partnered with third party attribution companies to assist with attribution metrics, click-through data and ROI metrics. Such companies include: Podsights, Chartable, Claritas, Artsai, Podtrac and Extreme Reach.

Our ability to harness our data allows us to know our audiences. We believe we understand people through their mindset, activities, and tastes, and we can serve them relevant advertising catered specifically to them. Our advertising platform is continually moving toward a holistic people-based marketing approach that is better for both our listeners and our advertisers.

By offering advertisers customized opportunities within our programs we are able to deliver results for our brands and advertisers. Taking our podcast brands beyond an audio experience, we also give advertisers the opportunity to scale their buys across our video and social products when aligning with a PodcastOne podcast. We believe we will further strengthen our advertising business, since these are increasingly popular mediums for our advertising partners, the brands they represent and consumer behaviors.

***Blue Chip Advertiser Relationships with Targeted Measurable Campaigns and Value-Added Opportunities*** ⸺ Our in-house marketing and production teams are responsible for enhancing the growth and success of our talent/creators through various functions by focusing on brand building, audience development, strategy, talent, live events and sweepstakes. At the core of our shows are fundamental and trusted relationships with the hosts which collectively give us the ability to bring their vision to life. The multiple functions of creator services align cross-functionally and throughout PodcastOne to support creators on the platform while attracting new creators to our network.

In addition, because of our deep-rooted relationships with talent we are able to engage them in host read embedded spots and coach them through voice-over delivery to increase direct response sales and advertiser satisfaction. Furthermore, these relationships allow us to create value-added opportunities with brands through talent socials, YouTube and other influencer marketing tools.

Advertisers also have the opportunity to brand entire podcast series, as executed by Microsoft and our MotorTrend podcast most recently. This would allow advertisers to enter into content development deals for their brand with us, where we would we produce and distribute an entire podcast series for the specific brand. Advertisers benefit from branding a podcast series by getting 100% share of voice ads, which in our experience significantly helps them launch a new product, service or offering. Two podcast series examples that we have recently put together in a similar format are *The Inevitable* podcast and *On the Edge with Microsoft Edge* podcast.

We also offer comprehensive sales opportunities for advertisers ranging from video, audio and social to live events and merchandise. By scaling across our talent's networks we can offer exclusive branding opportunities to our clients including higher CPMs for us and value added opportunities for advertisers.

**Our Content Strategy** 

At the core, our content strategy is about partnering with influencers and creators who will not only thrive in the audio space but who complement our current programming. Since July 2020 we have onboarded over 50 shows, increasing downloads by more than 50% for some (*On Display with Melissa Gorga*, *Trust Me*) and consistently ranking in the top 15 publishers according to Podtrac. We grow by continuing to identify what resonates with our listeners and delivering content consumers want to listen to.

There is also a surge in video podcasts (vodcasts), a product we have been delivering for some of our shows since 2020. We are encouraging all of our podcasters to create video content, a platform we can support (produce, edit, distribute) on their behalf via YouTube and various social platforms. With YouTube's recent hyper focus on bringing podcast content to their platform, we expect to see considerable podcast listener growth and AdSense dollars (revenue) from the platform.

**Our Technology** 

We have built an internal Content Management System ("CMS") system that creators and producers can use to track metrics about shows on an episode-by-episode basis. CMS is the platform where podcast episodes are uploaded, RSS feeds are created and distributed to listening platforms, and the listening data is analyzed and displayed in a dashboard for the creators / producers to see. We are focused on continuously improving our technology so that it is user-friendly and sets us apart from other independent publishers.

We are one of the few podcast networks with a proprietary CMS that allows for a customizable internal system resulting in improved audience analytics. Our hosts/talent are also able to view their own download numbers, trends and analytics on this proprietary software, something many network competitors don't provide. This fully owned and operated enterprise CMS rivals other paid platforms such as Megaphone (Spotify-owned), Art19 (Amazon-owned) and SimpleCast (SiriusXM/Pandora-owned). The CMS' day-to-day operation and maintenance is managed by a vendor we contract with and is constantly being updated to be a best-in-class system.

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**Marketing**

Since our inception, we have focused our marketing efforts on enhancing our brand's authenticity and presence among consumers, creators and advertisers. Initially, our campaigns were designed to educate the market on the concept of on-demand podcast streaming and the navigation functionality we provided. As familiarity with the podcast access model spread, our promotional efforts shifted to promote the specific shows, talent and brands in our portfolio. We've found that consumers don't particularly know or care who is producing the content they are listening to. They are listening because they like what a host or creator represents and has to say.

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**Our Competition**

We compete for the time and attention of our users across different forms of media, including traditional broadcast, satellite, and internet radio (iHeartRadio, LastFM, Pandora, and SiriusXM), other providers of on-demand audio streaming services (Spotify, Amazon Prime, Apple Music, Deezer, Google Play Music, Joox, Pandora, and SoundCloud), and other providers of in-home and mobile entertainment such as cable television, video streaming services, and social media and networking websites. Additionally, we compete with midsized publishers creating and distributing ad-supported content for the aforementioned audio platforms (*Dear Media*, *Kast Media*, *Barstool Sport*s, etc.). We compete to attract and engage listeners with our content accessibility, perceptions of advertising load in our shows, brand awareness and reputation. Many of our competitors enjoy competitive advantages such as greater name recognition, legacy operating histories, and larger marketing budgets, as well as greater financial, technical, human, and other resources.

Additionally, we compete to attract and retain advertisers and a share of their advertising spend for our Ad-Supported Service. We believe our ability to compete depends primarily on the reputation and strength of our brand as well as our reach and ability to deliver a strong return on investment to our advertisers, which is driven by the size of our show-specific audiences, our advertising products, our targeting, delivery and measurement capabilities, and third party/agency relationships.

We also compete to attract and retain highly talented individuals, including producers, editors, sales executives and marketers. Our ability to attract and retain personnel is driven by compensation, culture, and the reputation and strength of our brand. We believe we provide competitive compensation packages and foster a team-oriented culture where each employee is encouraged to have a meaningful contribution to PodcastOne. We also believe the reputation and strength of our brand helps us attract individuals that are passionate about our Service.

For information on competition-related risks, see "Risk Factors" on page 25.

 **History and Development of PodcastOne**

We are a Delaware corporation incorporated on February 5, 2014. On July 1, 2020, we were acquired by LiveOne and became its wholly owned subsidiary. On July 15, 2022, we completed a private placement offering (the "Notes Financing") of our unsecured convertible notes to certain accredited investors and institutional investors for gross proceeds of $8,835,800. After the Direct Listing, we will become LiveOne's majority owned subsidiary.

**Intellectual Property**

Our success depends in part upon our ability to protect our technologies and intellectual property. To accomplish this, we rely on a combination of intellectual property rights, including trade secrets, patents, copyrights, and trademarks, as well as contractual restrictions, technological measures, and other methods.

In addition to the forms of intellectual property listed above, we own rights to proprietary processes and trade secrets, including those underlying the PodcastOne platform. We use contractual and technological means to control the use and distribution of our proprietary software, trade secrets, and other confidential information, both internally and externally, including contractual protections with employees, contractors, customers, and partners. Finally, since 2019, PodcastOne has included passive participation in substantially all of its agreements, meaning if a podcast goes to derivative, PodcastOne has creative control but does accrue payment as a passive participant.

***LaunchPadOne* ⸺** LaunchPadOne is a free innovative podcast hosting, distribution, and monetization platform that provides an end-to-end podcast solution. With over 1,000 available podcasts, LaunchPadOne offers creators a 360 podcasting ecosystem - a cutting-edge technology hosting platform, customizable design elements, a podcast player, distribution tools to publish on all major listening apps, including Apple Podcasts, Spotify, Google Podcasts, Overcast and Pocket Casts and others, and a deep network of shows. LaunchPadOne's robust platform technology, promotion and monetization opportunities will allow podcast creators to leverage unique opportunities from us, such as the ability to accumulate new listeners, get discovered, and collaborate with the established podcast network. We will monetize the audience of the LaunchPadOne network through ad insertion technology platform, which generates revenue for us. Simultaneously, LaunchPadOne creators receive free hosting and also have the opportunity to generate revenue for their own podcasts by embedding any ads they sell on their own.

**Certain Relationships and Related Party Transactions** 

Please see section "Certain Relationships and Related Party Transactions ⸺ Various Agreements Entered into with LiveOne ⸺ Other Agreements" in this prospectus for a summary of material agreements, other than material agreements entered into in the ordinary course of business, to which we are or have been a party.

**Concentration of Ownership**

LiveOne, which beneficially owns 100% of the outstanding shares of our common stock prior to the Spin-Out, will beneficially own approximately 82.3% of our common stock after the completion of the Spin-Out (not including the exercise of the Bridge Warrants or the exercise of the Placement Agent Warrants and assuming the conversion of all of the Bridge Notes) and, as a result, will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of significant corporate transactions. See "Description of Capital Stock." As a result of the completion of the Spin-Out, we will be a "controlled company" within the meaning of the corporate governance standards of Nasdaq. See "Management — Controlled Company Exemption."

**Summary Risk Factors**

 

*Our business is subject to a number of risks and uncertainties, as more fully described under "Risk Factors" in this prospectus. We have various categories of risks, including risks related to our business and industry; risks related to our intellectual property; risks related to regulatory compliance and legal matters; risks related to tax and accounting matters; risks related to ownership of our common stock; and general risk factors, which are discussed more fully in the section titled "Risk Factors." These risks could materially and adversely impact our business, financial condition, and results of operations, which could cause the trading price of our common stock to decline and could result in a loss of all or part of your investment. Additional risks, beyond those summarized below or discussed elsewhere in this prospectus, may apply to our business, activities, or operations as currently conducted or as we may conduct them in the future or in the markets in which we operate or may in the future operate. Some of these risks include:*

● We have incurred significant operating and net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.

● We may require additional capital, including to fund our and/or LiveOne's current debt obligations and to fund potential acquisitions and capital expenditures, which may not be available on terms acceptable to us or at all and which depends on many factors beyond our control.

● If LiveOne does not comply with the provisions of its senior credit facility, its senior lender may terminate its obligations to LiveOne and require LiveOne and/or us to repay all outstanding amounts owed thereunder.

● We may require additional capital, including to fund our current debt obligations and to fund potential acquisitions and capital expenditures, which may not be available on terms acceptable to us or at all and which depends on many factors beyond our control.

● We face and will continue to face competition for ad-supported listening time.

● Our business is dependent upon the performance of the podcasts and their talent.

● Significant up-front and/or minimum guarantees required under certain of our podcast license agreements may limit our operating flexibility and may adversely affect our business, operating results, and financial condition.

● If we fail to increase the number of listeners consuming our podcast content, our business, financial condition and results of operations may be adversely affected.

● Our revenue and operating results are highly dependent on the overall demand for advertising. Factors that affect the amount of advertising spending, such as economic downturns, can make it difficult to predict our revenue and could adversely affect our business.

● Expansion of our operations to deliver additional podcasts subjects us to increased business, legal, financial, reputational and competitive risks.

● Increases in the costs in relation to podcast content creators, such as higher podcast MGs and/or talent revenue share compensation and costs of discovering and cultivating a top podcast content creator, may have an adverse effect on our business, financial condition and results of operations.

● We use third-party services and technologies in connection with our business, and any disruption to the provision of these services and technologies to us could result in adverse publicity and a slowdown in the growth of our users, which could materially and adversely affect our business, financial condition and results of operations.

● We face competition for users' attention and time.

● We face significant competition for advertiser and sponsorship spend.

● We cannot assure you that we will be able to meet Nasdaq's initial listing requirements to consummate the Direct Listing, and Nasdaq may not permit our shares of common stock to be quoted on its exchange, which could limit investors' ability to make transactions in our securities and subject us to additional trading restrictions.

● Our failure to meet the continued listing requirements of Nasdaq could result in a de-listing of our common stock and penny stock trading.

● We plan to expand into international markets in the 2024 fiscal year, which would subject us to risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to such markets, which could adversely affect our business, financial condition and results of operations.

● Our success depends, in significant part, on discretionary consumer and corporate spending on entertainment and factors adversely affecting such spending could have a material adverse effect on our business, financial condition and results of operations.

● Unfavorable outcomes in legal proceedings may adversely affect our business, financial conditions and results of operations.

● LiveOne's debt agreements contain restrictive and financial covenants that may limit our operating flexibility, and LiveOne's substantial indebtedness may limit cash flow available to us to invest in the ongoing needs of our business.

● LiveOne may not have the ability to repay the amounts then due under the senior credit facility, which may have a material adverse effect on our business, financial condition and results of operations.

● The Distribution could result in significant tax liability to LiveOne and its stockholders.

● We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Out.

● We have no operating history as an independent publicly-traded company, and our historical financial information is not necessarily representative of the results we would have achieved as an independent publicly-traded company and may not be a reliable indicator of our future results.

● We may not be able to access the credit and capital markets at the times and in the amounts needed on acceptable terms.

● Certain of LiveOne's and our agreements contain provisions requiring the consent of third parties in connection with the Spin-Out. If these consents are not obtained, we may be unable to consummate the Spin-Out and/or enjoy the benefit of these agreements in the future.

● Our listing differs significantly from an underwritten initial public offering.

● Our stock price may be volatile, and could decline significantly and rapidly.

● The trading price of our common stock, upon listing on The Nasdaq Capital Market, may have little or no relationship to the historical sales prices of our capital stock in private transactions, and there have not been any private transactions in the recent past other than the acquisition of our Company by LiveOne on July 1, 2020 and a private placement offering (the "Bridge Financing") on July 15, 2022, of our unsecured convertible notes with an original issue discount of 10% (the "OID") in the aggregate principal amount of $8,838,500 (the "Bridge Notes") to certain accredited investors and institutional investors (collectively, the "Bridge Investors"), for gross proceeds of $8,835,000 pursuant to the Subscription Agreements entered into with the Bridge Investors (the "Bridge Subscription Agreements"). In connection with the sale of the Bridge Notes, the Bridge Investors received the Bridge Warrants to purchase a number of shares (the "Bridge Warrant Shares") of our common stock as more fully discussed below, and we issued the Placement Agent Warrants to the placement agent. The Bridge Notes, the Bridge Warrants and the Placement Agent Warrants were issued as restricted securities in a private placement transaction exempt from the registration requirements of the Securities Act.

● An active, liquid, and orderly market for our common stock may not develop or be sustained. You may be unable to sell your shares of our common stock at or above the price at which you purchased them.

● LiveOne as our principal stockholders will have the ability to influence the outcome of director elections and other matters requiring stockholder approval.

● LiveOne's majority ownership of our common stock will have the effect of concentrating voting control with it and its affiliates, which will limit your ability to influence the outcome of important transactions and to influence corporate governance matters, such as electing directors, and to approve material mergers, acquisitions, or other business combination transactions that may not be aligned with your interests.

● Other than our executive officers, none of LiveOne's stockholders are party to any contractual lock-up agreement or other contractual restrictions on transfer. Following our listing, sales of substantial amounts of our common stock in the public markets, or the perception that sales might occur, could cause the trading price of our common stock to decline.

● We may be required to redeem a portion of the Bridge Notes if we are unable to consummate the Direct Listing by February 15, 2023, March 15, 2023 or April 15, 2023, as applicable.

**Implications of Being an Emerging Growth Company** 

As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include that:

● we are only required to include two years of audited consolidated financial statements in this prospectus in addition to any required interim financial statements, and correspondingly only required to provide reduced disclosure in "Management's Discussion and Analysis of Financial Condition and Results of Operations";

● we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act");

● we are not required to submit certain executive compensation matters to stockholder advisory votes, such as "say-on-pay," "say-on-frequency," and "say-on-golden parachutes"; and

● we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to our median employee compensation.

We may take advantage of these provisions until the last day of the fiscal year during which the fifth anniversary of this listing occurs or such earlier time that we are no longer an emerging growth company. We will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (ii) the last day of the fiscal year during which the fifth anniversary of this listing occurs; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

Under the JOBS Act, emerging growth companies also can delay adopting new or revised accounting standards until such time as those standards would otherwise apply to private companies. We currently intend to take advantage of this exemption.

For risks related to our status as an emerging growth company, see "Risk Factors — Risks Related to Ownership of Our Common Stock — We are an "emerging growth company," and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors."

**Channels for Disclosure of Information**

Investors, the media, and others should note that, following the effectiveness of the registration statement of which this prospectus forms a part, we intend to announce material information to the public through filings with the SEC, the investor relations page on our website (www.podcastone.com), blog posts on our website, press releases, public conference calls, webcasts, our Twitter feed (@PodcastOne), our Instagram page, our Facebook page and our LinkedIn page. Information contained on or accessible through our website is not incorporated by reference into this prospectus, and inclusion of our website address, Twitter feed, Instagram page, Facebook page and LinkedIn page in this prospectus are inactive textual references only. You should not consider information contained on our website or our social media pages to be part of this prospectus or in deciding whether to purchase shares of our common stock.

The information disclosed by the foregoing channels could be deemed to be material information. As such, we encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels.

Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.

**Corporate Information**

We were incorporated in Delaware on February 5, 2014. On July 1, 2020, we were acquired by LiveOne and became its wholly owned subsidiary. We have two wholly owned subsidiaries, Courtside, LLC, a Delaware limited liability company, and PodcastOne Sales, LLC, a California limited liability company. As a result of the Direct Listing, we will become LiveOne's majority owned subsidiary. Our principal executive offices are located at 335 North Maple Drive, Suite 127, Beverly Hills, CA 90210. Our main corporate website address is www.podcastone.com. We make available on or through our website our periodic reports that we file with the SEC. This information is available on our website free of charge as soon as reasonably practicable after we electronically file the information with or furnish it to the SEC. The contents of our website are not incorporated by reference into this document and shall not be deemed "filed" under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

**QUESTIONS AND ANSWERS ABOUT THE SPIN-OUT** 

 

*The following questions and answers briefly address some commonly asked questions about the Spin-Out. They may not include all the information that is important to you. We encourage you to read carefully this entire prospectus and the other documents to which we have referred you. We have included references in certain parts of this section to direct you to a more detailed discussion of each topic presented in this section.* 

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| ***Q:*** | ***What is the Spin-Out?*** |

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| A: | The Spin-Out is the method by which we will separate from LiveOne. In the Distribution, LiveOne will distribute to holders of LiveOne's common stock, $0.001 par value per share ("LiveOne common stock"), between five to ten percent of the outstanding shares of our common stock held by LiveOne as of the Record Date (the Distribution), and in connection with the Distribution, we will complete the Direct Listing. Following the Spin-Out, we will be an independent publicly-traded company, however, we will remain a majority owned subsidiary of LiveOne. |

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| ***Q:*** | ***Will the number of LiveOne's shares of common stock I own change as a result of the Spin-Out?*** |

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A: No, the number of shares of LiveOne common stock you own will not change as a result of the Spin-Out.

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| ***Q:*** | ***What are the reasons for the Spin-Out?*** |

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A: The LiveOne board of directors considered the following potential benefits in deciding to pursue the Spin-Out:

● The opportunities and challenges we expect to arise in the immediate future of the LiveOne media business differ markedly from those of our business.

● We believe the Spin-Out will enhance and keep in place our management team while unlocking value for our stockholders and enhance the ability of our Company and LiveOne to focus on their respective strategies.

● Our near-term goals for our business include the expansion of both the scale and the scope of our business model and also pursuing growth opportunities more broadly in and specifically for the podcast sector, including by enhancing and expanding our roster of podcast talent. Achieving these goals may require acquisitions or mergers funded, in part, with capital raises and strategic alliances with other podcasting companies. Our business will be separate and distinct from LiveOne's business and, accordingly, we believe that pursuing such growth opportunities will be greatly facilitated with a capital structure that is specifically tailored for our needs, separate from those of LiveOne.

● The Spin-Out will establish our Company as a separate publicly traded corporation, which we believe will meaningfully enhance our industry market perception and provide us with access to capital markets, thereby providing greater growth opportunities for us than our consolidated operation as a division of LiveOne.

● The Spin-Out will enable our Company to utilize our equity to incentivize our podcasters and other talent to bring them under the PodcastOne umbrella and make them stakeholders in our Company.

● LiveOne's board of directors has determined that distributing between 5% and 10% of the outstanding shares of our common stock held by LiveOne on a pro rata basis to holders of record of LiveOne is in the best interests of LiveOne and its stockholders and will also assist our Company to comply with the initial listing requirements of The Nasdaq Capital Market. LiveOne's management and board of directors ultimately concluded that the Distribution of 2,020,000 shares, or approximately 8.7% of the outstanding shares of our common stock at the time of completion of the Spin-Out (not including the exercise of the Bridge Warrants or the exercise of the Placement Agent Warrants and assuming the conversion of all of the Bridge Notes), strikes the balance between providing LiveOne's stockholders of record an opportunity to participate in unlocking the value of our Company as a stand-alone public company, allowing our Company to comply with such initial listing requirements and having LiveOne maintain control of our Company positions LiveOne to be able to derive the most value in the future from its then majority ownership of our Company.

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| ***Q:*** | ***Why is the separation of our Company structured as a Spin-Out?*** |

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| A: | LiveOne believes that the Distribution of a portion of our common stock and the Direct Listing (the Spin-Out) is the best way to separate our business from LiveOne and to benefit LiveOne's and our stockholders in a manner that will achieve the above benefits and is in the best interests of LiveOne's stockholders and our stockholders. After the Distribution and the Direct Listing, LiveOne shall continue to maintain a control interest in our Company and will still benefit from synergies with us as an audio creator first platform, while the Distribution and Direct Listing will provide a vehicle for access by our Company to additional capital and stockholder liquidity for what LiveOne and we believe to be an under-valued asset. In addition, the Distribution and the Direct Listing provide a mechanism to grant current stockholders of LiveOne a direct stockholder interest in our Company. Despite the positive attributes listed herein, potential detriments of the Distribution and Direct Listing may include, but are not limited to the following: dilution of LiveOne's ownership of our Company, dilution of our Company's ownership, potential tax obligation for our stockholders and anticipated higher costs that we would have to incur as a standalone publicly traded company. While LiveOne and our Company also considered an underwritten public offering and/or a sale of our Company, our Company and LiveOne currently believe that the Distribution and the Direct Listing is in the best interests of LiveOne's and our stockholders by providing the greatest value to them for the reasons stated herein.  |

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| ***Q:*** | ***What will I receive in the Distribution?*** |

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| A: | As a holder of LiveOne common stock, LiveOne's stockholders who hold their shares both on the Record Date and the Distribution Date (each as defined below) will receive a special dividend of an aggregate of between five to ten percent of the outstanding shares of our common stock held by LiveOne as of the Record Date pro rata in proportion of the number of shares of LiveOne common stock held by them as of the Record Date. Each ______ shares of LiveOne common stock outstanding as of 5:00pm New York City, on the Record Date will entitle the holder thereof to receive one share of our common stock (the "Distribution Ratio"), with any holder of less than ______ shares of LiveOne common stock receiving one share of our common stock as result of rounding up of any fractional shares of our common stock. The distribution agent will distribute only whole shares of our common stock in the Distribution. See "Questions and Answers About the Distribution — How will fractional shares be treated in the Distribution?" for more information on the treatment of the fractional share you may be entitled to receive in the Distribution. Your proportionate interest in LiveOne will not change as a result of the Spin-Out. For a more detailed description, see "The Spin-Out." |

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| ***Q:*** | ***What is being distributed to holders of LiveOne common stock in the Distribution?*** |

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| A: | LiveOne will in aggregate distribute approximately 2,020,000 outstanding shares of our common stock in the Distribution out of the 20,000,000 shares of our common stock held by LiveOne as of the Record Date, consisting of (i) 2,000,000 Distribution Shares to be distributed as a special dividend in the Distribution and (ii) up to an additional 20,000 Distribution Shares to the extent that any Distribution Shares to be issued to LiveOne's stockholders of record in the Distribution are required to be rounded up. The actual number of shares of our common stock that LiveOne will distribute may change and will depend on the number of shares of LiveOne common stock outstanding on the Record Date. The Distribution Shares that LiveOne distributes and the remaining shares of our common stock owned by LiveOne constitute all of the issued and outstanding shares of our common stock immediately prior to the Spin-Out. For more information on the shares being distributed in the Distribution, see "Description of Our Capital Stock — Common Stock." |

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| ***Q:*** | ***What is the Record Date for the Distribution?*** |

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| A: | LiveOne has designated the close of business as of 5:00pm, New York City time, on March 10, 2023, which we refer to in this prospectus as the "Record Date", as the record ownership date for the Distribution. |
| ***Q:*** | ***What is the Distribution Date for the Distribution?*** |

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| A: | LiveOne has designated the close of business as of 5:00pm, New York City time, on ______, 2023, which we refer to in this prospectus as the "Distribution Date". Such date shall be determined in the future by Nasdaq and our Company and shall be close to the date of when this registration statement is declared effective by the SEC. **If you hold shares of LiveOne common stock as of the Record Date but sell such shares on or prior to the Distribution Date or after, you will not receive the portion of the Distribution Shares that you may be entitled to.** |
| ***Q:*** | ***When will the Distribution to holders of LiveOne common stock occur?*** |

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| A: | The Distribution will be effective as of the Distribution Date. On or shortly after the Distribution Date, the whole shares of our common stock will be credited in book-entry accounts for LiveOne's stockholders entitled to receive those shares in the Distribution. See "Questions and Answers About the Spin-Out — How will LiveOne distribute shares of our common stock?" for more information on how to access your book-entry account or your bank, brokerage or other account holding LiveOne common stock you will receive in the Distribution. |

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| ***Q:*** | ***What do I have to do to participate in the Distribution?*** |

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| A: | Other than holding your shares of LiveOne common stock as of both the Record Date and the Distribution Date, you are not required to take any action, but we urge you to read this prospectus carefully. Holders of LiveOne common stock on the Record Date will not need to pay any cash or deliver any other consideration, including any shares of LiveOne common stock, in order to receive shares of our common stock in the Distribution. No stockholder approval of the Spin-Our or the Distribution is required. We are not asking you for a vote, and we request that you do not send us a proxy card. |

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| ***Q:*** | ***If I sell my shares of LiveOne common stock on or before the Distribution Date, will I still be entitled to receive shares of the common stock in the Distribution?*** |

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| A: | **If you hold shares of LiveOne common stock on the Record Date and decide to sell them on or before the Distribution Date, you will lose your entitlement to our common stock in the Distribution.** However, your bank, broker or other nominee may allow you to choose to sell your LiveOne common stock with or without your entitlement to our common stock in the Distribution. You should discuss these alternatives with your bank, broker or other nominee. See "The Distribution — Trading Prior to the Distribution Date" for more information. |

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| ***Q:*** | ***How will LiveOne distribute shares of our common stock?*** |

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| A: | *Registered stockholders*: If you are a registered stockholder (meaning you own your shares of LiveOne common stock directly through LiveOne's transfer agent, Vstock Transfer, LLC), our distribution agent and transfer agent (Vstock Transfer, LLC) will credit the whole shares of our common stock you receive in the Distribution to a new book-entry account with the transfer agent on or shortly after the Distribution Date. Our distribution agent will mail you a book-entry account statement that reflects the number of whole shares of our common stock you own. You will be able to access information regarding your book-entry account holding our common stock at Vstock Transfer, LLC. |

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*"Street name" or beneficial stockholders*: If you own your shares of LiveOne common stock beneficially through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the whole shares of our common stock you receive in the Distribution on or shortly after the Distribution Date. Please contact your bank, broker or other nominee for further information about your account.

We will not issue any physical stock certificates to any stockholders, even if requested. See "The Spin-Out —When and how you will you receive shares of our common stock" for a more detailed explanation.

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| ***Q:*** | ***How will fractional shares be treated in the Distribution?*** |

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| A: | The distribution agent will not distribute any fractional shares of our common stock in connection with the Distribution. The distribution agent will round up any fractional shares resulting from the Distribution to the nearest whole share, and each LiveOne stockholder who otherwise would be entitled to a fractional share shall receive, in lieu of a fractional share, a whole new share of our common stock at no additional cost. If trading in our common stock begins on a "when-issued" basis, we anticipate that the "when-issued" trades will generally settle within four trading days following the Distribution Date. At such time that Nasdaq approves our common stock to be listed on The Nasdaq Capital Market, we will seek clarification from Nasdaq if trading in our common stock will begin on a "when-issued" basis. |

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| ***Q:*** | ***What are the U.S. federal income tax consequences to me of the Distribution?*** |

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| A: | The Distribution will be determined not to qualify for non-recognition of gain and loss, and therefore, U.S. Holders will be subject to tax. Each U.S. Holder who receives our common stock in the Distribution would generally be treated as receiving a distribution in an amount equal to the fair market value of our common stock received, which would generally result in a gain to be recognized, as applicable, by, or be includible in the income of, such U.S. Holder as a result of the Distribution, and the aggregate tax basis of the LiveOne common stock and our common stock held by each U.S. Holder immediately after the Distribution will be the same as the aggregate tax basis of the LiveOne common stock held by the U.S. Holder immediately before the Distribution, allocated between the LiveOne common stock and our common stock in proportion to their relative fair market values on the date of the Distribution. See "Material U.S. Federal Income Tax Consequences of the Distribution" for more information regarding the potential tax consequences to you of the Distribution. |

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| ***Q:*** | ***Why did we complete the Bridge Financing and what are the conversion terms of the Bridge Notes in connection with the Direct Listing?*** |

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| A: | On July 15, 2022, we completed a private placement offering (the "Bridge Financing") of our unsecured convertible notes with an original issue discount of 10% (the "OID") in the aggregate principal amount of $8,838,500 (the "Bridge Notes") to certain accredited investors and institutional investors (collectively, the "Bridge Investors"), for gross proceeds of $8,835,000 pursuant to the Subscription Agreements entered into with the Bridge Investors (the "Bridge Subscription Agreements"). In connection with the sale of the Bridge Notes, the Bridge Investors received the Bridge Warrants to purchase the Bridge Warrant Shares, and we issued the Placement Agent Warrants to the placement agent, as more fully discussed in this prospectus. The Bridge Notes, the Bridge Warrants and the Placement Agent Warrants were issued as restricted securities in a private placement transaction exempt from the registration requirements of the Securities Act. As part of the Bridge Financing, LiveOne purchased $3 million worth of Bridge Notes. We completed the Bridge Financing in order to generate additional working capital for our Company and LiveOne and for general corporate purposes of our Company, as well as to provide capital for our Company to go public on a national exchange. In connection with the Bridge Financing, among other things, LiveOne and the Bridge investors agreed that LiveOne shall not effect the Direct Listing or an initial public offering, as applicable, unless our post-money valuation at the time of such event is at least $150 million. In February 2023, in connection with the Direct Listing, LiveOne obtained a valuation report from an independent, third party valuation firm, which indicates that the fair market value range of our Company's equity as a wholly-owned subsidiary of LiveOne, on a controlling, marketable interest basis, as of December 31, 2022, is reasonably stated as between $230 million and $274 million. <br>The Bridge Notes mature on July 15, 2023, subject to a one-time three-month extension at our election (the "Maturity Date"), and bear interest at a rate of 10% per annum payable on maturity. Upon the completion of the Direct Listing, the Bridge Notes shall automatically convert into shares of our common stock at a price per share equal to the lesser of (i) the price equal to $60,000,000 divided by the aggregate number of shares of our common stock outstanding immediately prior to the completion of the Direct Listing (assuming full conversion or exercise of all convertible and exercisable securities of our Company then outstanding, subject to certain exceptions), and (ii) 70% of the initial listing price of the shares of our common stock in the Direct Listing (the "Conversion Price"). At the time of the Direct Listing we anticipate that our valuation shall be at least $150 million, and accordingly, the Conversion Price and the exercise price of the Bridge Warrants and the Placement Agent Warrants shall then equal to $3.00 per share. <br>In addition, immediately prior to the completion of the Direct Listing, each Bridge Investor (other than LiveOne) may at such investor's option require us to redeem up to 45% of the principal amount of such investor's Bridge Notes (together with accrued interest thereon, but excluding the OID), in aggregate up to $3,000,000 for all of the Bridge Notes (other than those held by LiveOne), with such redemption to be made pro rata to the redeeming Bridge Investors. Upon a Bridge Investor's redemption of any Bridge Notes, then a portion of such investor's Bridge Warrants shall be forfeited and cancelled in accordance with the following formula: for each $1,000 of the principal amount of the Bridge Notes redeemed, Bridge Warrants to purchase 100% of the Bridge Warrant Shares issued per $1,000 of the principal amount of the Bridge Notes shall be immediately forfeited and cancelled. We shall not be required to redeem or repay more than a total of $3,000,000 of the principal amount of the Bridge Notes as a result of such optional redemption describe herein or the Early Redemption and/or the Reg St Redemption (each as defined below) <br>If the Direct Listing or an initial public offering, as applicable, has not occurred on or before prior to the Maturity Date, the Bridge Notes shall be convertible, in whole or in part, into shares of our common stock at the option of the holder of the respective Bridge Notes at a price per share equal to $60,000,000 divided by the aggregate number of outstanding shares of common stock as of the Maturity Date (assuming full conversion or exercise of all convertible and exercisable securities of our Company then outstanding, subject to certain exceptions).  |

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| ***Q:*** | ***Do we intend to pay cash dividends?*** |

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A: Following the Spin-Out, we do not anticipate paying any dividends on our common stock in the foreseeable future. See "Dividend Policy" for more information.

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| ***Q:*** | ***How will our common stock trade?*** |

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| A: | Currently, there is no public market for our common stock. We have applied to list our common stock on The Nasdaq Capital Market under the symbol "PODC." We expect our common stock to begin trading on or about ______, 2023. <br>We anticipate that trading in our common stock may begin on a "when-issued" basis as early as two trading days prior to the Distribution Date for the Distribution and will continue up to and including the Distribution Date. "When-issued" trading in the context of a Distribution refers to a sale or purchase made conditionally on or before the Distribution Date because the securities to be distribution in the Distribution have not yet been distributed. "When-issued" trades generally settle within four trading days after the Distribution Date. On the first trading day following the Distribution Date, any "when-issued" trading of our common stock will end and "regular-way" trading will begin. Regular-way trading refers to trading after the security has been distributed and typically involves a trade that settles on the third full trading day following the date of the trade. See "The Spin-Out — Trading Prior to the Distribution Date" for more information. At such time that Nasdaq approves our common stock to be listed on The Nasdaq Capital Market, we will seek clarification from Nasdaq if trading in our common stock will begin on a "when-issued" basis. We cannot predict the trading prices for our common stock before, on or after the Distribution Date. <br>We will publicly announce the Distribution Date once it is determined in the future by Nasdaq and our Company, which we anticipate shall be close to the date of when this registration statement is declared effective by the SEC.  |

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| ***Q:*** | ***Will the Spin-Out affect the trading price of shares of my LiveOne common stock?*** |

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|:---|:---|
| A: | We expect the trading price of shares of LiveOne common stock immediately following the Spin-Out to be equal to or higher than immediately prior to the Spin-Out because we expect that the trading price will reflect the value of Courtside Group, Inc. and its subsidiaries as an independent publicly-traded company. Furthermore, until the market has fully analyzed the value of LiveOne and the Spin-Out, the trading price of shares of LiveOne common stock may fluctuate. However, we cannot assure you that, following the Spin-Out, the trading price of LiveOne common stock and our common stock will equal or exceed what the trading price of LiveOne common stock will be equal to or higher than immediately prior to the Spin-Out. Furthermore, we cannot assure you that, following the Spin-Out, the combined trading prices of LiveOne common stock and our common stock will equal or exceed what the trading price of LiveOne common stock would have been in the absence of the Spin-Out. It is possible that after the Spin-Out, the combined equity value of LiveOne and our Company will be less than LiveOne's equity value before the Spin-Out. |

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| | |
|:---|:---|
| ***Q:*** | ***Do I have appraisal rights in connection with the Spin-Out?*** |

---

A: No. Holders of LiveOne common stock are not entitled to appraisal rights in connection with the Spin-Out.

---

| | |
|:---|:---|
| ***Q:*** | ***Who is the Distribution Agent and the transfer agent and registrar for our common stock?*** |

---

A: Vstock Transfer, LLC is the Distribution Agent for the Distribution and the transfer agent and registrar for our common stock.

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| | |
|:---|:---|
| ***Q:*** | ***Are there risks associated with owning shares of our common stock?*** |

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---

| | |
|:---|:---|
| A: | Yes. Our business faces both general and specific risks and uncertainties. Our business also faces risks relating to the Spin-Out. Following the Spin-Out, we will also face risks associated with being an independent publicly-traded company. Accordingly, you should read carefully the information set forth in the section titled "Risk Factors" in this prospectus. |

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| | |
|:---|:---|
| ***Q:*** | ***Are there any conditions to completing the Spin-Out?*** |

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| | |
|:---|:---|
| A: | Yes. The Spin-Out is conditional upon a number of matters, including the authorization and approval of the board of directors of LiveOne, the consent of the senior lenders of LiveOne under its existing senior secured debt agreements, approval of the listing of our common stock on The Nasdaq Capital Market and the declaration of effectiveness of our Registration Statement on Form S-1, of which this prospectus is a part, by the SEC. See "The Spin-Out — Conditions to the Spin-Out" for a more detailed explanation of the conditions to completing the Spin-Out. |

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| | |
|:---|:---|
| ***Q:*** | ***Where can I get more information?*** |

---

A: Before the Spin-Out, if you have any questions relating to the Spin-Out, you should contact:

LiveOne

Investor Relations

ir@liveone.com

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(310) 601-2505

After the Spin-Out, if you have any questions relating to our Company, you should contact:

Investor Relations

PodcastOne

335 N. Maple Drive, Suite 127

Beverly Hills, CA 90210

ir@podcastone.com

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(310) 858-0888

**SUMMARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL AND**

 **OPERATING DATA**

The following tables summarize our unaudited pro forma condensed consolidated financial and operating data. The summary consolidated statements of operations and cash flows information for the years ended March 31, 2022 (except the pro forma net loss per share and pro forma share information) have been derived from our audited consolidated financial statements appearing elsewhere in this prospectus. The summary consolidated statements of operations and cash flows information for the nine months ended December 31, 2022 (except the pro forma net loss per share and pro forma share information) and the summary consolidated balance sheet information as of December 31, 2022 have been derived from our unaudited consolidated financial statements appearing elsewhere in this prospectus (except the pro forma balance sheet information). The unaudited interim consolidated financial statements were prepared on a basis consistent with our audited consolidated financial statements and include, in management's opinion, all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair statement of the financial information set forth in those statements. Our historical results are not necessarily indicative of the results that may be expected for any period in the future and our interim results are not necessarily indicative of our expected results for the year ending March 31, 2023. You should read the following summary consolidated financial data together with the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus.

This unaudited pro forma condensed consolidated financial data and unaudited pro forma consolidated condensed financial data is for informational purposes only. We have based the pro forma adjustments upon available information and certain assumptions that we believe are reasonable under the circumstances. We describe in greater detail the assumptions underlying the pro forma adjustments in the notes below which you should read in conjunction with this unaudited pro forma condensed consolidated financial data.

There are no pro forma adjustments necessary to reflect our operations and financial position as an autonomous entity from LiveOne as the financial statements reflect all potential adjustments including an allocation of overhead expenses (please refer to Note 2 – Summary of Significant Accounting Policies and Note 14 – Subsequent Events of our consolidated financial statements included elsewhere in this prospectus for adjustments made with LiveOne).

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> March 31,**<br> **2022**  | **Nine Months<br> Ended<br> December 31,**<br> **2022** |
|  |  |  ***(Unaudited)*** |
|  |  ***(in thousands, except share and per share data)*** |  ***(in thousands, except share and per share data)*** |
| **Consolidated Statements of Operations Information:** |  |  |
|  Revenue | $32348 | $25802 |
|  Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp; Cost of sales<sup>(1)</sup> | 26271 | 19954 |
| &nbsp;&nbsp;&nbsp; Sales and marketing <sup>(1)</sup> | 5155 | 3931 |
| &nbsp;&nbsp;&nbsp; Product development<sup>(1)</sup> | 251 | 134 |
| &nbsp;&nbsp;&nbsp; General and administrative<sup>(1)</sup> | 4871 | 2723 |
| &nbsp;&nbsp;&nbsp; Amortization of intangible assets | 502 | 76 |
|  Total operating expenses | 37050 | 26818 |
|  Other income (expense), net | 1098 | (2000) |
|  Income (loss) before provision for income taxes | (3604) | (3016) |
|  Provision (benefit) for income taxes | - | - |
|  Net income (loss) | $(3604) | $(3016) |
|  Net loss per share attributable to common stockholders, basic and diluted<sup>(2)</sup> | $(0.02) | $(0.02) |
|  Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted<sup>(2)</sup> | 147984230 | 140510698 |
|  Pro forma net income (loss) per share attributable to common stockholders, basic and diluted (unaudited)<sup>(3)</sup> | $(0.16) | $(0.13) |
|  Pro forma weighted-average shares used in computing pro forma net income (loss) per share attributable to common stockholders, basic and diluted (unaudited)<sup>(3)</sup> | 23300611 | 23300611 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes stock-based compensation expense as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended March 31, 2022**<br> **(Successor)** | **Nine Months Ended December 31,**<br> **2022** |
|  |  |  ***(Unaudited)*** |
|  |  ***(in thousands)*** |  ***(in thousands)*** |
| Cost of sales | $500 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;219 |
| Product development | 8 |  |
| Sales and marketing | 477 | 195 |
| General and administrative | 1541 | 337 |
| Total stock-based compensation | $2526 | $751 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(2) See Note 2 of each of the notes to our consolidated
 financial statements included elsewhere in this prospectus for an explanation of the calculations of our net income (loss) per share,
 basic and diluted, for the years ended March 31, 2022, period from July 1, 2020 to March 31, 2021, period from April 1, 2020
 to June 30, 2020 and for the nine months ended December 31, 2022 and 2021.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Unaudited pro forma net income (loss) per share attributable to common stockholders,
 basic and diluted, for the year ended March 31, 2022, period from July 1, 2020 to March 31, 2021, period from April 1, 2020
 to June 30, 2020 and for the nine months ended December 31, 2022 is calculated giving effect to the Bridge Notes Conversion
 of 3,138,273 shares of our common stock and issuance of 162,338 shares to former holders of LiveOne's 8.5% Senior Secured Convertible
 Notes (the "Harvest Notes") as if the conversion occurred as of April 1, 2020. The pro forma amounts do not reflect the
 mandatory or optional redemption feature note in Note 9 – PodcastOne Bridge Loan of our interim financial statements included
 elsewhere in this prospectus. In addition, the pro forma share outstanding amount for the year ended March 31, 2022 reflects the
 cancellation of 127,984,230 shares of our common stock, which amount reflect the number of shares of our common stock that were canceled
 upon the approval of our board of directors so that we would have 20,000,000 shares of our common stock issued and outstanding prior
 to giving effect to the Direct Listing and the various transactions contemplated in connection therewith, as more fully described
 in this prospectus.

The following table summarizes our unaudited pro forma net loss per share for the year ended March 31, 2022 and the nine months ended December 31, 2022:

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> March 31,<br> 2022** | **Nine months Ended<br> December 31,<br> 2022** |
|  |  ***(Unaudited)*** |  ***(Unaudited)*** |
|  |  ***(in thousands, except per share data)*** |  ***(in thousands, except per share data)*** |
| Numerator |  |  |
| &nbsp;&nbsp;&nbsp; Net income (loss) | $(3604) | $(3016) |
|  Net income (loss), basic and diluted | $(0.02) | $(0.02) |
|  Denominator |  |  |
| &nbsp;&nbsp;&nbsp; Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic and diluted | 147984230 | 140510698 |
| Pro forma adjustment to reflect the issuance of shares attributed to the Harvest Notes | 162338 | 162338 |
| &nbsp;&nbsp;&nbsp; Pro forma adjustment to reflect assumed conversion of the Bridge Loan | 3138273 | 3138273 |
| &nbsp;&nbsp;&nbsp; Pro forma adjustment to reflect the cancellation of shares | (127984230) | (120510698 ) |
| &nbsp;&nbsp;&nbsp; Pro forma weighted-average shares used in computing pro forma net income (loss) per share attributable to common stockholders, basic and diluted | 23300611 | 23300611 |
| &nbsp;&nbsp;&nbsp; Pro forma net loss per share attributable to common stockholders, basic and diluted | $(0.16) | $(0.13) |

---

The following table summarizes our cash flows for the year ended March 31, 2022 and the nine months ended December 31, 2022:

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> March 31,**<br> **2022** | **Nine Months<br> Ended<br> December 31,**<br> **2022** |
|  |  |  ***(Unaudited)*** |
|  |  ***(in thousands)*** |  ***(in thousands)*** |
| **Consolidated Statements of Cash Flows Information:** |  |  |
|  Net cash provided by (used in) operating activities | $(1988) | $(4348) |
|  Net cash provided by (used in) investing activities | $(283) | $(162) |
|  Net cash provided by financing activities | $- | $7376 |

---

The following table summarizes our unaudited pro forma Balance Sheet as of December 31, 2022:

---

| | | |
|:---|:---|:---|
|  | **As of December 31, 2022** | **As of December 31, 2022** |
|  | **Actual** | **Pro Forma<sup>(1)</sup>** |
|  |  ***(Unaudited)*** |  ***(Unaudited)*** |
|  |  ***(in thousands)*** |  ***(in thousands)*** |
| **Consolidated Balance Sheet Information:** | | |
| Cash and cash equivalents | $3969 | $2969 |
| Working capital (deficit)<sup>(2)</sup> | (6857) | 269 |
| Total assets | 28486 | 27486 |
| Total liabilities | 17667 | 10541 |
| Additional paid-in capital | 19535 | 27371 |
| Accumulated deficit | (8715) | (10426) |
| Total stockholders' equity | $10820 | $16946 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The pro forma
 consolidated balance sheet data above gives effect to (i) the Bridge Notes Conversion of
 $5,715,000, which includes the redemption of $1,000,000 of the notes in cash as a result
 of the Company not completing a Qualified Financing or Event by February 15<sup>th</sup>;
 (ii) the cancellation of the redemption feature derivative liability associated with
 the Bridge Notes of $1,411,000; (iii) interest expense acceleration related to the accretion
 of the remaining Bridge Loan debt discount of $3,121,000; and (iv) the cancellation of 127,984,230
 shares of our common stock and the adoption of our Amended and Restated Bylaws, each of which
 will occur in connection with the effectiveness of the registration statement of which this
 prospectus forms a part.

(2) We
 define working capital as current assets less current liabilities. See our consolidated financial statements and related notes included
 elsewhere in this prospectus for further details regarding our current assets and current liabilities as of December 31, 2022.

**Non-GAAP Financial Measures** 

The following tables present certain financial measures not in accordance with accounting principles generally accepted in the United States of America ("GAAP") (non-GAAP financial measures), along with the most directly comparable GAAP measure, for each period presented below. In addition to our results determined in accordance with GAAP, we believe these non-GAAP financial measures are useful in evaluating our operating performance.

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, 2022, period from July 1, 2020 to March 31, 2021, period from April 1, 2020 to June 30, 2020 and the nine months ended December 31, 2022 and 2021 (in thousands):

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Net<br> Income<br> (Loss)** | **Depreciation<br> and<br> Amortization** | **Stock-Based<br> Compensation** | **Non-<br> Recurring<br> Acquisition and<br> Realignment<br> Costs** | **Other<br> (Income)<br> Expense** | **(Benefit)<br> Provision<br> for Taxes** | **Adjusted<br> EBITDA** |
|  **Period Ended** | | | | | | | |
|  Year Ended March 31, 2022 (Successor) | $(3604) | $634 | $2526 | $- | $(1098) | $- | $(1542) |
|  July 1, 2020 to March 31, 2021 (Successor) | $(2095) | $560 | $167 | $370 | $28 | $(4) | $(974) |
|  April 1, 2020 to June 30, 2020 (Predecessor) | $(1169) | $26 | $38 | $- | $1 | $4 | $(1100) |
|  **Nine months Ended** |  |  |  |  |  |  |  |
|  December 31, 2022 | $(3016) | $241 | $751 | $- | $2000 |  | $(24) |
|  December 31, 2021 | $(2895) | $520 | $2175 | $- | $(494) |  | $(694) |

---

The following table sets forth reconciliation of Gross Profit to Revenue, the most comparable GAAP financial measure for the year ended March 31, 2022, period from July 1, 2020 to March 31, 2021, period from April 1, 2020 to June 30, 2020 and the nine months ended December 31, 2022 and 2021 (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> March 31,**<br> **2022** | **Nine Months Ended <br> December 31,**<br> **2022** |
|  |  |  ***(Unaudited)*** |
|  |  ***(in thousands)*** |  ***(in thousands)*** |
| Revenue | $32348 | $25802 |
| Less: |  |  |
| Cost of sales | (26271) | (19954) |
| Amortization of developed technology | (110) | (154) |
| Contribution margin | 5967 | 5694 |
| Add back amortization of developed technology | 110 | 154 |
| Gross profit | $6077 | $5848 |

---

For additional information about these non-GAAP financial measures and reconciliations of the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with U.S. GAAP, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures."

**RISK FACTORS**

 

*Investing in our common stock involves a high degree of risk. You should consider and read carefully all of the risks and uncertainties described below, as well as other information included in this prospectus, including our consolidated financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially adversely affect our business, financial condition, or results of operations. In such case, the trading price of our common stock could decline, and you may lose some or all of your original investment. The risks discussed below are not the only risks we face. Additional risks or uncertainties not currently known to us, or that we currently deem immaterial, may also have a material adverse effect on our business, financial condition, prospects, results of operations, or cash flows. We cannot assure you that any of the events discussed in the risk factors below will not occur.*

**Risks Related to Our Business and Industry**

***We have incurred significant operating and net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.***

 ****

As reflected in our consolidated financial statements included elsewhere herein, we have a history of losses, incurred significant operating and net losses in each year since our inception, including net losses of $3.6 million and $2.1 million for the fiscal years ended March 31, 2022 and period from July 1, 2020 to March 31, 2021, respectively, and (cash used)/provided by in operating activities of $(2.0) million and $0.2 million for the fiscal years ended March 31, 2022 and period from July 1, 2020 to March 31, 2021, respectively. We incurred net losses of $3.0 million and $2.9 million for the nine months ended December 31, 2022 and 2021, respectively, and had cash used in operating activities of $4.3 million and $1.0 million for the nine months ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $8.7 million and net current liabilities of $17.7 million. We anticipate incurring additional losses until such time that we can generate significant increases to our revenues, and/or reduce our operating costs and losses. To date, we have financed our operations exclusively through the sale of equity securities (including convertible securities), and after our acquisition by LiveOne on July 1, 2020, through LiveOne's sale of its and our equity and/or debt securities (including convertible securities). The size of our future net losses will depend, in part, on the rate of future expenditures and our ability to significantly grow our business and increase our revenues. We expect to continue to incur substantial and increased expenses as we grow our business. We also expect an increase in our expenses associated with our operations as a publicly-traded company. We may incur significant losses in the future for a number of other reasons, including unsuccessful acquisitions, costs of integrating new businesses, expenses, difficulties, complications, delays and other unknown events. As a result of the foregoing, we expect to continue to incur significant losses for the foreseeable future and we may not be able to achieve or sustain profitability.

Our ability to meet our total liabilities of $17.7 million as of December 31, 2022, and to continue as a going concern, is dependent on our ability to increase revenue, reduce costs, achieve a satisfactory level of profitable operations, obtain additional sources of suitable and adequate financing and further develop and execute on our business plan. We may never achieve profitability, and even if we do, we may not be able to sustain being profitable. As a result of the going concern uncertainty, there is an increased risk that you could lose the entire amount of your investment in our company, which assumes the realization of our assets and the satisfaction of our liabilities and commitments in the normal course of business.

 ****

***We may require additional capital, including to fund our and/or LiveOne's current debt obligations and to fund potential acquisitions and capital expenditures, which may not be available on terms acceptable to us or at all and which depends on many factors beyond our control.***

Historically, we have funded our business operations and capital expenditures primarily through the issuance and sale of our and/or LiveOne's equity and/or debt issuances (including convertible securities). To support our growing business, we must have sufficient capital to continue to make significant investments in our platform and product offerings. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to those of our common stock, and our existing stockholders may experience dilution. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. Any refinancing of our indebtedness could be at significantly higher interest rates, require additional restrictive financial and operational covenants, or require us to incur significant transaction fees, issue warrants or other equity securities, or issue convertible securities. These restrictions and covenants may restrict our ability to finance our operations and engage in, expand, or otherwise pursue our business activities and strategies. Our ability to comply with these covenants and restrictions may be affected by events beyond our control, and breaches of these covenants and restrictions could result in a default and an acceleration of our obligations under a debt agreement. If we raise additional funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our technologies or our solutions under development, or grant licenses on terms that are not favorable to us, which could lower the economic value of those programs to us.

We evaluate financing opportunities from time to time, and our ability to obtain financing will depend, among other things, on our development efforts, business plans and operating performance and the condition of the capital markets at the time we seek financing and to an extent, subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot be certain that additional financing will be available to us on favorable terms, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business, financial condition and results of operations could be adversely affected.

 ****

 ***If LiveOne does not comply with the provisions of its senior credit facility, its senior lender may terminate its obligations to LiveOne and require LiveOne and/or us to repay all outstanding amounts owed thereunder.***

The senior credit facility contains provisions that limit our operating activities, including covenant relating to the requirement to maintain a certain amount cash (as provided in the senior credit facility loan agreement). If an event of default occurs and is continuing, the senior credit facility lender may among other things, terminate its obligations thereunder, accelerate its debt and require LiveOne and/or us to repay all amounts thereunder. For example, on October 13, 2022, a judgement was entered in favor of SoundExchange, Inc. ("SX") against LiveOne and Slacker in the United States District Court Central District of California in the amount of approximately $9.8 million. On February 3, 2023, LiveOne entered into an agreement to settle the dispute with SX and related court judgement entered against the defendants, pursuant to which LiveOne agreed to make certain monthly payments to SX for a period of 24 months and certain other payments in the event LiveOne obtains additional financing(s), unless LiveOne repays the judgment amount earlier pursuant to the terms of the agreement, and SX agreed not to take any action to enforce such judgment, so long as the defendants are not in default under the agreement. LiveOne's debt agreements with the provider of the senior credit facility contains a covenant that if a material adverse change occurs in its financial condition, or such lender reasonably believes the prospect of payment or performance of their loan is materially impaired, the lender at its option may immediately accelerate their debt and require LiveOne to repay all outstanding amounts owed thereunder. If for any reason LiveOne fails to comply with the terms of its settlement agreement with SX, its senior credit facility provider may declare an event of default and at its option may immediately accelerate its debt and require LiveOne and/or us to repay all outstanding amounts owed under the senior credit facility, which would materially adversely impact our business, operating results and financial condition. As of December 31, 2022, LiveOne was in full compliance with these covenants.

 ****

***We may require additional capital, including to fund our current debt obligations and to fund potential acquisitions and capital expenditures, which may not be available on terms acceptable to us or at all and which depends on many factors beyond our control.***

To support our growing business, we must have sufficient capital to continue to make significant investments in our platform and product offerings. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to those of our common stock, and our existing stockholders may experience dilution. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. Any refinancing of our indebtedness could be at significantly higher interest rates, require additional restrictive financial and operational covenants, or require us to incur significant transaction fees, issue warrants or other equity securities, or issue convertible securities. These restrictions and covenants may restrict our ability to finance our operations and engage in, expand, or otherwise pursue our business activities and strategies. Our ability to comply with these covenants and restrictions may be affected by events beyond our control, and breaches of these covenants and restrictions could result in a default and an acceleration of our obligations under a debt agreement. If we raise additional funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our technologies or our solutions under development, or grant licenses on terms that are not favorable to us, which could lower the economic value of those programs to us.

We evaluate financing opportunities from time to time, and our ability to obtain financing will depend, among other things, on our development efforts, business plans and operating performance and the condition of the capital markets at the time we seek financing and to an extent, subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot be certain that additional financing will be available to us on favorable terms, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business, financial condition and results of operations could be adversely affected.

***We face and will continue to face competition for ad-supported listening time.***

We compete with providers of podcasts that offer an on-demand catalog of podcast content that is similar to ours. We face increasing competition from a growing variety of podcast providers that seek to differentiate their service by content offering and product features, and they may be more successful than us in predicting listener preferences, providing popular content, and innovating new features.

Our competitors include providers of internet radio, terrestrial radio, and satellite radio. Internet radio providers may offer more extensive content libraries than we offer and some may be offered internationally more broadly than our PodcastOne service. In addition, internet radio providers may leverage their existing infrastructure and content libraries, as well as their brand recognition and listener base, to augment their services by offering competing on-demand podcast features to provide listeners with more comprehensive podcast service delivery choices. Terrestrial radio providers often offer their content for free, are well-established and accessible to consumers, and offer media content that we currently do not offer. In addition, many terrestrial radio stations have begun broadcasting digital signals, which provide high-quality audio transmission. Satellite radio providers, such as SiriusXM and iHeartRadio, may offer extensive and exclusive news, comedy, sports and talk content, and national signal coverage.

We believe that companies with a combination of technical expertise, brand recognition, financial resources, and digital media experience also pose a significant threat of developing competing on-demand audio distribution technologies. In particular, if known incumbents in the digital media space such as Facebook choose to offer competing services, they may devote greater resources than we have available, have a more accelerated time frame for deployment, and leverage their existing listener base and proprietary technologies to provide services that our listeners and advertisers may view as superior. Furthermore, Amazon Music, Apple Podcasts, Spotify, iHeartMusic and others have competing podcast services, which may negatively impact our business, operating results, and financial condition. Our current and future competitors may have higher brand recognition, more established relationships with content licensors and mobile device manufacturers, greater financial, technical, and other resources, more sophisticated technologies, and/or more experience in the markets in which we compete. Our current and future competitors may also engage in mergers or acquisitions with each other, as SiriusXM and Pandora have done, or to acquire smaller podcasting services, such as Spotify has done, to combine and leverage their audiences. Our current and future competitors may innovate new features or introduce new ways of consuming or engaging with content that cause our listeners, especially the younger demographic, to switch to another product, which would negatively affect our listener retention, growth, and engagement. In addition, Apple and Google also own application store platforms and are charging in-application purchase fees, which are not being levied on their own applications, thus creating a competitive advantage for themselves against us. If other competitors that own application store platforms and competitive services adopt similar practices, we may be similarly impacted. As the market for on-demand audio on the internet and mobile and connected devices increases, new competitors, business models, and solutions are likely to emerge.

We also compete for listeners based on our presence and visibility as compared with other businesses and platforms that deliver audio content through the internet and connected devices. We face significant competition for listeners from companies promoting their own digital audio content online or through application stores, including several large, well-funded, and seasoned participants in the digital media market. Device application stores often offer listeners the ability to browse applications by various criteria, such as the number of downloads in a given time period, the length of time since an application was released or updated, or the category in which the application is placed. The websites and applications of our competitors may rank higher than our website and our PodcastOne application, and our application may be difficult to locate in device application stores, which could draw potential listeners away from our service and toward those of our competitors. If we are unable to compete successfully for listeners against other digital media providers by maintaining and increasing our presence, ease of use, and visibility online, on devices, and in application stores, our number of premium subscribers, ad-supported users, and the amount of content streamed on our service may fail to increase or may decline and our subscription fees and advertising sales may suffer.

We compete for a share of advertisers' overall marketing budgets with other content providers on a variety of factors, including perceived return on investment, effectiveness and relevance of our advertising products, pricing structure, and ability to deliver large volumes or precise types of advertisements to targeted listener demographic pools. We also compete for advertisers with a range of internet companies, including major internet portals, search engine companies, social media sites, and mobile applications, as well as traditional advertising channels such as terrestrial radio and television.

Large internet companies with strong brand recognition, such as Facebook, Google, Amazon, and Twitter, have significant numbers of sales personnel, substantial advertising inventory, proprietary advertising technology solutions, and traffic across web, mobile, and connected devices that provide a significant competitive advantage and have a significant impact on pricing for reaching these listener bases. Failure to compete successfully against our current or future competitors could result in the loss of current or potential advertisers, a reduced share of our advertisers' overall marketing budget, the loss of existing or potential listeners, or diminished brand strength, which could adversely affect our pricing and margins, lower our revenue, increase our research and development and marketing expenses, and prevent us from achieving or maintaining profitability.

***Our business is dependent upon the performance of the podcasts and their talent.***

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We independently contract with podcasts and talent with significant loyal audiences in their respective markets. Although we have entered into long-term agreements with some of our key podcast hosts to protect our interests in those relationships, we can give no assurance that all or any of these persons will remain with us, will be able to continue to provide podcasting services, will retain their audiences or will continue to be profitable. Competition for these podcasts and talent is intense and certain of these talent and podcasts are under no legal obligation to remain with us after the expiration of their podcast license agreements. Our competitors may choose to extend offers to any of these podcasts and/or talent on terms which we may be unwilling to meet. Furthermore, the popularity and audience loyalty of our key podcasts is highly sensitive to rapidly changing public tastes. A loss of such popularity or audience loyalty is beyond our control and could have a material adverse effect on our ability to attract local and/or national advertisers and on our revenue and/or ratings, and could result in increased expenses.

***Significant up-front and/or minimum guarantees required under certain of our podcast license agreements may limit our operating flexibility and may adversely affect our business, operating results, and financial condition.***

Certain of our podcast license agreements contain significant up-front and/or require that we make minimum guarantee payments ("MGs"). In addition, in order to secure top podcasts and/or renew top performing podcasts, we may be required to fund significant MGs payment requirements. While some MGs are recoupable by us as a direct cost before we share any revenue with the underlying partners, some MGs related to our content acquisition costs are not always tied to our revenue and/or audience growth forecasts (e.g., number of listeners, downloads, YouTube viewers, social media followers), or the number of podcasts distributed our service. We may also be subject to MGs to rights holders with respect to certain strategic partnerships we enter into that may not produce all of the expected benefits. Accordingly, our ability to achieve and sustain profitability and operating leverage on our service in part depends on our ability to increase our revenue through increased advertising sales on terms that maintain an adequate gross margin. The duration of our license agreements for podcast content that contain MGs is frequently between one and two years. If our forecasts of user acquisition or retention do not meet our expectations or advertising sales decline significantly during the term of our license agreements, our margins may be materially and adversely affected. To the extent our advertising sales do not meet our expectations, our business, operating results, and financial condition could also be adversely affected as a result of such MGs. In addition, the fixed cost nature of these MGs may limit our flexibility in planning for, or reacting to, changes in our business and the market segments in which we operate.

We rely on estimates of the market share of streamed and/or downloaded content by the provider, as well as our own user growth and forecasted advertising revenue, to forecast whether such MGs could be recouped against our actual content acquisition costs incurred over the duration of the license agreement. To the extent that this revenue and/or market share estimates underperform relative to our expectations, leading to content acquisition costs that do not exceed such MGs, our margins may be materially and adversely affected.

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***If we fail to increase the number of listeners consuming our podcast content, our business, financial condition and results of operations may be adversely affected.***

The size of our listener base consuming our podcast content is critical to our success, and we will need to develop and grow our listener base to be successful. We currently generate substantially all of our revenue from advertising and sponsorship, which is dependent on the number of listeners consuming our podcast content that we attract. For example, if we are unable to retain and attract listeners consuming our podcast content, we may be unable to maintain or increase the frequency of listeners' engagement with our platform and our podcasts. In addition, if listeners do not perceive our content as original, entertaining or engaging, we may not be able to attract advertising and sponsorship opportunities and/or increase the resulting frequency of listeners' engagement with our platform and content. If we are unable to retain and attract listeners, our network and services could also be less attractive to potential new advertisers, sponsors and listeners, as well as to podcasts and podcasting talent, which could have a material and adverse impact on our business, financial condition and results of operations.

***Our revenue and operating results are highly dependent on the overall demand for advertising. Factors that affect the amount of advertising spending, such as economic downturns, can make it difficult to predict our revenue and could adversely affect our business.***

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Our business depends on the overall demand for advertising and on the economic health of our current and prospective advertisers. If advertisers reduce their overall advertising spending, our revenue and results of operations are directly affected. Many advertisers devote a disproportionate amount of their advertising budgets to the fourth quarter of the calendar year to coincide with increased holiday purchasing, and buyers may spend more in the fourth quarter for budget reasons. As a result, if any events occur to reduce the amount of advertising spending during the fourth quarter, or reduce the amount of inventory available to advertisers during that period, it could have a disproportionate adverse effect on our revenue and operating results for that fiscal year. Economic downturns or instability in political or market conditions generally may cause current or new advertisers to reduce their advertising budgets. Adverse economic conditions and general uncertainty about economic prospects in the future are likely to affect our business prospects. In particular, uncertainty regarding the general business conditions in the United States and globally and if such economies deteriorate or become volatile could cause advertisers to delay, decrease or cancel ad purchases. Moreover, any changes in the favorable tax treatment of advertising expenses and the deductibility thereof would likely cause a reduction in advertising demand. In addition, continued geopolitical turmoil in many parts of the world have and may continue to put pressure on global economic conditions, which could lead to reduced spending on advertising.

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***Expansion of our operations to deliver additional podcasts subjects us to increased business, legal, financial, reputational, and competitive risks.***

Expansion of our operations to deliver additional podcasts and other non-music content involves numerous risks and challenges, including increased capital requirements, new competitors, and the need to develop new strategic relationships. Growth in these areas may require additional changes to our existing business model and cost structure, modifications to our infrastructure, and exposure to new regulatory, legal and reputational risks, including infringement liability, any of which may require additional expertise that we currently do not have. There is no guarantee that we will be able to generate sufficient revenue from podcasts or other non-music content to offset the costs of creating or acquiring this content. Failure to successfully monetize and generate revenues from such content, including failure to obtain or retain rights to podcasts or other non-music content on acceptable terms, or at all, or to effectively manage the numerous risks and challenges associated with such expansion could adversely affect our business, operating results, and financial condition.

In addition, we enter into multi-year commitments for original content that we produce or commission. Given the multiple-year duration and largely fixed cost nature of such commitments, if our user growth and retention do not meet our expectations, our margins may be adversely impacted. Payment terms for certain content that we produce or commission will typically require more upfront cash payments than other content licenses or arrangements whereby we may not pay for the production of such content. To the extent our user and/or revenue growth do not meet our expectations, our liquidity and results of operations could be adversely affected as a result of such content commitments. The long-term and fixed cost nature of certain content commitments may also limit our flexibility in planning for or reacting to changes in our business, as well as our ability to adjust our content offering if our users do not react favorably to the content we produce. Any such event could adversely impact our business, operating results, and financial condition.

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***Increases in the costs in relation to podcast content creators, such as higher podcast MGs and/or talent revenue share compensation and costs of discovering and cultivating a top podcast content creator, may have an adverse effect on our business, financial condition and results of operations.***

We depend upon podcast content creators to continuously provide a large variety of high-quality content on our platform, which is a key factor of engaging and satisfactory user experience that ensures long-term user stickiness. We compete with other audio platforms for active, popular or celebrity content creators. To attract and retain top content creators and maintain the high level of content quality, we enter into contracts with our podcast content creators under which such creators are usually paid a certain percentage of the ad sales and other revenue that we generate related to their podcast. The compensation to a top podcast content creator may increase as the competition intensifies. If our content creators become too costly, we will not be able to produce high quality content at commercially acceptable costs. If our competitors' platforms offer higher revenue sharing percentage with an intent to attract our popular podcast content creators, costs to retain such content creators may increase. Furthermore, as our business and user base further expand, we may have to devote more resources in encouraging our podcast content creators to produce content that meets the evolving interests of a diverse user base, which would increase the costs of content on our platform. If we are unable to generate sufficient revenues that outpace our increased costs in relation to content creators, our business, financial condition and results of operations may be materially and adversely affected.

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***We use third-party services and technologies in connection with our business, and any disruption to the provision of these services and technologies to us could result in adverse publicity and a slowdown in the growth of our users, which could materially and adversely affect our business, financial condition and results of operations.***

Our business depends upon services provided by, and relationships with, third parties. We currently engage third-party service providers in certain areas of our operations such as monitoring of its podcasts. If such third-party service providers fail to detect the illegal or inappropriate activities or content in our podcasts, we may be subject to regulator's disapproval or penalties as well as adverse media exposure which could materially and adversely affect our business, financial condition and results of operations. In addition, some third-party software we use in our operations is currently publicly available without charge. If the owner of any such software decides to make claims against us, charge users, or no longer makes the software publicly available, we may need to enter into settlement with such owners, incur significant cost to license the software, find replacement software or develop it on our own. If we are unable to find or develop replacement software at a reasonable cost, or at all, our business and operations may be adversely affected.

Our overall network relies on bandwidth connections provided by third-party operators and we expect this dependence on third parties to continue. The networks maintained and services provided by such third parties are vulnerable to damage or interruption, which could impact our business, financial condition and results of operations.

We also depend on the third-party online payment systems for sales of our products and services. If any of these third-party online payment systems suffer from security breaches, users may lose confidence in such payment systems and refrain from purchasing our virtual gifts online, in which case our results of operations would be negatively impacted.

We exercise no control over the third-parties with whom we have business arrangements. For some of services and technologies such as online payment systems, we rely on a limited number of third-party providers with limited access to alternative networks or services in the event of disruptions, failures or other problems. If such third-parties increase their prices, fail to provide their services effectively, terminate their service or agreements or discontinue their relationships with us, we could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on our business, financial condition and results of operations.

***Our revenue model also depends in part on high impression volumes, the growth of which may not be sustained.***

We generate revenue by charging a CPM based on the volume of purchased digital ads that we measure on behalf of these customers. If the volume of impressions we measure does not continue to grow or decreases for any reason, our business will suffer. For example, if digital ad spending remains constant and our advertiser customers transition to higher CPM ad inventory, overall impression volumes may decrease, which may result in fewer impressions for us to verify and a corresponding decline in our revenues. We cannot assure you that growth in volume of impressions will be sustained. If our customers adjust their buying patterns or alter their preference to higher CPM ad inventory, our business, financial condition, and results of operations may be harmed.

***Our advertising sales depend on how our listener data is collected and how advertisers select their ad listener targeting in the future.***

Our advertising sales depend on how our listener data is collected and how advertisers select their ad listener targeting in the future. Advertiser spending varies based on their desire to target certain categories of listeners and supporting listener data. If our advertisers determine to target different listeners or shift their ad spending towards different listener categories, our business, financial condition, and results of operations may be harmed.

***The COVID-19 virus has adversely impacted, and is expected to continue to adversely impact, our business, results of operations and financial position.***

In 2020, COVID-19 was declared a pandemic and both the pandemic and measures taken in response have had a significant impact, both direct and indirect, on our businesses and the economy generally, as supply chains have been disrupted, facilities and production had been suspended, and advertiser spend on our podcasts had fallen. As of the date of this prospectus, the U.S. and world economy has emerged from the impact of the COVID-19 virus. As a result of the COVID-19 virus variants, we have experienced and may continue to experience disruptions that may adversely impacted our business, results of operations and financial position. The extent of future disruptions will depend on numerous evolving factors, which are highly uncertain, rapidly changing and cannot be predicted, and could result in significantly more severe impacts in the future, including:

● reduced ad budgets and spend, order cancellations and increased competition for advertising revenue;

● the effect of the pandemic on our customers and other business partners and vendors;

● changes in how we conduct operations, including our events;

● increased competition with alternative media platforms and technologies;

● the inability of customers to pay amounts owed to our Company, or delays in collections of such amounts;

● additional goodwill or other impairment charges;

● limitations on our employee resources, including because of work-from-home, stay-at-home and shelter-in-place orders from federal or state governments, employee furloughs, or sickness of employees or their families;

● diversion of management resources to focus on mitigating the impacts of the COVID-19 virus;

● reduced capital expenditures; and

● impacts from prolonged remote work arrangements, including increased cybersecurity risks.

These disruptions negatively impacted our revenue, results of operations and financial position for the years ended March 31, 2022 and 2021 and these disruptions may continue to have a negative impact through 2023 fiscal year.

The COVID-19 virus continues to evolve. The extent to which the pandemic continues to impact our business, liquidity and financial results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, impact of variants, travel restrictions and social distancing throughout the United States, the duration and extent of business closures or business disruptions, the availability, adoption and effectiveness of vaccines and treatments and the effectiveness of actions taken to contain the disease. If we or our customers again experience prolonged shutdowns or other business disruptions beyond current expectations, our ability to conduct our business in the manner and within planned timelines could be materially and adversely impacted, and our business, liquidity and financial results will be adversely affected. Additionally, concerns over the economic impact of the COVID-19 pandemic have caused extreme volatility in financial and other capital markets, which has adversely affected our stock price and credit rating and could impact our ability to access the capital markets in the future.

***Our ability to attract and retain users is highly sensitive to rapidly changing public tastes in content providers and technology.***

Our ability to attract and retain audiences is highly sensitive to rapidly changing public tastes in content providers and technology and is dependent on our ability to maintain the attractiveness of our platform, content, technology and reputation as a place where quality original content can be accessed and distributed. We will rely on the popularity of our Content Providers and the quality of their respective content to retain audiences, secure sponsorships and to facilitate growth in revenue from advertising. Maintaining the popularity of our content will be challenging, and our relationship with listeners and viewers could be harmed for many reasons, including the quality and diversity of our online content. For example, if users do not perceive our platform and services to be original, entertaining, engaging, useful, reliable or trustworthy, we may be unable to attract and retain users to our content and/or increase the frequency of users' engagement with our talent and programs. A There is no guarantee that we will not experience a similar erosion of our user base. If our platform or content becomes less popular with fans, our growth strategy would be harmed, which could in turn harm our business and financial results.

Our ability to attract and retain users depends upon many additional factors both within and beyond our control. In addition to the popularity of our content, we believe that our ability to attract and retain users depends upon many factors both within and beyond our control, including:

● the popularity, usefulness, ease of use, performance and reliability of our podcasts, compared to those of our competitors;

● our ability to attract new listeners and YouTube viewers;

● the timing and market acceptance of our podcasts, platform and services, which includes the PodcastOne distribution network.

● the frequency and relative prominence of the ads displayed by us or our competitors;

● our ability to establish and maintain relationships with our podcasters to provide new content for our network;

● changes mandated by, or that we elect to make to address, legislation, regulatory authorities or litigation, including settlements and consent decrees, some of which may have a disproportionate effect on us;

● retain and motivate talented employees, particularly engineers, producers and platform content managers;

● fluctuations in costs of content which we may be unwilling or unable to pass through to our users;

● competitors' offerings that may include more favorable terms than we offer in order to obtain agreements for new content arrangements;

● investments in new products, features, and functionality;

● technological changes and innovations that we are unable to adopt or are late in adopting that offer more attractive entertainment alternatives than we or other live streamed entertainment providers currently offer;

● acquisitions or consolidation within our industry, which may result in more formidable competitors;

● general administration, including legal, accounting, and other expenses; and

● awareness of our reputation and the brand on a global basis; strength relative to our competitors.

● Ability to cross-promote internally, by leveraging our network of podcasts, and externally, due to our in-depth relationship, with competitors.

● Utilize talent booking to enable cross platform promotion through guest appearances.

If we are unable to attract and retain new audiences and/or ensure that our user acquisition cost does not exceed our user life-time value, any of these factors could adversely affect our business, financial condition and results of operations.

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***Emerging industry trends in digital advertising may pose challenges for our ability to forecast or optimize our advertising inventory, which may adversely impact our ad-supported revenue.***

The digital advertising industry is introducing new ways to measure and price advertising inventory. For example, a significant portion of advertisers are in the process of moving from purchasing advertisement impressions based on the number of advertisements served by the applicable ad server to a new "attribution-based, data driven model (based on tracking pixels) for select products and brand awareness. In the absence of a uniform industry standard, agencies and advertisers have adopted several different measurement methodologies and standards. In addition, measurement services may require technological integrations, which are still being evaluated by the advertising industry without an agreed-upon industry standard metric. As these trends in the industry continue to evolve, our advertising revenue may be adversely affected by the availability, accuracy, and utility of the available analytics and measurement technologies as well as our ability to successfully implement and operationalize such technologies and standards.

Further, the digital advertising industry is shifting to data-driven technologies and advertising products, such as automated buying. These data-driven advertising products and automated buying technologies allow publishers and advertisers to use data to target advertising toward specific groups of listeners who are more likely to be interested in the advertising message delivered to them. These advertising products and programmatic technologies are currently more developed in terms of advertising technology and industry adoption on the web than they are on mobile or on other software applications, and may not integrate with our desktop software version of the ad-supported services. Because the majority of our ad-supported listener hours occur on mobile devices, if we are unable to deploy effective solutions to monetize the mobile device usage by our ad-supported listener base, our ability to attract advertising spend, and ultimately our advertising revenue, may be adversely affected by this shift. In addition, we rely on third-party advertising technology platforms to participate in automated buying, and if these platforms cease to operate or experience instability in their business models, it also may adversely affect our ability to capture advertising spend.

***We are a party to many content acquisition and other license agreements that are complex and impose numerous obligations upon us which may make it difficult to operate our business, and a breach of such agreements could adversely affect our business, operating results and financial condition.***

Many of our content acquisition and other license agreements are complex and impose numerous obligations on us, including obligations to, among other things:

● calculate and make payments based on complex participation structures, which requires tracking usage of content on our service that may have inaccurate or incomplete metadata necessary for such calculation;

● provide periodic reports on the exploitation of the content in specified formats;

● provide advertising inventory;

● comply with certain broadcasting limitations and restrictions;

● comply with certain marketing and advertising restrictions; and

● comply with certain security and technical specifications.

Some of our content acquisition and other license agreements grant the licensor the right to audit our compliance with the terms and conditions of such agreements. In addition, some of our content acquisition and other license agreements require consent to undertake certain business initiatives and without such consent, our ability to undertake new business initiatives may be limited. This could hurt our competitive position.

If we materially breach any of these obligations or any other obligations set forth in any of our content acquisition and other license agreements, or if we use content in ways that are found to exceed the scope of such agreements, we could be subject to monetary penalties and our rights under such license agreements could be terminated, either of which could have a material adverse effect on our business, operating results and financial condition. We may enter into settlement agreements in the future requiring us to make substantial payments as a result of claims that we are in breach of certain provisions in, or have exceeded the scope of, our content acquisition and other license agreements.

***We face competition for users' attention and time.***

The market for entertainment video and radio content is intensively competitive and subject to rapid change. We compete against other entertainment video and radio providers, such as (i) interactive on-demand audio content and pre-recorded entertainment, (ii) broadcast radio providers, including terrestrial and Internet radio providers, (iii) cable, satellite and Internet television and movie content providers, and (iv) other sources of entertainment for our users' attention and time. These content and service providers pose a competitive threat to the extent existing or potential users choose to consume their content or use their services rather than our content or our services. The online marketplace for content providers may rapidly evolve and provide users with a number of alternatives or new access models, which could adversely affect our business, financial condition and results of operations.

***We face intense competition from competitors, and we may not be able to increase our revenues, which could adversely impact our business, financial condition and results of operations.***

The podcast streaming industry is highly competitive. The podcast streaming industry competes with other forms of entertainment for consumers' discretionary spending, and within this industry we compete with other platforms to secure rights to content. In the markets in which we promote our streaming podcasts, we face competition from other promoters and streaming operators. These competitors may engage in more extensive development efforts, undertake more far-reaching marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to existing and potential artists. Our competitors may also develop services, advertising options or podcast platforms that are equal or superior to those we provide or that achieve greater market acceptance and brand recognition than we achieve. It is possible that new competitors may emerge and rapidly acquire significant market share.

Our current and future competitors may have more well-established brand recognition, more established relationships with, and superior access to, Content Providers and other Industry Stakeholders, greater financial, technical and other resources, more sophisticated technologies or more experience in the markets in which we compete. These competitors may also compete with us for key employees and other individual service providers who have relationships with popular Content Providers and that have a history of being able to book such guests or secure the rights to stream their content. If we are unable to compete successfully for users against other providers by maintaining and increasing our presence and visibility, the number of users of our network may fail to increase as expected or decline and our advertising sales, subscription fees and other revenue streams will suffer.

***Our new platform features, services and initiatives, changes to existing features, services and initiatives could fail to attract users, content partners, advertisers and platform partners or generate revenue.***

Our new platform features, services and initiatives and changes to existing features, services and initiatives could fail to attract users, content partners, advertisers and platform partners or generate revenue. Our industry is subject to rapid and frequent changes in technology, evolving customer needs and the frequent introduction by our competitors of new and enhanced offerings. We must constantly assess the playing field and determine whether we need to improve or re-allocate resources amongst our existing platform features and services or create new products (independently or in conjunction with third parties). Our ability to increase the size and engagement of our user base, attract content partners, advertisers and platform partners and generate revenue will depend on those decisions. We may introduce significant changes to our existing platform and services or develop and introduce new and unproven products and services, including technologies with which we have little or no prior development or operating experience. If new or enhanced platform features or services fail to engage users, content partners and advertisers, we may fail to attract or retain users or to generate sufficient revenue or operating profit to justify our investments, and our business and operating results could be adversely affected.

***We face significant competition for advertiser and sponsorship spend.***

We face significant competition for advertiser spend. Substantially all of our revenue to date is generated through advertising within our podcast episodes. We compete against online and mobile businesses, including those referenced above, and radio, for advertising budgets. We also compete with advertising networks, exchanges, demand side platforms and other platforms, such as Google AdSense, DoubleClick Ad Exchange, Oath advertising platform and Microsoft Media Network, for marketing budgets and in the development of the tools and systems for managing and optimizing advertising campaigns. PodcastOne competes with platforms, such as Apple Podcasts, Spotify, SiriusXM Satellite Radio, YouTube, and Amazon Prime that provide interactive on-demand audio content and pre-recorded entertainment. In order to grow our revenues and improve our operating results, we will need to increase our share of spending on advertising relative to our competitors, many of which are larger companies that offer more traditional and widely accepted advertising products. In addition, some of our larger competitors have substantially broader product or service offerings and leverage their relationships based on other products or services to gain additional share of advertising budgets. If we are not able to compete effectively for users and advertisers spend, our business, financial condition and results of operations would be materially and adversely affected.

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***The third-party services and software that we use are highly technical and may contain undetected software bugs or vulnerabilities, which could manifest in ways that could seriously harm our reputation and our business.***

The third-party services and software that we use are highly technical and complex. The tech solutions that we use or may introduce in the future, may contain undetected software bugs, hardware errors, and other vulnerabilities. These bugs and errors can manifest in any number of ways in our products, including through diminished performance, security vulnerabilities, malfunctions, or even permanently disabled products. Our tech providers have a practice of updating their tech solutions and software and some errors in their technology and software may be discovered only after a product has been used by listeners, and may in some cases be detected only under certain circumstances or after extended use. Any errors, bugs or other vulnerabilities discovered in the underlying code or backend after release could damage our reputation, drive away listeners, allow third parties to manipulate or exploit our software, lower revenue and expose us to claims for damages, any of which could seriously harm our business. Additionally, errors, bugs, or other vulnerabilities may—either directly or if exploited by third parties—affect our ability to make accurate royalty payments.

We also could face claims for product liability, tort or breach of warranty. Defending a lawsuit, regardless of its merit, is costly and may divert management's attention and seriously harm our reputation and our business. In addition, if our liability insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business could be seriously harmed.

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***We rely upon the Amazon Web Services ("AWS") to operate certain aspects of our business and to store certain data, and any disruption of or interference with our use of the AWS could have a material adverse effect on our business, operating results, and financial condition.***

AWS provides a distributed computing infrastructure platform for business operations, or what is commonly referred to as a cloud computing service. We rely upon the AWS to operate certain aspects of our business and to store certain data. We may not be able to easily switch our AWS operations to another cloud provider, and any disruption of, or interference with, our use of AWS could have a material adverse effect on our business, operating results, and financial condition.

***Interruptions, delays or discontinuations in service arising from our own systems or from third parties could impair the delivery of our services and harm our business.***

We rely on systems housed in our own facilities and upon third parties, including bandwidth providers and third-party "cloud" data storage services, to enable our users to receive our content in a dependable, timely, and efficient manner. We have experienced and may in the future experience periodic service interruptions and delays involving our own systems and those of third parties that we work with. Both our own facilities and those of third parties are vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures, and similar events. They also are subject to break-ins, sabotage, intentional acts of vandalism, the failure of physical, administrative, technical, and cyber security measures, terrorist acts, natural disasters, human error, the financial insolvency of third parties that we work with, and other unanticipated problems or events. The occurrence of any of these events could result in interruptions in our services and to unauthorized access to, or alteration of, the content and data contained on our systems and that these third parties store and deliver on our behalf.

Any disruption in the services provided by these third parties could materially adversely impact our business reputation, customer relations, and operating results. Upon expiration or termination of any of our agreements with third parties, we may not be able to replace the services provided to us in a timely manner or on terms and conditions, including service levels and cost, that are favorable to us, and a transition from one third party to another could subject us to operational delays and inefficiencies until the transition is complete.

***We rely upon the Google Cloud Platform to operate certain aspects of our business and to store certain data, and any disruption of or interference with our use of the Google Cloud Platform could have a material adverse effect on our business, operating results, and financial condition.***

Google Cloud Platform ("GCP") provides a distributed computing infrastructure platform for business operations, or what is commonly referred to as a cloud computing service. We have designed our software and computer systems to utilize data processing, storage capabilities, and other services provided by GCP. Currently, we are in the process of transitioning all of our data storage (including personal data of users and content data licensed from rights holders) and computing from our own servers to GCP. We cannot easily switch our GCP operations to another cloud provider, and any disruption of, or interference with, our use of GCP could have a material adverse effect on our business, operating results, and financial condition. While the consumer side of Google competes with us, we do not believe that Google will use the GCP operation in such a manner as to gain competitive advantage against our Service. Subsequent to year end, we entered into a new service agreement with Google for the use of GCP.

***If we are unable to increase revenue from our services on mobile devices, such as smartphones, our results of operations may be materially adversely affected.***

Our business model with respect to monetization of our services on mobile and connected devices is still evolving. As users migrate away from personal computers, there is increasing pressure to monetize mobile. In all markets, we offer our ad-supported services on mobile, from which we generate advertising revenue. If we are unable to effectively monetize our services on mobile and connected devices, our business, operating results and financial condition may suffer.

***Negative media coverage could adversely affect our business.***

We receive important media coverage across the United States. Unfavorable publicity regarding, for example, payments to talent, publishers, artists and other copyright owners, our privacy practices, terms of service, service changes, service quality, litigation or regulatory activity, government surveillance, the actions of our advertisers, the actions of our developers whose services are integrated with our services, the use of our services for illicit, objectionable or illegal ends, the quality and integrity of content streamed on our services or the actions of other companies that provide similar services to us, could materially adversely affect our reputation. Such negative publicity also could have an adverse effect on the size, engagement and loyalty of our listener base and result in decreased revenue, which could materially adversely affect our business, operating results and financial condition.

***Our business depends on a strong brand, and any failure to maintain, protect and enhance our brand would hurt our ability to retain or expand our base of ad-supported users, premium subscribers and advertisers.***

We have developed a strong "PodcastOne" brand that we believe contributes and will contribute significantly to the success of our business. Maintaining, protecting and enhancing the "PodcastOne" brand is critical to expanding our listener base and advertisers, and will depend largely on our ability to continue to develop and provide an innovative and high-quality experience for our listeners and to attract advertisers, content owners, mobile device manufacturers, and other consumer electronic product manufacturers to work with us, which we may not do successfully. If we do not successfully maintain a strong brand, our business could be harmed.

Our brand may be impaired by a number of other factors, including any failure to keep pace with technological advances on our platform or with our services, slower load times for our services, a decline in the quality or quantity of the content available on our services, a failure to protect our intellectual property rights or any alleged violations of law, regulations, or public policy. Additionally, the actions of our developers, advertisers, and content partners may affect our brand if listeners do not have a positive experience using third-party applications or websites integrated with us or that make use of our content. Further, if our partners fail to maintain high standards for products that are integrated into our services, fail to display our trademarks on their products in breach of our agreements with them, or use our trademarks incorrectly or in an unauthorized manner, or if we partner with manufacturers of products that our listeners reject, the strength of our brand could be adversely affected.

We have historically been required to spend significant resources to establish and maintain our brand. If we are unable to maintain the growth rate in the number of our listener base, we may be required to expend greater resources on advertising, marketing and other brand-building efforts to preserve and grow consumer awareness of our brand, which would adversely affect our operating results and may not be effective.

Our trademarks, trade dress and other designations of origin are important elements of our brand. We have registered "PodcastOne" as a trademark in the United States. Nevertheless, competitors or other companies may adopt marks similar to ours, or use our marks and confusingly similar terms as keywords in Internet search engine advertising programs, thereby impeding our ability to build brand identity and possibly leading to confusion among our listeners. We cannot assure you that our trademark applications, even for key marks, will be approved. We may face opposition from third parties to our applications to register key trademarks in foreign jurisdictions in which we have expanded or may expand our presence. If we are unsuccessful in defending against these oppositions, our trademark applications may be denied. Whether or not our trademark applications are denied, third parties may claim that our trademarks infringe upon their rights. As a result, we could be forced to pay significant settlement costs or cease the use of these trademarks and associated elements of our brand in those or other jurisdictions. Doing so could harm our brand or brand recognition and adversely affect our business, financial condition and results of operation.

***We cannot assure you that we will be able to meet Nasdaq's initial listing requirements to consummate the Direct Listing, and Nasdaq may not permit our shares of common stock to be quoted on its exchange, which could limit investors' ability to make transactions in our securities and subject us to additional trading restrictions.***

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We anticipate that our securities will be listed on Nasdaq, a national securities exchange, upon consummation of the Direct Listing. Although, at the time of the Direct Listing we expect to meet Nasdaq's minimum initial listing standards, which generally only require that we meet certain requirements relating to stockholders' equity, market capitalization, aggregate market value of publicly held shares and distribution requirements, we cannot assure you that our securities will be, or will continue to be, listed on Nasdaq in the future. However, we cannot assure you that we will be able to meet those initial listing requirements at that time.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as "covered securities." Because we expect that our shares of common stock will be listed on Nasdaq, our shares of common stock will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. If we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities.

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***Our failure to meet the continued listing requirements of Nasdaq could result in a de-listing of our ordinary shares and penny stock trading.***

If our common stock is listed on The Nasdaq Capital Market and if we fail to satisfy the applicable continued listing requirements, Nasdaq may commence delisting procedures against our Company (during which we may have additional time of up to six months to appeal and correct our non-compliance). If our ordinary shares are ultimately delisted from Nasdaq, our ordinary shares would likely then trade only in the over-the-counter market and the market liquidity of our ordinary shares could be adversely affected and their market price could decrease. If our ordinary shares were to trade on the over-the-counter market, selling our ordinary shares could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity with respect to our securities; a determination that our shares are a "penny stock," which will require brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; a reduced amount of news and analyst coverage for our Company; and a decreased ability to issue additional securities or obtain additional financing in the future. These factors could result in lower prices and larger spreads in the bid and ask prices for our ordinary shares and would substantially impair our ability to raise additional funds and could result in a loss of institutional investor interest and fewer development opportunities for us.

In addition to the foregoing, if our ordinary shares are ultimately delisted from Nasdaq and they trade on the over-the-counter market, the application of the "penny stock" rules could adversely affect the market price of our ordinary shares and increase the transaction costs to sell those shares. The SEC has adopted regulations which generally define a "penny stock" as an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. If our ordinary shares are ultimately delisted from Nasdaq and then trade on the over-the-counter market at a price of less than $5.00 per share, our ordinary shares would be considered a penny stock. The SEC's penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and the salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules generally require that before a transaction in a penny stock occurs, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's agreement to the transaction. If applicable in the future, these rules may restrict the ability of brokers-dealers to sell our ordinary shares and may affect the ability of investors to sell their shares, until our ordinary shares no longer is considered a penny stock.

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***Our business emphasizes rapid innovation and prioritizes long-term user engagement over short-term financial condition or results of operations. That strategy may yield results that sometimes do not align with the market's expectations. If that happens, our stock price may be negatively affected.***

As our business grows and becomes more complex, our success will depend on our ability to quickly develop and launch new and innovative products. We believe our culture fosters this goal. Our focus on complexity and quick reactions could result in unintended outcomes or decisions that are poorly received by our users, advertisers, or partners. Our culture also prioritizes our long-term user engagement over short-term financial condition or results of operations. We frequently make decisions that may reduce our short-term revenue or profitability if we believe that the decisions benefit the aggregate user experience and will thereby improve our financial performance over the long-term. These decisions may not produce the long-term benefits that we expect, in which case, our user growth and engagement, our relationships with advertisers and partners, as well as our business, operating results, and financial condition could be seriously harmed.

***Podcast streaming depends on effectively working with third-party platforms, operating systems, online platforms, hardware, networks, regulations, and standards we do not control. Changes in our services or those operating systems, hardware, networks, regulations, or standards, and our limitations on our ability to access those platforms, operating systems, hardware or networks may seriously harm our business.***

Our services require high-bandwidth data capabilities. If the costs of data usage increase or access to data networks is limited, our business may be seriously harmed. Additionally, to deliver high-quality audio, video, and other content over networks, our services must work well with a range of technologies, systems, networks, regulations and standards that we do not control. In addition, the adoption of any laws or regulations that adversely affect the growth, popularity, or use of the Internet, including laws governing Internet neutrality, could decrease the demand for our Service and increase our cost of doing business. Previously, Federal Communications Commission (the "FCC") "open Internet rules" prohibited mobile providers in the United States from impeding access to most content, or otherwise unfairly discriminating against Content Providers like us. These rules also prohibited mobile providers from entering into arrangements with specific Content Providers for faster or better access over their data networks. However, on December 14, 2017, the FCC voted to repeal the "open Internet rules" and as a result, broadband services are now subject to less U.S. federal regulation. A number of parties have already stated they would appeal this order, and it Is possible United States Congress may adopt legislation restoring some of the "open Internet rules." If, as a result of the repeal of "open Internet rules," broadband providers in the United States decrease access to certain content, start entering into arrangements with specific Content Providers for faster or better access over their data networks, or otherwise unfairly discriminate against Content Providers like us, this could increase our cost of doing business and put us at a competitive disadvantage relative to larger competitors. Additionally, mobile providers may be able to limit our users' ability to access our platforms or make them a less attractive alternative to our competitors' applications. If that occurs, our business, operating results and financial condition would be seriously harmed.

The European Union (the "EU") currently requires equal access to Internet content. Additionally, as part of its Digital Single Market initiative, the EU may impose network security, disability access, or 911-like obligations on "over-the-top" services such as those provided by us, which could increase our costs. If the EU or the courts modify these open Internet rules, mobile providers may be able to limit our users' ability to access our platforms or make them a less attractive alternative to our competitors' applications. If that occurs, our business, operating results and financial condition would be seriously harmed.

We rely on a variety of operating systems, online platforms, hardware, and networks to reach our customers. These platforms range from desktop and mobile operating systems and application stores to wearables and intelligent voice assistants. The owners or operators of these platforms may not share our interests and may restrict our access to them or place conditions on access that would materially affect our ability to access those platforms. In particular, where the owner of a platform also is our direct competitor, the platform may attempt to use this position to affect our access to customers and ability to compete. For example, an online platform might arbitrarily remove our services from its platform, deprive us of access to business-critical data, or engage in other harmful practices. Online platforms also may unilaterally impose certain requirements that negatively affect our ability to convert users to the premium service, such as conditions that limit our freedom to communicate promotions and offers to our users. Similarly, online platforms may force us to use the platform's payment processing systems which may be inferior to and more costly than other payment processing services available in the market.

Online platforms frequently change the rules and requirements for services like ours to access the platform, and such changes may adversely affect the success or desirability of our services. Online platforms may limit our access to information about users, limiting our ability to convert and retain them. Online platforms also may deny access to application programming interfaces ("API") or documentation, limiting functionality of our services on the platform.

There can be no assurance that we will be able to comply with the requirements of those operating systems, online platforms, hardware, networks, regulations and standards on which our services depend, and failure to do so could result in serious harm to our business.

***If our security systems are breached, we may face civil liability, and public perception of our security measures could be diminished, either of which would negatively affect our ability to attract and retain, ad-supported users, advertisers, Content Providers and other business partners.***

Techniques used to gain unauthorized access to data and software are constantly evolving, and we may be unable to anticipate or prevent unauthorized access to data pertaining to our users, including credit card and debit card information and other personal data about our Users, business partners, and employees. Like all Internet services, our services, which are supported by our own systems and those of third parties that we work with, is vulnerable to software bugs, computer viruses, Internet worms, break-ins, phishing attacks, attempts to overload servers with denial-of-service, or other attacks and similar disruptions from unauthorized use of our and third-party computer systems, any of which could lead to system interruptions, delays, or shutdowns, causing loss of critical data or the unauthorized access to personal data. Computer malware, viruses, and computer hacking and phishing attacks have become more prevalent in our industry, have occurred on our systems in the past, and may occur on our systems in the future. As our business and brand reputation grow, we may become a particularly attractive target for such attacks. Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, any failure to maintain performance, reliability, security, and availability of our products and technical infrastructure to the satisfaction of our users may harm our reputation and our ability to retain existing users and attract new users. Although we have developed systems and processes that are designed to protect our data and user data, to prevent data loss, to disable undesirable accounts and activities on our platform, and to prevent or detect security breaches, we cannot assure you that such measures will provide absolute security, and we may incur significant costs in protecting against or remediating cyber-attacks.

In addition, if an actual or perceived breach of security occurs to our systems or a third party's systems, we may face regulatory or civil liability and public perception of our security measures could be diminished, either of which would negatively affect our ability to attract and retain Users, which in turn would harm our efforts to attract and retain advertisers, Content Providers and other business partners. We also would be required to expend significant resources to mitigate the breach of security and to address matters related to any such breach. We also may be required to notify regulators about any actual or perceived personal data breach (including the EU Lead Data Protection Authority) as well as the individuals who are affected by the incident within strict time periods.

Any failure, or perceived failure, by us to maintain the security of data relating to our users, to comply with our posted privacy policy, laws and regulations, rules of self-regulatory organizations, industry standards, and contractual provisions to which we may be bound, could result in the loss of confidence in us, or result in actions against us by governmental entities or others, all of which could result in litigation and financial losses, and could potentially cause us to lose Users, advertisers, and revenues. In Europe, European Data Protection Authorities could impose fines and penalties of up to 4% of annual global turnover or €20 million, whichever is higher, for a personal data breach.

***We are at risk of attempts at unauthorized access to our services, and failure to effectively prevent and remediate such attempts could have an adverse impact on our business, operating results, and financial condition. Unauthorized access to our services may cause us to misstate key performance indicators, which once discovered, corrected, and disclosed, could undermine investor confidence in the integrity of our key performance indicators and could cause our stock price to drop significantly.***

We have in the past been, and continue to be, impacted by attempts by third parties to manipulate and exploit our software for the purpose of gaining unauthorized access to our service. For example, we have detected instances of third parties seeking to provide mobile device users a means to suppress advertisements without payment and gain access to features only available to the ad-supported services. If in the future we fail to successfully detect and address such issues, it may have artificial effects on our key performance indicators, such as content hours, content hours per listener, which underlie, among other things, our contractual obligations with advertisers, as well as harm our relationship with them. This may impact our results of operations, particularly with respect to margins on our ad-supported segment, by increasing our ad-supported cost of sales without a corresponding increase to our ad-supported revenue, which could seriously harm our business.

***We are at risk of artificial manipulation of stream and download counts and failure to effectively manage and remediate such fraudulent streams could have an adverse impact on our business, operating results and financial condition. Fraudulent streams may cause us to overstate key performance indicators, which once discovered, corrected and disclosed, could undermine investor confidence in the integrity of our key performance indicators and could cause our stock price to drop significantly.***

We have in the past been, and continue to be, impacted by attempts by third parties to artificially manipulate stream counts. Such attempts may, for example, be designed to influence placement of content on PodcastOne podcasts. For example, an individual might generate fake listeners to listen to podcasts, thereby increasing their visibility on our or third-party charts. We use a combination of algorithms and manual review by employees to detect fraudulent streams. However, we may not be successful in detecting, removing and addressing all fraudulent streams (and any related user accounts). If in the future we fail to successfully detect, remove and address fraudulent streams and fake listeners, it may result in the manipulation of our data, including the key performance indicators which underlie, among other things, our contractual obligations with advertisers (which could expose us to the risk of litigation), as well as harm our relationships with advertisers and rights holders. In addition, once we detect, correct and disclose fraudulent streams and fake listeners and the key performance indicators they affect, investor confidence in the integrity of our key performance indicators could be undermined. These could have a material adverse impact on our business, operating results and financial condition.

***Our listener metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may seriously harm and negatively affect our reputation and our business.***

We regularly review key metrics related to the operation of our business to evaluate growth trends, measure our performance and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third party. While these numbers are based on what we believe to be reasonable estimates of our listener base for the applicable period of measurement, there are inherent challenges in measuring how our services are used across large populations globally. Errors or inaccuracies in our metrics or data could result in incorrect business decisions and inefficiencies.

In addition, advertisers generally rely on third-party measurement services to calculate our metrics, and these third-party measurement services may not reflect our true audience. Some of our demographic data also may be incomplete or inaccurate because listeners self-report their names and dates of birth. Consequently, the personal data we have may differ from our listeners' actual names and ages. If advertisers, partners, or investors do not perceive our listener, geographic or other demographic metrics to be accurate representations of our listener base, or if we discover material inaccuracies in our listener, geographic or other demographic metrics, our reputation may be seriously harmed, which could have an adverse impact on our business, operating results, and financial condition.

***Our business is subject to a variety of laws around the world. Government regulation of the Internet is evolving and any changes in government regulations relating to the Internet or other areas of our business or other unfavorable developments may adversely affect our business, operating result, and financial condition.***

We are a U.S.-based company that is registered under the laws of the State of Delaware, and with operations in certain countries and territories around the world. As a result of the scope of our operations, we are subject to a variety of laws in different countries. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting. It also is likely that if our business grows and evolves and our solutions are used more globally, we will become subject to laws and regulations in additional jurisdictions. It is difficult to predict how existing laws will be applied to our business and the new laws to which we may become subject.

We are subject to general business regulations and laws, as well as regulations and laws specific to the Internet. Such laws and regulations include, but are not limited to, labor, advertising and marketing, real estate, taxation, user privacy, data collection and protection, intellectual property, anti-corruption, anti-money laundering, foreign exchange controls, antitrust and competition, electronic contracts, telecommunications, sales procedures, automatic subscription renewals, credit card processing procedures, consumer protections, broadband Internet access and content restrictions. We cannot guarantee that we have been or will be fully compliant in every jurisdiction in which we are subject to regulation, as existing laws and regulations governing issues such as intellectual property, privacy, taxation, and consumer protection, among others, are constantly changing. The adoption or modification of laws or regulations relating to the Internet or other areas of our business could limit or otherwise adversely affect the manner in which we currently conduct our business. For example, certain jurisdictions have implemented or are contemplating implementing laws which may negatively impact our automatic renewal structure or our free or discounted trial incentives. Further, compliance with laws, regulations, and other requirements imposed upon our business may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business.

Moreover, as Internet commerce continues to evolve, increasing regulation by U.S. federal and state agencies and other international regulators becomes more likely and may lead to more stringent consumer protection laws, which may impose additional burdens on us. The adoption of any laws or regulations that adversely affect the popularity or growth in use of the Internet, including laws limiting Internet neutrality, could decrease user demand for our services and increase our cost of doing business. Future regulations, or changes in laws and regulations or their existing interpretations or applications, also could hinder our operational flexibility, raise compliance costs, and result in additional historical or future liabilities for us, resulting in material adverse impacts on our business, operating results and financial condition.

***We plan to expand into international markets in the 2024 fiscal year, which would subject us to risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to such markets, which could adversely affect our business, financial condition and results of operations.***

We intend to expand the international presence of our platform into various jurisdictions abroad by offering our platform directly to international users, as well as through joint ventures and partnerships. Accordingly, we expect to face additional risks in the case of our future international operations, including:

● political instability, adverse changes in diplomatic relations and unfavorable economic and business conditions in the markets in which we plan to have international operations or into which we may expand, particularly in the case of emerging markets;

● more restrictive or otherwise unfavorable government regulation of the podcasting and content broadcasting industries, which could result in increased compliance costs and/or otherwise restrict the manner in which we provide services and the amount of related fees charged for such services;

● limitations on the enforcement of our intellectual property rights;

● limitations on the ability of our foreign subsidiaries to repatriate profits or otherwise remit earnings;

● adverse tax consequences due both to the complexity of operating across multiple tax regimes as well as changes in, or new interpretations of, international tax treaties and structures;

● diminished ability to legally enforce our contractual rights in foreign countries;

● limitations on technology infrastructure, which could limit our ability to migrate international operations to a common platform;

● lower levels of internet usage and advertiser spending in comparison to those in the United States;

● difficulties in managing operations and adapting to consumer desires due to distance, language and cultural differences, including issues associated with (i) business practices and customs that are common in certain foreign countries but might be prohibited by United States law and our internal policies and procedures, and (ii) management and operational systems and infrastructures, including internal financial control and reporting systems and functions, staffing and managing of foreign operations, which we might not be able to do effectively or cost-efficiently; and

● fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies.

As we hope to expand into new markets these risks will be intensified and will have the potential to impact a greater percentage of our business and operating results. Our ability to expand our operations into new international jurisdictions will depend, in significant part, on our ability to identify potential acquisition candidates, joint venture or other partners, and enter into arrangements with these parties on favorable terms, as well as our ability to make continued investments to maintain and grow existing international operations. If the revenue generated by international operations is insufficient to offset expenses incurred in connection with the maintenance and growth of these operations, our business, financial condition and results of operations could be materially and adversely affected. In addition, in an effort to make international operations in one or more given jurisdictions profitable over the long term, significant additional investments that are not profitable over the short term could be required over a prolonged period.

In foreign countries in which we operate, a risk exists that our employees, contractors or agents could, in contravention of our policies, engage in business practices prohibited by applicable United States laws and regulations, such as the United States Foreign Corrupt Practices Act, as well as the laws and regulations of other countries prohibiting corrupt payments to government officials such as the United Kingdom Bribery Act 2010. We maintain policies prohibiting such business practices. Nevertheless, the risk remains that one or more of our employees, contractors or agents, including those based in or from countries where practices that violate such United States laws and regulations or the laws and regulations of other countries may be customary, as well as those associated with newly-acquired businesses, will engage in business practices that are prohibited by our policies, circumvent our compliance programs and, by doing so, violate such laws and regulations. Any such violations, even if prohibited by our internal policies, could result in fines, criminal sanctions against us and/or our employees, prohibitions on the conduct of our business and damage to our reputation, which could adversely affect our business, financial condition and results of operations.

***Our success depends, in significant part, on discretionary consumer and corporate spending on entertainment and factors adversely affecting such spending could have a material adverse effect on our business, financial condition and results of operations.***

Our business depends on discretionary consumer and corporate spending. Many factors related to discretionary consumer and corporate spending, including economic conditions affecting disposable consumer income such as employment, interest and tax rates and inflation can significantly impact our operating results. Business conditions, as well as various industry conditions, including corporate marketing and promotional spending and interest levels, can also significantly impact our operating results. These factors can affect advertising sales and sponsorship spending, as well as the financial results of sponsors of our content providers and the industry as a whole. Negative factors such as challenging economic conditions, public concerns over terrorism and security incidents, particularly when combined, can impact corporate and consumer spending, and one negative factor can impact our results more than another. There can be no assurance that consumer and corporate spending will not be adversely impacted by current economic conditions, or by any further or future deterioration in economic conditions, thereby possibly impacting our operating results and growth.

During past economic slowdowns and recessions, many consumers reduced their discretionary spending and advertisers reduced their advertising expenditures. In addition, a decline in attendance at or reduction in the number of live entertainment and leisure events may have an adverse effect on our revenue and operating income. The impact of economic slowdowns on our business is difficult to predict, but they may result in reductions in sponsorship and advertising opportunities and our ability to generate revenue. The risks associated with our businesses may become more acute in periods of a slowing economy or recession.

We are subject to governmental regulation, which may change from to time, and our failure to comply with these regulations could adversely affect our business, financial condition and results of operations.

Our operations are subject to federal, state and local laws, statutes, rules, regulations, policies and procedures, both domestically and internationally, which may change from time to time. Our failure to comply with these laws and regulations could result in fines and proceedings against us by governmental agencies and consumers, which if material, could adversely affect our business, financial condition and results of operations. In addition, the promulgation of new laws, rules and regulations could restrict or unfavorably impact our business, which could decrease demand for services, reduce revenue, increase costs and subject us to additional liabilities. From time to time, federal, state and local authorities and consumers commence investigations, inquiries or litigation with respect to our compliance with applicable consumer protection, advertising, unfair business practice, antitrust (and similar or related laws) and other laws. We may be required to incur significant legal expenses in connection with the defense of future governmental investigations and litigation.

Changes in laws or regulations that adversely affect the growth, popularity or use of the Internet, including regulations or decisions by the FCC impacting net neutrality, could decrease the demand for our service and increase our cost of doing business. See "— Changes in how network operators handle and charge for access to data that travel across their networks could adversely impact our business" below. Certain laws intended to prevent network operators from discriminating against the legal traffic that traverse their networks have been implemented in many countries, including the United States and the EU. In others, the laws may be nascent or non-existent. Given uncertainty around these rules, including changing interpretations, amendments or repeal, coupled with potentially significant political and economic power of local network operators, we could experience discriminatory or anti-competitive practices that could impede our growth, cause us to incur additional expense or otherwise negatively affect our business.

***We depend upon third-party licenses for sound recordings and an adverse change to, loss of, or claim that we do not hold any necessary licenses may materially adversely affect our business, operating results and financial condition.***

With respect to podcasts and other non-music content, we produce or commission the content itself or obtain distribution rights directly from rights holders. In the former scenario, we employ various business models to create original content. In the latter scenario, we negotiate licenses directly with individuals that enable creators to post content directly to our service after agreeing to comply with the applicable terms and conditions. We are dependent on those who provide content on its service complying with the terms and conditions of its license agreements as well as the PodcastOne Terms and Conditions of Use (the "Terms and Conditions of Use"). However, we cannot guarantee that rights holders or content providers will comply with their obligations, and such failure to do so may materially impact its business, operating results, and financial condition.

There is also no guarantee that we have all of the licenses it needs to stream content, as the process of obtaining such licenses involves many rights holders, some of whom are unknown, and myriad complex legal issues across many jurisdictions, including open questions of law as to when and whether particular licenses are needed. Additionally, there is a risk that rights holders, creators, performers, writers and their agents, or societies, unions, guilds, or legislative or regulatory bodies will create or attempt to create new rights or regulations that could require PodcastOne to enter into license agreements with, and pay royalties to, newly defined groups of rights holders, some of which may be difficult or impossible to identify.

Even when we are able to enter into license agreements with rights holders, it cannot guarantee that such agreements will continue to be renewed indefinitely. For example, from time to time, our license agreements with certain rights holders and/or their agents expire while we negotiate their renewals and, per industry custom and practice, we may enter into brief (for example, month-, week-, or even days-long) extensions of those agreements or provisional licenses and/or continue to operate on an at will basis as if the license agreement had been extended, including by our continuing to make content available. During these periods, we may not have assurance of long-term access to such rights holders' content, which could have a material adverse effect on its business and could lead to potential copyright infringement claims.

It is also possible that such agreements will never be renewed at all. The lack of renewal, or termination, of one or more of our license agreements, or the renewal of a license agreement on less favorable terms, could have a material adverse effect on its business, financial condition, and results of operations.

***We cannot predict the impact of the COVID-19 virus on our customers and other business partners, and the full effects of the COVID-19 virus are highly uncertain and cannot be predicted.***

The COVID-19 virus is partially affecting our revenue, sponsorship and advertiser partners and other business partners, and we are not able to assess the full extent of the current impact nor predict the ultimate consequences that will result therefrom. For example, during our 2022 and 2021 fiscal years, as a result of the COVID-19 pandemic, certain of our advertising and sponsor partners were forced to reduce their marketing budgets. If our revenue and/or sales channels are substantially impaired for an extended period of time, our revenues will be materially reduced.

We are continuously monitoring our own operations and intend to take appropriate actions to mitigate the risks arising from the COVID-19 pandemic to the best of our abilities, but there can be no assurances that we will be successful in doing so. To the extent we are able to obtain information about and maintain communications with our revenue, sponsorship and advertiser partners, vendors and other business partners, we will seek to minimize disruptions to our revenue, content and distribution channels, but many circumstances will be beyond our control. Governmental action and/or regional quarantines may further result in labor shortages and work stoppages. All of these factors may have far reaching direct and indirect impacts on our business, operations, and financial results and condition. The ultimate extent of the effects of the COVID-19 pandemic on our Company is highly uncertain and will depend on future developments which cannot be predicted. Even after the COVID-19 outbreak has subsided, we may continue to experience material adverse impact on our business as a result of its global economic impact, including any related recession, as well as lingering impact on demand for our services, our customers, suppliers, vendors and other business partners.

***Government proposed COVID-19 vaccine mandates could have a material adverse impact on our business and results of operations.***

On November 5, 2021, the U.S. Department of Labor's Occupational Safety and Health Administration ("OSHA") issued an Emergency Temporary Standard ("ETS") requiring that most employers with at least 100 employees ensure that their employees are fully vaccinated for COVID-19 or require employees to obtain a negative COVID-19 test at least once a week. On January 25, 2022, OSHA withdrew the ETS, although the agency did not withdraw the ETS as a proposed rule. OSHA clarified that it is prioritizing its resources to focus on finalizing a permanent COVID-19 Healthcare Standard. If the ETS is reissued or a new COVID-19 Healthcare Standard or similar standard is issued by OSHA, as a company with more than 100 employees, such standard(s) would require us to mandate COVID-19 vaccination of our workforce or have our unvaccinated employees undergo required weekly COVID-19 testing, which could be difficult and costly. Further, additional vaccine and testing mandates may be announced in jurisdictions in which we operate our business, and there could be potential conflict with actions by certain states that are in conflict with the federal mandate, the impacts of which remain uncertain. Requirements to mandate COVID-19 vaccination of our workforce or require our unvaccinated employees to be tested weekly could result in labor disruptions, employee attrition and difficulty securing future labor needs, and could have a material adverse effect on our revenues, costs, financial condition and results of operations.

**Risks Related to Our Company**

***We will incur significant increased costs if and when we become a public company.***

Should we become a public company, we will incur significant legal, accounting and other expenses. Following the Direct Listing, we will be subject to mandatory reporting requirements of the Exchange Act, which require, among other things, that we file with the SEC annual, quarterly and current reports with respect to our business and financial condition. We will continue to incur costs associated with the preparation and filing of these SEC reports. Furthermore, we will be subject to additional corporate governance and other compliance requirements if our shares of common stock are listed on The Nasdaq Capital Market. In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act and The Nasdaq Capital Market have imposed various other requirements on public companies. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact (in ways we cannot currently anticipate) the manner in which we operate our business. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have and will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we will incur additional expense to increase our director and officer liability insurance. We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.

***As a result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common stock.***

We are required pursuant to Section 404 of the Sarbanes-Oxley Act ("Section 404") to furnish a report on internal control over financial reporting issued by management on, among other things, the effectiveness of our internal control over financial reporting on an annual basis. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Such a report is provided as part of the consolidated financial statements included in this Direct Listing. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

In addition, if and when we cease to be a smaller reporting company and become subject to Section 404(b) of the Sarbanes-Oxley Act, we will be required to furnish an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To remain in compliance with Section 404, we will continue to be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to dedicate substantially greater internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that our independent registered public accounting firm, when required, will not be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

 ***For the years ended March 31, 2022 and 2021, PodcastOne's management concluded that PodcastOne's disclosure controls and procedures and PodcastOne's internal control over financial reporting were not effective due to the existence of material weaknesses in PodcastOne's internal control over financial reporting during such periods. If PodcastOne is unable to establish and maintain effective disclosure controls and internal controls over financial reporting, its ability to produce accurate financial statements on a timely basis or prevent fraud could be impaired, and the market price of our securities may be negatively affected.***

Effective internal controls over financial reporting are necessary for PodcastOne's to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet PodcastOne's reporting obligations. In addition, any testing by PodcastOne conducted in connection with Section 404, or the subsequent testing by its independent registered public accounting firm, if and when required, may reveal additional deficiencies in its internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. For PodcastOne's fiscal years ended March 31, 2022 and 2021, PodcastOne's management conducted an assessment of its disclosure controls and procedures and its internal control over financial reporting and concluded that they were ineffective for each of such periods, due to the existence of certain material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis.

In connection with the preparation of PodcastOne's consolidated financial statements for the year ended March 31, 2022 and 2021, management identified material weaknesses in the following: PodcastOne's controls related to the preparation of the financial statements were not adequately designed to ensure the accuracy and completeness of amounts and disclosures and the classification between current and noncurrent liabilities; and management's identification of and accounting for significant and unusual transactions, specifically accounting for business combinations, including push down accounting.

If PodcastOne is unable to establish and maintain proper and effective disclosure controls and procedures and internal control over financial reporting, it may not be able to produce timely and accurate financial statements.

 ***We may face litigation and other risks as a result of the restatement of our previously issued financial statements and related matters.***

On July 1, 2020, LiveOne's wholly owned subsidiary, LiveXLive PodcastOne, Inc., acquired 100% of the equity interests of our Company for net consideration of $16.1 million consisting of 5,363,636 shares of LiveOne's common stock with a fair value of $14.6 million, contingent consideration with a fair value of $1.1 million and an additional true-up of 203,249 shares of LiveOne's common stock during the third quarter of fiscal 2021 valued at $0.4 million, that was issued as part of the final purchase price consideration. As a result, LiveOne pushed down the contingent consideration to us on the date of acquisition in the amount of $1.1 million to our financial statements and booked the marked to market change in value at each reporting period. It was subsequently determined that in accordance with ASC 805-50-30-12 the liability for the contingent consideration should not have been pushed down as it was an obligation of LiveOne.

We have evaluated the financial statement impact in each of the previously filed reporting periods affected, and concluded that the correction of the error in the accounting for contingent consideration is quantitatively material to our previously filed financial statements. As discussed in Note 3 – Restatement of Prior Financial Information to our consolidated financial statements included elsewhere in this prospectus, we have restated our previously issued financial statements as of March 31, 2022 and 2021 and for the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021 (Successor), in accordance with Accounting Standards Codification ("ASC") Topic 250, *Accounting Changes and Error Corrections*.

As a result of the restatement, we may face the potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws or other claims arising from the restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements. As of the date of this prospectus, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition.

If in the future PodcastOne identifies new material weaknesses in its internal control over financial reporting, including in any companies that we may acquire in the future, if PodcastOne is unable to comply with the requirements of Section 404 in a timely manner or assert that its internal control over financial reporting is effective, or if and when applicable, PodcastOne's independent registered public accounting firm is unable to express an opinion as to the effectiveness of its internal control over financial reporting, investors may lose confidence in the accuracy and completeness of its financial reports and the market price of its common stock could be negatively affected, and PodcastOne could become subject to investigations by the stock exchange on which its securities are then listed, the SEC, or other regulatory authorities, which could require additional financial and management resources. Inferior internal controls could also cause investors to lose confidence in PodcastOne's reported financial information, which could have a negative effect on the trading price of its common stock.

To address PodcastOne's material weaknesses, PodcastOne has added personnel as well as implemented new financial systems and processes. PodcastOne intends to continue to take steps to remediate the material weaknesses described above through hiring additional qualified accounting and financial reporting personnel, and further evolving our accounting processes. PodcastOne will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time. Furthermore, PodcastOne cannot assure you that the measures it has taken to date, and actions it may take in the future, will be sufficient to remediate the control deficiencies that led to its material weaknesses in its internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. PodcastOne's current controls and any new controls that it develops may become inadequate because of changes in conditions in our business. Further, weaknesses in PodcastOne's disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm PodcastOne's operating results or cause it to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.

***We heavily depend on relationships with our content providers and other industry stakeholders and adverse changes in these relationships, could adversely affect our business, financial condition and results of operations.***

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Our business is particularly dependent upon personal relationships, as executives within entertainment companies such as ours leverage their network of relationships with Content Providers and other Industry Stakeholders to secure the rights to their content and develop other partnerships that are critical to our success. Due to the importance of those industry contacts, the loss of any of these relationships, and adverse changes in these relationships could adversely affect our business, financial condition and results of operations. We can give no assurance that all or any of these Content Providers or other Industry Stakeholders will retain their associations with us or our executives, directors, employees or other individual service providers. Additionally, to the extent the decision makers of our Content Providers are replaced with individuals with whom our executives, directors or other key personnel do not have relationships, our competitive position and financial condition could be harmed.

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***We may incur substantially more debt or take other actions that would intensify the risks discussed in this prospectus regarding our and/or LiveOne/s indebtedness.***

In addition to LiveOne's current outstanding debt and notes and our Bridge Notes, we and our subsidiaries may incur substantial additional debt, subject to restrictions contained in LiveOne's and our existing and future debt instruments, some or all of which may be secured debt. The senior credit facility contains certain restrictive covenants that limit our ability to merge with other companies or consummate certain changes of control, make certain investments, pay dividends or repurchase shares of our common stock, transfer or dispose of assets or enter into various specified transactions. We therefore may not be able to engage in any of the foregoing transactions unless we obtain the consents of our senior lenders or terminate our existing debt agreements. The senior credit facility also contain certain covenants, including maintaining a minimum amount of cash at all times and are secured by substantially all of LiveOne's and our Company's and LiveOne's and our respective subsidiaries' assets. Please see more under "Risks Related to Our Relationship with LiveOne and its Indebtedness."

***We may not have sufficient cash flow from our business operations to make payments on our indebtedness.***

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt and/or obtaining additional equity capital on terms that may be onerous or highly dilutive. In the event of an acceleration of amounts due under our debt instruments as a result of an event of default, including upon the occurrence of an event that would reasonably be expected to have a material adverse effect on our business, operations, properties, assets or condition or a failure to pay any amount due, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments. There is no guarantee that we will be able to generate sufficient cash flow or sales to meet the financial covenants or pay the principal and interest under our debt agreements or to satisfy all of the financial covenants. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. Capital markets have been volatile in the recent past; a downturn could negatively impact our ability to access capital should the need arise. As a result, the inability to meet our debt obligations could cause us to default on those obligations. Any such defaults could materially harm our financial condition and liquidity.

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***We rely on key members of our management and the loss of their services or investor confidence in them could adversely affect our success, development and financial condition.***

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Our success depends, to a large degree, upon certain key members of our management, particularly Kit Gray, our President, Robert Ellin, our Executive Chairman, Aaron Sullivan, our Interim Chief Financial Officer, and Sue McNamara, our Head of Sales. Mr. Gray has extensive knowledge about our business and our operations, and the loss of Mr. Gray, Mr. Ellin, Mr. Sullivan or Ms. McNamara or any other key member of our senior management would likely have a material adverse effect on our business and operations. We do not currently maintain a key-person insurance policy for Mr. Gray or any other member of our management. Our executive team's expertise and experience in acquiring, integrating and growing businesses, particularly those focused on podcasts and Content Providers, have been and will continue to be a significant factor in our growth and ability to execute our business strategy. The loss of any of our executive officers could slow the growth of our business or have a material adverse effect on our business, results of operations and financial condition.

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***Unfavorable outcomes in legal proceedings may adversely affect our business, financial conditions and results of operations.***

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Our results may be affected by the outcome of future litigation. Unfavorable rulings in our legal proceedings may have a negative impact on us that may be greater or smaller depending on the nature of the rulings. In addition, from time to time in the future we may be subject to various claims, investigations, legal and administrative cases and proceedings (whether civil or criminal) or lawsuits by governmental agencies or private parties, including as described in the immediately preceding risk factor. If the results of such investigations, proceedings or suits are unfavorable to us or if we are unable to successfully defend against third party lawsuits, we may be required to pay monetary damages or may be subject to fines, penalties, injunctions or other censure that could have a material adverse effect on our business, financial condition and results of operations. For example, please see more under "⸺ If LiveOne does not comply with the provisions of its senior credit facility, its senior lender may terminate its obligations to LiveOne and require LiveOne and/or us to repay all outstanding amounts owed thereunder." Even if we adequately address the issues raised by an investigation or proceeding or successfully defend a third-party lawsuit or counterclaim, we may have to devote significant financial and management resources to address these issues, which could harm our business, financial condition and results of operations.

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***Our quarterly operating results may be volatile and are difficult to predict in the future, and our stock price may decline if we fail to meet the expectations of securities analysts or investors.***

Our revenue, margins and other operating results could vary significantly in the future from quarter-to-quarter and year-to-year and may fail to match our past performance due to a variety of factors, including many factors that are outside of our control, including, our holding, promoting and managing our podcasting. Factors that may contribute to the variability of our operating results and cause the market price of our common stock to fluctuate include:

● the entrance of new competitors or competitive services in our market, including consolidation among competitors, customers or vendors,

● our ability to retain and grow the number of our user base and increase engagement among new and existing users;

● our revenue mix, which drives gross profit;

● the timing of the launch of our new or updated podcasts, services or features;

● the addition or loss of popular content;

● the popularity of podcasts and specifically our podcast content;

● announcements or planned introductions of new podcasts, services, functionality and products by us or our competitors;

● significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform; and

● an increase in costs associated with protecting our intellectual property, defending against third-party intellectual property infringement allegations or procuring rights to third-party intellectual property.

***We may not be able to attract qualified personnel.***

Our ability to expand operations to accommodate our anticipated growth will depend on our ability to attract and retain qualified personnel. However, competition for the types of employees we seek is intense. We may face particular challenges in recruiting and retaining personnel who have experience in talent acquisition, marketing, sales, production, development, operations and other technical expertise, in the podcast industry, which is critical to our initiatives. Our ability to meet our business development objectives will depend in part on our ability to recruit, train and retain top quality personnel with advanced skills who understand our technology and business. We cannot provide any assurance that we will be able to attract qualified personnel to execute our business strategies or develop and expand our online properties. If we are unable to engage and retain the necessary personnel, our business may be materially and adversely affected.

Additionally, we expect to retain the existing managers and executives of certain companies we acquire to have them continue managing and operating the acquired business. We believe that these individuals will have the market expertise and network of personal relationships to best implement the growth strategies of the acquired businesses. If we are unable to retain the key personnel of the acquired businesses, we may not be able to achieve the anticipated benefits and synergies of an acquisition.

***We engage a number of consultants to work for us. If the consultants that we utilize are characterized as employees and if we are deemed to be delinquent in our payroll taxes or incur other employment-related liabilities with respect to those consultants, we and our management team could incur significant liabilities.***

We engage a number of consultants to work for us in various aspects of our business. Although we believe that the consultants that we utilize in our business, as is customary to do so in our business, are properly characterized as independent contractors, tax or other regulatory authorities may in the future challenge our characterization of independent contractors. We are aware of a number of judicial decisions and legislative proposals that could bring about major reforms in worker classification, including the California legislature's recent passage of California Assembly Bill 5 ("AB 5"). AB 5 purports to codify a new test for determining worker classification that is widely viewed as expanding the scope of employee relationships and narrowing the scope of independent contractor relationships. Given AB 5's recent passage, there is no guidance from the regulatory authorities charged with its enforcement, and there is a significant degree of uncertainty regarding its application. In addition, AB 5 has been the subject of widespread national discussion and it is possible that other jurisdictions, including New York, may enact similar laws. If such regulatory authorities or state, federal or foreign courts were to determine that our recording artists and songwriters are employees, and not independent contractors, we would be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes and to pay unemployment and other related payroll taxes. We would also be liable for unpaid past taxes and subject to penalties. As a result, any determination that our consultants are our employees could have a material adverse effect on our business, financial condition and results of operations. In addition to the taxes that we would be required to pay if we were required to remit payroll taxes for our consultants, and the payments that we would be required to make for other employment-related obligations, our operations would be severely disrupted and individual officers or members of our board of directors could be personally liable for certain of any assessments made. A government entity could potentially shut down our operations until such time as the payroll taxes were brought current. Such a shutdown could effectively push us into bankruptcy and an investor could lose all his or her investment in us.

***Rising inflation may adversely affect us by increasing costs of labor, equipment and other costs beyond what we can recover through price increases.***

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Inflation can adversely affect us by increasing the costs of labor, technology, equipment and other costs required to operate and grow our business. The United States is experiencing high levels of inflation, which may depress consumer demand for our services and reduce our profitability if we are unable to raise prices enough to keep up with increases in our costs. Inflationary pressures have resulted in increases in salaries and the cost of certain equipment and technology necessary for the production of our services, and such increases may continue to impact us in the future. Accordingly, we are exposed to risks associated with significant levels of cost inflation. If we are unable to increase our prices to offset the effects of inflation, our business, operating results, and financial condition could be materially and adversely affected.

***Our corporate culture has contributed to our success, and if we cannot successfully maintain our culture as we assimilate new employees, we could lose the innovation, creativity and teamwork fostered by our culture.***

We are undergoing growth in our business, including in our employee headcount. A significant portion of our management team has been with us since inception. We expect that significant additional hiring will be necessary to support our strategic plans. This rapid influx of new team members from different business backgrounds may make it difficult for us to maintain our corporate culture. We believe our culture has contributed significantly to our ability to attract and retain talent, to acquire podcast content and to innovate and grow successfully. If our culture is negatively affected, our ability to support our growth and innovation may diminish.

**Risks Related to Our Relationship with LiveOne and its Indebtedness**

***LiveOne's debt agreements contain restrictive and financial covenants that may limit our operating flexibility, and LiveOne's substantial indebtedness may limit cash flow available to us to invest in the ongoing needs of our business.***

LiveOne has a significant amount of indebtedness. Its total outstanding consolidated indebtedness as of December 31, 2022 was $30.2 million, net of fees and discounts, of which approximately $21.0 million was exchanged for shares of LiveOne's Series A Preferred Stock in February 2023. While LiveOne has certain restrictions and covenants with its current indebtedness, it could in the future incur additional indebtedness beyond such amount. LiveOne's existing debt agreements with senior facility lender contain certain restrictive covenants that limit our ability to merge with other companies or consummate certain changes of control, make certain investments, pay dividends or repurchase shares of our common stock, transfer or dispose of assets, or enter into various specified transactions. We therefore may not be able to engage in any of the foregoing transactions unless we obtain the consent of LiveOne's senior secured lender or LiveOne terminates its existing debt agreements. LiveOne's debt agreements also contain certain financial covenants, including maintaining a minimum cash amount at all times and achieving certain financial covenants and are secured by substantially all of our assets. There is no guarantee that LiveOne and our Company will be able to generate sufficient cash flow or sales to meet the financial covenants or pay the principal and interest under LiveOne's debt agreements or to satisfy all of the financial covenants. We may also incur significant additional indebtedness in the future.

LiveOne's substantial debt combined with our other financial obligations and contractual commitments could have other significant adverse consequences, including:

● requiring LiveOne to dedicate a substantial portion of cash flow from operations to the payment of interest on, and principal of, our debt, which will reduce the amounts available to fund working capital, capital expenditures, product development efforts and other general corporate purposes;

● increasing its vulnerability to adverse changes in general economic, industry and market conditions;

● obligating LiveOne to restrictive covenants that may reduce its ability to take certain corporate actions or obtain further debt or equity financing;

● limiting its flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and

● placing LiveOne at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.

LiveOne intends to satisfy its current and future debt service obligations with its and our existing cash and cash equivalents and marketable securities and funds from external sources, including equity and/or debt financing. However, LiveOne and/or our Company may not have sufficient funds or may be unable to arrange for additional financing to pay the amounts due under LiveOne's existing debt. Funds from external sources may not be available on acceptable terms, if at all. In the event of an acceleration of amounts due under our debt instruments as a result of an event of default, including upon the occurrence of an event that would reasonably be expected to have a material adverse effect on our business, operations, properties, assets or condition or a failure to pay any amount due, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments.

 ***LiveOne may not have the ability to repay the amounts then due under its senior credit facility at maturity.***

At maturity the entire outstanding principal amount of LiveOne's senior secured facility will become due and payable by it. As of March 10, 2023, none is due in fiscal 2024 and $7.0 million of its total indebtedness is due in fiscal 2025. LiveOne's failure to repay any outstanding amount of its senior credit facility would constitute a default under such facility. A default would increase the interest rate to the default rate under the senior credit facility or the maximum rate permitted by applicable law until such amount is paid in full. A default under the senior credit facility could also lead to a default under agreements governing LiveOne's and/or our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, LiveOne and our Company may not have sufficient funds to repay LiveOne's senior credit facility or make cash payments thereon. Furthermore, upon the occurrence and during the continuation of any event of default, the senior lender shall have the right to, among other things, take possession of LiveOne's, our and LiveOne's and our respective subsidiaries' assets and property constituting the collateral thereunder and the right to assign, sell, lease or otherwise dispose of all or any part of the collateral. Please also see above under the risk factor captioned "⸺ If LiveOne does not comply with the provisions of its senior credit facility, its senior lender may terminate its obligations to LiveOne and require LiveOne and/or us to repay all outstanding amounts owed thereunder," for potential consequences if an event of default is triggered as a result of LiveOne's default under its settlement agreement with SX.

 ***We will be a "controlled company" within the meaning of the corporate governance standards of The Nasdaq Capital Market as a result of the completion of the Spin-Out. As a result, we will qualify for, but do not currently intend to rely on exemptions from corporate governance standards, and accordingly, we intend for you to have the same protections afforded to stockholders of companies that are not a "controlled company" and are subject to all corporate governance requirements of The Nasdaq Capital Market.***

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So long as more than 50% of the voting power for the election of our directors is held by an individual, a group or another company, we will qualify as a "controlled company" under listing requirements of The Nasdaq Capital Market. After the completion of the Spin-Out, LiveOne will continue to beneficially hold a majority of our outstanding common stock and voting power. As a result, after the completion of the Spin-Out, we will be a "controlled company" under The Nasdaq Capital Market rules. As a controlled company, we are exempt from certain Nasdaq corporate governance requirements, however, we do not currently intend to rely on such exemptions. Accordingly, upon the completion of the Spin-Out, we intend for our board of directors to have a majority of independent directors and the compensation committee and nominating committee of our board of directors to be comprised entirely of independent directors, and ensure that the compensation of our executive officers and nominees for directors are determined by or recommended to our board of directors by the independent members of our board of directors. To the extent we rely on one or more of these exemptions, holders of our common stock will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of The Nasdaq Capital Market.

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***We may have conflicts of interest with LiveOne and, because of (i) certain provisions in our Amended and Restated Certificate of Incorporation relating to related person transactions and corporate opportunities, (ii) agreements we have and will enter into with LiveOne in connection with the Direct Listing, and (iii) LiveOne's controlling beneficial ownership interest in our Company, we may not be able to resolve such conflicts on terms favorable to us.***

Conflicts of interest may arise between LiveOne and us in a number of areas relating to our ongoing relationship. Potential conflicts of interest that we have identified include the following:

● Certain of our directors and management may have conflicts of interest. Robert Ellin and our director nominees, Ramin Arani, Jay Krigsman and Craig Foster, serve as both our directors and as a director of LiveOne. Robert Ellin, our Executive Chairman, and Aaron Sullivan, our Interim Chief Financial Officer, serve both as our and LiveOne's senior management. Such directors and officers owe fiduciary duties to our company pursuant to Delaware law, but these relationships could create, or appear to create, conflicts of interest when these persons are faced with decisions with potentially different implications for LiveOne and us.

● Sale of shares of our common stock. LiveOne may decide to sell all or a portion of our shares that it holds in the public markets and/or to a third party, including to one of our competitors, thereby possibly depressing the trading price of our common stock and/or giving that third-party substantial influence over our business and our affairs. Such a sale could be in conflict with your interests.

● Developing business relationships with LiveOne's competitors. We may from time to time partner with, obtain advertising revenue from and/or sell to a number of companies that compete with LiveOne. These companies may be less willing or unwilling to develop and maintain relationships with us, and may favor our competitors or may view us as competitors, because of our relationship with LiveOne.

● Allocation of business opportunities. Business opportunities may arise that both we and LiveOne find attractive, and which would complement our businesses. We may be prevented from taking advantage of new business opportunities that LiveOne has entered into. Furthermore, our Amended and Restated Certificate of Incorporation will provide that, until the later of (i) first date on which LiveOne ceases to beneficially own 20% or more of our outstanding shares of common stock and (ii) the date upon which none of our officers and/or directors are also officers and/or directors of LiveOne, (x) we will waive any interest or expectancy in potential transactions presented to our directors and officers who are also directors and/or officers of LiveOne unless expressly offered to such person in his or her capacity as our director and/or officer, as applicable, and (y) LiveOne shall have the right to, and shall have no duty not to, engage in the same or similar business activities or lines of business as we do, do business with any of our clients or customers, and employ or otherwise engage any of our officers or employees. See "Description of Capital Stock — Provisions of Our Amended and Restated Certificate of Incorporation Relating to Related Person Transactions and Corporate Opportunities." We may therefore not be entitled to, and LiveOne may be entitled to, pursue business opportunities which may otherwise be appropriate for us.

● LiveOne will continue to beneficially hold a majority of our common stock (including voting power), and we and LiveOne expect to continue as strategic partners, collaborating on projects to pursue the growth of streaming and podcasting sectors. LiveOne may from time to time make strategic decisions that it believes are in the best interests of its business as a whole, including our company. These decisions may be different from the decisions that we would have made on our own. LiveOne's decisions with respect to us or our business, including any related party transactions between LiveOne and us, may be resolved in ways that favor LiveOne and its stockholders, which may not coincide with the interests of our other stockholders.

**Risks Related to Technology and Intellectual Property**

***We rely on integrations with advertising platforms, demand-side platforms ("DSPs"), proprietary platforms and ad servers, over which we exercise very little control.***

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Our business depends on our ability to integrate our content with a variety of third-party advertising platforms, DSPs, proprietary platforms and ad services. We are able to make our podcasts available on other popular podcasting platforms such as Apple, Amazon, Spotify and wherever podcasts are heard, allowing our listeners to utilize such platforms to listen to our podcasts. We have also formed partnerships with advertising platforms to integrate our podcasts with their software and product offerings, allowing our advertisers to utilize our solutions wherever they purchase or place an ad. For example, we rely on integration with Apple and Spotify in order to provide our podcasts through their platforms. Apple or Spotify may determine to only host shows that are proprietary to them, which would have a significant effect on our ability to offer our podcasts to larger group of listeners and would materially adversely affect our business, results of operations and financial condition. Some of these integration partners have significant market share in the segment in which they operate. To date, we have relied on written contracts and other arrangements to govern our relationships with these partners. However, these are subject to change by such providers from time to time and in many instances the provider may choose to terminate these contracts without cause and with short notice periods. Many of these agreements are short term with automatic renewal provisions, and there can be no assurances that such providers will agree to renew their agreements with us. Moreover, such providers may choose to stop integrating with our podcasts and may unilaterally stop providing us with data necessary to our business if they acquire a competitor which provides podcasting services similar to ours or if they begin to deliver podcasts similar to ours on their own. We cannot assure you that our existing podcast partners and integration partners will continue to, or that potential new podcast partners or integration partners will agree to, integrate our podcasts into their podcast offerings or services. Such integrations may not be replaceable, and so loss of any such integrations could materially impact our business and our results of operations and we may lose listeners.

Our business and revenues could also be affected by social issues or disruptions. For example, if there is public disapproval or boycotting of a specific podcasting platform, such as Spotify or other podcasting platform, our ability to optimize ad placement or to forecast listener metrics may be impacted based on unforeseen trends or events.

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***We rely heavily on technology to distribute content and manage other aspects of our operations, and the failure of this technology to operate effectively could adversely affect our business.***

We utilize a combination of proprietary and third-party technology. Our business substantially depends on advertising revenue and is supported by our PodcastOne App which offers users access to our podcasts on their favorite device. We cannot be sure that the PodcastOne App or any enhancements or other modifications we make in the future to such apps will, perform as intended or otherwise be of value to our users. Future enhancements and modifications to our technology could consume considerable resources. If we are unable to successfully develop, maintain and enhance our technology to manage the distribution of podcasts in a timely and efficient manner, our ability to attract and retain users may be impaired. In addition, if our technology or that of third parties we utilize in our operations fails or otherwise operates improperly, our ability to attract and retain users may be impaired. Also, any harm to our users' personal computers or mobile devices caused by software used in our operations could have an adverse effect on our business, results of operations and financial condition.

***We may be unable to adequately protect our intellectual property rights.***

We may be unable to detect unauthorized use of, or otherwise sufficiently protect, our intellectual property rights. We rely on a combination of laws and contractual restrictions with employees, individual service providers, users, artists, suppliers and others content licensors and Content Providers to establish and protect these proprietary rights. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use proprietary information, trademarks, or copyrighted material without authorization which, if discovered, might require legal action to correct. Furthermore, assets we may acquire in connection with any future acquisitions (including brand names and trademark rights), may have been improperly adopted or inadequately protected prior to our acquisitions of them. This could include failures to obtain assignments of ownership or confidentiality agreements from third parties, failures to clear use of trademarks, or other failures to protect trademarks and other proprietary rights. In addition, third parties may independently and lawfully develop similar intellectual property or duplicate our services.

We will apply to register, or secure by contract when appropriate, our trademarks and service marks as they are developed and used and reserve and register domain names as we deem appropriate. While we intend to vigorously protect our trademarks, service marks and domain names as we deem appropriate, effective trademark protection may not be available or may not be sought in every country in which we operate, and contractual disputes may affect the use of marks governed by private contract. Similarly, not every variation of a domain name may be available or be registered, even if available. Our failure to protect our intellectual property rights in a meaningful manner or challenges to related contractual rights could result in the erosion of brand names or the loss of rights to our owned or licensed marks and limit our ability to control marketing on or through the Internet using our various domain names or otherwise, which could adversely affect our business, financial condition, and results of operations. In addition, the loss of, or inability to otherwise obtain, rights to use third party trademarks and service marks, including the loss of exclusive rights to use third party trademarks in territories where we present festivals, could adversely affect our business or otherwise result in competitive harm.

We currently own the www.podcastone.com domain name. Internet regulatory bodies generally regulate domain names. If we lose the ability to use a domain name in a particular country, we would be forced either to incur significant additional expenses to market our services within that country or, in extreme cases, to elect not to offer our services in that country. Either result could harm our business, operating results, and financial condition. The regulation of domain names in the United States and in foreign countries is subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars, or modify the requirements for holding domain names. As a result, we may not be able to acquire or maintain the domain names that utilize our brand names in the United States or other countries in which we may conduct business in the future.

Litigation or proceedings before governmental authorities and administrative bodies may be necessary in the future to enforce our intellectual property rights, to protect our patent rights, trademarks, trade secrets, and domain names and to determine the validity and scope of the proprietary rights of others. Our efforts to enforce or protect our proprietary rights may be ineffective and could result in substantial costs and diversion of resources and management time, each of which could substantially harm our operating results. Additionally, changes in law may be implemented, or changes in interpretation of such laws may occur, that may affect our ability to protect and enforce our patents and other intellectual property.

***We may be accused of infringing upon intellectual property rights of third parties.***

From time to time, we have been and may be in the future subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement and other violations of the trademarks, copyrights, patents and other intellectual property or proprietary rights of third parties. The legal proceedings and claims include notices provided to us by content owners of users' violation of the Digital Millennium Copyright Act, which obligate us to investigate and remove infringing user content from our website.

In addition, Internet, technology, and media companies are frequently subject to litigation based on allegations of infringement, misappropriation, or other violations of intellectual property rights. Many companies in these industries, including many of our competitors, have substantially larger patent and intellectual property portfolios than we do, which could make us a target for litigation as we may not be able to assert counterclaims against parties that sue us for patent, or other intellectual property infringement. In addition, various "non-practicing entities" that own patents and other intellectual property rights often attempt to aggressively assert claims in order to extract value from technology companies. Further, from time to time we may introduce new products and services, including in territories where we currently do not have an offering, which could increase our exposure to patent and other intellectual property claims from competitors and non-practicing entities. It is difficult to predict whether assertions of third-party intellectual property rights or any infringement or misappropriation claims arising from such assertions will substantially harm our business, operating results, and financial condition. If we are forced to defend against any infringement or misappropriation claims, whether they are with or without merit, are settled out of court, or are determined in our favor, we may be required to expend significant time and financial resources on the defense of such claims. Furthermore, an adverse outcome of a dispute may require us to pay significant damages, which may be even greater if we are found to have willfully infringed upon a party's intellectual property; cease exploiting copyrighted content that we have previously had the ability to exploit; cease using solutions that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to redesign our solutions; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies, content, or materials; indemnify our partners and other third parties; and/or take other actions that may have material effects on our business, operating results, and financial condition.

***Changes in how network operators handle and charge for access to data that travel across their networks could adversely impact our business.***

We will rely upon the ability of consumers to access our service through the Internet. Changes in laws or regulations that adversely affect the growth, popularity or use of the Internet, including laws impacting net neutrality, could decrease the demand for our service and increase our cost of doing business. To the extent that network operators implement usage-based pricing, including meaningful bandwidth caps, or otherwise try to monetize access to their networks by data providers, we could incur greater operating expenses and our subscriber acquisition and retention could be negatively impacted. For example, in late 2010, Comcast informed Level 3 Communications that it would require Level 3 to pay for the ability to access Comcast's network. Furthermore, to the extent network operators were to create tiers of Internet access service and either charge us for or prohibit us from being available through these tiers, our business could be negatively impacted.

Most network operators that provide consumers with access to the Internet also provide these consumers with multichannel video programming. As such, companies like Comcast, Charter Spectrum and Cablevision have an incentive to use their network infrastructure in a manner adverse to our continued growth and success. For example, Comcast exempted certain of its own Internet video traffic (e.g., Streampix videos to the Xbox 360) from a bandwidth cap that applies to all unaffiliated Internet video traffic (e.g., Netflix videos to the Xbox 360). While we believe that consumer demand, regulatory oversight and competition will help check these incentives, to the extent that network operators are able to provide preferential treatment to their data as opposed to ours or otherwise implement discriminatory network management practices, our business could be negatively impacted. In international markets, especially in Latin America, these same incentives apply; however, the consumer demand, regulatory oversight and competition may not be as strong as in our domestic market.

***The success of our business and operations depends, in part, on the integrity of our systems and infrastructures, as well as affiliate and third-party computer systems, Wi-Fi and other communication systems. System interruption and the lack of integration and redundancy in these systems and infrastructures may have an adverse impact on our business, financial condition and results of operations.***

System interruption and the lack of integration and redundancy in the information systems and infrastructures, both of our own systems and other computer systems and of affiliate and third-party software, Wi-Fi and other communications systems service providers on which we rely, may adversely affect our ability to operate websites, process and fulfill transactions, respond to user inquiries and generally maintain cost-efficient operations. Such interruptions could occur by virtue of natural disaster, malicious actions such as hacking or acts of terrorism or war, or human error. In addition, the loss of some or all of certain key personnel could require us to expend additional resources to continue to maintain our software and systems and could subject us to systems interruptions.

Although we maintain up to date information technology systems and network infrastructures for the operation of our businesses, techniques used to gain unauthorized access to private networks are constantly evolving, and we may be unable to anticipate or prevent unauthorized access to our systems and data.

***Privacy concerns could limit our ability to leverage our consumer subscriber data and compliance with privacy regulations could result in significant expense.***

In the ordinary course of business and in particular in connection with merchandising our service to our users, we collect and utilize data supplied by our users. We currently face certain legal obligations regarding the manner in which we treat such information. Other businesses have been criticized by privacy groups and governmental bodies for attempts to link personal identities and other information to data collected on the Internet regarding users' browsing and other habits. Increased regulation of data utilization practices, including self-regulation or findings under existing laws, that limit our ability to use collected data, could have an adverse effect on our business. As our business evolves and as we expand internationally, we may become subject to additional and/or more stringent legal obligations concerning our treatment of user information, and to the extent that we need to alter our business model or practices to adapt to these obligations, we could incur significant expenses.

In addition, we cannot fully control the actions of third parties who may have access to the user data we collect and the user data collected by our third-party vendors. We may be unable to monitor or control such third parties and the third parties having access to our website in their compliance with the terms of our privacy policies, terms of use, and other applicable contracts, and we may be unable to prevent unauthorized access to, or use or disclosure of, user information. Any such misuse could hinder or prevent our efforts with respect to growth opportunities and could expose us to liability or otherwise adversely affect our business. In addition, these third parties may become the victim of security breaches or have practices that may result in a breach, and we could be responsible for those third-party acts or failures to act.

Any failure, or perceived failure, by us or the prior owners of acquired businesses to maintain the privacy of data relating to our users (including disclosing data in a manner that was objectionable to our users), to comply with our posted privacy policies, our predecessors' posted policies, laws and regulations, rules of self-regulatory organizations, industry standards and contractual provisions to which we or they may be bound, could result in the loss of confidence in us, or result in actions against us by governmental entities or others, all of which could result in litigation and financial losses, and could potentially cause us to lose users, advertisers, revenue and employees.

***Our reputation and relationships with subscribers would be harmed if our premium subscriber data, particularly billing data, were to be accessed by unauthorized persons.***

We will maintain personal data regarding our users, including names and, in many cases, mailing addresses. With respect to billing data, such as credit card numbers, we expect to rely on licensed encryption and authentication technology to secure such information. If we or our payment processing services experience any unauthorized intrusion into our users' data, current and potential users may become unwilling to provide the information to us necessary for them to become subscribers, we could face legal claims, and our business could be adversely affected. Similarly, if a well-publicized breach of the consumer data security of any other major consumer website were to occur, there could be a general public loss of confidence in the use of the Internet for commerce transactions which could adversely affect our business.

In addition, we do not plan to obtain signatures from subscribers in connection with the use of credit and debit cards (together, "payment cards") by them. Under current payment card practices, to the extent we do not obtain cardholders' signatures, we will be liable for fraudulent payment card transactions, even when the associated financial institution approves payment of the orders. From time to time, fraudulent payment cards may be used on our website to obtain service. Typically, these payment cards will not have been registered as stolen and therefore will not be rejected by any automatic authorization safeguards. We do not currently carry insurance against the risk of fraudulent credit card transactions. A failure to adequately control fraudulent credit card transactions would harm our business and results of operations.

***Regulatory and business practice developments relating to personal information of our users and/or failure to adequately protect the personal information of our users may adversely affect our business.***

Due to the nature of such businesses, the businesses we have acquired or intend to acquire in the future maintain, or have arrangements with third parties who maintain, information on users who or may purchase in the future our services and products electronically through their individual websites or otherwise register on the website for access to our content provided. We are in the process of evaluating the information collected to understand if we can aggregate and reuse the contact information to inform these individuals of upcoming events, offerings and other services and products that we believe enhance the user experience. Data protection laws and regulation may impair our ability to use these data in such ways, as certain uses may be prohibited. The use of such user information is an important component of our growth strategy in the future. The collection, storage and use of user information is subject to regulation in many jurisdictions, including the United States and the EU, and this regulation is becoming more prevalent and stringent. Further, there is a risk that data protection regulators may seek jurisdiction over our activities even in locations in which we do not have an operating entity. This may arise in a number of ways, either because we are conducting direct marketing activities in a particular jurisdiction and the local laws apply to and are enforceable against us, or because one of our databases is controlling the processing of information within that jurisdiction. We intend to develop a comprehensive policy aimed at ensuring adequate protection of our users' personal information and compliance with applicable law. There is a risk that we will be unable to successfully adopt and implement this policy, which may give rise to liabilities or increased costs.

Although we intend to develop systems and processes that are designed to protect customer and employee information and to prevent security breaches or incidents (which could result in data loss or other harm or loss), such measures cannot provide absolute security or certainty. It is possible that advances in computer and hacker capabilities, new variants of malware, the development of new penetration methods and tools, inadvertent violations of company policies or procedures or other developments could result in a compromise of customer or employee information or a breach of the technology and security processes that are used to protect customer and employee information. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems may change frequently and as a result, may be difficult for our business to detect for long periods of time. In addition, despite our best efforts, we may be unable to anticipate these techniques or implement adequate preventative measures. We may need to expend in the future significant capital and other resources to protect against and remedy such potential security breaches, incidents and their consequences, including the establishment of a dedicated cybersecurity organization within our larger technology environment.

We also face risks associated with security breaches and incidents affecting third parties with which we are affiliated or with which we otherwise conduct business. Consumers are generally concerned with the security and privacy of the Internet, and any publicized security problems affecting our businesses and/or third parties may discourage consumers from doing business with us, which could have an adverse effect on our business, financial condition and results of operations.

In some countries, the use of cookies and other information placed on users' Internet browsers or users' computing devices is currently regulated, regardless of the information contained within or referred to by the cookie. Specifically, in the EU, this is now subject to national laws being introduced pursuant to the amended Directive 2002/58 on Privacy and Electronic Communications. The effect of these measures may require users to provide explicit consent to such a cookie being used. The laws being introduced pursuant to this measure are not finalized in every European Member State, and we have not determined what effect this could have on our business when we place the cookie on the user's computer or when a third party does so. The effect may be to limit the amount of information we receive in relation to each use of the service and/or to limit our ability to link this information to a unique identity, which could adversely affect our business and financial condition.

In the United States, the Federal Trade Commission ("FTC") is starting to exercise greater authority over how online consumer data is collected and maintained by businesses. Prompted by the FTC's recommendation regarding online tracking, a number of federal legislative proposals have been introduced that would allow users to opt out of online monitoring. A number of states have passed similar legislation and some states are becoming more active in enforcing these laws to protect consumers.

The laws in this area are complex and developing rapidly. For instance, on April 14, 2016, the EU General Data Protection Regulation (the "GDPR") became effective within Europe on May 25, 2018. The primary objectives of the GDPR are to give citizens of the EU back the control of their personal data and to simplify the regulatory environment for international business by unifying the regulation within the EU. We have not yet assessed the full effect of the GDPR. Failure to comply with the GDPR may result in significant monetary penalties. As we expand our operations into new jurisdictions, the costs associated with compliance with applicable local data privacy laws and regulations increases. It is possible that government or industry regulation in these markets will require us to deviate from our standard processes and/or make changes to our products, services and operations, which will increase operational cost and risk. There is a risk that Internet browsers, operating systems, or other applications might be modified by their developers in response to this regulation to limit or block our ability to access information about our users. It is possible that existing or future regulations could make it difficult or impossible for us to collect or use our user information in the way we would like which would impede our growth strategy and potentially reduce the revenue we hope to generate. It is also possible that we could be found to have violated regulations relating to user data, which could result in us being sanctioned, suffering fines or other punishment, being restricted in our activities and/or suffering reputational harm. Any of the foregoing could adversely affect our business and financial results.

**Risks Related to Our Acquisition Strategy**

***We can give no assurances as to when we will consummate any future acquisitions or whether we will consummate any of them at all.***

We may build our business through one or more strategic acquisitions and to possibly use our remaining cash to fund any cash portion of the consideration we will pay in connection with those acquisitions. However, such additional acquisitions, may be subject to conditions and other impediments to closing, including some that are beyond our control, and we may not be able to close any of them successfully. In addition, our future acquisitions will be required to be closed within certain timeframes as negotiated between us and the acquisition target, and if we are unable to meet the closing deadlines for a given transaction, we may be required to forfeit payments we have made, if any, be forced to renegotiate the transaction on less advantageous terms and could fail to consummate the transaction at all. If we are unable to close any future acquisition, it could significantly alter our business strategy and impede our prospects for growth. If we are unable to successfully consummate a particular acquisition, we may not be able to quickly and materially increase the number of additional podcasts available on our network, produce and/or participate in the planned events or have ownership or licenses of the brands owned or licensed by that acquisition target. Further, we may not be able to identify suitable acquisition candidates to replace these acquisitions, and even if we were to do so, we may only be able to consummate them on less advantageous terms. In addition, some of the businesses we acquire may incur significant losses from operations, which, in turn, could have a material and adverse impact on our business, results of operations and financial condition.

In addition, we will need to integrate these acquired businesses successfully in order for our growth strategy to succeed and for us to become profitable. We expect that the management teams of the acquired businesses will adopt our policies, procedures and best practices, and cooperate with each other in scheduling events, booking talent and in other aspects of their operations. We may face difficulty in integrating the operations of any businesses we may acquire in the future, such as coordinating geographically dispersed organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures, the diversion of management's attention from other business concerns, the inherent risks in entering markets or lines of business in which we have either limited or no direct experience; and the potential loss of key employees, individual service providers, customers and strategic partners of acquired companies.

Further, we expect that future target companies may have material weaknesses in internal controls relating to the proper application of accrual-based accounting under GAAP prior to our acquiring them. The Public Company Accounting Oversight Board defines a material weakness as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. We will be relying on the proper implementation of our policies and procedures to remedy any such material weaknesses, and prevent any potential material misstatements in our financial reporting. Any such misstatement could adversely affect the trading price of our common stock, cause investors to lose confidence in our reported financial information, and subject us to civil and criminal fines and penalties. If our acquired companies fail to integrate in these important ways, or we fail to adequately understand the business operations of our acquired companies, our growth and financial results could suffer.

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***A number of other companies are seeking to make acquisitions in our industry, which may make our acquisition strategy more difficult or expensive to pursue.***

The emergence and growth of podcasts and podcasting networks has brought increased media attention, and a number of companies and investors have been making acquisitions of such podcasts and/or businesses or announced their intention to do so. We compete with many of these companies, and certain of them have greater financial resources than we do for pursuing and consummating acquisitions and to further develop and integrate acquired businesses. Our strategy relies on our ability to consummate important future acquisitions to foster the growth of our core business and to establish ourselves as the key provider of streamed high-quality live music content. The increased focus on acquisitions of such companies may impede our ability to acquire these companies because they choose another acquirer. It could also increase the price that we must pay for these companies. Either of these outcomes could reduce our growth, harm our business and prevent us from achieving our strategic goals.

***We may enter into acquisitions and take actions in connection with such transactions that could adversely affect our business and results of operations.***

Our future growth rate depends in part on our selective acquisition of additional businesses and assets. We may be unable to identify suitable targets for acquisition or make further acquisitions at favorable prices. If we identify a suitable acquisition candidate, our ability to successfully complete the acquisition would depend on a variety of factors, and may include our ability to obtain financing on acceptable terms and requisite government approvals. In addition, any credit agreements or credit facilities that we may enter into in the future may restrict our ability to make certain acquisitions. In connection with future acquisitions, we could take certain actions that could adversely affect our business, including:

● using a significant portion of our available cash;

● issuing equity securities, which would dilute current stockholders' percentage ownership;

● incurring substantial debt;

● incurring or assuming contingent liabilities, known or unknown;

● incurring amortization expenses related to intangibles; and

● incurring large accounting write-offs or impairments.

We may also enter into joint ventures, which involve certain unique risks, including, among others, risks relating to the lack of full control of the joint venture, potential disagreements with our joint venture partners about how to manage the joint venture, conflicting interests of the joint venture, requirement to fund the joint venture and its business not being profitable.

In addition, we cannot be certain that the due diligence investigation that we conduct with respect to any investment or acquisition opportunity will reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. For example, instances of fraud, accounting irregularities and other deceptive practices can be difficult to detect. Executive officers, directors and employees may be named as defendants in litigation involving a company we are acquiring or have acquired. Even if we conduct extensive due diligence on a particular investment or acquisition, we may fail to uncover all material issues relating to such investment, including regarding the controls and procedures of a particular target or the full scope of its contractual arrangements. We rely on our due diligence to identify potential liabilities in the businesses we acquire, including such things as potential or actual lawsuits, contractual obligations or liabilities imposed by government regulation. However, our due diligence process may not uncover these liabilities, and where we identify a potential liability, we may incorrectly believe that we can consummate the acquisition without subjecting ourselves to that liability. Therefore, it is possible that we could be subject to litigation in respect of these acquired businesses. For example, see "Item 3. Legal Proceedings" regarding our ongoing litigation with Wantickets and its principal. If our due diligence fails to identify issues specific to an investment or acquisition, we may obtain a lower return from that transaction than the investment would return or otherwise subject ourselves to unexpected liabilities. We may also be forced to write-down or write-off assets, restructure our operations or incur impairment or other charges that could result in our reporting losses. Charges of this nature could contribute to negative market perceptions about us or our shares of common stock.

**Risks Related to the Spin-Out** 

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***The Distribution could result in significant tax liability to LiveOne and its stockholders.***

The Distribution will be determined not to qualify for non-recognition of gain and loss, and therefore, U.S. Holders will be subject to tax. Each U.S. Holder who receives our common stock in the Distribution would generally be treated as receiving a distribution in an amount equal to the fair market value of our common stock received, which would generally result in a gain to be recognized, as applicable, by, or be includible in the income of, such U.S. Holder as a result of the Distribution, and the aggregate tax basis of the LiveOne common stock and our common stock held by each U.S. Holder immediately after the Distribution will be the same as the aggregate tax basis of the LiveOne common stock held by the U.S. Holder immediately before the Distribution, allocated between the LiveOne common stock and our common stock in proportion to their relative fair market values on the date of the Distribution.

LiveOne will also recognize gain in an amount up to the fair market value of our common stock held by LiveOne immediately before the Distribution. See below and "Material U.S. Federal Income Tax Consequences of the Distribution" for more information.

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***We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Out.***

We believe that, as an independent publicly-traded company, we will be able to, among other things, better focus our financial and operational resources on our specific business, implement and maintain a capital structure designed to meet our specific needs, design and implement corporate strategies and policies that are targeted to our business, more effectively respond to industry dynamics and create effective incentives for our management and employees that are more closely tied to our business performance. However, by separating from LiveOne, we may be more susceptible to market fluctuations and have less leverage with suppliers, and we may experience other adverse events. In addition, we may be unable to achieve some or all of the benefits that we expect to achieve as an independent company in the time we expect, if at all. The completion of the Spin-Out will also require significant amounts of our management's time and effort, which may divert management's attention from operating and growing our business.

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***We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent publicly-traded company, and we may experience increased costs after the Spin-Out.***

LiveOne has provided us with various corporate services. Following the Spin-Out, LiveOne will have no obligation to provide us with assistance other than the transition services described under "Certain Relationships and Related Party Transactions—Agreements with LiveOne." These services do not include every service that we have received from LiveOne in the past, and LiveOne is only obligated to provide these services for limited periods from the date of the Spin-Out. Accordingly, following the Spin-Out, we will need to provide internally or obtain from unaffiliated third parties the services we currently receive from LiveOne. We may be unable to replace these services in a timely manner or on terms and conditions as favorable as those we receive from LiveOne. We may be unable to successfully establish the infrastructure or implement the changes necessary to operate independently or may incur additional costs. If we fail to obtain the services necessary to operate effectively or if we incur greater costs in obtaining these services, our business, financial condition and results of operations may be adversely affected.

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***We have no operating history as an independent publicly-traded company, and our historical financial information is not necessarily representative of the results we would have achieved as an independent publicly-traded company and may not be a reliable indicator of our future results.***

We derived the historical financial information included in this prospectus from LiveOne's consolidated financial statements, and this information does not necessarily reflect the results of operations and financial position we would have achieved as an independent publicly-traded company during the periods presented or those that we will achieve in the future. This is primarily because of the following factors:

● prior to the Spin-Out, we operated as part of LiveOne's broader corporate organization, and LiveOne performed various corporate functions for us. Our historical financial information reflects allocations of corporate expenses from LiveOne for these and similar functions. These allocations may not reflect the costs we will incur for similar services in the future as an independent publicly-traded company;

● we will enter into transactions with LiveOne that did not exist prior to the Spin-Out or modify our existing agreements with LiveOne, such as LiveOne's provision of transition services, which will cause us to incur new costs; and

● Our historical financial information does not reflect changes that we expect to experience in the future as a result of our separation from LiveOne, including changes in our cost structure, personnel needs, tax structure, financing and business operations. As part of LiveOne, we enjoyed certain benefits from LiveOne's operating diversity, size, borrowing leverage and available capital for investments, and we will lose these benefits after the Spin-Out. As an independent entity, we may be unable to purchase services and technologies, such as insurance and health care benefits and computer software licenses or access capital markets on terms as favorable to us as those we obtained as part of LiveOne prior to the Spin-Out.

Following the Spin-Out, we will also be responsible for the additional costs associated with being an independent publicly-traded company, including costs related to corporate governance, investor and public relations and public reporting. In addition, certain costs incurred by LiveOne, including executive oversight, accounting, treasury, tax, legal, human resources, occupancy, procurement, information technology and other shared services, have historically been allocated to us by LiveOne; but these allocations may not reflect the future level of these costs to us as we begin to provide these services ourselves. Therefore, our historical financial statements may not be indicative of our future performance as an independent publicly-traded company. We cannot assure you that our operating results will continue at a similar level when we are an independent publicly-traded company. For additional information about our past financial performance and the basis of presentation of our financial statements, see "Selected Historical Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our historical financial statements and the notes thereto included elsewhere in this prospectus.

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***We may not be able to access the credit and capital markets at the times and in the amounts needed on acceptable terms.***

From time to time we may need to access the long-term and short-term capital markets to obtain financing. Although we believe that the public markets sources of capital in place at the time of the Spin-Out will permit us to finance our operations for the foreseeable future on acceptable terms and conditions, we have not previously accessed the capital markets as an independent public company, and our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including our financial performance, our credit ratings or absence thereof, the liquidity of the overall capital markets and the state of the economy. We cannot assure you that we will have access to the capital markets at the times and in the amounts needed or on terms acceptable to us.

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***Certain of LiveOne's and our agreements contain provisions requiring the consent of third parties in connection with the Spin-Out. If these consents are not obtained, we may be unable to consummate the Spin-Out and/or enjoy the benefit of these agreements in the future.***

Certain of LiveOne's and our agreements contain provisions that require the consent of third parties to the Spin-Out. In particular, LiveOne and our Company are required to (i) obtain the consents of LiveOne's senior lenders under its existing senior secured debt agreements, (ii) obtain approval of the listing of our common stock on The Nasdaq Capital Market and (iii) have the SEC declare the effectiveness of our Registration Statement on Form S-1, of which this prospectus is a part. If we fail to obtain such consents on commercially reasonable and satisfactory terms or at all, we may be unable to consummate the Spin-Out and/or such consents may impair our entitlement to the benefit of these contracts in the future.

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***We may have been able to receive better terms from unaffiliated third parties than the terms we receive in our agreements with LiveOne.***

We will negotiate agreements with LiveOne related to our separation from LiveOne, including the Separation Agreement and Administrative Services Agreement, while we are still part of LiveOne. Accordingly, these agreements may not reflect terms that would have resulted from arms-length negotiations between unaffiliated parties. The terms of the agreements being negotiated relate to, among other things, allocations of assets, liabilities, rights, indemnifications and other obligations between LiveOne and us. We may have received better terms from third parties because third parties may have competed with each other to win our business. See "Certain Relationships and Related Party Transactions" for more information.

 ***The implications of Pirani v. Slack Technologies, Inc. (No. 20-16419 (9<sup>th</sup> Cir. 2021) lawsuit may expose us to potential litigation and any adverse outcome in such litigation may have a material adverse impact on our business and/or financial condition.***

Slack Technologies, Inc. ("Slack"), a technology company that offers a popular instant messaging platform for businesses and organizations, opted to go public through a direct listing on the New York Stock Exchange in June 2019. A direct listing allows a company to go public without going through the traditional route of issuing new shares in an underwritten initial public offering. Beginning in September 2019, seven purported class action lawsuits were filed against Slack, its directors, certain of its officers and certain investment funds associated with certain of its directors, each alleging violations of securities laws in connection with Slack's registration statement on Form S-1 related to such direct listing (the "Slack Registration Statement") filed with the SEC. In 2021, the U.S. Ninth Circuit Court of Appeals in Pirani v. Slack Technologies, Inc. (No. 20-16419 (9<sup>th</sup> Cir. 2021) litigation affirmed the conclusion of the U.S. District Court for the Northern District of California in 2021 that Pirani, who bought Slack stock in its direct listing, had standing to bring claims under Sections 11 and 12(a)(2) of the Securities Act, despite the fact that he was unable to prove that the shares he bought were registered under the allegedly misleading registration statement that he was challenging. The Ninth Circuit's ruling has resulted in some uncertainty as to one of the longest standing precedents in federal securities case law by eliminating the requirement under Section 11 of the Securities Act that a claimant "trace" his shares to a registration statement, threatening not only the viability of direct listings, but also of the entire initial public offering ecosystem.

The Supreme Court has agreed to hear oral arguments in Slack v. Pirani litigation, as the case presents novel questions about standing under the Securities Act and could have significant ramifications for investors who purchase securities through direct listings and other alternative forms of public offerings. If the Ninth Circuit's decision is left intact, the ruling may carve out a special, more expansive rule of potential liability under Securities Act for issuers that go public via a direct listing and impose Section 11 liability on exempt transactions that do not require registration statements.

There can be no assurances as to the outcome of the Supreme Court's review of the Slack v. Pirani litigation and whether the Supreme Court limits its decision to claims brought where shares are acquired in a direct listing, and whether the court would choose to alter the well-established and largely uniform case law across the circuits that requires tracing of shares to a specific registration statement under Section 11 of the Securities Act (that Section 11 claims may only be brought by plaintiffs whose shares were issued pursuant to the faulty registration statement). If the Supreme Court elects to expand the grounds on which a plaintiff would have standing to sue under Section 11 of the Securities Act and if we successfully complete the Direct Listing and are subsequently potentially sued for violations of Section 11, any adverse outcome in such litigation may have a material adverse impact on our business and/or financial condition. In addition, even if the Supreme Court does not elect to expand the grounds on which a plaintiff would have standing to sue under Section 11 and if we successfully complete the Direct Listing, we may be subject to future litigation for alleged other violations of the Securities Act, any adverse outcome in such litigation may have a material adverse impact on our business and/or financial condition.

 ***We may be required to redeem a portion of our Bridge Notes if we are unable to consummate the Direct Listing by certain dates.***

If we do not consummate the Direct Listing by February 15, 2023, March 15, 2023 or April 15, 2023, as applicable, unless in either case permitted by the written consent of the holders holding the majority of the Bridge Notes, we shall be required to redeem $1,000,000 of the then outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by the tenth calendar day of each month immediately following such respective date above (subject to any cure period), up to an aggregate redemption of $3,000,000 over the course of such three months, each of which shall be distributed to the holders of the Bridge Notes (other than LiveOne) on a prorated basis. As of March 10, 2023, we have not yet consummated the Direct Listing and accordingly, we are currently required to redeem $1,000,000 of the outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by March 10, 2023 (subject to any cure period). We shall not be required to redeem or repay more than a total of $3,000,000 of the principal amount of the Bridge Notes as a result of the Optional Redemption, the Early Redemption and/or the Reg St Redemption. Any such redemption could adversely affect our liquidity, business and operations, and/or may require us to raise additional capital via the issuance of equity and/or debt.

 **Risks Relating to Our Common Stock and the Securities Market**

***Our listing differs significantly from an underwritten initial public offering.***

 ****

Prior to the opening of trading on The Nasdaq Capital Market, there will be no book building process and no price at which underwriters initially sell shares to the public to help inform efficient and sufficient price discovery with respect to the opening trades on The Nasdaq Capital Market. This listing of our common stock on The Nasdaq Capital Market differs from an underwritten initial public offering in several significant ways, which include, but are not limited to, the following:

● There are no underwriters. Therefore, buy and sell orders submitted prior to and at the opening of trading of our common stock on The Nasdaq Capital Market will not have the benefit of being informed by a published price range or a price at which the underwriters initially sell shares to the public, as would be the case in an underwritten initial public offering. Moreover, there will be no underwriters assuming risk in connection with the initial resale of shares of our common stock. Unlike in a traditional underwritten offering, this registration statement does not include the registration of additional shares that may be used at the option of the underwriters in connection with overallotment activity. Moreover, we will not engage in, and have not and will not, directly or indirectly, request any financial advisor to engage in, any special selling efforts or stabilization or price support activities in connection with any sales made pursuant to this registration statement. In an underwritten initial public offering, the underwriters may engage in "covered" short sales in an amount of shares representing the underwriters' option to purchase additional shares. To close a covered short position, the underwriters purchase shares in the open market or exercise the underwriters' option to purchase additional shares. In determining the source of shares to close the covered short position, the underwriters typically consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the underwriters' option to purchase additional shares. Purchases in the open market to cover short positions, as well as other purchases underwriters may undertake for their own accounts, may have the effect of preventing a decline in the trading price of shares of our common stock. Given that there will be no underwriters' option to purchase additional shares and no underwriters engaging in stabilizing transactions with respect to the trading of our common stock on The Nasdaq Capital Market, there could be greater volatility in the trading price of our common stock during the period immediately following the listing. See also — "Our stock price may be volatile, and could decline significantly and rapidly."

● There is not a fixed or determined number of shares of common stock available for sale in connection with the registration and the listing, except that the Distribution Shares and shares of our common stock underlying the Bridge Notes, Bridge Warrants and the Placement Agent Warrants may be sold by the Registered Stockholders on our first trading day or from time to time thereafter. Therefore, there can be no assurance that any Registered Stockholders or other existing stockholders will sell any of their shares of common stock, and there may initially be a lack of supply of, or demand for, shares of common stock on The Nasdaq Capital Market. Alternatively, we may have a large number of Registered Stockholders or other existing stockholders who choose to sell their shares of common stock in the near term, resulting in potential oversupply of our common stock, which could adversely impact the trading price of our common stock once listed on The Nasdaq Capital Market and thereafter.

● Our future stockholders who will receive the Distribution Shares have not entered into contractual lock-up agreements or have any other restrictions on transfer (other than those stockholders who are our affiliates). LiveOne has not entered into any contractual lock-up agreement and is not subject to any other restrictions on transfer (other than with respect to the shares of our common stock underlying the Bridge Notes and Bridge Warrants owned by LiveOne). LiveOne and our other Registered Stockholders (other than the Joseph Gunnar & Co., LLC) have entered into lock-up agreements with our Company pursuant which they agreed not to sell any shares of our common stock beneficially owned by them underlying the Bridge Notes and Bridge Warrants, and certain of our officers and directors have entered into lock-up agreements with our Company pursuant which they agreed not to sell any shares of our common stock beneficially owned by them or securities convertible, exchangeable or exercisable into, shares of our common stock beneficially owned, until the earliest to occur, if any (the "Restriction Period"), of (i) the termination of the underwriting agreement with respect to the Qualified Financing before the sale of any securities to the underwriters of the Qualified Financing, (ii) the termination of the Qualified Financing or Qualified Event, as applicable and (iii) with respect to the Purchasers, three months from the date of the consummation of the Qualified Financing or Qualified Event, as applicable, and with respect to our officers and directors, six months from the date of the consummation of the Qualified Financing or Qualified Event, as applicable, subject to certain exceptions as set forth below. In an underwritten initial public offering, it is customary for an issuer's officers, directors, and most or all of its other stockholders to enter into a 180-day contractual lock-up arrangement with the underwriters to help promote orderly trading immediately after such initial public offering. Consequently, any of LiveOne's stockholders who receive the Distribution Shares, excluding our directors and officers who own our common stock, may sell any or all of their shares at any time, including immediately upon listing. Our stockholders receiving shares of our common stock as a result of the conversion of their Bridge Notes or exercise of their Bridge Warrants may sell any or all of their shares at any time after the expiration of the Restriction Period. If such sales were to occur in a significant volume in a short period of time following the listing, it may result in an oversupply of our common stock in the market, which could adversely impact the trading price of our common stock. See also "—Substantial sales of our common stock may occur in connection with the Spin-Out, which could cause our stock price to decline. Following our listing, sales of substantial amounts of our common stock in the public markets, or the perception that sales might occur, could cause the trading price of our common stock to decline." In the event that the following conditions are both met at any time following the conclusion of the Measuring Period as defined below, the Restriction Period shall immediately terminate: (a) the closing price of our common stock reflects a price per share equal to or greater than 25% of the price per share (or unit, if units are offered in the Qualified Financing) at which the Qualified Financing or Qualified Event, as applicable, is made and (b) our common stock trades at a volume greater than $1,000,000 per trading day for five consecutive trading days. For purposes hereof, the term "Measuring Period" means the earlier of (i) 45 days from the closing of the Qualified Financing or Qualified Event, as applicable, or (ii) the full delivery of the over-allotment to our Company by the underwriter in the Qualified Financing.

● We will not conduct a traditional "roadshow" with underwriters prior to the opening of trading of our common stock on The Nasdaq Capital Market. We plan to hold an investor day and will announce the date for this investor day over financial news outlets in a manner consistent with typical corporate outreach to investors. We will prepare an electronic presentation for this investor day, which will include content similar to a traditional roadshow presentation. We will make a version of the presentation publicly available, without restrictions, on our website. There can be no guarantee that the investor day and other investor education meetings will be as effective a method of investor education as a traditional "roadshow" conducted in connection with an underwritten initial public offering. As summarized elsewhere in this prospectus, there may not be efficient or sufficient price discovery with respect to our common stock or sufficient demand among potential investors immediately after our listing, which could result in a more volatile trading price of our common stock.

Such differences from an underwritten initial public offering could result in a volatile trading price for our common stock and uncertain trading volume, which may adversely affect your ability to sell any common stock that you may purchase.

We have agreed to indemnify certain of the Registered Stockholders for certain claims arising in connection with sales under this prospectus. Large indemnity payments would materially adversely affect our business, financial condition, and results of operations.

***Our stock price may be volatile, and could decline significantly and rapidly.***

The listing of our common stock and the registration of the Registered Stockholders' shares of common stock is a novel process that is not an underwritten initial public offering. We have engaged the Financial Advisor to serve as our financial advisor. There will be no book building process and no price at which underwriters initially sell shares to the public to help inform efficient and sufficient price discovery with respect to the opening trades on The Nasdaq Capital Market. Pursuant to Nasdaq's rules, once the Financial Advisor, in its capacity as our designated financial advisor to perform the functions under Nasdaq Rule 4120(c)(8), has notified Nasdaq that our shares of common stock are ready to trade, Nasdaq will calculate the Current Reference Price for our shares of common stock, in accordance with Nasdaq's rules. If the Financial Advisor then approves proceeding at the Current Reference Price, Nasdaq will conduct a price validation test in accordance with Nasdaq Rule 4120(c)(8). As part of conducting such price validation test, Nasdaq may consult with the Financial Advisor, if the price bands need to be modified, to select the new price bands for purposes of applying such test iteratively until the validation tests yield a price within such bands. Upon completion of such price validation checks, the applicable orders that have been entered will then be executed at such price and regular trading of our shares of common stock on The Nasdaq Capital Market will commence. Under Nasdaq's rules, the "Current Reference Price" means: (i) the single price at which the maximum number of orders to buy or sell our shares of common stock can be matched; (ii) if more than one price exists under clause (i), then the price that minimizes the number of our shares of common stock for which orders cannot be matched; (iii) if more than one price exists under clause (ii), then the entered price (i.e. the specified price entered in an order by a customer to buy or sell) at which our shares of common stock will remain unmatched (i.e. will not be bought or sold); and (iv) if more than one price exists under clause (iii), a price determined by Nasdaq after consultation with the Financial Advisor in its capacity as financial advisor. The Financial Advisor will exercise any consultation rights only to the extent that it may do so consistent with the anti-manipulation provisions of the federal securities laws, including Regulation M (to the extent applicable), or applicable relief granted thereunder. The Financial Advisor will determine when our shares of common stock are ready to trade and approve proceeding at the Current Reference Price primarily based on consideration of volume, timing, and price. In particular, the Financial Advisor will determine, based primarily on pre-opening buy and sell orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference Price. If the Financial Advisor does not approve proceeding at the Current Reference Price (for example, due to the absence of adequate pre-opening buy and sell interest), the Financial Advisor will request that Nasdaq delay the open until such a time that sufficient price discovery has been made to ensure a reasonable amount of volume crosses on the opening trade. The length of such delay could vary greatly, from a short period of time such as one day, to a decision to not list our shares on The Nasdaq Capital Market at all. As a result, the absence of sufficient price discovery may result in delays in the opening of trading along with volatile prices and supply once trading commences. The opening public price may bear no relationship to the market price for our common stock after our listing, and thus may decline below the opening public price.

Moreover, prior to the opening trade, there will not be a price at which underwriters initially sell shares of common stock to the public as there would be in an underwritten initial public offering. The absence of a predetermined initial public offering price could impact the range of buy and sell orders collected by Nasdaq from various broker-dealers. Consequently, upon listing on The Nasdaq Capital Market, the trading price of our common stock may be more volatile than in an underwritten initial public offering and could decline significantly and rapidly.

Further, if the trading price of our common stock is above the level that investors determine is reasonable for our common stock , some investors may attempt to short our common stock after trading begins, which would create additional downward pressure on the trading price of our common stock, and there will be more ability for such investors to short our common stock in early trading than is typical for an underwritten public offering given the lack of contractual lock-up agreements or other restrictions on transfer.

The trading price of our common stock following the listing also could be subject to wide fluctuations in response to numerous factors in addition to the ones described in the preceding risk factors, many of which are beyond our control, including:

● actual or anticipated fluctuations in our financial condition, results of operations, or operating metrics and those of our competitors;

● the number of shares of our common stock made available for trading;

● issuance of our and/or LiveOne's equity or debt securities, or disclosure or announcements relating thereto;

● our convertible debt securities being converted into equity or the anticipation of such conversion;

● failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or variance in our financial performance from expectations of securities analysts;

● changes in laws or regulations applicable to our Company;

● announcements by us or our competitors of significant events or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;

● lawsuits threatened or filed against us and/or LiveOne;

● future sales of our common stock by LiveOne, us or our stockholders or the anticipation of such sales;

● changes in our board of directors, senior management or key personnel;

● the trading volume of our common stock;

● changes in operating performance and stock market valuations of companies in our industry;

● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

● changes in the anticipated future size and growth rate of our market;

● significant data breaches, disruptions to, or other incidents involving our platform;

● general economic and market conditions;

● other events or factors, including those resulting from war, incidents of terrorism, pandemics (including the COVID-19 pandemic), elections, or responses to these events; and

● whether investors or securities analysts view our stock structure unfavorably, particularly our dual-class structure and the concentrated voting control of our executive officers, directors, and their affiliates.

In addition, stock markets with respect to newly public companies, particularly companies in the technology industry, have experienced significant price and volume fluctuations that have affected and continue to affect the stock prices of these companies. Stock prices of many companies, including technology companies, have fluctuated in a manner often unrelated to the operating performance of those companies. These fluctuations may be even more pronounced in the trading market for our common stock shortly following the listing of our common stock on The Nasdaq Capital Market as a result of the supply and demand forces described above. In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management's attention.

 ***The trading price of our common stock, upon listing on The Nasdaq Capital Market, may have little or no relationship to the historical sales prices of our capital stock in private transactions, and other than the acquisition of our Company by LiveOne on July 1, 2020 and the sale of the Bridge Notes, there have not been any private transactions of our common stock in the recent past and shares of our common stock do not have a history of trading in private transactions.***

Prior to the listing of our common stock on The Nasdaq Capital Market, there has been no public market for our capital stock. Other than the acquisition of our Company by LiveOne on July 1, 2020 and the sale of the Bridge Notes, there have not been any private transactions of our common stock in the recent past and shares of our common stock do not have a history of trading in private transactions. In the section titled "Sale Price History of Our Capital Stock," we have summarized the only recent private transaction in which we sold the Bridge Notes and Bridge Warrants and issued the Placement Agent Warrants. Given that there have not been any private transactions of our common stock in the recent past and shares of our common stock do not have a history of trading in private transactions, this information may have little or no relation to broader market demand for our common stock and thus the initial trading price of our common stock on The Nasdaq Capital Market once trading begins. As a result, you should not place undue reliance on the historical sales price in such transaction as it may differ materially from the opening trading prices and subsequent trading prices of our common stock on The Nasdaq Capital Market. For more information about how the initial listing price on The Nasdaq Capital Market will be determined, see "Plan of Distribution."

***An active, liquid, and orderly market for our common stock may not develop or be sustained. You may be unable to sell your shares of common stock at or above the price at which you purchased them.***

We currently expect our common stock to be listed and traded on The Nasdaq Capital Market. Prior to listing on The Nasdaq Capital Market, there has been no public market for our common stock. Moreover, consistent with Regulation M and other federal securities laws applicable to our listing, we have not consulted with Registered Stockholders or other existing stockholders regarding their desire or plans to sell shares in the public market following the listing or discussed with potential investors their intentions to buy our common stock in the open market. While our common stock may be sold after our listing on The Nasdaq Capital Market by the Registered Stockholders pursuant to this prospectus or by our other existing stockholders in accordance with Rule 144 of the Securities Act of 1933, as amended (the "Securities Act"), unlike an underwritten initial public offering, there can be no assurance that any Registered Stockholders or other existing stockholders will sell any of their shares of common stock, and there may initially be a lack of supply of, or demand for, common stock on The Nasdaq Capital Market. Conversely, there can be no assurance that the Registered Stockholders and other existing stockholders will not sell all of their shares of our common stock, resulting in an oversupply of our common stock on The Nasdaq Capital Market. In the case of a lack of supply of our common stock, the trading price of our common stock may rise to an unsustainable level. Further, institutional investors may be discouraged from purchasing our common stock if they are unable to purchase a block of our common stock in the open market in a sufficient size for their investment objectives due to a potential unwillingness of our existing stockholders to sell a sufficient amount of our common stock at the price offered by such institutional investors and the greater influence individual investors have in setting the trading price. If institutional investors are unable to purchase our common stock in a sufficient amount for their investment objectives, the market for our common stock may be more volatile without the influence of long-term institutional investors holding significant amounts of our common stock. In the case of a lack of demand for our common stock, the trading price of our common stock could decline significantly and rapidly after our listing. Therefore, an active, liquid, and orderly trading market for our common stock may not initially develop or be sustained, which could significantly depress the trading price of our common stock and/or result in significant volatility, which could affect your ability to sell your shares of common stock.

 **

***LiveOne owns majority percentage of our common stock and voting power and will be able to exert significant control over matters subject to stockholder approval. In addition, our Executive Chairman, Robert Ellin, and stockholders affiliated with him own a significant percentage of LiveOne common stock and will be able to exert significant control over matters subject to stockholder approval.***

 **

Prior to the completion of the Spin-Out, LiveOne owns all of the shares of our outstanding common stock and voting power and will be able to exert significant control over matters subject to stockholder approval. In addition, Robert Ellin, our Executive Chairman, and his affiliates beneficially own approximately 22.3% of shares of LiveOne's common stock issued and outstanding as of March 10, 2023. In addition, pursuant to the Distribution, Robert Ellin, our Executive Chairman, and his affiliates shall receive approximately 381,474 shares of our common stock, which is approximately 1.6% of shares of our common stock issued and outstanding upon completion of the Spin-Out (after giving effect to the Bridge Notes Conversion). Therefore, LiveOne and Mr. Ellin and stockholders affiliated with him may have the ability to influence us through their ownership positions. LiveOne and Mr. Ellin and these stockholders may be able to determine or significantly influence all matters requiring stockholder approval. For example, LiveOne and Mr. Ellin and these stockholders, acting together, may be able to control or significantly influence elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may believe are in your best interest as one of our stockholders.

***Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to an equity incentive plan and any acquisition agreement, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.***

We expect that significant additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity and/or convertible securities, our stockholders may experience substantial dilution. We may sell or otherwise issue our common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell or issue our common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent issuances. These issuances may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders. We may pay for future acquisitions with additional issuances of shares of our common stock as well, which would result in further dilution for existing stockholders. If our board of directors elects to issue additional shares of our common stock, stock options, restricted stock units and/or other equity-based awards under an equity incentive plan, our stockholders may experience additional dilution, which could cause our stock price to fall.

 ****

***Sales of a substantial number of shares of our common stock in the public market by certain of our stockholders could cause our stock price to fall.***

Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our common stock. Our directors, executive officers and the entities affiliated with our directors and executive officers are subject to lock-up agreements with the holders of the Bridge Notes that restrict such stockholders' ability to transfer shares of our common stock for up to six months from the completion of the Direct Listing. Subject to certain limitations, all of our outstanding shares held by our directors, executive officers and entities affiliated with our directors prior to the Direct Listing, and the other shares subject to lock-up periods described above, will become eligible for sale upon expiration of the applicable lock-up period. In addition, shares issued or issuable upon exercise of warrants, if any, held by these stockholders and vested as of the expiration of the lock-up period will be eligible for sale at that time.

Furthermore, our business profile and market capitalization may not fit the investment objectives of some LiveOne stockholders and, as a result, these LiveOne stockholders may sell their shares of our common stock after the Spin-Out. See risk factor below captioned "— Substantial sales of our common stock may occur in connection with the Spin-Out, which could cause our stock price to decline." Low trading volume for our common stock, which may occur if an active trading market does not develop, among other reasons, would amplify the effect of the above factors on our stock price volatility.

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could adversely affect the trading price of our common stock.

 ***We will not conduct a traditional "roadshow" with underwriters prior to the opening of trading of our common stock on The Nasdaq Capital Market, however we plan to host an investor day and engage in certain other investor education meetings.***

Typically, companies involved in a direct listing engage other investors through education meetings and presentations for an investor day with content similar to that of a traditional roadshow presentation. We will not conduct a traditional "roadshow," however, we plan to have an "Investor Day" as companies who engage in direct listings normally conduct. As a result, there will not be efficient or sufficient price discovery with respect to our common stock and there may not be sufficient demand among potential investors immediately after our Direct Listing, which could result in a more volatile trading price of our common stock.

***Substantial sales of our common stock may occur in connection with the Spin-Out, which could cause our stock price to decline.***

LiveOne stockholders receiving shares of our common stock in the Distribution (other than our officers and directors) generally may sell those shares immediately in the public market. Although we have no actual knowledge of any plan or intention of any significant stockholder to sell our common stock following the Spin-Out, it is likely that some LiveOne stockholders, possibly including some of its larger stockholders, will sell their shares received in the Distribution if, for reasons such as our business profile or market capitalization as an independent company, we do not fit their investment objectives, or, in the case of index funds, we are not a participant in the index in which they are investing. The sales of significant amounts of our common stock or the perception in the market that this will occur may decrease the market price of our common stock.

In addition, following the effectiveness of the registration statement of which this prospectus forms a part, we intend to file a registration statement to register all shares subject to awards outstanding or reserved for future issuance under our equity compensation plan. Accordingly, these shares will be able to be freely sold in the public market upon issuance, subject to applicable vesting requirements and compliance by affiliates with Rule 144.

***Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute all other stockholders.***

We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors, and consultants under our equity incentive plan. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in companies, products, or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the per share value of our common stock to decline.

***Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock.***

 ****

Provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, as they will be in effect immediately following the effectiveness of the registration statement of which this prospectus forms a part, may have the effect of delaying or preventing a change of control or changes in our management. Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws will include provisions that:

● authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;

● specify that special meetings of our stockholders can be called only by our board of directors;

● establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; and

● provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum.

These provisions may discourage, delay or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (the "DGCL"), which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any "interested" stockholder for a period of three years following the date on which the stockholder became an "interested" stockholder. In addition, these provisions may frustrate, discourage, delay or prevent certain types of transactions involving an actual or a threatened acquisition or change in control of our Company, including unsolicited takeover attempts, even though the transaction may offer our stockholders the opportunity to sell their common stock at a price above the prevailing market price. Any of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our common stock, and they could deter potential acquirers of our company, thereby reducing the likelihood that you would receive a premium for your shares of our common stock in an acquisition.

 **

***Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.***

 **

Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, as they will be in effect immediately following the effectiveness of the registration statement of which this prospectus forms a part, will provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. In addition, as permitted by Section 145 of the DGCL, our Amended and Restated Bylaws and indemnification agreements that we have entered or intend to enter into with our directors and officers will provide that:

● we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe such person's conduct was unlawful;

● we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law;

● we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification;

● the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees, and agents and to obtain insurance to indemnify such persons; and

● we may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees, and agents.

While we have procured directors' and officers' liability insurance policies, such insurance policies may not be available to us in the future at a reasonable rate, may not cover all potential claims for indemnification, and may not be adequate to indemnify us for all liability that may be imposed.

***Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws will provide for an exclusive forum in the Court of Chancery of the State of Delaware for certain disputes between us and our stockholders, and that the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act.***

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Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws will provide that: (i) unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for: (A) any derivative action or proceeding brought on our behalf, (B) any action asserting a claim for or based on a breach of a fiduciary duty owed by any of our current or former directors, officers, other employees, agents, or stockholders to us or our stockholders, including, without limitation, a claim alleging the aiding and abetting of such a breach of fiduciary duty, (C) any action asserting a claim against us or any of our current or former directors, officers, other employees, agents, or stockholders arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (D) any action asserting a claim related to or involving us that is governed by the internal affairs doctrine; (ii) unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act and the rules and regulations promulgated thereunder; (iii) the exclusive forum provisions are intended to benefit and may be enforced by us, our officers and directors, the financial advisors to any offering giving rise to such complaint, and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering; and (iv) any person or entity purchasing or otherwise acquiring or holding any interest in our shares of capital stock will be deemed to have notice of and consented to these provisions. Nothing in our current certificate of incorporation or bylaws or our restated certificate of incorporation or amended and restated bylaws precludes stockholders that assert claims under the Exchange Act from bringing such claims in federal court, to the extent that the Exchange Act confers exclusive federal jurisdiction over such claims, subject to applicable law.

We believe these provisions may benefit us by providing increased consistency in the application of Delaware law and federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums, and protection against the burdens of multi-forum litigation. If a court were to find the choice of forum provision that will be contained in our restated certificate of incorporation or our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and results of operations.

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***FINRA sales practice requirements may limit a stockholder's ability to buy and sell our stock.***

The Financial Industry Regulatory Authority ("FINRA") has adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative or low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA has indicated its belief that there is a high probability that speculative or low-priced securities will not be suitable for at least some customers. If these FINRA requirements are applicable to us or our securities, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock.

***If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.***

The trading market for our shares of common stock will be influenced by the research and reports that securities or industry analysts publish about us. Securities and industry analysts currently provide publish limited research focused on our Company. If the current securities or industry analysts do not provide extensive coverage or commence coverage of our Company, the price and trading volume of our shares of common stock could be negatively impacted. If other securities or industry analysts initiate coverage and one or more of the analysts who cover us downgrade our shares of common stock or publish inaccurate or unfavorable research about our Company, the price of our shares of common stock would likely decline. Furthermore, if one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our shares of common stock could decrease, which might cause the price of our shares of common stock and trading volume to decline.

***We are currently a* "*smaller reporting company*," *and our election to comply with the reduced disclosure requirements as a public company may make it more challenging for investors to analyze our results of operations and financial prospects and may make our common stock less attractive to investors*.**

We are currently considered to be a "smaller reporting company" as defined by the SEC's revised rules. For so long as we remain a smaller reporting company, we are permitted and intend to rely on exemptions from certain disclosure and other requirements that are applicable to other public companies that are not smaller reporting companies, such as providing only two years of audited financing statements, providing simplified executive compensation disclosures in our filings, being exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of our internal control over financial reporting, and having certain other decreased disclosure obligations in our filings with the SEC. Consequently, it may be more challenging for investors to analyze our results of operations and financial prospects. We will remain a smaller reporting company if we have either (i) a public float of less than $250 million held by non-affiliates as of the last business day of the second quarter of our then current fiscal year or (ii) annual revenues of less than $100 million during such recently completed fiscal year with less than $700 million in public float as of the last business day of the second quarter of such fiscal year.

If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. It is possible that some investors will find our common stock less attractive as a result, which may result in a less active trading market for our common stock and higher volatility in our stock price.

***Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.***

Section 382 and 383 ("Section 382 and 383") of the Internal Revenue Code of 1986, as amended (the "Code"), contains rules that limit the ability of a company that undergoes an ownership change to utilize its net operating losses ("NOLs") and tax credits existing as of the date of such ownership change. Under the rules, such an ownership change is generally any change in ownership of more than 50% of a company's stock within a rolling three-year period. The rules generally operate by focusing on changes in ownership among stockholders considered by the rules as owning, directly or indirectly, 5% or more of the stock of a company and any change in ownership arising from new issuances of stock by the company. As a result of these Section 382 and 383 limitations, any ownership changes as defined by Section 382 and 383 may limit the amount of NOL carryforwards that could be utilized annually to offset future taxable income.

***We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock.***

We have never declared or paid any cash dividend on our common stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Additionally, any credit and security agreement that we may enter into in the future will likely contain covenants that will restrict our ability to pay dividends. Any return to stockholders will therefore be limited to the appreciation of their stock.

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***We are an "emerging growth company," and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.***

We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from reporting requirements that are applicable to other public companies that are not "emerging growth companies," including the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act (Section 404), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our consolidated financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make our common stock less attractive to investors. In addition, if we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards.

We will remain an emerging growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of the listing of our common stock on The Nasdaq Capital Market; (2) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (3) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (4) the date we qualify as a "large accelerated filer," with at least $700 million of equity securities held by non-affiliates.

We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future results of operations may not be comparable to the results of operations of certain other companies in our industry that adopted such standards. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.

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*The risks above do not necessarily comprise of all those associated with an investment in our Company. This registration statement contains forward looking statements that involve unknown risks, uncertainties and other factors that may cause our actual results, financial condition, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Factors that might cause such a difference include, but are not limited to, those set out above.*

**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This prospectus contains forward-looking statements. All statements contained in this prospectus other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and our objectives for future operations, are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions are intended to identify such forward-looking statements.

Forward-looking statements contained in this prospectus include, but are not limited to, statements about:

● future business, social, goals and measures;

● our anticipated growth prospects and trends in markets and industries relevant to our business;

● business and investment plans;

● expectations about our ability to maintain or enhance our leadership position in the markets in which we participate;

● future consumer demand and behavior;

● future products and technology, and the expected availability and benefits of such products and technology;

● development of regulatory frameworks for current and future technology;

● projected cost and pricing trends;

● potential future benefits and competitive advantages associated with our technologies; the future use and availability of services and technologies supplied by third parties;

● uncertain events or assumptions, including statements relating to market opportunity, potential podcast listener numbers and other characterizations of future events or circumstances; expected completion of the Spin-Out;

● future responses to and effects of the COVID-19 pandemic;

● availability, uses, sufficiency and cost of capital and capital resources, including expected returns to stockholders such as dividends, and the expected timing of future dividends;

● other statements described in this prospectus under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business."

The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. Forward-looking statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We believe that these factors include, but are not limited to, adverse changes in general economic or market conditions and other one-time events and other important factors set forth under "Risk Factors." Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement of which this prospectus forms a part with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

The estimates and forward-looking statements contained in this prospectus speak only as of the date of this prospectus. Except as required by applicable law, we undertake no obligation to publicly update or revise any estimates or forward-looking statements whether as a result of new information, future events or otherwise, or to reflect the occurrence of unanticipated events.

**INDUSTRY, MARKET AND OTHER DATA**

This prospectus contains estimates and forecasts concerning our industry, our current and anticipated future solutions, that are based on industry publications and reports or other publicly available information as well as our internal estimates and expectations. This information involves a number of assumptions and limitations, and is subject to significant uncertainty, and you are cautioned not to give undue weight to these estimates. Industry surveys and publications generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy and completeness of the included information. We have not independently verified this third-party information. Similarly, our internal estimates and forecasts are based on a variety of assumptions, including assumptions regarding market acceptance of podcasts and the manner in which this new and rapidly evolving market will develop. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the headings "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in this prospectus.

The source of certain statistical data, estimates, and forecasts contained in this prospectus are the following independent industry publications or reports:

● https://www.podcastawards.com

● http://www.edisonresearch.com/wp-content/uploads/2022/02/Super-Listeners-from-Edison-Research-and-Ad-Results-Media-2-16-22.pdf

● Podtrac

● https://www.iab.com/insights/u-s-podcast-advertising-revenue-report-fy-2021-results-2022-2024-growth-projections

● Edison Research – "Share of Ear" Q3-Q4 2017 vs Q32021

● https://www.edisonresearch.com/the-spoken-word-audio-report-2022-from-npr-and-edison-research/

● eMarketer, Feb 2021

● https://www.insideradio.com/free/emarketer-forecast-podcast-ad-revenue-to-climb-29-this-year/article_b059daaa-d741-11ec-a248-2b06e48f20f9.html

● https://www.buzzsprout.com/blog/podcast-statistics

● https://www.insideradio.com/podcastnewsdaily/to-be-discovered-edison-s-tom-webster-says-podcasters-need-to-reach-into-new-places/article_c8b7e27a-f60c-11eb-8ed0-7fab7c703dd4.html

**TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND TRADENAMES** 

We own or otherwise have rights to the trademarks, service marks, and copyrights, including those mentioned in this prospectus, used in conjunction with the operation of our business. This prospectus includes our own trademarks, which are protected under applicable intellectual property laws, as well as trademarks, service marks, copyrights, and tradenames of other companies, which are the property of their respective owners. We do not intend our use or display of other companies' trademarks, service marks, copyrights, or tradenames to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Solely for convenience, trademarks and tradenames referred to in this prospectus may appear without the <sup>®</sup>, <sup>™</sup>, or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and tradenames.

**THE SPIN-OUT** 

**Background** 

On July 15, 2022, LiveOne announced plans for the spin-out of our Company as a separate public company and LiveOne's plan to dividend a portion of shares of our common stock to LiveOne's stockholders as of a future record date. LiveOne has now determined to distribute five to ten percent of LiveOne's equity interest in us to LiveOne's eligible stockholders, with the exact terms of such dividend and the condition of eligibility of LiveOne's stockholders to receive such dividend to be announced at a future date, prior to the registration statement of which this prospectus is a part being declared effective by the SEC. We refer to such dividend distribution in this prospectus as the Distribution. Following the Spin-Out, LiveOne, the holders of the Bridge Notes (on as converted basis) and our management will own the remaining outstanding shares of our common stock, and we will operate independently from LiveOne (other than our Company continuing to be LiveOne's majority owned subsidiary). No approval of LiveOne common stock holders is required in connection with the Spin-Out, and LiveOne common stock holders will not have any appraisal rights in connection with the Spin-Out.

The completion of the Spin-Out is subject to the satisfaction of a number of conditions. In addition, LiveOne has the right not to complete the Distribution and/or terminate the Direct Listing process prior to its completion if, at any time, LiveOne's board of directors determines, in its sole and absolute discretion, that the Distribution and/or the Direct Listing is not in the best interests of LiveOne or its stockholders or is otherwise not advisable. For a more detailed description, see "The Spin-Out — Conditions to the Spin-Out."

**Reasons for the Spin-Out** 

LiveOne's board of directors considered the following potential benefits in deciding to pursue the Spin-Out:

● The opportunities and challenges we expect to arise in the immediate future of LiveOne's core business differ markedly from those of our business. For LiveOne, the reasons for the Spin-Out include: unlocking value for stockholders, providing our management team an opportunity to showcase their skills, establishing access for our Company to capital markets, securing and keeping in place our management team (while recruiting others), utilizing our equity to incentivize podcasters to bring them under the PodcastOne umbrella by making them stakeholders in our Company. We believe the Spin-Out and our Company going public will enhance the ability of LiveOne and our Company to focus on their respective strategies.

● Our near-term goals for our business include the expansion of both the scale and the scope of our historic business model and also pursuing growth opportunities by enhancing and expanding our podcast offerings and related synergetic opportunities. Achieving these goals will likely require acquisitions or mergers funded, in part, with capital raises and strategic alliances with other companies. Our business will be separate and distinct from LiveOne's business (other than our Company continuing to be LiveOne's majority owned subsidiary) and, accordingly, we believe that pursuing such growth opportunities will be greatly facilitated with a capital structure that is tailored for our needs, separate from those of LiveOne.

● The Spin-Out will establish our Company as an independent publicly traded corporation, which we believe will meaningfully enhance our industry market perception, thereby providing greater growth opportunities for us than our consolidated operation as a private subsidiary of LiveOne.

**When and How You Will Receive Company Shares** 

LiveOne will distribute to its eligible stockholders of record as of the Record Date a special dividend of five to ten percent of LiveOne's equity interest in us, which in aggregate amounts to 2,020,000 shares of our common stock, consisting of (i) 2,000,000 Distribution Shares to be distributed as a special dividend in the Distribution and (ii) up to an additional 20,000 Distribution Shares to the extent that any Distribution Shares to be issued to LiveOne's stockholders of record in the Distribution are required to be rounded up. The exact terms of such dividend and the condition of eligibility of LiveOne's stockholders to receive such dividend to be announced at a future date, prior to the registration statement of which this prospectus is a part being declared effective by the SEC

Prior to the Spin-Out, LiveOne will deliver all of the Distribution Shares to the distribution agent. Vstock Transfer, LLC ("Vstock"), will serve as distribution agent in connection with the Distribution and as transfer agent and registrar for our common stock.

If you own shares of LiveOne common stock as of the close of business on both the Record Date and the Distribution Date, the shares of our common stock that you may be entitled to receive in the Distribution will be issued to your account as follows:

● *Registered stockholders*. If you own your shares of LiveOne common stock directly through LiveOne's transfer agent, Vstock, you are a registered stockholder. In this case, the distribution agent will credit the whole shares of our common stock you receive in the Distribution by way of direct registration in book-entry form to a new account with our transfer agent. Registration in book-entry form refers to a method of recording share ownership where no physical stock certificates are issued to stockholders, as is the case in the Distribution. You will be able to access information regarding your book-entry account holding our shares at Vstock.

Commencing on or shortly after the Distribution Date, the distribution agent will mail to you an account statement that indicates the number of whole shares of our common stock that have been registered in book-entry form in your name. We expect it will take the distribution agent up to two weeks after the Distribution Date to complete the distribution of the shares of our common stock and mail statements of holding to all registered stockholders.

● *"Street name" or beneficial stockholders*. Most LiveOne stockholders own their shares of LiveOne common stock beneficially through a bank, broker or other nominee. In these cases, the bank, broker or other nominee holds the shares in "street name" and records your ownership on its books. If you own your shares of LiveOne common stock through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the whole shares of our common stock that you receive in the Distribution on or shortly after the Distribution Date. We encourage you to contact your bank, broker or other nominee if you have any questions concerning the mechanics of having shares held in "street name."

If you sell any of your shares of LiveOne common stock on or before the Distribution Date, the buyer of those shares may in some circumstances be entitled to receive the shares of our common stock to be distributed in respect of the LiveOne shares you sold. **Therefore, you must hold your shares of LiveOne common stock as of both the Record Date and the Distribution Date, to be eligible to receive the portion of the Distribution Shares that you may be entitled to receive in the Distribution.** See "The Spin-Out — Trading Prior to the Distribution Date" for more information.

We are not asking LiveOne stockholders to take any action in connection with the Spin-Out. No approval of the holders of LiveOne common stock is required for the Spin-Out. We are not asking you for a proxy and request that you not send us a proxy. We are also not asking you to make any payment or surrender or exchange any of your shares of LiveOne common stock for shares of our common stock. The number of outstanding shares of LiveOne common stock will not change as a result of the Spin-Out.

**Number of Shares You Will Receive** 

On the Distribution Date, you will be entitled to receive one share of our common stock for each ______ shares of LiveOne common stock you hold on the Record Date.

**Treatment of Fractional Shares** 

The distribution agent will not distribute any fractional shares of our common stock as part of the Distribution. The distribution agent will round up any fractional shares resulting from the Distribution to the nearest whole share, and each LiveOne stockholder who otherwise would be entitled to a fractional share shall receive, in lieu of a fractional share, a whole new share of our common stock at no additional cost. The distribution agent is not an affiliate of either LiveOne or us.

The distribution agent will reflect for each registered holder of LiveOne common stock one whole share of our common stock that have been registered in book-entry form in your name in lieu of that holder's fractional share as soon as practicable following the Distribution Date. We expect it will take the distribution agent up to two weeks after the Distribution Date to complete the distribution of the shares of our common stock and mail statements of holding to all registered stockholders.

If you hold your shares of LiveOne common stock through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with one whole share of our common stock that you receive in the Distribution in lieu of your fractional share as soon as practicable following the Distribution Date.

**Results of the Spin-Out** 

After the Spin-Out, we will be an independent publicly-traded company. Immediately following the Spin-Out, we expect to have approximately ______ holders of shares of our common stock and approximately 23.1 million shares of our common stock outstanding, based on the number of LiveOne stockholders and shares of LiveOne common stock outstanding on the Record Date. The actual number of shares of our common stock LiveOne will distribute in the Distribution will depend on the actual number of shares of LiveOne common stock outstanding on the Record Date, which will reflect any issuance of new shares or exercises of outstanding options pursuant to LiveOne's equity plans, and any repurchase of LiveOne shares by LiveOne under its common stock repurchase program, on or prior to the Record Date. The Spin-Out will not affect the number of outstanding shares of LiveOne common stock or any rights of LiveOne stockholders, although the trading price of shares of LiveOne common stock immediately following the Distribution may be lower than immediately prior to the Distribution because the trading price of LiveOne common stock will no longer reflect the partial value of the Distribution Shares. Furthermore, until the market has fully analyzed the value of LiveOne without our Company, the trading price of shares of LiveOne common stock may fluctuate.

Before our separation from LiveOne, we intend to enter into a Separation Agreement and several other agreements with LiveOne related to the Spin-Out. These agreements will govern the relationship between us and LiveOne up to and after completion of the Spin-Out and allocate between us and LiveOne various assets, liabilities, rights and obligations, including employee benefits, intellectual property and tax-related assets and liabilities. We describe these arrangements in greater detail under "Certain Relationships and Related Party Transactions — Agreements with LiveOne."

**Listing and Trading of Our Common Stock** 

As of the date of this prospectus, we are a wholly owned subsidiary of LiveOne. Accordingly, no public market for our common stock currently exists, although a "when-issued" market in our common stock may develop prior to the Spin-Out. See "The Spin-Out — Trading Prior to the Distribution Date" below for an explanation of a "when-issued" market. We intend to list our common stock on The Nasdaq Capital Market under the symbol "PODC." Following the Spin-Out, LiveOne common stock will continue to trade on The Nasdaq Capital Market under the symbol "LVO."

Neither we nor LiveOne can assure you that our common stock will begin trading on The Nasdaq Capital Market. In addition, neither we nor LiveOne can assure you as to the trading price of LiveOne common stock or our common stock after the Spin-Out, or as to whether the combined trading prices of our common stock and the LiveOne common stock after the Spin-Out will be less than, equal to or greater than the trading prices of LiveOne common stock prior to the Spin-Out. The trading price of our common stock may fluctuate significantly following the Spin-Out. See "Risk Factors — Risks Relating to Our Common Stock and the Securities Market" for more detail.

The shares of our common stock distributed to LiveOne stockholders will be freely transferable, except for shares received by individuals who are LiveOne's and/or our affiliates. Individuals who may be considered our affiliates after the Spin-Out include individuals who control, are controlled by or are under common control with us, as those terms generally are interpreted for federal securities law purposes. These individuals may include some or all of LiveOne's and/or our directors and executive officers. Individuals who are LiveOne's and/or our affiliates will be permitted to sell their shares of our common stock only pursuant to an effective registration statement under the Securities Act, or an exemption from the registration requirements of the Securities Act, such as those afforded by Section 4(1) of the Securities Act or Rule 144 thereunder.

**Trading Prior to the Distribution Date** 

We anticipate that trading in our common stock may begin on a "when-issued" basis as early as two trading days prior to the Distribution Date and continue up to and including the Distribution Date. "When-issued" trading in the context of a Distribution refers to a sale or purchase made conditionally on or before the Distribution Date because the securities of the spun-off entity have not yet been distributed. If you own shares of LiveOne common stock at the close of business on both the Record Date and the Distribution Date, you will be entitled to receive shares of our common stock in the Distribution. You may trade this entitlement to receive shares of our common stock, without the shares of LiveOne common stock you own, on the "when-issued" market. We expect "when-issued" trades of our common stock to settle within four trading days after the Distribution Date. On the first trading day following the Distribution Date, we expect that "when-issued" trading of our common stock will end and "regular-way" trading will begin.

We also anticipate that, as early as two trading days prior to the Record Date and continuing up to and including the Distribution Date, there will be two markets in LiveOne common stock: a "regular-way" market and an "ex-distribution" market. Shares of LiveOne common stock that trade on the regular-way market will trade with an entitlement to receive shares of our common stock in the Distribution. Shares that trade on the ex-distribution market will trade without an entitlement to receive shares of our common stock in the Distribution. Therefore, if you sell shares of LiveOne common stock in the regular-way market up to and including the Distribution Date, you will be selling your right to receive shares of our common stock in the Distribution. However, if you own shares of LiveOne common stock at the close of business on both the Record Date and the Distribution Date and sell those shares on the ex-distribution market up to and including the Distribution Date, you will still receive the shares of our common stock that you would otherwise be entitled to receive in the Distribution.

We have applied to list our common stock on The Nasdaq Capital Market. Following the Distribution Date, we expect shares of our common stock to be listed on The Nasdaq Capital Market under the trading symbol "PODC." If "when-issued" trading occurs, the listing for our common stock is expected to be under a trading symbol different from our regular-way trading symbol. We will announce our "when-issued" trading symbol when and if it becomes available. If the Spin-Out does not occur, all "when-issued" trading will be null and void. At such time that Nasdaq approves our common stock to be listed on The Nasdaq Capital Market, we will seek clarification from Nasdaq if trading in our common stock will begin on a "when-issued" basis.

**Conditions to the Spin-Out** 

We expect that the Distribution will be effective on or about the Distribution Date in connection with the consummation of the Direct Listing, which we expect to be effective on or about ______, 2023, provided that the following conditions shall have been satisfied:

● LiveOne's board of directors shall not have withdrawn its authorization and approval of the Direct Listing and/or the Distribution;

● LiveOne's senior lenders (East West Bank, Harvest Small Cap Partners, L.P. and Harvest Small Cap Partners Master, Ltd.) shall have authorized and approved the Direct Listing and the Distribution, and we shall have entered into any amendments to LiveOne's security agreements and other ancillary agreements with the senior lenders that they determine to be necessary, in each case, on terms and conditions acceptable to us;

● the Separation Agreement and the Administrative Services Agreement and the ancillary agreements contemplated by those agreements shall have been executed by each party to those agreements;

● we shall have entered into any financing we determine to be necessary or advisable, in each case, on terms and conditions acceptable to us;

● the SEC shall have declared effective the registration statement, of which this prospectus is a part, under the Securities Act, and no stop order suspending the effectiveness of such registration statement shall be in effect and no proceedings for that purpose shall be pending before or threatened by the SEC;

● our common stock shall have been accepted for listing on The Nasdaq Capital Market or another national securities exchange approved by LiveOne, subject to official notice of issuance;

● no order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution shall be in effect, and no other event outside the control of LiveOne shall have occurred or failed to occur that prevents the consummation of the Distribution;

● no other events or developments shall have occurred prior to the Distribution Date that, in the judgment of LiveOne's board of directors, would result in the Spin-Out having a material adverse effect on LiveOne or its stockholders;

● prior to the Distribution Date, this prospectus shall have been mailed or otherwise publicly made available to the holders of LiveOne common stock as of the Record Date;

● LiveOne shall have duly elected the individuals to be listed as members of our post-Distribution board of directors in this prospectus, and such individuals shall be the members of our board of directors, which we refer to as our "Board," immediately after the Distribution; provided that our then current directors may appoint additional directors to serve on our board of directors prior to the date on which "when-issued" trading of our common stock commences;

● immediately prior to the Distribution Date, our Amended and Restated Certificate of Incorporation and Amended and Restated By-laws, each in substantially the form filed as an exhibit to the registration statement of which this prospectus is a part, shall be in effect; and

● LiveOne shall have received a certificate signed by our Interim Chief Financial Officer, dated as of the Distribution Date, certifying the satisfaction of certain conditions.

**Reasons for Furnishing this Prospectus** 

We are furnishing this prospectus solely to provide information to LiveOne's stockholders who will receive shares of our common stock in the Distribution. You should not construe this prospectus as an inducement or encouragement to buy, hold or sell any of our securities or any securities of LiveOne. We believe that the information contained in this prospectus is accurate as of the date set forth on the cover. Changes to the information contained in this prospectus may occur after that date, and neither we nor LiveOne undertakes any obligation to update the information except in the normal course of our and LiveOne's public disclosure obligations and practices and except as required by applicable law.

**MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION**

 ****

 **Consequences to U.S. Holders of LiveOne Common Stock** 

The following is a summary of the material U.S. federal income tax consequences to holders of LiveOne common stock in connection with the Distribution. This summary is based on the Code, the Treasury Regulations promulgated under the Code and judicial and administrative interpretations of those laws, in each case as in effect and available as of the date of this prospectus and all of which are subject to change at any time, possibly with retroactive effect. Any such change could affect the tax consequences described below.

This summary is limited to holders of LiveOne common stock that are U.S. Holders, as defined immediately below, that hold their LiveOne common stock as a capital asset. A "U.S. Holder" is a beneficial owner of LiveOne common stock that is, for U.S. federal income tax purposes:

● an individual who is a citizen or a resident of the United States;

● a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any state thereof or the District of Columbia;

● an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

● a trust if a court within the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or, in the case of a trust that was treated as a domestic trust under law in effect before 1997, a valid election is in place under applicable Treasury Regulations.

This summary does not discuss all tax considerations that may be relevant to stockholders in light of their particular circumstances, nor does it address the consequences to stockholders subject to special treatment under the U.S. federal income tax laws, such as:

● dealers or traders in securities or currencies;

● tax-exempt entities;

● banks, financial institutions or insurance companies;

● real estate investment trusts, regulated investment companies or grantor trusts;

● persons who acquired LiveOne common stock pursuant to the exercise of employee stock options or otherwise as compensation;

● stockholders who own, or are deemed to own, 10% or more, by voting power or value, of LiveOne equity;

● stockholders owning LiveOne common stock as part of a position in a straddle or as part of a hedging, conversion or other risk reduction transaction for U.S. federal income tax purposes;

● certain former citizens or long-term residents of the United States;

● stockholders who are subject to the alternative minimum tax; or

● persons who own LiveOne common stock through partnerships or other pass-through entities.

This summary does not address any U.S. state or local or foreign tax consequences or any estate, gift or other non-income tax consequences.

If a partnership, or any other entity treated as a partnership for U.S. federal income tax purposes, holds LiveOne common stock, the tax treatment of a partner in that partnership will generally depend on the status of the partner and the activities of the partnership. Such a partner or partnership should consult its own tax advisor as to its tax consequences.

**YOU SHOULD CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES OF THE DISTRIBUTION.** 

 ****

***General***

Subject to the qualifications and limitations set forth herein, we believe that for U.S. federal income tax purposes:

● each U.S. Holder who receives our common stock in the Distribution would generally be treated as receiving a distribution in an amount equal to the fair market value of our common stock received, which would generally result in a gain to be recognized, as applicable, by, or be includible in the income of, such U.S. Holder as a result of the Distribution;

● the aggregate tax basis of the LiveOne common stock and our common stock held by each U.S. Holder immediately after the Distribution will be the same as the aggregate tax basis of the LiveOne common stock held by the U.S. Holder immediately before the Distribution, allocated between the LiveOne common stock and our common stock in proportion to their relative fair market values on the date of the Distribution; and

● the holding period of our common stock received by each U.S. Holder will include the holding period of their LiveOne common stock, provided that such LiveOne common stock is held as a capital asset on the date of the Distribution.

U.S. Holders that have acquired different blocks of LiveOne common stock at different times or at different prices should consult their tax advisors regarding the allocation of their aggregate adjusted tax basis among, and the holding period of, shares of our common stock distributed with respect to such blocks of LiveOne common stock.

The opinions above do not address any U.S. state or local or foreign tax consequences of the Distribution. The opinions assume that the Distribution will be completed according to the terms of the Separation Agreement and rely on the facts as stated in the Separation Agreement, the other ancillary agreements, this prospectus and a number of other documents. In addition, the opinions above are based on certain representations as to factual matters from, and certain covenants by, LiveOne and us. The opinions cannot be relied on if any of the assumptions, representations or covenants are incorrect, incomplete or inaccurate or are violated in any material respect.

The conclusions set forth above are not binding on the Internal Revenue Service ("IRS") or the courts, and we cannot assure you that the IRS or a court will not take a contrary position.

 ****

***Information Statement***

Treasury Regulations require each LiveOne stockholder that, immediately before the Distribution, owned 5% or more (by vote or value) of the total outstanding stock of LiveOne to attach to such stockholder's U.S. federal income tax return for the year in which the Distribution occurs a statement setting forth certain information related to the Distribution.

 ****

***Consequences to LiveOne***

The following is a summary of the material U.S. federal income tax consequences to LiveOne in connection with the Distribution that may be relevant to holders of LiveOne common stock.

Subject to the qualifications and limitations set forth herein, we believe that the Distribution will not qualify for non-recognition of gain and loss under Section 355 of the Code for U.S. federal income tax purposes, and LiveOne will need to recognize gain in an amount up to the fair market value of our common stock held by it immediately before the Distribution.

The statements set forth above are subject to the same qualifications and limitations as are set forth above in relation to the consequences of the Distribution to U.S. Holders.

 **Consequences to Non-U.S. Holders of LiveOne Common Stock** 

The following discussion is a summary of the material U.S. federal income tax consequences to Non-U.S. Holders (as defined below) generally applicable to the ownership and disposition of our common stock by a Non-U.S. Holder (as defined below) that acquires our common stock and holds our common stock as a capital asset (generally, property held for investment), but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local, or non-U.S. tax laws are not discussed. This discussion is based on the Code, Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the IRS, in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a Non-U.S. Holder. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance that the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the ownership and disposition of our common stock.

This discussion does not address all U.S. federal income tax consequences relevant to a Non-U.S. Holder's particular circumstances, including the impact of the Medicare contribution tax on net investment income and the alternative minimum tax or subject to special rules, including, without limitation:

● U.S. expatriates and former citizens or long-term residents of the United States;

● persons holding our common stock as part of a hedge, straddle, or other risk reduction strategy or as part of a conversion transaction or other integrated investment;

● banks, insurance companies, and other financial institutions;

● brokers, dealers, or traders in securities;

● "controlled foreign corporations," "passive foreign investment companies," and corporations that accumulate earnings to avoid U.S. federal income tax;

● partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);

● tax-exempt organizations or governmental organizations;

● persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code;

● persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation;

● tax-qualified retirement plans; and

● "qualified foreign pension funds" as defined in Section 897(l)(2) of the Internal Revenue Code and entities all of the interests of which are held by qualified foreign pension funds.

If an entity treated as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership, and certain determinations made at the partner level. Accordingly, partnerships holding our common stock and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.

 **THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.** 

 **Definition of a Non-U.S. Holder** 

For purposes of this discussion, a "Non-U.S. Holder" is any beneficial owner of our common stock that is neither a "U.S. person" nor an entity treated as a partnership for U.S. federal income tax purposes. A U.S. person is any person that, for U.S. federal income tax purposes, is or is treated as any of the following:

● an individual who is a citizen or resident of the United States;

● a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia;

● an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

● a trust that (i) is subject to the primary supervision of a U.S. court and all substantial decisions of which are subject to the control of one or more "United States persons" (within the meaning of Section 7701(a)(30) of the Code), or (ii) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.

 **Distributions** 

As described in the section titled "Dividend Policy," we do not currently anticipate paying dividends on our common stock. However, if we do make distributions of cash or property on our common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and first be applied against and reduce a Non-U.S. Holder's adjusted tax basis in its common stock, but not below zero. Any excess will be treated as capital gain and will be treated as described under the subsection titled "—Sale or Other Taxable Disposition" below.

Subject to the discussion below regarding effectively connected income, dividends paid to a Non-U.S. Holder will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable income tax treaty, provided the Non-U.S. Holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) certifying qualification for the lower treaty rate). A Non-U.S. Holder that does not timely furnish the required documentation, but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under any applicable tax treaties.

If dividends paid to a Non-U.S. Holder are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such dividends are attributable), the Non-U.S. Holder will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the Non-U.S. Holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States.

Any such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular rates. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected dividends, as adjusted for certain items. Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.

 **Sale or Other Taxable Disposition** 

A Non-U.S. Holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition of our common stock unless:

● the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such gain is attributable);

● the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or

● Our common stock constitutes a U.S. real property interest (USRPI) by reason of our status as a U.S. real property holding corporation (USRPHC) for U.S. federal income tax purposes.

Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular rates applicable to U.S. persons. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.

A Non-U.S. Holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on gain realized upon the sale or other taxable disposition of our common stock, which may be offset by certain U.S. source capital losses of the Non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

With respect to the third bullet point above, we believe we currently are not, and do not anticipate becoming, a USRPHC. Because the determination of whether we are a USRPHC depends, however, on the fair market value of our USRPIs relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance we currently are not a USRPHC or will not become one in the future. Even if we are or were to become a USRPHC, gain arising from the sale or other taxable disposition of our common stock by a Non-U.S. Holder will not be subject to U.S. federal income tax if our common stock is "regularly traded," as defined by applicable Treasury Regulations, on an established securities market, and such Non-U.S. Holder owned, actually and constructively, 5% or less of our common stock throughout the shorter of the five-year period ending on the date of the sale or other taxable disposition or the Non-U.S. Holder's holding period.

Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.

 **Information Reporting and Backup Withholding** 

Payments of dividends on our common stock will not be subject to backup withholding, provided the Non-U.S. Holder certifies its non-U.S. status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E, or W-8ECI, or otherwise establishes an exemption. However, information returns are required to be filed with the IRS in connection with any distributions on our common stock paid to the Non-U.S. Holder, regardless of whether such distributions constitute dividends or whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of our common stock within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting if the applicable withholding agent receives the certification described above or the Non-U.S. Holder otherwise establishes an exemption. Proceeds of a disposition of our common stock conducted through a non-U.S. office of a non-U.S. broker that does not have certain enumerated relationships with the United States generally will not be subject to backup withholding or information reporting.

Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a Non-U.S. Holder's U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

 **Additional Withholding Tax on Payments Made to Foreign Accounts** 

Withholding taxes may be imposed under Sections 1471 to 1474 of the Code (such Sections commonly referred to as the Foreign Account Tax Compliance Act (FATCA)) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or (subject to the proposed Treasury Regulations discussed below) gross proceeds from the sale or other disposition of, our common stock paid to a "foreign financial institution" or a "non-financial foreign entity" (each as defined in the Code), unless (i) the foreign financial institution undertakes certain diligence and reporting obligations, (ii) the non-financial foreign entity either certifies it does not have any "substantial United States owners" (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (i) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain "specified United States persons" or "United States owned foreign entities" (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.

Under applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our common stock. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of our common stock beginning on January 1, 2020, proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued.

 **Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our common stock.** 

**USE OF PROCEEDS**

Registered Stockholders may, or may not, elect to sell or distribution, as applicable, shares of our common stock covered by this prospectus. To the extent any Registered Stockholder chooses to sell or distribution, as applicable, shares of our common stock covered by this prospectus, we will not receive any proceeds from any such sales of our common stock. See "Principal and Registered Stockholders."

**DIVIDEND POLICY** 

We have never declared or paid any cash dividends on our capital stock. We do not currently anticipate paying dividends on our common stock. Any declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends, the provisions of Delaware law affecting the payment of dividends and distributions to stockholders, and other considerations that our board of directors deems relevant. In addition, future agreements governing our indebtedness may limit our ability to pay dividends. See "Risk Factors — Risks Related to Ownership of Our Common Stock — We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock."

**CAPITALIZATION** 

The following table sets forth our cash and cash equivalents, and our capitalization as of December 31, 2022 as follows:

● on an actual basis; and

● on a pro forma basis gives effect to (i) the Bridge Notes Conversion of $5,715,000, which includes the redemption of $1,000,000 of the notes in cash as a result of the Company not completing a Qualified Financing or Event by February 15th; (ii) the cancellation of the derivative associated with the redemption feature in the Bridge Notes of $1,411,000; (iii) interest expense acceleration related to the accretion of the remaining Bridge Loan debt discount of $3,121,000; and (iv) the cancellation of 127,984,230 shares of our common stock due to the filing and effectiveness of our Amended and Restated Certificate of Incorporation and the adoption of our Amended and Restated Bylaws, each of which will occur in connection with the effectiveness of the registration statement of which this prospectus forms a part.

You should read this information in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus and the "Summary Consolidated Financial and Operating Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of this prospectus.

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| | | |
|:---|:---|:---|
|  | **As of December 31, 2022** | **As of December 31, 2022** |
|  | **Actual** | **Pro Forma** |
|  |  ***(Unaudited)*** |  ***(Unaudited)*** |
|  |  ***(in thousands, except share<br> and per share data)*** |  ***(in thousands, except share<br> and per share data)*** |
|  Cash and cash equivalents | $3969 | $2969 |
|  **Debt:** |  |  |
|  Bridge loan | 5715 |  |
|  Redemption feature derivative | 1411  | —  |
|  Warrant derivative | 1854 | 1854 |
|  **Stockholders' equity:** |  |  |
|  Preferred stock, par value $0.00001 per share; no shares authorized, actual; 10,000,000 shares authorized, pro forma; no shares issued and outstanding, actual; and no shares issued and outstanding, pro forma |  |  |
|  Common stock, par value $0.00001 per share; 100,000,000 shares authorized, actual; 100,000,000 shares authorized, pro forma; 20,000,000 shares issued and outstanding, actual; and 23,300,611 shares issued and outstanding, pro forma |  |  |
|  Additional paid-in capital | 19535 | 27371 |
|  Accumulated deficit | (8715) | (10426) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total stockholders' equity** | 10820 | 16946 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total capitalization | $19800 | $18800 |

---

The number of shares of our common stock common stock outstanding as of December 31, 2022 excludes the following:

● 2,000,000 shares of our common stock reserved for issuance under our 2022 Plan, as well as any future increases in the number of shares of our common stock reserved for issuance under the 2022 Plan.

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF<br> FINANCIAL CONDITION AND RESULTS OF OPERATIONS** 

 

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the "Summary Consolidated Financial and Operating Information" section of this prospectus and the consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the "Risk Factors" section of this prospectus. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Our fiscal year end is March 31, and references throughout this prospectus to a given fiscal year are to the 12 months ended on that date.* 

**Overview** 

We were incorporated in the State of Delaware on February 5, 2014 and are a leading podcast platform and publisher that makes our content available to audiences via all podcasting distribution platforms, including our website (www.podcastone.com), our PodcastOne app, Apple Podcasts, Spotify, Amazon Music and more. We were recently ranked #14 on the list of Top Podcast Publishers by the podcast metric company Podtrac.

We are currently a wholly owned subsidiary of LiveOne, a Nasdaq listed company, and will be a majority owned subsidiary of LiveOne and a standalone publicly traded company after the completion of the Spin-Out. We intend to mitigate risk by acquiring multiple assets over time and across a broad spectrum of podcast related media and companies. We intend to develop these assets to provide returns via organic growth, revenue production, out-licensing, sale or spin out.

We also produce vodcasts (video podcasts), branded podcasts, merchandise, and live events on behalf of our talent and clients. With a proven 360-degree advertiser solution for multiplatform integration opportunities and hyper-targeting, we deliver millions of monthly impressions, 4.8+ million monthly unique listeners, and 20+ million IAB monthly downloads. With content covering all verticals (i.e. sports, entertainment, true-crime, business, audio dramas, self-growth, etc.), we provide a platform for brands to reach their most sought after targeted audiences.

Our operating model is focused on offering white glove service to our shows, talent, and advertising clients. With an in-house sales, production, marketing, and tech team, we believe PodcastOne delivers more to clients and talent than any other publisher in the marketplace. This allows us to scale our operations while attracting talent who bring in brand advertisers and revenue. We earn revenue through the sale of embedded host read ads, dynamic ads (host read and otherwise), segment sponsorships, and programmatic monetization channels. We also provide the opportunity for clients to have 100% share of voice with branded podcast episodes or series as well as live tours, merch, and IP ownership for original programming.

In addition to our core business, we also built, own and operate a solution for the growing number of independent podcasters, Launchpad One. Launchpad One is a self-publishing podcast platform, created to provide a low or no cost tool for independent podcasters without access to parent podcasting networks or state of the art equipment to create shows. Launchpad One serves as a talent pool for us to find new podcasts and talent.

We have experienced significant growth in recent years driven by increased advertising activity. For the years ended March 31, 2022, the period July 1, 2020 to March 31, 2021 and April 1, 2020 to June 30, 2020, our revenue was $32.3 million, $19.7 million and $4.2 million, respectively, representing year-over-year growth of 36%. Our revenue was $25.8 million and $24.1 million, respectively, for the nine months ended December 31, 2022 and 2021, respectively, representing year-over-year growth of 7%. For the years ended March 31, 2022, the period July 1, 2020 to March 31, 2021 and April 1, 2020 to June 30, 2020 and nine months ended December 31, 2022 and 2021, our net income (loss) was $(3.6) million, $(2.1) million, $(1.2) million, $(3.0) million, and $(2.9) million, respectively. For the years ended March 31, 2022 the period July 1, 2020 to March 31, 2021 and April 1, 2020 to June 30, 2020 and nine months ended December 31, 2022 and 2021, our net cash provided by (used in) operating activities was $(2.0) million, $0.3 million, $(0.4) million, $(4.4) million, and $(1.0) million, respectively.

**Our Business Model** 

We are an Ad-Supported Service that provides free content to listeners via their mobile and desktop devices. We generate revenue from the sale of audio, video and social advertising delivered through advertising impressions. We generally enter into arrangements with advertising agencies that purchase advertising on our platform on behalf of the agencies' clients. These advertising arrangements typically specify the type of advertising product, pricing, insertion dates, and number of impressions in a stated period. Revenue for our Ad-Supported segment is affected primarily by the number of a show's listeners and our ability to provide innovative advertising products that are relevant to our Ad-Supported Users and enhance returns for our advertising partners. Our advertising strategy centers on the belief that advertising products that are based on content and are relevant to the Ad-Supported User can enhance Ad-Supported Users' experiences and provide even greater returns for advertisers through the strength of our host-read embedded promos. According to a Super Listener Survey in 2021, an estimated 49% of listeners believe the hosts actually use the products and services they recommend and 60% of podcast listeners say they have bought something from hearing a podcast ad. Offering advertisers additional ways to purchase advertising on a programmatic basis is another key way that we expand our portfolio of advertising products and enhance advertising revenue. Furthermore, we continue to focus on analytics and measurement tools to evaluate, demonstrate, and improve the effectiveness of advertising campaigns on our platform.

When we are onboard new talent both parties have the common interest of creating content that advertisers want to purchase. We craft our deals with a percentage split of the advertising revenue (host-read embedded ads, DAI and programmatic) which strengthens our partnerships because when advertisers spend, we all win.

**Key Factors Affecting Our Performance** 

We believe that the growth and future success of our business depends on many factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations.

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***Impressions***

The digital advertising industry is introducing new ways to measure and price advertising inventory. For example, a significant portion of advertisers are in the process of moving from purchasing advertisement impressions based on the number of advertisements served by the applicable ad server to a new "viewable" impression standard (based on number of pixels in view and duration) for select products. In the absence of a uniform industry standard, agencies and advertisers have adopted several different measurement methodologies and standards. In addition, measurement services may require technological integrations, which are still being evaluated by the advertising industry without an agreed-upon industry standard metric. As these trends in the industry continue to evolve, our advertising revenue may be adversely affected by the availability, accuracy, and utility of the available analytics and measurement technologies as well as our ability to successfully implement and operationalize such technologies and standards.

Further, the digital advertising industry is shifting to data-driven technologies and advertising products, such as automated buying. These data-driven advertising products and automated buying technologies allow publishers and advertisers to use data to target advertising toward specific groups of users who are more likely to be interested in the advertising message delivered to them. These advertising products and programmatic technologies are currently more developed in terms of advertising technology and industry adoption on the web than they are on mobile or on other software applications, and may not integrate with our desktop software version of the ad-supported services. Because the majority of our ad-supported user hours occur on mobile devices, if we are unable to deploy effective solutions to monetize the mobile device usage by our ad-supported user base, our ability to attract advertising spend, and ultimately our advertising revenue, may be adversely affected by this shift. In addition, we rely on third-party advertising technology platforms to participate in automated buying, and if these platforms cease to operate or experience instability in their business models, it also may adversely affect our ability to capture advertising spend.

We generate revenue by charging a cost per thousand impressions ("CPM") based on the volume of purchased digital ads that we measure on behalf of these customers. If the volume of impressions we measure does not continue to grow or decreases for any reason, our business will suffer. For example, if digital ad spending remains constant and our advertiser customers transition to higher CPM ad inventory, overall impression volumes may decrease, which may result in fewer impressions for us to verify and a corresponding decline in our revenues.

***Podcast Services***

 

Our podcasts are available to users online alongside LiveOne's digital Internet radio. Our users are able to listen to a variety of podcasts, from music, radio personalities, news, entertainment, comedy and sports. The podcasts are available on our platform, the LiveOne platforms and also on other leading podcast listening platforms such as Apple Music, Spotify, and Amazon. We monetize podcasts through paid advertising. We own one of the largest networks of podcast content in North America, which has over 300 exclusive podcast shows that produces over 300 episodes per week and has generated over 2.48 billion downloads during the year ended March 31, 2022. In April 2021, we announced an agreement with Samsung for all PodcastOne distributed content to be available via the Listen tab on Samsung TV.

In addition to PodcastOne's core business, it also built, owns and operates a solution for the growing number of independent podcasters, LaunchPadOne. LaunchPadOne is a self-publishing podcast platform, created to provide a low or no cost tool for independent podcasters without access to parent podcasting networks or state of the art equipment to create shows. LaunchPadOne serves as a talent pool for us to find new podcasts and talent.

**Key Business Metric**

We review a number of operating and financial metrics, including the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies who may calculate similarly-titled metrics in a different way.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended March 31,** | **Year Ended March 31,** | | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** | |
|  | **2022** | **2021** |<br> **YoY Growth** | **2022** | **2021** |<br> **YoY Growth** |
| Number of podcast downloads | 590412840 | 439193924 | 34% | 552481253 | 392207460 | 41% |

---

**Number of Podcast Downloads**

We are an Ad-Supported Service that provides free content to listeners via their mobile and desktop devices. We generate revenue from the sale of audio, video and social advertising delivered through advertising impressions. We generally enter into arrangements with advertising agencies that purchase advertising on our platform on behalf of the agencies' clients. These advertising arrangements typically specify the type of advertising product, pricing, insertion dates, and number of impressions in a stated period. Revenue for our Ad-Supported segment is affected primarily by the number of a show's listeners and our ability to provide innovative advertising products that are relevant to our Ad-Supported Users and enhance returns for our advertising partners. Therefore we believe our ability to grow and measure our effectiveness of advertisers is dependent on tracking the number of podcast downloaded on our platform.

**Response to COVID-19**

While the COVID-19 pandemic has had an adverse effect on the global economy, including the businesses of many of our customers and prospective customers and did, in the early stages of the pandemic, result in increased attrition from our smaller customers and those customers in the most impacted industries such as travel and entertainment, overall, the COVID-19 pandemic has resulted in favorable trends for our business and the businesses of those customers who have been able to leverage digital optimization of their products as sales increasingly shifted online. For example, during the second quarter of fiscal year 2020, the average customer's event utilization rate, which is the percent of contracted event volume a customer consumes, increased to over 100% signaling early upsell opportunities.

Although we believe the COVID-19 pandemic has largely resulted in favorable trends for our business, we have experienced business disruptions, particularly at our San Francisco headquarters due to shelter-in-place orders and restrictions on our ability to travel to customers. Moreover, our existing and prospective customers have experienced and may continue to experience slowdowns in their businesses, including due to ongoing worldwide supply chain disruptions, which in turn has and may result in reduced demand for our platform, lengthening of sales cycles, loss of customers, and difficulties in collections. In addition, the pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, which could limit our ability to access capital on favorable terms or at all. The ongoing impact of the pandemic on our future business, financial condition, and results of operations depends on the pandemic's duration and severity, which are difficult to assess or predict. See "Risk Factors" for further discussion of the impact of the COVID-19 pandemic on our business.

**Non-GAAP Financial Measures** 

The following table presents certain non-GAAP financial measures, along with the most directly comparable U.S. GAAP measure, for each period presented below. In addition to our results determined in accordance with U.S. GAAP, we believe these non-GAAP financial measures are useful in evaluating our operating performance. See below for a description of the non-GAAP financial measures and their limitations as an analytical tool. A reconciliation is also provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP.

***Adjusted EBITDA***

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 and intangible asset 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.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Net<br> Income<br> (Loss)** | **Depreciation<br> and<br> Amortization** | **Stock-Based<br> Compensation** | **Non-<br> Recurring<br> Acquisition and<br> Realignment<br> Costs** | **Other<br> (Income)<br> Expense** | **(Benefit)<br> Provision<br> for Taxes** | **Adjusted<br> EBITDA** |
| **Period Ended** | | | | | | | |
| Year Ended March 31, 2022 (Successor) | $(3604) | $634 | $2526 | $- | $(1098) | $- | $(1542) |
| July 1, 2020 to March 31, 2021 (Successor) | $(2095) | $560 | $167 | $370 | $28 | $(4) | $(974) |
| April 1, 2020 to June 30, 2020 (Predecessor) | $(1169) | $26 | $38 | $- | $1 | $4 | $(1100) |
| **Nine months Ended** |  |  |  |  |  |  |  |
| December 31, 2022 | $(3016) | $241 | $751 | $- | $2000 |  | $(24) |
| December 31, 2021 | $(2895) | $520 | $2175 | $- | $(494) |  | $(694) |

---

*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 reconciliation of Gross Profit to Revenue, the most comparable GAAP financial measure for the year ended March 31, 2022, period from July 1, 2020 to March 31, 2021, period from April 1, 2020 to June 30, 2020 and the nine months ended December 31, 2022 and 2021 (in thousands):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended<br> March 31,** | **July 1, <br> 2020 to<br> March 31,<br> 2021** | **April 1, <br> 2020 to <br> June 30,<br> 2020** | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** |
|  | **2022** | **(Successor)** | **(Predecessor)** | **2022** | **2021** |
|  |  |  |  |  ***(Unaudited)*** |  ***(Unaudited)*** |
|  |  ***(in thousands)*** |  ***(in thousands)*** |  ***(in thousands)*** |  ***(in thousands)*** |  ***(in thousands)*** |
|  Revenue | $32348 | $19675 | $4165 | $25802 | $24131 |
|  Less: |  |  |  |  |  |
|  Cost of sales | (26271) | (15368) | (2911) | (19954) | (19539) |
|  Amortization of developed technology | (110) | (9) | - | (154) | (75) |
| &nbsp;&nbsp;&nbsp; Contribution margin | 5967 | 4298 | 1254 | 5694 | 4517 |
|  Add back amortization of developed technology | 110 | 9 | - | 154 | 75 |
| &nbsp;&nbsp;&nbsp; Gross profit | $6077 | $4307 | $1254 | $5848 | $4592 |

---

***Limitations and Reconciliations of Non-GAAP Financial Measures***

Non-GAAP financial measures are presented for supplemental informational purposes only. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under U.S. GAAP. There are a number of limitations related to the use of non-GAAP financial measures versus comparable financial measures determined under U.S. GAAP. For example, other companies in our industry may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance. In addition, free cash flow does not reflect our future contractual commitments and the total increase or decrease of our cash balance for a given period. All of these limitations could reduce the usefulness of these non-GAAP financial measures as analytical tools. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures and to not rely on any single financial measure to evaluate our business.

**Components of Results of Operations** 

 ****

***Revenue***

We generate 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 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.

 ****

***Cost of Sales***

Cost of sales consists of direct costs comprised of revenue sharing expenses owed to content creators and commissions.

 ****

***Operating Expenses***

Our operating expenses consist of cost of sales, product development, sales and marketing, and general and administrative expenses. Personnel-related expenses are the most significant component of operating expenses and consist of salaries, benefits, stock-based compensation expense, and, in the case of sales and marketing expenses, sales commissions. Operating expenses also include an allocation of overhead costs for facilities and shared IT-related expenses. As we continue to invest in our business, we expect our operating expenses to continue to increase in dollar amount, and although we believe our operating expenses as a percentage of revenue will decrease over the longer term, we expect operating expenses as a percentage of revenue will increase in the short term as we invest in product innovation and sales growth and incur additional professional services and compliance costs as we operate as a public company.

***Sales and Marketing***

Sales and Marketing include direct and indirect costs related to our event advertising and marketing. Additionally, sales and marketing include merchandising advertising and royalty costs. Advertising expenses to promote our services are expensed as incurred.

  ****

***Product Development***

Product development costs not capitalized are primarily expenses for research and development, product and content development activities, including internal software development and improvement costs which have not been capitalized by us.

  ****

***Sales and Marketing***

Sales and Marketing include the direct and indirect costs related to our product and event advertising and marketing. Additionally, sales and marketing include merchandising advertising and royalty costs. Advertising expenses to promote our services are expensed as incurred.

  ****

***General and Administrative***

General and administrative expenses consist primarily of personnel-related expenses for our finance, human resources, information technology, and legal organizations. These expenses also include non-personnel costs, such as outside legal, accounting, and other professional fees, software subscriptions, as well as certain tax, license, and insurance-related expenses, and allocated overhead costs.

We also expect to recognize certain expenses as part of our transition to a publicly-traded company, consisting of professional fees and other expenses. In the quarters leading up to the listing of our common stock, we expect to incur professional fees and expenses, and in the quarter of our listing we expect to incur fees paid to our financial advisor in addition to other professional fees and expenses related to such listing. Following the listing of our common stock, we expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a U.S. securities exchange and costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC. In addition, as a public company, we expect to incur additional costs associated with accounting, compliance, insurance, and investor relations. As a result, we expect our general and administrative expenses to continue to increase in dollar amount for the foreseeable future but to generally decrease as a percentage of our revenue over the longer term, although the percentage may fluctuate from period to period depending on the timing and amount of our general and administrative expenses, including in the short term as we expect to incur increased compliance and professional service costs.

  ****

***Other Income (Expense), Net***

Other income (expense), net consists primarily of interest expense, gain/losses on derivatives, forgiveness on Paycheck Protection Program ("PPP") loans and changes in fair value of contingent consideration.

**Results of Operations** 

The following tables set forth our results of operations for the periods presented and as a percentage of our revenue for those periods. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | | | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** |
|  | **Year Ended<br> March 31,<br> 2022**<br> **(Successor)** | **July 1, <br> 2020<br> to March 31, 2021**<br> **(Successor)** | **April 1, <br> 2020<br> to June 30,<br> 2020**<br> **(Predecessor)** | **2022** | **2021** |
|  |  |  |  |  ***(Unaudited)*** |  ***(Unaudited)*** |
|  |  ***(in thousands)*** |  ***(in thousands)*** |  ***(in thousands)*** |  ***(in thousands)*** |  ***(in thousands)*** |
| **Consolidated Statements of Operations Information:** |  |  |  |  |  |
|  Revenue | $32348 | $19675 | $4165 | $25802 | $24131 |
|  Operating expenses: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Cost of sales<sup>(1)</sup> | 26271 | 15368 | 2911 | 19954 | 19.539 |
| &nbsp;&nbsp;&nbsp; Sales and marketing <sup>(1)</sup> | 5155 | 3077 | 915 | 3931 | 3642 |
| &nbsp;&nbsp;&nbsp; Product development<sup>(1)</sup> | 251 | 495 | 149 | 134 | 212 |
| &nbsp;&nbsp;&nbsp; General and administrative<sup>(1)</sup> | 4871 | 2359 | 1354 | 2723 | 3696 |
| &nbsp;&nbsp;&nbsp; Amortization of intangible assets | 502 | 448 | - | 76 | 431 |
|  Total operating expenses | 37050 | 21747 | 5329 | 26818 | 27520 |
|  Other income (expense), net | 1098 | (27) | (1) | (2000) | 494 |
|  Income (loss) before provision for income taxes | (3604) | (2099) | (1165) | (3016) | (2895) |
|  Provision (benefit) for income taxes | - | (4) | 4 | - | - |
|  Net income (loss) | $(3604) | $(2095) | $(1169) | $(3016) | $(2895) |

---

(1) Amounts include stock-based compensation
expense as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | | | **Nine Months Ended<br> December 31,**  | **Nine Months Ended<br> December 31,**  |
|  | **Year Ended<br> March 31,<br> 2022**<br> **(Successor)** | **July 1, <br> 2020<br> to March 31,<br> 2021**<br> **(Successor)** | **April 1, <br> 2020<br> to June 30,<br> 2020**<br> **(Predecessor)** | **2022** | **2021** |
|  |  |  |  |  ***(Unaudited)*** |  ***(Unaudited)*** |
|  |  ***(in thousands)*** |  ***(in thousands)*** |  ***(in thousands)*** |  ***(in thousands)*** |  ***(in thousands)*** |
| Cost of sales | $500 | $82 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $174 | $430 |
| Product development | 8 |  |  |  | 8 |
| Sales and marketing | 477 | 82 |  | 195 | 399 |
| General and administrative | 1541 | 3 | 38 | 382 | 1338 |
| Total stock-based compensation | $2526 | $167 | $38 | $751 | $2175 |

---

The following table sets forth the components of our statements of operations data, for each of the periods presented, as a percentage of revenue.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | | | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** |
|  | **Year Ended<br> March 31,<br> 2022**<br>**(Successor)** | **July 1, <br> 2020<br> to March 31, 2021**<br>**(Successor)** | **April 1, <br> 2020<br> to June 30,<br> 2020**<br>**(Predecessor)** | **2022** | **2021** |
|  |  |  |  | ***(Unaudited)*** | ***(Unaudited)*** |
|  **Consolidated Statements of Operations Information:** |  |  |  |  |  |
|  Revenue | 100% | 100% | 100% | 100% | 100% |
|  Operating expenses: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Cost of sales<sup>(1)</sup> | 81% | 78% | 70% | 77% | 81% |
| &nbsp;&nbsp;&nbsp; Sales and marketing <sup>(1)</sup> | 16% | 16% | 22% | 15% | 15% |
| &nbsp;&nbsp;&nbsp; Product development<sup>(1)</sup> | 1% | 3% | 4% | 1% | 1% |
| &nbsp;&nbsp;&nbsp; General and administrative<sup>(1)</sup> | 15% | 12% | 32% | 11% | 15% |
| &nbsp;&nbsp;&nbsp; Amortization of intangible assets | 2% | 2% | - % | \* % | 2% |
|  Total operating expenses | 115% | 111% | 128% | 104% | 114% |
|  Other income (expense), net | (3)% | \* % | - % | 8% | (2)% |
|  Income (loss) before provision for income taxes | (11)% | (11)% | (28)% | (12)% | (12)% |
|  Provision (benefit) for income taxes | - % | - % | - % | - % | - % |
|  Net income (loss) | (11)% | (11)% | (28)% | (12)% | (12)% |

---

\* less than 1%

Note: Certain figures may not sum due to rounding.

 ****

 ***Comparison of Nine months Ended December 31, 2022 to Nine months Ended December 31, 2021***

 

*Revenue* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** | | |
|  | **2022** | **2021** | **$ Change** | **% Change** |
|  | ***(Unaudited)<br> (in thousands, except percentages)*** | ***(Unaudited)<br> (in thousands, except percentages)*** | ***(Unaudited)<br> (in thousands, except percentages)*** | ***(Unaudited)<br> (in thousands, except percentages)*** |
|  Revenue | $25802 | $23839 | $1963 | 7% |

---

Revenue increased $2.0 million, or 7%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. The increase in revenue was primarily due to growth in advertising inventory.

 

*Operating Expenses* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine months Ended<br> December 31,** | **Nine months Ended<br> December 31,** | | |
|  | **2022** | **2021** | **$ Change** | **% Change** |
|  |  ***(Unaudited)*** |  ***(Unaudited)*** |  ***(Unaudited)*** |  ***(Unaudited)*** |
|  |  ***(in thousands, except percentages)*** |  ***(in thousands, except percentages)*** |  ***(in thousands, except percentages)*** |  ***(in thousands, except percentages)*** |
| Cost of sales | $19954 | $19539 | $415 | 2% |
| Sales and marketing | 3931 | 3642 | 289 | 8% |
| Product development | 134 | 212 | (78) | (37)% |
| General and administrative | 2723 | 3696 | (973) | (26)% |
| Amortization of intangible assets | 76 | 431 | (355) | (82)% |
| Total operating expenses | $26818 | $27520 | $(703) | (3)% |

---

 

*Cost of Sales* 

 

Cost of sales decreased $0.4 million, or 2%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. The decrease was primarily due to improved revenue share splits with content creators resulting in lower content cost.

*Sales and Marketing* 

Sales and marketing expenses increased $0.3 million, or 8%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. The increase was primarily due to an increase in advertising to generate sales.

*Product Development* 

Product development expenses decreased $0.1 million, or 37%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. The decrease was due to additional project costs being capitalized.

 

*General and Administrative* 

General and administrative expenses decreased by $1.0 million, or 26%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. The decrease was primarily due to the reduction of headcount.

 

*Amortization of intangible assets*

Amortization of intangible asset expenses decreased by $0.4 million, or 82%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. The decrease was primarily due to the content creator relationship asset being fully amortized in the prior period.

 

*Other Income (Expense), net* 

 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** | | |
|  | **2022** | **2021** | **$ Change** | **% Change** |
|  |  ***(Unaudited) <br> (in thousands, except percentages)*** |  ***(Unaudited) <br> (in thousands, except percentages)*** |  ***(Unaudited) <br> (in thousands, except percentages)*** |  ***(Unaudited) <br> (in thousands, except percentages)*** |
| Other income (expense), net | $(2000) | $494 | $2494 | 505% |

---

 

Other income (expense), net increased $2.5 million, or 505%, during the nine months ended December 31, 2022 compared to the nine months ended December 31, 2020. The increase is primarily due to an increase in change in fair value of derivative of $1.0 million and the prior year forgiveness of our PPP loan of $0.5 million which was offset by an increase in interest expense of $3.0 million as a result of accretion of the debt discount on our Bridge Loan.

  ****

***Comparison of Fiscal 2022 and Fiscal 2021***

 

*Revenue* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended<br> March 31,** | **Year Ended<br> March 31,** | | |
|  | **2022** | **2021** | **$ Change** | **% Change** |
|  | ***(in thousands, except percentages)*** | ***(in thousands, except percentages)*** | ***(in thousands, except percentages)*** | ***(in thousands, except percentages)*** |
| Revenue | $32348 | $23840 | $8508 | 36% |

---

Revenue increased $8.5 million, or 36%, for fiscal 2022 compared to fiscal 2021. The increase in revenue was primarily due to the increase in advertising inventory.

 

*Operating Expenses* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended<br> March 31,** | **Year Ended<br> March 31,** | | |
|  | **2022** | **2021** | **$ Change** | **% Change** |
|  | ***(in thousands, except percentages)*** | ***(in thousands, except percentages)*** | ***(in thousands, except percentages)*** | ***(in thousands, except percentages)*** |
| Cost of sales | $26271 | $18279 | $7997 | 44% |
| Sales and marketing | 5155 | 3991 | 1164 | 29% |
| Product development | 251 | 644 | (393) | (61)% |
| General and administrative | 4871 | 3713 | 1159 | 31% |
| Amortization of intangible assets | 502 | 448 | 54 | 12% |
| Total operating expenses | $37050 | $27076 | $9981 | 37% |

---

 

*Cost of sales*

Cost of sales increased $8.0 million, or 44%, for fiscal 2022 compared to fiscal 2021. The increase was primarily due to an increase revenue noted above.

*Sales and Marketing*

Sales and marketing expenses increased 1.2 million, or 29%, for fiscal 2022 compared to fiscal 2021. The increase was primarily due to an increase in advertising spend.

 

*Product Development* 

Product development decreased $0.4 million, or 61%, for fiscal 2022 compared to fiscal 2021. The decrease was primarily due to a decrease in project activity.

 

*General and Administrative* 

General and administrative expenses increased $1.1 million, or 31%, for fiscal 2022 compared to fiscal 2021. The increase was primarily due to an increase in stock-based compensation.

*Other Income (Expense), net* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended<br> March 31,** | **Year Ended<br> March 31,** | | |
|  | **2022** | **2021** | **$ Change** | **% Change** |
|  |  ***(in thousands, except percentages)*** |  ***(in thousands, except percentages)*** |  ***(in thousands, except percentages)*** |  ***(in thousands, except percentages)*** |
| Other income (expense), net | $1098 | $(28) | $1126 | 4021% |

---

Other income (expense), net increased $1.1 million, or 4,021%, for fiscal 2022 compared to fiscal 2021. The decrease is primarily due to income of $1.1 million as a result of forgiveness of our PPP loan.

**Liquidity and Capital Resources** 

***Current Financial Condition***

 ****

As of December 31, 2022, our principal sources of liquidity were our cash and cash equivalents in the amount of $4.0 million, which primarily are invested in cash in banking institutions in the U.S. The vast majority of our cash proceeds were received as a result of our operations, a bridge loan and intercompany loans from our parent. As of December 31, 2022, we had a bridge loan (net of discounts) of $5.7 million, derivative liabilities of $3.3 million and a related party payable balance of $2.4 million. Our parent is required to maintain minimum cash balances as a result of debt covenants on their debt.

 

On July 15, 2022 (the "Closing Date"), we completed a private placement offering of the Bridge Notes for gross proceeds of $8.0 million. In connection with the sale of the Bridge Notes, the holders of the Bridge Note received the Bridge Warrants, and we issued the Placement Agent Warrants to the placement agent. The Bridge Notes mature on July 15, 2023, subject to a one-time three-month extension at our election. The Bridge Notes bear interest at a rate of 10% per annum payable on maturity. The Bridge Notes shall automatically convert into the securities of our Company sold in a Qualified Financing (an initial public offering of our securities on a national securities exchange) or a Qualified Event (a direct listing of our securities on a national securities exchange), as applicable, upon the closing of a Qualified Financing or Qualified Event, as applicable, at a price per share equal to the lesser of (i) the price equal to $60.0 million divided by the aggregate number of shares of our common stock outstanding immediately prior to the closing of a Qualified Financing or Qualified Event, as applicable (assuming full conversion or exercise of all convertible and exercisable securities of our Company then outstanding, subject to certain exceptions), and (ii) 70% of the offering price of the shares (or whole units, as applicable) in the Qualified Financing or 70% of the initial listing price of the shares on a national securities exchange in the Qualified Event, as applicable. Each holder of the Bridge Notes (other than LiveOne) may at such holder's option require us to redeem up to 45% of the principal amount of such holder's Bridge Notes (together with accrued interest thereon, but excluding the OID), in aggregate up to $3,000,000 for all of the Bridge Notes (other than those held by LiveOne), immediately prior to the completion of a Qualified Financing or a Qualified Event, as applicable, with such redemption to be made pro rata to the redeeming holders of the Bridge Notes (the "Optional Redemption"). Upon a holder's redemption of any Bridge Notes pursuant to the Optional Redemption right, then a portion of such holder's Bridge Warrants shall be forfeited and cancelled in accordance with the following formula: for each $0.001 million of the principal amount of the Bridge Notes redeemed, the Bridge Warrants to purchase 100% of the Bridge Warrant shares issued per $0.001 million of the principal amount of the Bridge Notes shall be immediately forfeited and cancelled.

 

LiveOne also agreed (i) not to effect a Qualified Financing or a Qualified Event, as applicable, unless immediately following such event LiveOne owns no less than 66% of our equity, unless in either case otherwise permitted by the written consent of the holders of the majority of the Bridge Notes (excluding LiveOne) (the "Majority Noteholders") and LiveOne's senior lender, as applicable, (ii) that until a Qualified Financing or a Qualified Event, as applicable, is consummated, LiveOne guaranteed the repayment of the Bridge Notes when due (other than the Bridge Notes issued to LiveOne) and any interest or other fees due thereunder, and (iii) that if we have not consummated a Qualified Financing or a Qualified Event, as applicable, by February 15, 2023, March 15, 2023 or April 15, 2023, as applicable, unless in either case permitted by the written consent of the Majority Noteholders, we shall be required to redeem $1,000,000 of the then outstanding Bridge Notes pro rata from the Bridge Notes holders (other than the Bridge Notes issued to LiveOne) by the tenth calendar day of each month immediately following such respective date, up to an aggregate redemption of $3,000,000 over the course of such three months, each of which shall be distributed to the holders of the Bridge Notes (other than LiveOne) on a prorated basis (the "Early Redemption").

We further agreed to register the shares of our common stock issuable upon conversion of the Bridge Notes and exercise of the Bridge Warrants and the exercise of the Placement Agent Warrants in connection with a Qualified Financing or a Qualified Event. If we do not file such registration statement on or prior to April 15, 2023, we shall be required to prepay $1,000,000 of the Bridge Notes pro rata to the Bridge Notes holders (other than LiveOne), and if we do not file such registration statement on or prior to July 15, 2023, we shall be required to prepay $2,000,000 of the Bridge Notes pro rata to the Bridge Notes holders (other than LiveOne) (the "Reg St Redemption"). We shall not be required to redeem or repay more than a total of $3,000,000 of the principal amount of the Bridge Notes as a result of the Optional Redemption, the Early Redemption and/or the Reg St Redemption. As of March 10, 2023, we have not yet consummated the Direct Listing and accordingly, we are currently required to redeem $1,000,000 of the outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by March 10, 2023 (subject to any cure period). As a result it may be necessary for us to maintain cash balances to support the consolidated minimum requirement and use our available cash to redeem the applicable portion of the Bridge Notes, thus impacting cash available to support our liquidity in the future.

As of March 10, 2023, LiveOne's total outstanding consolidated indebtedness was $7.0 million, net of fees and discounts, which consisted entirely of LiveOne's senior credit facility. The senior credit facility documents contain a covenant that if a material adverse change occurs in its financial condition, or such lender reasonably believes the prospect of payment or performance of their loan is materially impaired, the lender at its option may immediately accelerate their debt and require LiveOne to repay all outstanding amounts owed thereunder. If for any reason LiveOne fails to comply with the terms of its settlement agreement with SX, its senior credit facility provider may declare an event of default and at its option may immediately accelerate its debt and require LiveOne and/or us to repay all outstanding amounts owed under the senior credit facility, which would materially adversely impact our business, operating results and financial condition. As of December 31, 2022, LiveOne was in full compliance with these covenants.

As reflected in our consolidated financial statements included elsewhere in this prospectus, we have a history of losses used cash of $4.4 million in operating activities for the nine months ended December 31, 2022 and had a working capital deficiency of $6.9 million as of December 31, 2022. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year from the date that the financial statements are issued. In addition, our independent registered public accounting firm in their audit report to our financial statements for the fiscal year ended March 31, 2022 expressed substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to execute our strategy and on our ability to raise additional funds through the sale of equity and/or debt securities via public and/or private offerings.

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.

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***Cash Flows***

The following table shows a summary of our cash flows for the periods presented:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | | | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** |
|  | **Year Ended<br> March 31,**<br> **2022** | **July 1, <br> 2020<br> to March 31,<br> 2021**<br> **(Successor)** | **April 1, <br> 2020<br> to June 30,<br> 2020**<br> **(Predecessor)** | **2022** | **2021** |
|  |  |  |  |  ***(Unaudited)*** |  ***(Unaudited)*** |
|  |  |  |  |  ***(in thousands)*** |  ***(in thousands)*** |
| **Consolidated Statements of Cash Flows Information:** |  |  |  |  |  |
|  Net cash provided by (used in) operating activities | $(1988) | $286 | $(436) | $(4348) | $(976) |
|  Net cash provided by (used in) investing activities | $(283) | $1198 | $- | $(162) | $(229) |
|  Net cash provided by financing activities | $- | $604 | $471 | $7376 | $- |

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***Operating Activities***

Our largest source of operating cash is cash collection from sales of advertising. Our primary uses of cash from operating activities are for revenue share payments to content creators, personnel-related expenses, marketing expenses and software expenses. In the last several years, we have generated negative cash flows from operating activities and have supplemented working capital requirements through net proceeds from contributions from our parent company.

Net cash used in operating activities of $4.4 million for the nine months ended December 31, 2022 reflects our net loss of $3.0 million, adjusted by non-cash items such as depreciation and amortization, stock-based compensation, accretion of our debt discount and derivatives of $2.6 million as well as net cash used from changes in our operating assets and liabilities of $3.9 million. The net cash provided by changes in operating assets and liabilities primarily consisted of a $1.7 million decrease in accounts receivable, offset by an increase of $4.9 million on related party receivable/payables, $0.7 million decrease in accrued expenses and accounts payable, resulting primarily from increases in accrued professional services, marketing, accrued payroll, and benefits due to an increase in the size of our operations.

Net cash used in operating activities of $1.0 million for the nine months ended December 31, 2021 reflects our net loss of $2.9 million, adjusted by non-cash items such as depreciation and amortization, stock-based compensation, forgiveness on our PPP loans of $2.2 million as well as net cash used from changes in our operating assets and liabilities of $0.3 million. The net cash provided by changes in operating assets and liabilities primarily consisted of a $3.5 million increase in accounts receivable, increase of $0.2 million in prepaid expenses, offset by an increase of $1.3 million in related party receivable/payable, $2.1 million increase in accrued expenses and accounts payable, resulting primarily from increases in accrued professional services, marketing, accrued payroll, and benefits due to an increase in the size of our operations.

Net cash used in operating activities of $2.0 million for fiscal 2022 reflects our net loss of $3.6 million, adjusted by non-cash items such as depreciation and amortization, stock-based compensation, forgiveness on our PPP loans of $2.1 million as well as net cash used from changes in our operating assets and liabilities of $0.5 million. The net cash used by changes in operating assets and liabilities primarily consisted of a $4.1 million increase in accounts receivable, increase of $0.3 million in prepaid expenses, offset by an increase of $2.0 million increase in related party receivables/payables, $1.8 million increase in accrued expenses and accounts payable, resulting primarily from increases in accrued professional services, marketing, accrued payroll, and benefits due to an increase in the size of our operations.

Net cash used in operating activities of $0.2 million for fiscal 2021 reflects our net loss of $3.3 million, adjusted by non-cash items such as depreciation and amortization, stock-based compensation, forgiveness on our PPP loans of $0.8 million as well as net cash provided from changes in our operating assets and liabilities of $2.3 million. The net cash provided by changes in operating assets and liabilities primarily consisted of a $0.2 million decrease in accounts receivable, decrease of $0.7 million in prepaid expenses and a decrease of $1.0 million in deferred revenue, offset by an increase of $0.7 million increase in related party receivables/payables, $1.6 million increase in accrued expenses and accounts payable, resulting primarily from increases in accrued professional services, marketing, accrued payroll, and benefits due to an increase in the size of our operations.

***Investing Activities***

Net cash used in investing activities of $0.2 million for the nine months ended December 31, 2022 consisted of $0.2 million of capitalized internal-use software development costs and in purchases of property and equipment.

Net cash used in investing activities of $0.2 million for the nine months ended December 31, 2021 consisted of $0.2 million of capitalized internal-use software development costs.

Net cash used in investing activities of $0.1 million for fiscal 2022 consisted of $0.1 million of capitalized internal-use software development costs and in purchases of property and equipment.

Net cash provided by investing activities of $1.2 million for fiscal 2021 consisted of $1.3 million in cash received from the PodcastOne acquisition and $0.1 million of capitalized internal-use software development costs.

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***Financing Activities***

Net cash provided by financing activities of $7.4 million for the nine months ended December 31, 2022 primarily consisted of approximately $7.4 million in net proceeds from the sale and issuance of convertible notes and warrants.

Net cash provided by financing activities of $1.1 million for fiscal 2021 primarily consisted of $1.1 million in net proceeds from notes payable.

**Contractual Obligations and Commitments** 

As of March 31, 2022, the contractual commitment amounts in the table below are associated with agreements that are enforceable and legally binding. Purchase orders issued in the ordinary course of business are not included in the table below, as our purchase orders represent authorizations to purchase rather than binding agreements.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Total** | **Less than<br> 1 year** | **1-3 years** | **3-5 years** | **More than<br> 5 years** |
|  | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** |
| Purchase commitments | $2579 | $2483 | $96 | $— | $— |
| Total contractual obligations | $2579 | $2483 | $96 | $— | $— |

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***Indemnification Agreements***

In the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties. Additionally, in connection with the listing of our common stock, we have entered into indemnification agreements with our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. No demands have been made upon us to provide indemnification under such agreements, and there are no claims that we are aware of that could have a material effect on our financial position, results of operations, or cash flows.

**Off-Balance Sheet Arrangements** 

For all periods presented, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

**Quantitative and Qualitative Disclosures About Market Risk** 

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***Interest Rate Risk***

Our cash and cash equivalents consists of cash on hand. As of December 31, 2022, we had cash and cash equivalents of $4.0 million. We do not have any marketable securities and we do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income on cash and cash equivalents. However, an immediate 10% increase or decrease in interest rates would not have a material effect on the fair value of our portfolio. We therefore do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

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***Inflation Risk***

We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, results of operations, or financial condition.

**Critical Accounting Policies and Estimates**

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***Revenue Recognition***

We generate revenue primarily from sales of advertising. Revenue is recognized when, or as, the related performance obligation is satisfied by transferring the control of the promised service to a customer. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these services.

We account for revenue contracts with customers by applying the requirements of ASC 606, which includes the following steps:

● Identification of the contract, or contracts, with the customer

● Identification of the performance obligations in the contract

● Determination of the transaction price

● Allocation of the transaction price to the performance obligations in the contract

● Recognition of the revenue when, or as, a performance obligation is satisfied

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 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.

From time to time we enter into barter transactions involving advertising provided in exchange for goods and services. Revenue from barter transactions is recognized based on delivery of impressions and in the same manner as described above. Services received are charged to expense when received or utilized. If services are received prior to the delivery of impressions, a liability is recorded. If delivery of impressions has occurred before the receipt of goods or services, a receivable is recorded.

**Recent Accounting Pronouncements** 

See Note 2 to our consolidated financial statements included elsewhere in this prospectus for more information regarding recent accounting pronouncements.

**JOBS Act Accounting Election** 

We are an emerging growth company, as defined in the JOBS Act. The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

**BUSINESS**

**Overview**

PodcastOne (the "Company," "PodcastOne," "we," "us" or "our") is a leading podcast platform and publisher that makes its content available to audiences via all podcasting distribution platforms, including PodcastOne's website (www.podcastone.com), Apple Podcasts, Spotify, Amazon Music and more. We are a majority owned subsidiary of LiveOne, Inc., a Delaware corporation and a Nasdaq-listed company ("LiveOne"). We have recently been recently ranked #14 on the list of Top Podcast Publishers by the podcast metric company, Podtrac.

We also produce vodcasts (video podcasts), branded podcasts, merchandise and live events on behalf of our talent and clients. With a proven 360-degree advertiser solution for multiplatform integration opportunities and hyper-targeting, we deliver millions of monthly impressions, 14+ million monthly unique listeners, and 60+ million Interactive Advertising Bureau monthly downloads. With content covering all verticals (i.e., sports, entertainment, true-crime, business, society & culture, self-help, etc.), we provide a platform for brands to reach their most sought after targeted audiences.

Our operating model is focused on offering white glove service to our shows, talent and advertising clients. With an in-house sales, production, marketing and tech team, we believe PodcastOne delivers more to clients and talent than any other publisher in the marketplace. This allows us to scale our operations while attracting talent who in turn, will bring in additional brand advertisers and revenue. We earn revenue through the sale of embedded host-read ads, dynamic ads (host-read and otherwise), segment sponsorships and programmatic monetization channels. We also provide the opportunity for clients to have 100% share of voice with branded podcast episodes or series as well as live tours, merch and IP ownership for original programming.

In addition to our core business, we also built, own and operate a solution for the growing number of independent podcasters: LaunchPadOne. LaunchPadOne is our owned self-publishing podcast platform, created to provide a low or no cost tool for independent podcasters without access to parent podcasting networks or state of the art equipment to create and publish shows. LaunchPadOne serves as a talent pool for us to find new podcasts and talent.

For the fiscal years ended March 31, 2022 and 2021, we generated $32.3 million and $23.8 million in revenue, respectively, representing a CAGR of 36%. For the nine months ended December 31, 2022 and 2021, we generated $25.8 million and $24.1 million in revenue, respectively, representing a CAGR of 7%. For the fiscal years ended March 31, 2022 and 2021, we incurred net losses $3.6 million and $3.3 million, respectively. For the nine months ended December 31, 2022 and 2021, we incurred net losses of $3.4 million and a net loss of $2.9 million, respectively.

We are more than a podcast company. We are in the relationship business. Every day, brands and creators partner with us to reach consumers who will purchase, listen and subscribe to their favorite PodcastOne podcasts across the audio landscape. We offer content across verticals so there is truly something for consumers who have varied preferences (reality TV, sports, true crime self-help, business, etc.). The power of our network and love of our brands is evident through our shows which consistently rank in the top 100 on the Apple Charts.

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**Recent Developments**

Our President, Kit Gray, has been recently named one of the 22 most influential people in podcasting, and our Vice President of Brand and Talent Partnerships, Eli Dvorkin, has been named to this year's Top 40 Under 40 in podcasting as chosen by Podcast Magazine. Our Chief Marketing Officer, Jacqueline Stone, recently received the Cynopsis 2022 Top Women in Media award.

We have an arrangement that allows us and our roster of top performing hosts to integrate unique visual elements into the podcasts they produce and distribute them via YouTube, becoming the first podcast network to utilize Adori, a pioneering interface technology. Adori's unique YouTube integration technology allows podcast hosts and networks to seamlessly import episodes from RSS feeds, enhance them with visual elements and upload enriched assets directly to YouTube. Adori's patented technology embeds contextual visuals, multi-format ads, AR experiences, buy buttons, polls, and other "call to action" features in the audio creating a more enhanced and richer listener experience. In creating visually enhanced podcasts, Adori's YouTube product provides additional monetization avenues for our slate of original programming, increased discoverability and SEO presence.

PodcastOne also has a very successful vertical featuring Kail Lowry's shows *Baby Mamas No Drama*, *Barely Famous* and *Vibin'* and *Kinda' Thrivin*.

In the fourth fiscal quarter ended March 31, 2022, we partnered with MotorTrend to produce a 12-part series around their *InEVitable* campaign, a new multi-platform initiative giving consumers a source for information, in-depth reporting, research/testing, predictions and entertainment devoted entirely to the future of mobility. *The InEVitable* is a podcast and vodcast series hosted by *MotorTrend* Head of Editorial, Ed Loh and *MotorTrend* editor and automotive personality Jonny Lieberman. The series provides in-depth discussion on the greatest challenges and changes coming for the future of transportation. Subsequently, we and *MotorTrend* have renewed this partnership for an extended 20+ episodes podcast and vodcast series. Production began in the first half of the fiscal year ending March 31, 2023.

Several of our shows have hit recent milestones: *Trust Me* released its 100<sup>th</sup> episode in November 2022 and was featured in *Harper's BAZAAR's* "20 of the Best Podcasts to Download Now." In October 2022, *Coffee Convos* was named by Edison Research as the top show delivering women listeners for advertisers. Co-Hosts Kailyn Lowry and Vee Rivera won the 2022 People's Choice Podcast Award for Influencer of the Year and Podcast Listener Influencer of Year for their podcast, *Baby Mama's No Drama*. The show also brought home the Rob Has a Podcast Entertainment award. *Southern Tea*, hosted by Lindsie Chrisley received a People's Choice Award in the Kids & Family category.

We also partnered with Hyundai to produce live events with our hosts that provide multiple revenue streams for our Company and our talent while giving Hyundai a platform to promote their new vehicle launches. Two live shows, including one with *The LadyGang* and one with Jordan Harbinger, were be captured as vodcasts and later streamed on LiveOne's streaming platform. As part of the branded content partnership, we are also developing an always-on audio plan to further drive promotion for Hyundai. In November 2022, we announced that Hyundai will have share of voice in the first four episodes of our new *Friday Night Lights* re-watch podcast It's Not Only Football: Friday Night Lights and Beyond, starring *Friday Night Lights* stars Scott Porter and Zach Gilford and their celebrity friend, Mae Whitman.

In the nine months ended December 31, 2022, PodcastOne and Action Park Media (APM) forged a partnership that added 11 podcasts to the LiveOne portfolio, including shows from Emmy Award-Winning *Entourage* creator Doug Ellin, Emmy-nominated star Kevin Dillon, retired NHL star Sean Avery, former NFL quarterback Ryan Leaf, as well as Kelly Stafford, Ted Foxman and more. This partnership gave PodcastOne exclusive distribution and advertising sales rights for APM's current slate of podcast and vodcast programming. In addition, it also allows for the two media companies to co-develop future podcast/vodcast based IP, produce advertiser-sponsored live streaming and touring opportunities for hosts/talent and create exclusive licensing for podcast-specific branded merchandise.

We further strengthened our relationship with Hubbard's WTOP with the launch of American Nightmare Season 3: UNKNOWN SUBJECT. We have partnered with them for all three seasons and are looking forward to continued Apple rankings and download success. We continue to see success in the sale of this show and anticipate the relationship continuing for additional seasons.

**Podcasts**

In the United States, podcasts have historically been and are expected to continue to develop as a high growth segment within the next five years. An estimated 177 million Americans have listened to a podcast at some point in their life, with "superfans" consuming over 11 hours of content per week in 2021. Driven by product innovations and content accessibility, the podcast market represents significant growth and monetization potential in the long term.

**Our Value Propositions**

The following elements denote the fundamental values of our PodcastOne community:

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***Easy audio making for everyone.*** We are one of the first online audio communities to provide a one-stop destination for creators to produce, edit, host and distribute audio content to consumer's mobile and desktop devices. The turnkey production, sales and marketing services we offer make it possible for our partners to create high-quality, original podcasts. The monthly average number of podcasts distributed by us increased from approximately 58.4 million in the second quarter of 2022 to approximately 41.3 million in the same period in 2021.

 

***Reaching audience and getting paid***. A host who makes his podcasts, live streaming or interactive audio products available via PodcastOne gains access to one of the largest online audio communities. Our podcasts on publicly available platforms (Apple Podcasts, Spotify, Amazon Music, etc.) can be shared, further amplifying their reach. Leveraging our data-driven marketing strategies and best-in-class sales organization, we help increase the value of one's original work, and motivate content creators to continue to create and share more content on our platform. Our data analytics also provide useful feedback to our hosts to help them create and distribute more unique and high-quality content that truly resonates with their audience and invites new listeners in.

 ***"White Glove" Offerings.*** We differentiate ourselves from our competitors through deeply integrated sales, marketing, production and distribution services that are offered to creators once onboarded with PodcastOne. Our data driven marketing function range across in network cross promotion, social media best practices, video asset creation and off-network trade opportunities. As a result, we have cultivated a highly engaged listener community across a variety of verticals (true crime, Sports, TV & film, etc.). In the quarter ending December 31, 2022, PodcastOne had recorded a total of 14.8 million average monthly listeners. We have an in-depth relationship with our creators on all levels as we are accessible and exude a work ethic incomparable to the other podcast networks in our industry.

***The Podcast Industry Keeps Growing While Radio is Shrinking.*** For the first time ever, the podcast advertising marketing grew beyond $1B in FY 2021 and are expected to exceed $2B in 2022 and reach $4B by 2024. The audio industry has shifted share of voice significantly from 74% radio / 12% podcasts /14% other in 2014 to 39% radio / 41% podcasts / 20% other.

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***Spoken Word is Increasing Among Gen Z.*** There has been a 214% increase in spoken word consumption since 2014 among the 13-24 year-old demographic, with 21% of that being podcast usage. PodcastOne delivers content that spans various verticals, preferences and ages, positioning us to be part of that 21% and we expect to see that percentage grow as Gen Z continues to shift their listening habits to podcasts.

***Increasing Penetration of Established Marketing.*** There is an opportunity for growth, even in more established markets. According to eMarketer, the number of podcast listeners is anticipated to grow to 126 million in 2022 and nearly 145 million listeners are expected to make podcasts a part of their media diet by 2026. Growth is projected to remain in double digits with an average podcast listening time per day topping 25 minutes by 2023.

***Podcast Services***

Listeners can access our podcasts on their mobile devices and desktops across all major distribution platforms (Apple Podcasts, Spotify, Amazon Music, etc.). We offer all of our podcasts for free to cultivate a broad and loyal user base and generate organic traffic to our audio entertainment which has attractive monetization potential. As we build and scale loyal listeners for our shows we are also building listeners for our other shows, due to our internal cross promotional network. As shows increase in listenership, their value also increases to advertisers, often times resulting in higher CPMs, in renewals and ultimately more revenue.

**PodcastOne is a Leading Podcasting Company**

PodcastOne is a leading advertiser-supported, on-demand digital audio network. With a 360-degree solution, including content creation, brand integration and distribution, PodcastOne sees more than 2.1 billion downloads annually, across 350 episodes produced weekly. Today, millions of people around the world have access to over 200 podcasts distributed by PodcastOne whenever and wherever they want. We were one of the first podcast companies and transformed the podcast industry by allowing users to stream audio content (podcasts) on demand. In contrast, traditional radio relies on a linear distribution model in which stations and channels are programmed to deliver a limited programming options with little freedom of choice.

We are one of the largest independent podcast publishers with deep routed relationships with our creators, advertisers and distribution platforms. With over 3.6M unique downloads a month in the US and 21.4M global streams and downloads, PodcastOne's portfolio continues to grow with engaged listeners and top tier talent. As illustrated below, we have been recently ranked #13 on the list of Top Podcast Publishers by the podcast metric company, Podtrac, as a leading podcast publisher.

PodcastOne is more than a Podcast company. We are in the relationship business. Every day, brands and creators partner with us to reach consumers who will purchase, listen and subscribe to their favorite PodcastOne podcasts across the audio landscape. We offer content across verticals so there is truly something for consumers who have varied preferences (reality TV, sports, true crime self-help, business, etc.). The power of our network and love of our brands is evident through our shows which consistently rank in the top 100 on the Apple Charts. Furthermore, we have built a promotional strategy that enables discoverability of PodcastOne shows just by being a listener of a show in the same vertical. For example, if you are listening to a PodcastOne true crime show, you will likely hear a promo about another true crime show from PodcastOne.

PodcastOne wins and so do our listeners as we are the most partner friendly network out there. Our brand reflects culture by turning a vast line-up (or slate) of compelling personalities and stories into entertaining and engaging listening experiences which connect our large audience to the world around them and expands into the lives of the listeners, well outside the podcast itself.

 ***Podtrac Ranker January 2023***

**How is PodcastOne Different?** 

We are a leading US podcast network with nearly 270 podcasts/vodcasts, which have generated more than 2.381 billion downloads to date. We accomplish this through several unique approaches including:

●  ***Best In Class Content Portfolio with Deep Talent Relationships*** *.* PodcastOne publishes many of the biggest podcasts including *The Adam Carolla Show*, *Off the Vine with Kaitlyn Bristowe*, *Coffee Convos*, *The LadyGang*, *Nappy Boy Radio with T-Pain*, and *The Jordan Harbinger Show*, spanning all major genres. We have personal relationships with each and every talent, which affords us the opportunity to build extensive multi-year agreements. These agreements provide exclusive rights to their podcasting content and derivative rights to new shows. Additionally, these value-added relationships with talent allow us to negotiate industry-leading participation splits.

●  ***Full Ownership of Technology Platform, with Proprietary Data and Insights*** *.* We are one of the few podcast networks with proprietary Content Management System ("CMS")/Content Delivery Network ("CDN") that allows for optimized programmatic capabilities and improved audience analytics. Our hosts/talent are also able to view their download numbers, trends and analytics on this proprietary software, something many competitors don't provide. This fully owned and operated enterprise Content Management System rivals other paid platforms such as Megaphone (Spotify-owned), Art19 (Amazon-owned) and SimpleCast (SiriusXM/Pandora-owned). The CMS day to day operation and maintenance is managed by a vendor we contract with and is constantly being updated to be a best-in-class system. The CMS is the platform where podcast episodes are uploaded, RSS feeds are created and distributed to listening platforms, and the listening data is analyzed and displayed in a dashboard for the hosts / producers to see.

●  ***Blue Chip Advertiser Relationships with Targeted Measurable Campaigns and Value-Added Opportunities.*** We offer and book competitive campaigns with new and legacy brands by: (1) using measurement tools and partners to deploy leading podcast measurement solutions that are tailored to our clients key performance indicators, including brand impact and sales lift; (2) engaging with third party attribution partners to provide greater insight for our clients into the effectiveness of their campaigns across multiple publishers and hosting providers; and (3) conducting brand lift studies that allow our Company to demonstrate and validate campaign impacts.

In addition, because of our deep-rooted relationships with talent we are able to engage them in host-read embedded spots and coach them through voice-over delivery to increase direct response sales and advertiser satisfaction. Furthermore, these relationships allow us to create value-added opportunities with brands through talent socials, YouTube and other influencer marketing tools.

Advertisers also have the opportunity to brand entire podcast series, as executed by Microsoft and MotorTrend most recently. This would allow advertisers to enter into content development deals for their brand with us, where we would we produce and distribute an entire podcast series for the specific brand. Advertisers benefit from branding a podcast series by getting 100% share of voice ads, which in our experience significantly helps them launch a new product, service or offering. Two podcast series examples that we have recently put together in a similar format are The Inevitable podcast and On the Edge with Microsoft Edge podcast.

●  ***White Glove Services for Our Partners.*** PodcastOne is more than just a hosting platform. Our hands-on approach to launching original content and growing existing shows enables us to support our talent with production, editing, marketing and sales capabilities. We are a one-stop shop for everything creators need for their podcasts to be successful. When it comes to the sales and marketing, we are here to share best practices, allocate in-network promo inventory to their shows and engage in 360-degree sales efforts on their behalf.  **** **  ***LaunchPadOne*** *.* LaunchPadOne is a free innovative podcast hosting, distribution, and monetization platform that provides an end-to-end podcast solution. With over 1,000 available podcasts, LaunchPadOne offers creators a 360-degree podcasting ecosystem - a cutting-edge technology hosting platform, customizable design elements, a podcast player, distribution tools to publish on all major listening apps, including Apple Podcasts, Spotify, Google Podcasts, Overcast and Pocket Casts and others, and a deep network of shows. LaunchPadOne's robust platform technology, promotion and monetization opportunities will allow podcast creators to leverage unique opportunities from PodcastOne, such as the ability to accumulate new listeners, get discovered, and collaborate with the established podcast network. PodcastOne will monetize the audience of the LaunchPadOne network through ad insertion technology platform, which generates revenue for PodcastOne. Simultaneously, LaunchPadOne creators will receive free hosting and also have the opportunity to generate revenue for their own podcasts by embedding any ads they sell on their own.

● **Best-In-Class Management Team with a Track Record of Execution and Growth *.*** **  PodcastOne provides an unparalleled management team with expertise and resources to produce and manage our podcasts in a turnkey manner. Our list of services include Production studios, Producers, Editors, Social Media, Marketing, Public Relations, Guest Booking, Content Hosting, Nationwide Sales, Host Read Executions, Dynamic Ad Insertion, Programmatic Ads, Vodcasts, Live Events, and Merchandising. Our best-in-class management team is comprised of the following executives who have scaled PodcastOne to position us as a competitive network in the industry that talent and advertisers want to be a part of: *Kit Gray: Co-Founder & President, PodcastOne* – Mr. Gray co-founded PodcastOne in 2012 and attracted high impact podcast talent including Adam Carolla, *The LadyGang* and Kaitlyn Bristowe. Mr. Gray has been recently named a "Top Influencer in Podcasting" by *Podcast Magazine*. *Sue McNamara: Head of Sales* – Ms. McNamara has 20 plus years of radio and podcast sales experience. Ms. McNamara is a former CBS radio sales management executive who was responsible for 35% PodcastOne revenue growth in fiscal year ended March 31, 2022. *Jacqueline Stone: Chief Marketing Officer* – Ms. Stone has more than 31 years of marketing leadership at diverse companies such as MiMedia, WebMD, Digitas/Publicis, About.com and AOL, where she spurred $65 million in revenue and led marketing for major advertising clients, AOL Studio Music Sessions and promotional events including the Super Bowl, US Open Tennis, and The Masters golf tournament. Ms. Stone also helped launch The Food Network and The Daily Meal and was integral to the creation of the American Express Centurion Lounge and American Express Small Business Saturday. Described by Adweek as a "marketing maverick," Stone is a Top 50 OnCon ICON Marketer Award winner, and recently received the Cynopsis 2022 Top Women in Media award, as well as being a member of the Cynopsis Digital "It List." *Eli Dvorkin: VP, Talent and Brand Partnerships* – Mr. Dvorkin was PodcastOne's first hired employee and joined our Company shortly after our inception. With over 15 years of audio experience, Mr. Dvorkin was recently named one of Podcast Magazine's 40 Under 40 in podcasting for his ability to create profitable brand partnerships and his ability to grow new and existing talent. *Stacie Parra & Alistair Walford, Co-Heads of Production* – With over 20 years of radio and podcast production experience, Ms. Parra has helped PodcastOne scale a production team that provides a one-stop shop for talent that need production and editing resources for their podcasts.

**Benefits for Creators** 

We provide a large but exclusive stage for creators to connect with existing fans and to be discovered by new fans. In addition to providing creators with access to a free, ad supported podcast marketplace. We also provide creators with a full stack of tools and services, enabling them to grow their podcasts in a turnkey manner.

●  ***Monetization.*** **  Between July 2020 and December 31, 2022, we have paid more than $30 million in MGs and advertiser revenue shares to creators. We do not pay to distribute our content and we monetize across all listener platforms.

●  ***Discovery.*** We not only help creators connect with existing fans, but we also support creators in connecting with the listeners who are most likely to become fans of their podcasts by running promos for all PodcastOne shows across respective verticals. From our data driven marketing approach that surface new podcasts to Users we offer creators the tools to reach their fans, new and old.

●  ***Distribution.*** A creator who makes their podcasts available on PodcastOne gains access to one of the largest publishing and distribution platforms based on our relationships with the top tier podcast apps and platforms. We enable creators to distribute their unique podcasts to this audience. We also pitch creator content for feature opportunities on Apple Podcasts, Spotify, Amazon Music, Stitcher, and iHeart to broaden their reach and discoverability. Additionally we promote our creator content across our social footprint and through email marketing to podcast fans.

●  ***Promotion*.** We empower creators and their managers to personalize and create unique profiles by providing them with best practices to develop their creator image, including featuring podcasts on their profiles and creating podcast playlists. On top of these standard services, we also offer creators specific promotional tools, designed to target specific Users and broad audiences in order to drive engagement.

●  ***Analytics*.** We provide numerous analytics for creators through our service. Analytics that creators can access include the demographics of their audience, users' anonymized geographical locations, top listening platforms, and podcast performance data such as number of downloads and weekly listening trends. We provide analytical support that creators need to optimize their performance and focus on doing what they do best—creating unique, entertaining experiences to share with fans around the world. For example, many creators have used our analytics to inform tour locations by citing the geographical audience insights provided in the CMS that would otherwise not have been known.

**Our Business Model.** We are an Ad-Supported Service that provides free content to listeners via their mobile and desktop devices. We generate revenue from the sale of audio, video and social advertising delivered through advertising impressions. We generally enter into arrangements with advertising agencies that purchase advertising on our platform on behalf of the agencies' clients. These advertising arrangements typically specify the type of advertising product, pricing, insertion dates, and number of impressions in a stated period. Revenue for our Ad-Supported segment is affected primarily by the number of a show's listeners and our ability to provide innovative advertising products that are relevant to our Ad-Supported Users and enhance returns for our advertising partners. Our advertising strategy centers on the belief that advertising products that are based on content and are relevant to the Ad-Supported User can enhance Ad-Supported Users' experiences and provide even greater returns for advertisers through the strength of our host-read embedded promos. According to a Super Listener Survey in 2021, an estimated 49% of listeners believe the hosts actually use the products and services they recommend and 60% of podcast listeners say they have bought something from hearing a podcast ad. Offering advertisers additional ways to purchase advertising on a programmatic basis is another key way that we expand our portfolio of advertising products and enhance advertising revenue. Furthermore, we continue to focus on analytics and measurement tools to evaluate, demonstrate, and improve the effectiveness of advertising campaigns on our platform.

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When we are onboard new talent both parties have the common interest of creating content that advertisers want to purchase. We craft our deals with a percentage split of the advertising revenue (host-read embedded ads, DAI and programmatic) which strengthens our partnerships because when advertisers spend, we all win.

**Our Growth Strategies** 

We believe we are still in the early stages of realizing our goal to connect creators and audiences around the world. Our growth strategies are focused on continuously improving our technology and attracting more listeners in current and new markets in order to collect more behavioral data, which we use to offer our Users, advertisers, and creators to achieve more targeted results. The key elements of our growth strategy are:

●  ***Strategically Launch New Podcasts with Culturally Relevant Creators*.** A creator with an engaged fanbase can strengthen our network and along with it, the PodcastOne brand. There is a lot of strategy that comes from onboarding new creators. Most importantly is how they will impact audience growth across their vertical within the PodcastOne ecosystem. We have seen success in this manner with the *Kail Lowry* vertical and our *Real Housewife-* hosted shows.

●  ***Acquire Existing Podcasts that will Thrive on Our Network.*** With the data we collect on show performance and show growth through our in-network promotional strategy we know what shows we can grow on our network. Additionally, this data can guide what is missing and why we may want to acquire a show with large numbers that will provide us with a jumping off point for growing our other shows.

●  ***Continue to Invest in our Advertising Business.*** We will continue to invest in our advertising products in order to create more value for advertisers and our Ad-Supported Users by enhancing our ability to make advertising content more relevant for our Ad-Supported Users. Our advertising strategy centers on the belief that advertising products that are based in podcasts and are relevant to the Ad-Supported User can enhance Ad-Supported Users' experiences and provide even greater returns for advertisers. We have introduced a number of new advertising products, including sponsored playlists, a self-serve audio advertising platform, and are testing skippable audio advertising. Offering advertisers additional ways to purchase advertising on a programmatic basis is one example of how we continue to expand our portfolio of advertising products. We also are focused on third party agency relationships and their development of analytics and measurement tools to evaluate, demonstrate, and improve the effectiveness of advertising campaigns on our platform.  ***Partner with New Distribution Platforms from Day One.*** Being on the ground floor of a developing platform is another key to our growth strategy. This allows for more discoverability and exclusive feature opportunities. When Facebook launched their audio platform, PodcastOne shows were a part of the press plan, received exclusive boosting opportunities and were among the first podcasts to streaming on their platform. Similarly, we are currently in beta with YouTube, who announced earlier this year that they are launching a podcast platform of their own. Approximately 18% of podcasts are consumed on YouTube and that number is quickly growing.

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***Advertising Solutions for Partners***

Our Ad-Supported Service has grown from $17.3 million in revenue from January through March 2021 to $20.5 million in revenue during that same time frame in 2022, representing an increase of 18%. As more audio content is created and converting listeners to buyers, brands and advertisers are continuing to shift their marketing spends from traditional mediums to podcasting. A March 2022 survey by Advertiser Perceptions shows that "while 31% of agencies and brands have dedicated podcast ad budgets, more than half (54%) are taking the money out of their overall digital allocation including 49% that said it comes from their digital audio budget line."

Technology innovation and data mining are at the heart of our Ad-Supported Service. From a technology perspective, we continue to adapt to what consumers want and the tools that agencies and partners are building to support these needs. We create content that resonates with listeners and that brands want to be aligned with.

PodcastOne has partnered with third party attribution companies to assist with attribution metrics, click-through data and ROI metrics. Such companies include: Podsights, Chartable, Claritas, Artsai, Podtrac and Extreme Reach.

Our ability to harness our data allows us to know our audiences. We believe we understand people through their mindset, activities, and tastes, and we can serve them relevant advertising catered specifically to them. Our advertising platform is continually moving toward a holistic people-based marketing approach that is better for both our listeners and our advertisers.

By offering advertisers customized opportunities within our programs we are able to deliver results for our brands and advertisers. Taking our podcast brands beyond an audio experience, we also give advertisers the opportunity to scale their buys across our video and social products when aligning with a PodcastOne podcast. We believe we will further strengthen our advertising business, since these are increasingly popular mediums for our advertising partners, the brands they represent and consumer behaviors.

**Creator Services**

Our in-house marketing and production teams are responsible for enhancing the growth and success of our talent/creators through various functions by focusing on brand building, audience development, strategy, talent, live events and sweepstakes. At the core of our shows are fundamental and trusted relationships with the hosts which collectively give us the ability to bring their vision to life. The multiple functions of creator services align cross-functionally and throughout PodcastOne to support creators on the platform while attracting new creators to our network.

**Our Content Strategy** 

At the core, our content strategy is about partnering with influencers and creators who will not only thrive in the audio space but who complement our current programming. Since July 2020 we have onboarded over 50 shows, increasing downloads by more than 50% for some (*On Display with Melissa Gorga*, *Trust Me*) and consistently ranking in the top 15 publishers according to Podtrac. We grow by continuing to identify what resonates with our listeners and delivering content consumers want to listen to.

There is also a surge in video podcasts (vodcasts), a product we have been delivering for some of our shows since 2020. We are encouraging all of our podcasters to create video content, a platform we can support (produce, edit, distribute) on their behalf via YouTube and various social platforms. With YouTube's recent hyper focus on bringing podcast content to their platform, we expect to see considerable podcast listener growth and AdSense dollars (revenue) from the platform.

**Our Technology** 

We have built an internal Content Management System ("CMS") system that creators and producers can use to track metrics about shows on an episode-by-episode basis. CMS is the platform where podcast episodes are uploaded, RSS feeds are created and distributed to listening platforms, and the listening data is analyzed and displayed in a dashboard for the creators / producers to see. We are focused on continuously improving our technology so that it is user-friendly and sets us apart from other independent publishers.

We are one of the few podcast networks with a proprietary CMS that allows for a customizable internal system resulting in improved audience analytics. Our hosts/talent are also able to view their own download numbers, trends and analytics on this proprietary software, something many network competitors don't provide. This fully owned and operated enterprise CMS rivals other paid platforms such as Megaphone (Spotify-owned), Art19 (Amazon-owned) and SimpleCast (SiriusXM/Pandora-owned). The CMS' day-to-day operation and maintenance is managed by a vendor we contract with and is constantly being updated to be a best-in-class system.

***Blue Chip Advertiser Relationships with Targeted Measurable Campaigns and Value-Added Opportunities.***

We offer and book competitive campaigns with new and legacy brands by: (1) using measurement tools and partners to deploy leading podcast measurement solutions that are tailored to our clients key performance indicators; including brand impact and sales lift; (2) engaging with third party attribution partners to provide greater insight for our clients into the effectiveness of their campaigns across multiple publishers and hosting providers; and (3) conducting brand lift studies that allow our Company to demonstrate and validate campaign impact.

In addition, because of our deep-rooted relationships with talent we are able to engage them in host read embedded spots and coach them through voice-over delivery to increase direct response sales and advertiser satisfaction. Furthermore, these relationships allow us to create value-added opportunities with brands through talent socials, YouTube and other influencer marketing tools.

Advertisers also have the opportunity to brand entire podcast series, as executed by Microsoft and MotorTrend most recently. This would allow advertisers to enter into content development deals for their brand with us, where we would we produce and distribute an entire podcast series for the specific brand. Advertisers benefit from branding a podcast series by getting 100% share of voice ads, which in our experience significantly helps them launch a new product, service or offering. Two podcast series examples that we have recently put together in a similar format are *The Inevitable* podcast and *On the Edge with Microsoft Edge* podcast.

We also offer comprehensive sales opportunities for advertisers ranging from video, audio and social to live events and merchandise. By scaling across our talent's networks we can offer exclusive branding opportunities to our clients including higher CPMs for us and value added opportunities for advertisers.

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**Marketing**

Since our inception, we have focused our marketing efforts on enhancing our brand's authenticity and presence among consumers, creators and advertisers. Initially, our campaigns were designed to educate the market on the concept of on-demand podcast streaming and the navigation functionality we provided. As familiarity with the podcast access model spread, our promotional efforts shifted to promote the specific shows, talent and brands in our portfolio. We've found that consumers don't particularly know or care who is producing the content they are listening to. They are listening because they like what a host or creator represents and has to say.

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**Our Competition**

We compete for the time and attention of our users across different forms of media, including traditional broadcast, satellite, and internet radio (iHeartRadio, LastFM, Pandora, and SiriusXM), other providers of on-demand audio streaming services (Spotify, Amazon Prime, Apple Music, Deezer, Google Play Music, Joox, Pandora, and SoundCloud), and other providers of in-home and mobile entertainment such as cable television, video streaming services, and social media and networking websites. Additionally, we compete with midsized publishers creating and distributing ad-supported content for the aforementioned audio platforms (*Dear Media*, *Kast Media*, *Barstool Sport*s, etc.). We compete to attract and engage listeners with our content accessibility, perceptions of advertising load in our shows, brand awareness and reputation. Many of our competitors enjoy competitive advantages such as greater name recognition, legacy operating histories, and larger marketing budgets, as well as greater financial, technical, human, and other resources.

Additionally, we compete to attract and retain advertisers and a share of their advertising spend for our Ad-Supported Service. We believe our ability to compete depends primarily on the reputation and strength of our brand as well as our reach and ability to deliver a strong return on investment to our advertisers, which is driven by the size of our show-specific audiences, our advertising products, our targeting, delivery and measurement capabilities, and third party/agency relationships.

We also compete to attract and retain highly talented individuals, including producers, editors, sales executives and marketers. Our ability to attract and retain personnel is driven by compensation, culture, and the reputation and strength of our brand. We believe we provide competitive compensation packages and foster a team-oriented culture where each employee is encouraged to have a meaningful contribution to PodcastOne. We also believe the reputation and strength of our brand helps us attract individuals that are passionate about our Service.

For information on competition-related risks, see "Risk Factors" on page 25.

 **History and Development of PodcastOne** 

We are a Delaware corporation incorporated on February 5, 2014. On July 1, 2020, we were acquired by LiveOne and became its wholly owned subsidiary.

On July 15, 2022, we completed a private placement offering (the "Notes Financing") of our unsecured convertible notes with an original issue discount of 10% in the aggregate principal amount of $8,838,500 (the "Notes") to LiveOne and certain accredited investors and institutional investors (collectively, the "Purchasers"), for gross proceeds of $8,035,000. In connection with the sale of the Notes, the Purchasers received warrants (the "Warrants") to purchase a number of shares (the "Warrant Shares") of our common stock. The Notes and the Warrants were issued as restricted securities in a private placement transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). After the Direct Listing, we will become LiveOne's majority owned subsidiary.

**Intellectual Property**

Our success depends in part upon our ability to protect our technologies and intellectual property. To accomplish this, we rely on a combination of intellectual property rights, including trade secrets, patents, copyrights, and trademarks, as well as contractual restrictions, technological measures, and other methods.

In addition to the forms of intellectual property listed above, we own rights to proprietary processes and trade secrets, including those underlying the PodcastOne platform. We use contractual and technological means to control the use and distribution of our proprietary software, trade secrets, and other confidential information, both internally and externally, including contractual protections with employees, contractors, customers, and partners. Finally, since 2019, PodcastOne has included passive participation in substantially all of its agreements, meaning if a podcast goes to derivative, PodcastOne has creative control but does accrue payment as a passive participant.

*LaunchPadOne*

LaunchPadOne is a free innovative podcast hosting, distribution, and monetization platform that provides an end-to-end podcast solution. With over 1,000 available podcasts, LaunchPadOne offers creators a 360 podcasting ecosystem - a cutting-edge technology hosting platform, customizable design elements, a podcast player, distribution tools to publish on all major listening apps, including Apple Podcasts, Spotify, Google Podcasts, Overcast and Pocket Casts and others, and a deep network of shows. LaunchPadOne's robust platform technology, promotion and monetization opportunities will allow podcast creators to leverage unique opportunities from PodcastOne, such as the ability to accumulate new listeners, get discovered, and collaborate with the established podcast network. PodcastOne will monetize the audience of the LaunchPadOne network through ad insertion technology platform, which generates revenue for PodcastOne. Simultaneously, LaunchPadOne creators will receive free hosting and also have the opportunity to generate revenue for their own podcasts by embedding any ads they sell on their own.

**Licensing Agreements** 

We have the following rights to creator and show content: the use of a Podcaster's actual name, professional name, nickname, recorded voice, biographical material, portraits, pictures, sobriquets and likenesses (as reasonably approved by Podcaster in advance) for advertising purposes of trade, promotion and publicity in connection with the institutions, service and products of Company; and in connection with licensing of the Podcast to third party platforms. The Podcaster has the right to meaningfully consult with Company in connection with Podcaster's biography.

**Other Agreements** 

Please see section "Certain Relationships and Related Party Transactions ⸺ Various Agreements Entered into with LiveOne ⸺ Other Agreements" below for a summary of material agreements, other than material agreements entered into in the ordinary course of business, to which we are or have been a party, unless entered into with stockholders named in the Registration Statement, for the two years immediately preceding the date of this prospectus.

**Government Regulation**

We are subject to many U.S. federal and state, European and other foreign laws and regulations, including those related to privacy, data protection, content regulation, intellectual property, consumer protection, rights of publicity, health and safety, employment and labor, competition, and taxation. These laws and regulations are constantly evolving and may be interpreted, applied, created, or amended in a manner that could harm our business. In addition, it is possible that certain governments may seek to block or limit our products or otherwise impose other restrictions that may affect the accessibility or usability of any or all of our products for an extended period of time or indefinitely.

In the area of information security and data protection, the laws in several jurisdictions require companies to implement specific information security controls to protect certain types of information. Data protection, privacy, consumer protection, content regulation, and other laws and regulations are very stringent and vary from jurisdiction to jurisdiction. In particular, we are subject to the data protection/privacy regulation under the laws of the EU.

The framework legislation at an EU level with respect to data protection currently is Directive 95/46/EC (the "Data Protection Directive"). The purpose of the Data Protection Directive is to provide for the protection of the individual's right to privacy with respect to the processing of personal data. Each member state is obligated to have national legislation consistent with the Data Protection Directive. These local laws can impose stringent rules relating to the way in which we process personal data.

The Data Protection Directive will be superseded by the General Data Protection Regulation ("GDPR"), which came into effect on May 25, 2018. The GDPR is intended to create a single legal framework that applies across all EU member states. However, there are certain areas where EU member states can derogate from the requirements in their own legislation. It is therefore likely that we will need to comply with these local regulations in addition to the GDPR. Local Supervisory Authorities will be able to impose fines of up to 4% of annual worldwide turnover of the preceding financial year or €20 million, whichever is greater, for non-compliance. These data protection authorities will have the power to carry out audits, require companies to cease or change processing, request information, and obtain access to premises. Where consent is relied upon as the legal basis for processing personal data, businesses must be able to demonstrate that the data subjects gave their consent to the processing of their personal data and will bear the burden of proof that consent was validly obtained and can be withdrawn at any time. The GDPR will implement more stringent operational requirements for processors and controllers of personal data, including, for example, requiring enhanced disclosures to data subjects about how personal data is processed, limiting retention periods of personal data, requiring mandatory data breach notification, and requiring additional policies and procedures to comply with the accountability principle under the GDPR. In addition, data subjects have more robust rights with regard to their personal data.

Our privacy policy and terms and conditions of use describe our practices concerning the use, transmission, and disclosure of User information and are posted on our website.

**Legal Proceedings** 

We are from time to time subject to various claims, lawsuits and other legal proceedings. Some of these claims, lawsuits and other legal proceedings involve highly complex issues, and often these issues are subject to substantial uncertainties. Accordingly, our potential liability with respect to a large portion of such claims, lawsuits and other legal proceedings cannot be estimated with certainty. Management, with the assistance of legal counsel, periodically reviews the status of each significant matter and assesses potential financial exposure. We recognize provisions for claims or pending litigation when it determines that an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertain nature of litigation, the ultimate outcome or actual cost of settlement may materially vary from estimates. If management's estimates prove incorrect, current reserves could be inadequate and we could incur a charge to earnings which could have a material adverse effect on our results of operations, financial condition, net worth, and cash flows.

From time to time, our parent company, LiveOne, is involved in legal proceedings and other matters arising in connection with the conduct of its business activities that name our parent and its senior officers, including Robert S. Ellin, its Chairman and Chief Executive Officer (who is expected to maintain a significant ongoing leadership role with PodcastOne as a director and/or officer), as a defendant. Many of these proceedings may be at preliminary stages and/or seek an indeterminate amount of damages. In the opinion of our parent company's management, after consultation with legal counsel, other than as set forth below, such routine claims and lawsuits are not significant and our parent company does not currently expect them to have a material adverse effect on its business, financial condition, results of operations, or liquidity, or ours.

On April 10, 2018, Joseph Schnaier, Danco Enterprises, LLC (an entity solely owned by Mr. Schnaier, "Danco"), Wantmcs Holdings, LLC (Mr. Schnaier is the managing member) and Wantickets (Mr. Schnaier is the 90% beneficial owner) filed a complaint in the Supreme Court of the State of New York, County of New York against LiveOne, LiveXLive Tickets, Inc. ("LXL Tickets"), Robert S. Ellin and certain other defendants. Plaintiffs subsequently voluntarily dismissed all claims against the other defendants. The complaint alleged multiple causes of action arising out of Schnaier's investment (through Danco) into LiveOne in 2016, LXL Tickets' purchase of certain operating assets of Wantickets pursuant to the Asset Purchase Agreement, dated as of May 5, 2017, and Mr. Schnaier's employment with LXL Tickets, including claims for fraudulent inducement, breach of contract, conversion, and defamation. Based on the remaining claims, plaintiffs are seeking damages of approximately $10.0 million as shall be determined at trial, if any, plus interest, attorneys' fees and costs and other such relief as the court may award. LiveOne has denied and continues to deny plaintiffs' claims. LiveOne believes that the complaint is an intentional act by the plaintiffs to publicly tarnish LiveOne's and its senior management's reputations through the public domain in an effort to obtain by threat of litigation certain results for Mr. Schnaier's self-serving and improper purposes. LiveOne is vigorously defending this lawsuit and believes that the allegations are without merit and that it has strong defenses. On June 26, 2018, LiveOne and LXL Tickets, filed counterclaims against the plaintiffs for breach of contract (including under the Asset Purchase Agreement), fraudulent inducement, and other causes of action, seeking injunctive relief, damages, attorneys' fees and expenses and such other relief as the court may award. In October 2018, pursuant to the terms of the APA, LiveOne submitted a formal demand to Wantickets, Mr. Schnaier and Danco to indemnify LiveOne, among other things, for its costs and expenses incurred in connection with this matter. In November 2021, the court denied LiveOne's summary judgment motion to dismiss plaintiffs' fraudulent inducement claim and dismissed plaintiff's breach of the employment agreement claim with respect to LiveOne. On October 6, 2022, New York Appellate Division reversed the trial court's decision and ordered that defendants' motion for summary judgment dismissing the first and second causes of action should be granted. As of December 31, 2022, all of plaintiffs' claims were dismissed or addressed by the parties or the court other than plaintiffs' claims for fraudulent inducement related to payment of Wantickets' audit costs, breach of contract based on Mr. Schnaier's employment agreement with LXL Tickets, and fraudulent inducement due to plaintiffs alleged inability to sell their shares of Company's common stock acquired pursuant to the APA. The trial has been scheduled for April 2023. LiveOne intends to continue to vigorously defend all remaining defendants against any liability to the plaintiffs with respect to the remaining claims, and LiveOne believes that the allegations are without merit and that it has strong defenses. As of December 31, 2022, while LiveOne has assessed that the likelihood of a loss, if any, is not probable, the outcome of this lawsuit is inherently uncertain and the potential range of loss could have a material adverse effect on LiveOne's business, financial condition and results of operations.

On February 23, 2023, Cherri Bell filed a complaint in the Superior Court of the State of California, County of Los Angeles against PodcastOne Sales, LLC, LiveOne and Mr. Gray. The complaint alleges several causes of action allegedly arising out of plaintiff's employment with PodcastOne Sales, including claims for retaliation in violation of California Labor Code §1102.5, wrongful termination in violation of public policy and intentional infliction of emotional distress. Plaintiff is seeking damages, which shall be determined at trial, if any, plus interest, attorneys' fees and costs and other such relief as the court may award. The defendants have denied plaintiffs' claims, and we believe that the allegations are without merit and that the defendants have strong defenses. We intend to vigorously defend all defendants against any liability to the plaintiff. As of the date of this Registration Statement, while we have assessed that the likelihood of a loss, if any, is not probable, the outcome of this lawsuit is inherently uncertain and the potential range of loss could have a material adverse effect on our business, financial condition and results of operations.

On June 28, 2022, SoundExchange, Inc. ("SX") filed a complaint in the U.S. District Court, Central District of California, against LiveOne and Slacker. The complaint alleges that the defendants have failed to make the necessary music royalty payments and corresponding late fees required under the Digital Millennium Copyright Act late allegedly due to SX. SX filed an application for an order to file the complaint under seal. On October 13, 2022, the court entered a judgment against the defendants for the sum of $9,765,396.70. On February 3, 2023, LiveOne and SX entered into an agreement to settle the dispute and related court judgement, pursuant to which LiveOne agreed to make certain monthly payments to SX for a period of 24 months and certain other payments in the event LiveOne obtains additional financing(s), unless LiveOne repays the judgment amount earlier pursuant to the terms of the agreement, and SX agreed not to take any action to enforce such judgment, so long as the defendants are not in default under the agreement.

**Property and Equipment** 

Our principal executive offices are located at 335 North Maple Drive, Suite 127, Beverly Hills, CA 90210, and our corporate website address is www.podcastone.com. We are under a month-to-month lease for approximately 1,308 square feet of office space.

The majority of our computing needs are serviced by Nox Solutions, who leverages Verizon's CDN services for PodcastOne's data storage. The data centers host the www.podcastone.com website and intranet applications that are used to manage the website content in addition to fueling our CMS. Our data centers are listed below.

**Verizon CDN Data Centers**

![](image_008.jpg)

We believe that our current facilities are adequate to meet our needs for the near future and that suitable additional or alternative space will be available on commercially reasonable terms to accommodate our foreseeable future operations.

**Employees** 

As of each of March 2022 and 2021, we had 44 full-time employees. As of December 31, 2022, we had 41 full-time employees.

**Corporate Information**

We were incorporated in Delaware on February 5, 2014. On July 1, 2020, we were acquired by LiveOne and became its wholly owned subsidiary. We have two wholly owned subsidiaries, Courtside, LLC, a Delaware limited liability company, and PodcastOne Sales, LLC, a California limited liability company. As a result of the Direct Listing, we will become LiveOne's majority owned subsidiary. Our principal executive offices are located at 335 North Maple Drive, Suite 127, Beverly Hills, CA 90210. Our main corporate website address is www.podcastone.com. We make available on or through our website our periodic reports that we file with the SEC. This information is available on our website free of charge as soon as reasonably practicable after we electronically file the information with or furnish it to the SEC. The contents of our website are not incorporated by reference into this document and shall not be deemed "filed" under the Exchange Act.

**MANAGEMENT**

**Executive Officers and Directors**

Set forth below are the names, ages and positions as of the date hereof of our executive officers, directors, and our director nominees who are expected to join our board of directors in connection with the Spin-Out:****

---

| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| **Executive Officers** |  |  |
| Kit Gray | &nbsp;&nbsp;&nbsp;&nbsp;46 | &nbsp;&nbsp;&nbsp;&nbsp;President |
| Robert Ellin | &nbsp;&nbsp;&nbsp;&nbsp;57 | &nbsp;&nbsp;&nbsp;&nbsp;Executive Chairman and Director |
| Aaron Sullivan | &nbsp;&nbsp;&nbsp;&nbsp;41 | &nbsp;&nbsp;&nbsp;&nbsp;Interim Chief Financial Officer |
| Sue McNamara | &nbsp;&nbsp;&nbsp;&nbsp;58 | &nbsp;&nbsp;&nbsp;&nbsp;Head of Sales |
| Jacqueline Stone | &nbsp;&nbsp;&nbsp;&nbsp;54 | &nbsp;&nbsp;&nbsp;&nbsp;Chief Marketing Officer |
| **Non-Employee Directors and Director Nominees** |  |  |
| Jay Krigsman<sup>(1)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;57 | &nbsp;&nbsp;&nbsp;&nbsp;Director Nominee |
| Craig Foster<sup>(1)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;51 | &nbsp;&nbsp;&nbsp;&nbsp;Director Nominee |
| Ramin Arani<sup>(1)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;52 | &nbsp;&nbsp;&nbsp;&nbsp;Director Nominee |
| Patrick Wachsberger<sup>(1)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;70 | &nbsp;&nbsp;&nbsp;&nbsp;Director Nominee |
| James Berk<sup>(1)</sup> | &nbsp;&nbsp;&nbsp;&nbsp;63 | &nbsp;&nbsp;&nbsp;&nbsp;Director |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Certain
 of our non-employee director nominees and/or Mr. Berk shall be appointed as a member of the Audit Committee, Compensation Committee
 and/or the Nominating and Corporate Governance Committee of our board of directors in connection with the consummation of the Spin-Out.

**Executive Officers**

 ****

***Kit Gray*** has served as our President and Co-Founder since October 2012. Prior to such date, Mr. Gray had worked at Katz Media Group (subsidiary of Clear Channel/iHeart Communications) in the Boston, New York and Los Angeles offices. Mr. Gray is a seasoned executive with extensive podcasting experience together with substantial financial and operational experience in building, managing and scaling the podcasting industry. Mr. Gray holds an MBA in finance and marketing from the Crummer Graduate School of Business at Rollins College, where he also received his undergraduate degree.

 ****

***Robert S. Ellin*** has served as our director since July 1, 2020 and as the Executive Chairman of our board of directors since December 14, 2022. Mr. Ellin is LiveOne's Chief Executive Officer and Chairman of the board of directors and has been serving in such role since September 7, 2017. Prior to such date Mr. Ellin served in various capacities with LiveOne as its founder. Mr. Ellin has more than 20 years of investment and turnaround experience. He is Managing Director and Portfolio Manager of Trinad Capital Master Fund Ltd. ("Trinad Capital"). Trinad Capital is a hedge fund dedicated to investing in micro-cap public companies. Mr. Ellin was a founder and served as a member of the board of directors from February 2005 to September 2013, and as Executive Chairman of the board of directors, of Mandalay Digital Group, Inc. (MNDL) from December 2011 to April 2013. He has also served on the Board of Governors at Cedars-Sinai Hospital in Los Angeles, California since March 2007. Prior to joining Trinad Capital, Mr. Ellin was the founder and President of Atlantis Equities, Inc. ("Atlantis"), a private investment company. Founded in 1990, Atlantis actively managed an investment portfolio of small capitalization public companies as well as select private company investments. Mr. Ellin played an active role in Atlantis investee companies including board representation, management selection, corporate finance and other advisory services. Through Atlantis and related companies, he spearheaded investments into THQ, Inc., Grand Toys, Forward Industries, Inc. (FORD), Majesco Entertainment (COOL) and iWon.com. Mr. Ellin also completed a leveraged buyout of S&S Industries, Inc. where he served as President from 1996 to 1998. S&S Industries was one of the largest manufacturers in the world of underwires which had strong partnerships with leading companies including Bally's, Maidenform, and Sara Lee. Prior to founding Atlantis Equities, Mr. Ellin worked in Institutional Sales at LF Rothschild and was Manager of Retail Operations at Lombard Securities. Mr. Ellin received his BBA degree from Pace University.

 

 

 *Board Membership Qualifications*: Our board of directors has concluded that Mr. Ellin is well-qualified to serve on our board of directors and has the requisite qualifications, skills and perspectives based on, among other factors, him being the Chief Executive Officer and Chairman of LiveOne, Inc., Managing Director and Portfolio Manager of Trinad Capital, a significant stockholder of LiveOne, and his extensive business, investment, finance and public company experience, particularly in investing in micro-cap public companies.

 ****

 ***Aaron Sullivan*** has served as our Interim Chief Financial Officer since December 31, 2021. Mr. Sullivan also serves as LiveOne's Interim Chief Financial Officer and has been serving in such role since December 31, 2021, and has been LiveOne's Vice President and Controller since March 2019. Mr. Sullivan is a seasoned executive with extensive financial, mergers and acquisitions and operational experience in building, managing and scaling organizations, as well with financial reporting and internal controls. Mr. Sullivan has built and led financial organizations across multi-billion-dollar technology companies. Prior to his appointment as LiveOne's Vice President and Controller, Mr. Sullivan served as the Controller - Cloud of j2 Global, Inc. (now Consensus Cloud Solutions, Inc.), a cloud software company, since July 2015. Prior to that, Mr. Sullivan worked at PricewaterhouseCoopers LLP, a global public accounting firm. Mr. Sullivan holds a B.A, Business & Economics degree from Trinity College Dublin, Ireland and is a Certified Public Accountant.

  ****

***Sue McNamara*** has served as our Executive Vice President of Sales at PodcastOne since April 2019. Ms. McNamara is a seasoned sales executive with 20+ years of extensive audio experience, including creating new revenue streams, expanding markets reach and driving revenue and market share to new heights. Prior to joining PodcastOne, Ms. McNamara was the VP of Northeast Sales for the United States Traffic Network, after almost a decade as Senior Vice President of Advertising Sales at CBS and 12+ years as the Executive Vice President/General Manager at Interep, for CBS Radio Sales. Ms. McNamara builds world class teams, spearheads revenue growth strategies and cross platform campaigns that cultivate client loyalty, develops sustainable business, and delivers revenue growth. She was named one of Radio Ink's Most Influential Women in Radio for six years in a row from 2009-2014.

 **Jacqueline Stone** has served as our Chief Marketing Officer since December 15, 2022. Ms. Stone is LiveOne's Chief Marketing Officer and has been serving in such role since January 1, 2020, as well as advisor and consultant to LiveOne since its inception. Prior to December 15, 2022, Ms. Stone provided services to us as part of her role with LiveOne. Ms. Stone oversees all facets of strategic and creative brand development, consumer marketing and cross-business initiatives. She oversees the synergy between LiveOne and its subsidiaries, which include our Company, CPS, Gramophone Media, and Palm Beach Records, among others. Prior to joining our Company, Ms. Stone has more than 31 years of marketing leadership at diverse companies such as MiMedia, WebMD, Digitas/Publicis, About.com and AOL, where she spurred $65 million in revenue and led marketing for major advertising clients, AOL Studio Music Sessions and promotional events including the Super Bowl, US Open Tennis, and The Masters golf tournament. Ms. Stone also helped launch The Food Network and The Daily Meal and was integral to the creation of the American Express Centurion Lounge and American Express Small Business Saturday. Described by Adweek as a "marketing maverick," Stone is a Top 50 OnCon ICON Marketer Award winner, and recently received the Cynopsis 2022 Top Women in Media award, as well as being a member of the Cynopsis Digital "It List." An adjunct professor at the New York University School of Professional Studies, Ms. Stone earned a BBA at the University of Miami. Ms. Stone received her MBA from Barry University, as well as a certificate in sports, entertainment and events marketing from NYU.

**Non-Employee Directors** 

***James Berk*** has served as a director of our Company since January 23, 2023. Mr. Berk is currently the Chairman and CEO of Goodman Media Partners since November 2017, investing in early-stage media and tech companies. Previously, Mr. Berk was our Chief Executive Officer from 2015 to 2017, where he led operations and strategy and positioned our Company for acquisition. From 2006 to 2015, Mr. Berk was the Chief Executive Officer of Participant Media, a global media and entertainment company that created content that inspired positive social change. During Mr. Berk's tenure, Participant greenlit more than 67 films, launched a digital news and social impact channel and cable television network. Prior to that, Mr. Berk served as the Chairman and the Chief Executive Officer of Gryphon Colleges from 2003 to 2006, which acquired and consolidated independent for-profit colleges, as the President and the Chief Executive Officer of Fairfield Communities, America's largest independent vacation ownership companies from 1999 to 2003, and the President and the Chief Executive Officer of Hard Rock Café International, a global entertainment and leisure company from 1995 to 1999. Since 2015, Mr. Berk has served as the Chairman of the UCLA School of Theater, Film and Television Executive Board, is a member of the USC Rossier School of Education Board and is a voting member of the Academies of Recording, Television, and Motion Picture Arts and Sciences. Mr. Berk received a BA in Fine Arts from California State University, Northridge, and Masters in Public Administration from California Lutheran College.

 *Board Membership Qualifications:* Our board of directors has concluded that Mr. Berk is well-qualified to serve on our board of directors and has the requisite qualifications, skills and perspectives based on, among other factors, his 25+ years serving as a chief executive officer, prior experience as our Chief Executive Officer, knowledge of the entertainment and media sector and his expertise in strategic planning, operations, mergers and acquisitions.

  ****

***Jay Krigsman*** has served as a director of LiveOne since April 26, 2012. Mr. Krigsman has been the Executive Vice President and Asset Manager of The Krausz Companies since 1992, where he assists in property acquisitions, oversees the company's property management team and is responsible for developing and implementing strategic leasing programs. Prior to joining The Krausz Companies, Mr. Krigsman had the senior leasing responsibilities for Birtcher Development Co. Mr. Krigsman holds a Certified Commercial Investment Member designation from the CCIM Institute, a Sr. Certified Leasing Specialist designation from the International Council of Shopping Centers and holds a California Real Estate Broker's License. Mr. Krigsman currently serves on the board of directors of Trinad Capital. Mr. Krigsman received a BA in Business Administration from the University of Maryland.

 

 *Board Membership Qualifications:* Our board of directors has concluded that Mr. Krigsman is well-qualified to serve on our board of directors and has the requisite qualifications, skills and perspectives based on, among other factors, his professional background and experience in acquisitions and management and him being the Executive Vice President and Asset Manager of The Krausz Companies for over 20 years.

 ****

***Craig Foster*** has served as a director of LiveOne since July 7, 2017. Mr. Foster previously served as the Chief Financial Officer and Chief Accounting Officer of Amobee, Inc., a digital advertising platform, from April 2015 until May 2017. From February 2013 until April 2015, Mr. Foster served as Chief Financial Officer and Chief Accounting Officer of Ubiquiti Networks, Inc., a publicly-traded networking and communications company. From June 2012 to February 2013, Mr. Foster served as Director in the technology infrastructure and software group of Credit Suisse Securities (USA) LLC, an investment bank. From August 2007 to June 2012, Mr. Foster served as an Executive Director and co-head of the software group of UBS Securities LLC, an investment bank. Mr. Foster has also held various management positions at RBC Capital Markets, an investment bank, Loudcloud, a software and services platform, PricewaterhouseCoopers, a public accounting firm and Deloitte, a public accounting firm. Mr. Foster holds an M.B.A. in Finance from the Wharton School of Business and a B.A. in Economics from the University of California, San Diego.

 

 *Board Membership Qualifications*: Our board of directors has concluded that Mr. Foster is well-qualified to serve on our board of directors and has the requisite qualifications, skills and perspectives based on, among other factors, his extensive experience in technology and software for over 10 years.

 ****

***Ramin Arani*** has served as a director of LiveOne since January 14, 2019. Mr. Arani was the portfolio manager at Fidelity Management & Research Company ("FMR Co"), the investment adviser for Fidelity's family of mutual funds, until his retirement at the end of 2018. FMR Co is a wholly owned subsidiary of FMR LLC, which is a greater than 5% stockholder of LiveOne and acquired its position as part of our public offering completed in December 2017. Fidelity Investments is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing, and other financial products and services to more than 20 million individuals, institutions and financial intermediaries. In his portfolio manager role, he served as the lead manager of the Fidelity Puritan Fund. Prior to assuming his lead responsibilities in 2008, Mr. Arani co-managed Fidelity Puritan Fund from 2007 to 2008. Previously, he managed the equity portion of Fidelity Asset Manager Portfolio from 2005 to 2006, Fidelity Trend Fund from 2000 to 2007 and Select Health Care Portfolio from 1999 to 2000. Mr. Arani has held various other roles within FMR Co's Equity Research group, including that of analyst covering the health care industry from 1999 to 2000, analyst covering the retail industry/portfolio manager of Select Retailing Portfolio from 1997 to 1999, and analyst covering defense electronics companies, then real estate investment trusts from 1992 to 1996. Before joining Fidelity in 1992, Mr. Arani was a research analyst intern at Josephthal & Co. in 1991. He has been in the investments industry since 1992. Mr. Arani earned his Bachelor of Arts degree in international relations from Tufts University. He also received the 1994, 1996 and 1998 Institutional Investor "Best of the Buyside" awards for his research work.

 

*Board Membership Qualifications*: Our board of directors has concluded that Mr. Arani is well-qualified to serve on our board of directors and has the requisite qualifications, skills and perspectives based on, among other factors, his experience in the investment industry for over 25 years, including deep understanding of the capital markets.

 ****

***Patrick Wachsberger*** has served as a director of LiveOne since January 25, 2019. Mr. Wachsberger currently serves as the founder and manager of Picture Perfect Entertainment LLC, a film and television production and distribution studio he founded in 2018. Prior to that, Mr. Wachsberger was serving as Co-Chairman of Lionsgate Films (Lionsgate Motion Picture Group), an American film production and film distribution studio ("Lionsgate"), joining in January 2012 when Lionsgate acquired Summit Entertainment, which he helped launch in 1993. Mr. Wachsberger has risen to become one of the leading international film executives in the world during his 30-year motion picture industry career. As Co-Chairman at Lionsgate, Mr. Wachsberger oversaw all aspects of Lionsgate's feature film acquisition, production and distribution and was responsible for leading its motion picture business around the world. During his tenure, Lionsgate's feature film slate generated nearly $10 billion at the global box office over the past five years, led by the critically-acclaimed breakout sensation Wonder, the global box office phenomenon La Land, winner of six Academy Awards®, double Oscar® winner Hacksaw Ridge, and the blockbuster Hunger Games, John Wick, and Now You See Me franchises. Other recent hits include The Hitman's Bodyguard, The Big Sick (in partnership with Amazon Studios) and The Shack. Under Mr. Wachsberger's leadership, Lionsgate built a global distribution infrastructure encompassing nearly 20 output deals in major territories, including the successful 50/50 joint venture of International Distribution Company in Latin America and Lionsgate's successful self-distribution operations in the U.K. Lionsgate, while also continuing to grow its film business in China and India. Mr. Wachsberger was awarded in 2017 the prestigious honor of Chevalier des Arts et des Lettres (Knight in the Order of Arts and Letters), received CineEurope's International Distributor of the Year award in 2018 and was named as a "Game Changer" at the 2016 Zurich Film Festival.

 

*Board Membership Qualifications*: Our board of directors has concluded that Mr. Wachsberger is well-qualified to serve on the board of directors and has the requisite qualifications, skills and perspectives based on, among other factors, his extensive experience and leadership in the media and entertainment industry, including with respect to the acquisition, production, growth and distribution of various entertainment assets.

**Composition of our Board of Directors**

Our board of directors is currently composed of two members. Our three other director nominees are expected to join our board of directors in connection with the completion of the Spin-Out, and our board of directors will then be composed of five members. Our Amended and Restated Certificate of Incorporation will provide that the number of directors of our board shall be established from time to time by our board of directors. Mr. Ellin is serving as the chairperson of our board of directors.

 **Controlled Company Exemption**

As a result of the completion of the Spin-Out, we will be a "controlled company" within the meaning of the corporate governance standards of The Nasdaq Capital Market. As a result, we qualify for exemptions from certain corporate governance requirements under the rules, including the requirements that within one year of the completion of this offering we have a board that is composed of a majority of "independent directors," as defined under the rules, and a compensation committee and a nominating and corporate governance committee that are composed entirely of independent directors. However, we currently intend to comply with all corporate governance requirements of The Nasdaq Capital Market and not to rely on such exemptions. In addition, even though we are a controlled company, we are required to comply with the rules of the SEC and Nasdaq relating to the membership, qualifications, and operations of the audit committee, as discussed below.

The rules of The Nasdaq Capital Market define a "controlled company" as a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. Upon the completion of the Spin-Out, LiveOne will beneficially own approximately 82.3% of the outstanding shares of our common stock and voting power (not including the exercise of the Bridge Warrants or the exercise of the Placement Agent Warrants and assuming the conversion of all of the Bridge Notes). Through its control of shares of our common stock representing a majority of the votes entitled to be cast in the election of directors, LiveOne will have the ability to control the vote to elect all of our directors. Accordingly, we will qualify as a "controlled company" under the listing requirements of The Nasdaq Capital Market and will be able to rely on the exemptions described above. However, we currently intend not to rely on such exemptions and intend to comply with all corporate governance requirements of The Nasdaq Capital Market. If we cease to be a controlled company and our common stock continues to be listed on The Nasdaq Capital Market, we will not be able to rely on such exemptions thereafter.

**Director Independence**

Our Board has undertaken a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise that director's ability to exercise independent judgment in carrying out that director's responsibilities. Our Board has affirmatively determined that each of our directors and director nominees, other than Mr. Ellin is an "independent director," as defined under Nasdaq rules. In making these determinations, our board of directors considered the current and prior relationships that each director has with our Company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each director and the transactions involving them described in "Certain Relationships and Related Party Transactions." In addition to determining whether each director satisfies the director independence requirements set forth in Nasdaq rules, in the case of members of our audit committee and compensation committee, our board of directors made an affirmative determination that such members also satisfy separate independence requirements and current standards imposed by the SEC and Nasdaq.

**Family Relationships**

There are no family relationships among any of our directors or executive officers.

**Leadership Structure of the Board** 

Our Amended and Restated Bylaws and corporate governance guidelines to be adopted immediately following the effectiveness of the registration statement of which this prospectus forms a part will provide our board of directors with flexibility to combine or separate the positions of chairperson of the board of directors and our Chief Executive Officer and/or President and if desired, to implement a lead independent director in accordance with its determination regarding which structure would be in the best interests of our Company. As of the date of this prospectus, we have not chosen a lead independent director. A lead independent director, if implemented, will preside over all meetings of the board of directors at which the chair is not present, including any executive sessions of the independent directors, approve board of directors meeting schedules and agendas, and act as the liaison between the independent directors and our Chief Executive Officer and/or President and the chair of the board of directors.

Our board of directors has concluded that our current leadership structure is appropriate at this time. However, our board of directors will continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate.

**Role of Board in Risk Oversight Process** 

Risk assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks we face. Throughout the year, senior management reviews these risks with the board of directors at regular board meetings as part of management presentations that focus on particular business functions, operations, or strategies, and presents the steps taken by management to mitigate or eliminate such risks.

Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through our board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. While our board of directors is responsible for monitoring and assessing strategic risk exposure, our audit committee is responsible for overseeing our major financial and cybersecurity risk exposures and the steps our management has taken to monitor and control these exposures. The audit committee also approves or disapproves any related person transactions. Our nominating and corporate governance committee monitors the effectiveness of our corporate governance guidelines. Our compensation committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

**Committees of the Board of Directors** 

Our board of directors will have an audit committee, a compensation committee, and a nominating and corporate governance committee, each of which will have the composition and responsibilities described below.

 ****

***Audit Committee***

Our audit committee will be responsible for, among other things:

● appointing, approving, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm;

● discussing with our independent registered public accounting firm its independence from management;

● reviewing with our independent registered public accounting firm the scope and results of their audit;

● approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;

● overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the quarterly and annual financial statements that we file with the SEC;

● overseeing our financial and accounting controls and compliance with legal and regulatory requirements;

● reviewing our policies on risk assessment, risk management, and risk oversight, including responsibility for oversight of risks and exposures associated with major financial and cybersecurity risks;

● reviewing related person transactions; and

● establishing procedures for the confidential, anonymous submission of concerns regarding questionable accounting, internal controls, or auditing matters.

Our audit committee is expected to consist of Messrs. Foster, Arani and Krigsman, with Mr. Foster serving as chair. Rule 10A-3 under the Exchange Act and Nasdaq rules require that our audit committee have at least one independent member upon the listing of our common stock, have a majority of independent members within 90 days of the date of this prospectus, and be composed entirely of independent members within one year of the date of this prospectus. Our board of directors has affirmatively determined that Messrs. Foster, Arani and Krigsman each meet the definition of "independent director" for purposes of serving on the audit committee under Rule 10A-3 under the Exchange Act and Nasdaq rules. Each member of our audit committee also meets the financial literacy requirements of Nasdaq rules. In addition, our board of directors has determined that Mr. Foster will qualify as an "audit committee financial expert," as such term is defined in Item 407(d)(5) of Regulation S-K. Our board of directors has adopted a written charter for the audit committee, to be effective in connection with the effectiveness of the registration statement of which this prospectus forms a part, which will be available on our principal corporate website at www.podcastone.com. The information contained on, or that can be accessed through, our website is deemed not to be incorporated in this prospectus or to be part of this prospectus.

 ****

***Compensation Committee***

Our compensation committee will be responsible for, among other things:

● reviewing and approving the compensation of our directors, Chief Executive Officer, and other executive officers;

● reviewing and approving the terms of any employment agreements, severance arrangements, change in control protections, and any other compensatory arrangements for our executive officers;

● overseeing our compensation and employee benefit plans; and

● appointing and overseeing any compensation consultants.

Our compensation committee is expected to consist of Messrs. Krigsman, Arani and Wachsberger, with Mr. Krigsman serving as chair. Our board has determined that Messrs. Krigsman, Arani and Wachsberger each meet the definition of "independent director" for purposes of serving on the compensation committee under Nasdaq rules. All members of our compensation committee are "non-employee directors" as defined in Rule 16b-3under the Exchange Act. Our board of directors has adopted a written charter for the compensation committee, to be effective in connection with the effectiveness of the registration statement of which this prospectus forms a part, which will be available on our principal corporate website at www.podcastone.com. The information contained on, or that can be accessed through, our website is deemed not to be incorporated in this prospectus or to be part of this prospectus.

 ****

***Nominating and Corporate Governance Committee***

Our nominating and corporate governance committee will be responsible for, among other things:

● identifying individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors;

● evaluating the overall effectiveness of our board of directors and its committees; and

● reviewing developments in corporate governance compliance and developing and recommending to our board of directors a set of corporate governance guidelines.

Our nominating and corporate governance committee is expected to consist of Messrs. Krigsman, Foster and Arani, with Mr. Arani serving as chair. Our board has determined that Messrs. Krigsman, Foster and Arani each meet the definition of "independent director" for purposes of serving on the nominating and corporate governance committee under Nasdaq rules. Our board of directors has adopted a written charter for the nominating and corporate governance committee, to be effective in connection with the effectiveness of the registration statement of which this prospectus forms a part, which will be available on our principal corporate website at www.podcastone.com. The information contained on, or that can be accessed through, our website is deemed not to be incorporated in this prospectus or to be part of this prospectus.

Our board of directors may, from time to time, establish other committees.

**Compensation Committee Interlocks and Insider Participation**

None of the members of our compensation committee is or has been one of our officers or employees. Except as set forth herein, none of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our board of directors or compensation committee. Because we are currently a wholly owned subsidiary of LiveOne and will be a majority owned subsidiary upon the completion of the Spin-Out, we have certain compensation committee interlocks with LiveOne. Messrs. Ellin, Arani, Krigsman, Foster and Wachsberger serve on the board of directors of LiveOne, and Mr. Krigsman serves on the compensation committee of the board of directors of LiveOne.

**Indemnification and Insurance**

We maintain directors' and officers' liability insurance. Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws will include provisions limiting the liability of directors and officers and indemnifying them under certain circumstances. We intend to enter into indemnification agreements with all of our directors to provide our directors and certain of their affiliated parties with additional indemnification and related rights. See "Description of Capital Stock — Limitation on Liability of Directors and Indemnification."

**Code of Conduct and Ethics** 

We have adopted a written code of business conduct and ethics that applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. In connection with the effectiveness of the registration statement of which this prospectus forms a part, our code of business conduct and ethics will be posted on our principal corporate website at www.podcastone.com. In addition, we intend to post on our website all disclosures that are required by law or Nasdaq rules concerning any amendments to, or waivers from, any provision of the code.

**Nominations to the Board of Directors**

 

*General* — Our directors take a critical role in guiding our strategic direction and oversee the management of our Company. Our board of directors' candidates are considered based upon various criteria, such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for the long-term interests of the stockholders, diversity, and personal integrity and judgment. In addition, directors must have time available to devote to our board of directors activities and to enhance their knowledge of our business. Accordingly, we seek to attract and retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to our Company.

Our nominating and corporate governance committee assists our board of directors in identifying qualified individuals to become board members, in determining the composition of our board of directors and in monitoring the process to assess board effectiveness.

 

*Changes to the Procedures by Which Security Holders May Recommend Nominees to Our Board of Directors* — During the year ended March 31, 2022, there were no material changes to the procedures by which our security holders may recommend nominees to our board of directors.

**2022 Non-Employee Director Compensation**

Historically, we have not had a formalized non-employee director compensation program, and we anticipate that prior to the completion of the Spin-Out, none of our non-employee directors shall receive any compensation for their services on our board of directors. In connection with the Spin-Out, we intend to adopt the following non-employee director compensation program for their services as a director of our Company (the "Director Compensation Program") to be effective upon the date of effectiveness of the registration statement of which this prospectus forms a part. Director compensation shall initially consist of an annual grant of between $90,000 and $130,000 worth of restricted stock units (or pro-rata for service less than one year) to each director, consisting of an annual grant of $90,000 worth of restricted stock units to each independent board member and (i) $10,000 worth of restricted stock units to each member of our audit committee and an additional $15,000 worth of restricted stock units to the chairman of our audit committee, and (ii) $5,000 worth of restricted stock units to each member of our compensation committee and an additional $10,000 worth of restricted stock units to the chairman of our compensation committee, with the number of restricted stock units calculated based on the fair market value of our stock on the date of the grant approval date. Members of our Nominating Committee are not expected to initially receive any additional compensation for their service on such committee. Each restricted stock unit represents a contingent right to receive one share of our common stock or the cash value thereof. Our board of director, in its sole discretion, will determine in accordance with the terms and conditions of our 2022 Plan the form of payout of the restricted stock units (cash and/or stock). Each director shall have the option to defer the settlement of the restricted stock units awarded to such person until the earlier of such time as such person is no longer serving on our board of directors or up to five years from the vesting date. Each annual restricted stock units grant is expected to vest in full on the later of the first anniversary of the date of the grant or the date of the next annual meeting, subject to continued service through each applicable vesting date. All equity awards held by non-employee directors under the Director Compensation Program will vest in full upon the consummation of a Change in Control (as defined in the 2022 Plan), subject to their continued service through immediately prior to such date. We shall also reimburse our non-employee directors for travel and other necessary business expenses incurred in the performance of their services for us.

At the direction of the compensation committee of our board of directors, we intend to undertake a process to formerly review, on a periodic basis, our board of directors' compensation, including but not limited to pay for (x) each of our non-employee directors in cash, (y) each member of the audit committee, compensation committee and nominating committee additional annual cash amounts, and (z) the chairpersons of the audit committee, compensation committee and nominating committee additional cash amounts. We anticipate retaining in the future an expert compensation consulting firm to benchmark director compensation and provide recommendations around near and long-term compensation for our board of directors. Currently, no additional per-meeting fees apply under the director compensation program. Subject to such compensation review, we may also grant to each non-employee director restricted stock units, shares of our common stock and/or stock options to purchase shares of our common stock (A) upon such non-employee director's appointment to the board of directors (prorated for the period from the director's appointment through the anticipated date of our next annual meeting of stockholders), and (B) on an annual basis thereafter. We may also grant additional discretionary stock-based awards to our non-employee directors, and subject to our director compensation review and board's approval, these directors may have the option of electing to receive their cash fees in the form of shares of our common stock. Only non-employee directors are currently eligible to receive compensation for their services as a director. Accordingly, Mr. Ellin, our Executive Chairman shall not receive any separate director compensation during our fiscal year ending March 31, 2023.

The following table sets forth information concerning the compensation earned by our non-employee directors for our fiscal year ended March 31, 2022.

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Fees Earned or<br> Paid in<br> Cash ($)** | **Option Awards($)** | **Total ($)** |
| Robert Ellin<sup>(1)</sup> |  |  |  |
| Ramin Arani<sup>(2)</sup> |  |  |  |
| Craig Foster <sup>(2)</sup> |  |  |  |
| Jay Krigsman<sup>(2)</sup> |  |  |  |
| Patrick Wachsberger<sup>(2)</sup> |  |  |  |
| James Berk<sup>(3)</sup> |  |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Mr. Ellin joined our
 board of directors on July 1, 2020.

(2) Messrs. Arani, Foster,
 Krigsman and Wachsberger are our director nominees who are expected to join our board of directors in connection with the Spin-Out.

(3) Mr. Berk joined our
 board of directors on January 23, 2023.

**EXECUTIVE COMPENSATION**

The following is a discussion and analysis of compensation arrangements of our named executive officers ("NEOs"). This discussion contains forward looking statements that are based on our current plans, considerations, expectations, and determinations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from currently planned programs as summarized in this discussion. As an "emerging growth company" as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to emerging growth companies. As a "smaller reporting company" as defined in Regulation S-K, we have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.

We seek to ensure that the total compensation paid to our executive officers is reasonable and competitive. Compensation of our executives is structured around the achievement of individual performance and near-term corporate targets as well as long-term business objectives.

Our NEOs for our fiscal year ended March 31, 2022 were as follows:

● Kit Gray, our President;

● Aaron Sullivan, our Interim Chief Financial Officer; and

● Sue McNamara, our Head of Sales.

**2022 Summary Compensation Table**

The following table sets forth for the fiscal years ended March 31, 2022 and 2021 compensation awarded or paid to our NEOs.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal<br> Position** | **Fiscal<br> Year<br> ended<br> March 31** | **Salary<br> ($)** | **Bonus<br> ($)** | **Stock<br> Awards<br> ($)<sup>(2)</sup>** | **Option<br> Awards<br> ($)** | **Non-Equity<br> Incentive<br> Plan<br> Compensation<br> ($)** | **Nonqualified<br> Deferred<br> Compensation<br> Earnings<br> ($)** | **All Other<br> Compensation<br> ($)<sup>(1)</sup>** | **Total<br> ($)** |
| Kit Gray, | 2022 | 375000 | – |  | – | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | – | 20045<sup>(4)</sup> | 395045 |
| &nbsp;&nbsp;&nbsp;*President* | 2021 | 263000 | – | 1193500<sup>(3)</sup> | – |  | – | 15995<sup>(4)</sup> | 1472495 |
| Aaron Sullivan, | 2022 | —<sup>(5)</sup> | – | —<sup>(5)</sup> | – |  | – | —<sup>(5)</sup> |  |
| &nbsp;&nbsp;&nbsp;*Interim CFO* | 2021 | —<sup>(5)</sup> | – | —<sup>(5)</sup> | – |  | – | —<sup>(5)</sup> |  |
| Sue McNamara, | 2022 | 325000 | – |  | – |  | – | 10898<sup>(8)</sup> | 335898 |
| &nbsp;&nbsp;&nbsp;*Head of Sales* | 2021 | 210000<sup>(6)</sup> | – | 255750<sup>(7)</sup> | – |  | – | 8907<sup>(8)</sup> | 474657 |

---

(1) Unless otherwise indicated, the amount of perquisites and other personal benefits has been excluded as the total value of perquisites and other personal benefits for each Named Executive Officer per year was less than $10,000.

(2) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 based on LiveOne's closing price of $3.41 on January 4, 2021, the closest date to January 1, 2021 which was a holiday. Compensation expense resulting from granted restricted stock units and restricted stock awards is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period.

(3) Represents Mr. Gray's grant of 350,000 restricted stock units of LiveOne, with each vested restricted stock unit to be settled by issuance to Mr. Gray of one share of our common stock. Except for 43,750 restricted stock units which shall vest on January 1, 2023, subject to Mr. Gray's continued employment by our Company on such vesting date, all of the remaining restricted stock units have vested. In the event of a Change of Control (as defined in Mr. Gray's employment agreement), 50% of any then unvested restricted stock units shall vest in full effective immediately prior to such event.

(4) The amount for 2022 represents personal benefits consisting of (i) health, dental and vision insurance in the amount of $12,272, (ii) life, accidental death and dismemberment insurance in the amount of $523, and (iii) 401k match in the amount of $7,250, paid by us on Mr. Gray's behalf. The amount for 2021 represents (i) health, dental and vision insurance in the amount of $10,070, (ii) life, accidental death and dismemberment insurance in the amount of $374, and (iii) 401k match in the amount of $5,552, paid by us on Mr. Gray's behalf.

(5) Mr. Sullivan did not receive any compensation or personal benefits from our Company for his services to us in addition to his compensation received from LiveOne.

(6) Represents Ms. McNamara's grant of 75,000 restricted stock units of LiveOne, with each vested restricted stock unit to be settled by issuance to Ms. McNamara's of one share of our common stock. Except for 9,375 restricted stock units which shall vest on January 1, 2023, subject to Ms. McNamara's continued employment by our Company on such vesting date, all of the remaining restricted stock units have vested. In the event of a Change of Control (as defined in Ms. McNamara's employment agreement), 50% of any then unvested restricted stock units shall vest in full effective immediately prior to such event.

(7) The amount for 2022 represents personal benefits consisting of health, dental and vision insurance in the amount of $10,898, paid by us on Ms. McNamara's behalf. The amount for 2021 represents health, dental and vision insurance in the amount of $8907, paid by us on Ms. McNamara's behalf.

**Narratives to 2022 Summary Compensation Table** 

 ****

***2022 Salaries***

Each of our NEOs, except for Mr. Sullivan, receive a base salary to compensate them for services rendered to our Company. Mr. Sullivan does not currently receive a salary from our Company and is expected to enter into a new employment agreement with our Company in connection with the Spin-Out pursuant to which he will receive a base salary to compensate him for services to be rendered to our Company. The base salary payable to each NEO is intended to provide a fixed component of compensation reflecting the executive's skill set, experience, role, and responsibilities.

For fiscal year 2022, Messrs. Gray and Sullivan and Ms. McNamara had an annual base salary of $375,000, $0 and $325,000, respectively.

Our board of directors and compensation committee may adjust base salaries from time to time in their discretion.

 ****

***2022 Bonuses***

Pursuant to his employment agreement with our Company, Mr. Gray is eligible to receive an annual performance bonus with a target amount of up to $375,000. The actual amount of the performance bonus for a fiscal year may be less than, equal to, or greater than the target amount. The award of any performance bonus shall be at the complete discretion of and subject to determination and approval by our board of directors. For fiscal year 2022, neither we nor LiveOne awarded any bonus to Mr. Gray, similar to other executives of LiveOne and our Company.

Mr. Sullivan has not entered into an employment agreement with our Company, but is expected to enter into a new employment agreement with us in connection with the Spin-Out pursuant to which he will be eligible to receive an annual performance bonus with a target amount of up to the amount of his annual salary. The actual amount of the performance bonus for a fiscal year may be less than, equal to, or greater than the target amount. The award of any performance bonus shall be at the complete discretion of and subject to determination and approval by our board of directors.

Pursuant to her employment agreement with our Company, Ms. McNamara is eligible to receive an annual performance bonus with a target amount of up to $81,250. The actual amount of the performance bonus for a fiscal year may be less than, equal to, or greater than the target amount. The award of any performance bonus shall be at the complete discretion of and subject to determination and approval by our board of directors. For fiscal year 2022, neither we nor LiveOne awarded any bonus to Ms. McNamara, similar to other executives of LiveOne and our Company.

 ****

***Equity-Based Compensation***

Effective as of January 1, 2021, pursuant to his employment agreement with our Company, LiveOne granted Mr. Gray 350,000 of its restricted stock units, made under LiveOne's 2016 Equity Incentive Plan, as amended. The restricted stock units vest as discussed below under "Additional Narratives to 2022 Summary Compensation Table and Outstanding Equity Awards at 2022 Fiscal Year End - Named Executive Officer Employment Agreements."

Mr. Sullivan has not entered into an employment agreement with our Company, but is expected to enter into a new employment agreement with us in connection with the Spin-Out pursuant to which he will be eligible to receive an annual equity compensation grant, as well as any other compensation grants or awards as our board of directors shall determine.

Effective as of January 1, 2021, pursuant to her employment agreement with our Company, LiveOne granted Ms. McNamara 75,000 of its restricted stock units, made under LiveOne's 2016 Equity Incentive Plan, as amended. The restricted stock units vest as follows: (i) 50% of the RSUs vested 12 months from the effective date of Ms. McNamara's employment agreement (the "initial vesting date"), (ii) 12.5% of the restricted stock units vested three months from the initial vesting date, (iii) 12.5% of the restricted stock units vested six months from the initial vesting date; (iv) 12.5% of the restricted stock units vested nine months from the initial vesting date; and (v) the remaining 12.5% of the restricted stock units shall vest on January 1, 2023, subject to Ms. McNamara continuing to provide services to us through such vesting date. In the event Ms. McNamara's employment is terminated without Cause (as defined in her Employment Agreement) or she resigns for Good Reason (as defined in her Employment Agreement), the vesting of any unvested restricted stock units will be fully accelerated. In the event of a Change of Control (as defined in Ms. McNamara's employment agreement), 50% of any then unvested restricted stock units shall vest in full effective immediately prior to such event.

In connection with the Spin-Out, we have adopted our 2022 Plan in order to facilitate the grant of equity incentives to our directors, employees (including our NEOs), and consultants and to enable us to obtain and retain services of these individuals, which is essential to our long-term success. The 2022 Plan will be effective on the day of the effectiveness of the registration statement of which this prospectus forms a part. We also intend to obtain approval of the 2022 Plan by our stockholders. For additional information about the 2022 Plan, please see " — Additional Narratives to 2022 Summary Compensation Table and Outstanding Equity Awards at 2022 Fiscal Year End — Equity Compensation Plans" below.

**Other Elements of Compensation**

 ****

***Retirement Savings and Health and Welfare Benefits***

We currently maintain a 401(k) retirement savings plan for our employees, including our NEOs, who satisfy certain eligibility requirements. Our NEOs are eligible to participate in the 401(k) plan on the same terms as other full-time employees. We may make discretionary matching contributions to the 401(k) Plan on behalf of our employees up to a maximum of 100% of the participant's elective deferral up to a maximum of 5% of the employees' annual compensation.

All of our full-time employees, including our NEOs, are eligible to participate in our health and welfare plans, including medical, dental, and vision benefits; medical and dependent care flexible spending accounts; short-term and long-term disability insurance; and life and AD&D insurance.

 ****

***Perquisites and Other Personal Benefits***

As set forth in the 2022 Summary Compensation Table above, we provided certain perquisites to our NEOs in fiscal year 2022. Our compensation committee or board of directors may from time to time approve perquisites to be provided to our NEOs and other executive officers in the future when our compensation committee determines that such perquisites are necessary or advisable to fairly compensate or incentivize our employees.

**2022 Outstanding Equity Awards at Fiscal Year Ended**

The following table sets forth certain information with respect to grants of plan-based awards for the fiscal year ended March 31, 2022 to our NEOs. Except as set forth below, all of the outstanding equity awards granted to our NEOs were fully vested as of March 31, 2022.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Option awards** | **Option awards** | **Option awards** | **Option awards** | **Stock awards** | **Stock awards** | **Stock awards** | **Stock awards** | **Stock awards** |
| <br>**Name** | **Number of<br> securities<br> underlying<br> unexercised<br> options<br> (#)<br> exercisable** | **Number of<br> securities<br> underlying<br> unexercised<br> options<br> (#)<br> unexercisable** | **Equity<br> incentive<br> plan<br> awards:<br> Number of<br> securities<br> underlying<br> unexercised<br> unearned<br> options<br> (#)** | **Option<br> exercise<br> price<br> ($)** | **Option<br> expiration<br> date** | **Number of<br> shares<br> or units<br> of stock<br> that<br> have not<br> vested<br> (#)** | **Market<br> value<br> of<br> shares<br> of units<br> of stock<br> that<br> have<br> not<br> vested<br> ($)** | **Equity<br> incentive<br> plan<br> awards:<br> Number of<br> unearned<br> shares,<br> units or<br> other<br> rights that<br> have not<br> vested (#)** | **Equity<br> incentive<br> plan<br> awards:<br> Market<br> or payout<br> value of<br> unearned<br> shares,<br> units or<br> other<br> rights<br> that have<br> not vested<br> ($)<sup>(3)</sup>** |
| Kit Gray | —<sup>(1)</sup> |  |  |  |  |  |  | 131250<sup>(1)</sup> | 107100 |
| Aaron Sullivan |  |  |  |  |  |  |  |  |  |
| Sue McNamara |  |  |  |  |  |  |  | 28125<sup>(2)</sup> | 22950 |

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(1) Represents restricted stock units, with each vested restricted stock unit to be settled by issuance to Mr. Gray of one share of
LiveOne's common stock, which shall vest as follows: one-third of such restricted stock units shall vest on each of July 1, 2022,
October 1, 2022 and January 1, 2023, subject to Mr. Gray continuing to provide services to us through such vesting date. In the event
of a Change of Control (as defined in Mr. Gray's employment agreement), 50% of any unvested restricted stock units shall vest
effective immediately prior to such event.

(2) Represents restricted stock units, with each vested restricted stock unit to be settled by issuance to Ms. McNamara of one share of LiveOne's
common stock, which shall vest as follows: one-third of such restricted stock units shall vest on each of July 1, 2022, October 1, 2022
and January 1, 2023, subject to Ms. McNamara continuing to provide services to us through such vesting date. In the event of a Change
of Control (as defined in Ms. McNamara's employment agreement), 50% of any unvested restricted stock units shall vest effective
immediately prior to such event.

(3) The market value of unearned restricted stock units is based on the price of $0.816, the closing price of LiveOne's common stock
on March 31, 2022 (the last trading day of our 2022 fiscal year, as required under the applicable rules).

**Additional Narratives to 2022 Summary Compensation Table and Outstanding Equity Awards at 2022 Fiscal Year End** 

 ****

***Named Executive Officer Employment Agreements***

The material terms of employment agreements with the NEOs previously entered into by our Company are described below.

 ****

 ***Kit Gray*** ⸺ Effective as of January 1, 2021, we entered into a two-year employment agreement with Mr. Gray at an annual salary of $375,000. Mr. Gray is also eligible to earn an annual fiscal year cash performance bonus for each whole or partial fiscal year of his employment period with our Company based upon the attainment of certain objectives to be established by our management, as more fully specified in his employment agreement. Mr. Gray's "target" performance bonus shall be 100% of his average annualized base salary during the fiscal year for which the performance bonus is earned. Under his employment agreement, Mr. Gray was also granted 350,000 restricted stock units of our Company (the "Gray RSUs"), which are scheduled to vest as follows: (i) 50% of the Gray RSUs vested 12 months from the effective date of Mr. Gray's employment agreement (the "initial vesting date"), (ii) 12.5% of the Gray RSUs vested three months from the initial vesting date, (iii) 12.5% of the Gray RSUs vested six months from the initial vesting date; (iv) 12.5% of the restricted stock units vested nine months from the initial vesting date; and (v) the remaining 12.5% of the Gray RSUs shall vest on January 1, 2023, subject to Mr. Gray continuing to provide services to us through such applicable vesting date. In the event of a Change of Control (as defined in Mr. Gray's employment agreement), 50% of any then unvested restricted stock units or any other equity awards granted to Mr. Gray shall vest in full effective immediately prior to such event. The Gray RSUs were granted pursuant to LiveOne's 2016 Equity Incentive Plan. Each vested Gray RSU shall be settled by delivery to Mr. Gray of one share of our common stock promptly after the applicable vesting date. If Mr. Gray's employment is terminated by us without "Cause" or by Mr. Gray for "Good Reason" (each as defined in his employment agreement, subject to our right to cure), he will be entitled to termination benefits, pursuant to which (i) we will be obligated to pay Mr. Gray certain accrued obligations and to continue to pay Mr. Gray his base salary for a period that is the lesser of (x) 6 months from the effective termination date (disregarding any reduction thereto in violation of his employment agreement) and (y) the remaining period of the term of his employment agreement, and (ii) the vesting of any unvested Gray RSUs and any other equity awards granted by us will be fully accelerated. The foregoing termination benefits are subject to Mr. Gray's delivery of an executed release of claims against us and continued compliance with his confidentiality agreement with us.

***Aaron Sullivan*** ⸺ Mr. Sullivan has not entered into an employment agreement with our Company and provides services to us pursuant to his employment offer letter with LiveOne, with no additional compensation paid by us to him for such services.

 ****

 ***Sue McNamara*** ⸺ Effective as of January 1, 2021, we entered into a two-year employment agreement with Ms. McNamara at an annual salary of $300,000. Ms. McNamara is also eligible to earn an annual fiscal year cash performance bonus for each whole or partial fiscal year of his employment period with our Company based upon the attainment of certain objectives to be established by our management, as more fully specified in her employment agreement. Ms. McNamara's "target" performance bonus shall be 25% of his average annualized base salary during the fiscal year for which the performance bonus is earned. Under her employment agreement, Ms. McNamara was also granted 75,000 restricted stock units of our Company (the "McNamara RSUs"), which are scheduled to vest as follows: (i) 50% of the McNamara RSUs vested 12 months from the effective date of Ms. McNamara's employment agreement (the "initial vesting date"), (ii) 12.5% of the McNamara RSUs vested three months from the initial vesting date, (iii) 12.5% of the McNamara RSUs vested six months from the initial vesting date; (iv) 12.5% of the McNamara RSUs vested nine months from the initial vesting date; and (v) the remaining 12.5% of the McNamara RSUs shall vest on January 1, 2023, subject to Ms. McNamara continuing to provide services to us through such applicable vesting date. In the event of a Change of Control (as defined in her employment agreement), 50% of any then unvested restricted stock units or any other equity awards granted to Ms. McNamara shall vest in full effective immediately prior to such event. The McNamara RSUs were granted pursuant to LiveOne's 2016 Equity Incentive Plan. Each vested Gray RSU shall be settled by delivery to Ms. McNamara of one share of our common stock promptly after the applicable vesting date. If Ms. McNamara's employment is terminated by us without "Cause" or by Ms. McNamara for "Good Reason" (each as defined in her employment agreement, subject to our right to cure), she will be entitled to termination benefits, pursuant to which (i) we will be obligated to pay Ms. McNamara certain accrued obligations and to continue to pay Ms. McNamara his base salary for a period that is the lesser of (x) 6 months from the effective termination date (disregarding any reduction thereto in violation of her employment agreement) and (y) the remaining period of the term of her employment agreement, and (ii) the vesting of any unvested McNamara RSUs and any other equity awards granted by us will be fully accelerated. The foregoing termination benefits are subject to Ms. McNamara's delivery of an executed release of claims against us and continued compliance with her confidentiality agreement with us.

 ****

 ***Jacqueline Stone*** ⸺ Ms. Stone has not entered into an employment agreement with our Company and provides services to us pursuant to her employment agreement with LiveOne, with no additional compensation paid by us to her for such services.

 ****

***New Employment Agreements with Named Executive Officers***

In connection with the Spin-Out, we intend to enter into amended and restated employment agreements with each of our NEOs that supersede and replace the salary, bonus, equity compensation and severance benefits they would otherwise be entitled to receive. Among other things, these employment agreements will provide for an annual base salary, target bonus entitlement, and the right to participate in benefits made available to other similarly situated executives.

 ****

***Confidential Information and Intellectual Property Assignment Agreements with Named Executive Officers***

Each of our NEOs have also executed or are expected to execute our standard confidential information and intellectual property assignment agreement.

**2022 Equity Incentive Plan** 

The following summarizes the material terms of our equity compensation plan, as it is currently contemplated, are summarized below, in which our NEOs will be eligible to participate following the Spin-Out.

We have adopted the 2022 Plan, which will be effective on the day prior to the effectiveness of the registration statement of which this prospectus forms a part. The principal purpose of the 2022 Plan is to attract, retain, and motivate selected employees, consultants, and directors through the granting of stock-based compensation awards and cash-based performance bonus awards.

Pursuant to the 2022 Plan, there are 2,000,000 shares of our common stock reserved for future issuance to our employees, directors and consultants. As described below, incentive awards authorized under the 2022 Plan include, but are not limited to, incentive stock options within the meaning of Section 422 of the Code. If an incentive award granted under the 2022 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2022 Plan.

*Administration* — The 2022 Plan is administered by our compensation committee or our board of directors in the absence of such a committee. Subject to the terms of the 2022 Plan, the 2022 Plan administrator may select participants to receive awards, determine fair market value of our shares, determine the types of awards and terms and conditions of awards and interpret provisions of the 2022 Plan, to institute an exchange program (without stockholder approval) pursuant to which outstanding awards may be surrendered or cancelled in exchange for awards of the same type (which may have lower exercise prices and different terms), awards of a different type, and/or cash (except that the 2022 Plan administrator may not, without stockholder approval, reprice any options or stock appreciation rights ("SARs"), or pay cash or issue new options or SARs in exchange for the surrender and cancellation of outstanding options or SARs), modify awards granted under the 2022 Plan, and make all other determinations deemed necessary or advisable for administering the 2022 Plan.

*Grants* — The 2022 Plan authorizes the grant to participants of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Code and SARs, as described below:

● Options granted under the 2022 Plan entitle the grantee, upon exercise, to purchase up to a specified number of shares from us at a specified exercise price per share. The exercise price for shares of common stock covered by an option generally cannot be less than the fair market value of common stock on the date of grant unless agreed to otherwise at the time of the grant. In addition, in the case of an incentive stock option granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting power of all classes of stock of our Company or any parent or subsidiary, the per share exercise price will be no less than 110% of the fair market value of our common stock on the date of grant.

● Restricted stock awards and restricted stock units may be awarded on terms and conditions established by the compensation committee or our board of directors, which may include performance conditions for restricted stock awards and the lapse of restrictions on the achievement of one or more performance goals for restricted stock units.

● The compensation committee or our board of directors may make performance grants, each of which will contain performance goals for the award, including the performance criteria, the target and maximum amounts payable, and other terms and conditions.

● The 2022 Plan authorizes the granting of stock awards. The compensation committee or our board of directors will establish the number of shares of our common stock to be awarded (subject to the aggregate limit established under the 2022 Plan upon the number of shares of our common stock that may be awarded or sold under the 2022 Plan) and the terms applicable to each award, including performance restrictions.

● SARs entitle the participant to receive a distribution in an amount not to exceed the number of shares of our common stock subject to the portion of the SAR exercised multiplied by the difference between the market price of a share of our common stock on the date of exercise of the SAR and the market price of a share of our common stock on the date of grant of the SAR.

 

*Non-Transferability of Awards* — Unless the 2022 Plan administrator provides otherwise, the 2022 Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.

*Certain Adjustments* — In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the 2022 Plan, the 2022 Plan administrator will adjust the number and class of shares that may be delivered under the 2022 Plan and/or the number, class and price of shares covered by each outstanding award, and the numerical share limits set forth in the 2022 Plan.

*Dissolution, Liquidation* — The 2022 Plan provides that in the event of a proposed dissolution or liquidation of our Company, to the extent it has not been previously exercised, an award will terminate immediately prior to the consummation of such proposed action.

Dividen*ds or Dividend Equivalents for Performance Awa*rds — Notwithstanding anything to the foregoing herein, the right to receive dividends, dividend equivalents or distributions with respect to a performance award will only be granted to a participant if and to the extent that the underlying award is earned.

 

*Merger, Change of Control* — The 2022 Plan provides that in the event of a merger or a change of control, as defined under the 2022 Plan, each outstanding award will be treated as the 2022 Plan administrator determines, including, without limitation, that each award will be assumed or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation.

*Duration, Amendment, and Termination* — Our board of directors has the power to amend, suspend or terminate the 2022 Plan without stockholder approval or ratification at any time or from time to time. No change may be made that increases the total number of shares of our common stock reserved for issuance pursuant to incentive awards or reduces the minimum exercise price for options or exchange of options for other incentive awards, unless such change is authorized by our stockholders within one year of such change. Unless sooner terminated, the 2022 Plan would terminate ten years after it was adopted.

*Compliance with Section 162(m) of the Code* — Section 162(m) of the Code generally precludes a tax deduction by any publicly-held company for compensation paid to any "covered employee" to the extent the compensation paid to such covered employee exceeds $1 million during any taxable year of the company. The recently-enacted Tax Cuts and Jobs Act of 2017 (the "2017 Tax Act") included changes to Section 162(m) effective for years after 2017. Prior to 2018, "covered employees" included the chief executive officer of the company and the three other highest paid officers of the company (other than the chief financial officer). For 2018 and later years, "covered employees" include the chief executive officer of the company, the chief financial officer of the company, the three highest paid officers of the company (other than the chief executive officer and the chief financial officer) and any employee who qualified as a "covered employee" for any tax year beginning after 2022. For years beginning prior to January 1, 2018, the $1 million deduction limit did not apply to "qualified performance-based compensation" that was based on the attainment of pre-established, objective performance goals established under a stockholder-approved plan. Effective for the years beginning on or after January 1, 2018, there is no exception for "qualified performance-based compensation"; but a transition rule provides that the "qualified performance-based compensation" exemption will continue to apply to grandfathered arrangements made pursuant to a binding contract in effect on or before November 2, 2017 that is not materially modified thereafter. We believe that it is important to preserve flexibility in administering compensation programs to promote various corporate goals. Accordingly, we have not adopted a policy that all compensation must qualify as deductible under Section 162(m). Amounts paid under our compensation programs may not be deductible as the result of Section 162(m). While our policy has generally been to preserve corporate tax deductions by qualifying compensation over $1 million paid to executive officers as performance-based, the compensation committees may, from time to time, conclude that compensation arrangements are in our best interests and the best interests of our stockholders despite the fact that such arrangements may not, in whole or part, qualify for tax deductibility. Going forward, we intend to continue to design our executive compensation arrangements to be consistent with our best interests and those of our stockholders; accordingly, the compensation committees, while considering the tax deductibility as a factor in determining executive compensation, may not limit such compensation to those levels that will be deductible, particularly in light of the elimination of the expansion of the covered employee group and the elimination of the exception for performance-based compensation.

*Forfeiture Provisions* — The 2022 Plan administrator may provide by rule or regulation or in any award agreement, or may determine in any individual case, the circumstances in which awards shall be paid or forfeited in the event a participant ceases to be employed by us, or to provide services to us, prior to the end of a performance period, period of restriction or the exercise, vesting or settlement of such award. Except as set forth for options, generally awards will be forfeited if not earned or vested upon termination, unless otherwise provided for in an award agreement.

*Adjustments for Stock Dividends and Similar Events* — The 2022 Plan administrator will make appropriate adjustments in outstanding awards and the number of shares of common stock available for issuance under the 2022 Plan, including the individual limitations on awards, to reflect dividends, splits, extraordinary cash dividends and other similar events.

**CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS**

In addition to the director, director nominee and executive officer compensation arrangements discussed above in the section entitled "Executive and Director Compensation," this section describes transactions, or series of related transactions, since April 1, 2019 to which we were a party or will be a party, in which:

● the amount involved exceeded or will exceed $120,000; and

● any of our directors, executive officers, or beneficial owners of more than 5% of our capital stock, or any members of the immediate family of, or person sharing the household with, or any entity affiliated with any such person, had or will have a direct or indirect material interest.

**Various Agreements Entered into with LiveOne** 

Following the Spin-Out, we and LiveOne will operate independently, and LiveOne will maintain a majority ownership interest in our Company. In order to govern the ongoing relationships between us and LiveOne after the Spin-Out and to facilitate an orderly transition, we and LiveOne intend to enter into agreements providing for various services and rights following the Spin-Out, and under which we and LiveOne will agree to indemnify each other against certain liabilities arising from our respective businesses. The following summarizes the terms of the material agreements we have entered into and expect to enter into with LiveOne.

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 ***Issuance of Bridge Notes and Bridge Warrants and Placement Agent Warrants***

On July 15, 2022, we completed a private placement offering (the "Bridge Financing") of our unsecured convertible notes with an original issue discount of 10% (the "OID") in the aggregate principal amount of $8,838,500 (the "Bridge Notes") to certain accredited investors and institutional investors (collectively, the "Bridge Investors"), for gross proceeds of $8,835,000 pursuant to the Subscription Agreements entered into with the Bridge Investors (the "Bridge Subscription Agreements"). In connection with the sale of the Bridge Notes, the Bridge Investors received warrants (the "Bridge Warrants") to purchase a number of shares (the "Bridge Warrant Shares") of our common stock as more fully discussed below. The Bridge Notes and the Bridge Warrants were issued as restricted securities in a private placement transaction exempt from the registration requirements of the Securities Act. As part of the Bridge Financing, LiveOne purchased $3 million worth of Bridge Notes. We used the net proceeds of the Bridge Financing for working capital and general corporate purposes. In connection with the Bridge Financing, we also issued the Placement Agent Warrants to Joseph Gunnar & Co., LLC as the placement agent for the Bridge Financing.

In connection with the Bridge Financing, LiveOne announced that it intends to complete the Spin-Out before March 31, 2023, subject to obtaining applicable approvals and consents, complying with applicable rules and regulations and satisfying applicable public market trading and listing requirements. Among other things, pursuant to the terms of the Bridge Subscription Agreements LiveOne agreed not to effect the Direct Listing or an initial public offering, as applicable, unless our post-money valuation at the time of such event is at least $150 million.

In February 2023, in connection with the Direct Listing, LiveOne obtained a valuation report from an independent, third party valuation firm, which indicates that the fair market value range of our Company's equity as a wholly-owned subsidiary of LiveOne, on a controlling, marketable interest basis, as of December 31, 2022, is reasonably stated as between $230 million and $274 million. The discussion in this paragraph describes the valuation method that was used by the third party valuation firm to calculate our valuation. There are three conceptually distinct methodologies that can be applied to estimate indications of value of a business or asset: (a) the income approach, (b) the market approach, and (c) the cost approach. Income Approach - the income approach quantifies the present value of anticipated future income generated by a business or an asset. Forecasts of future income require analyses of variables that influence income, such as revenues, expenses, and taxes. One form of the income approach, the discounted cash flow (DCF) method, defines future economic income as net cash flow and considers not only the profit-generating abilities of a business but also the investment in capital equipment and working capital required to sustain the projected net cash flow. The forecasted net cash flow is then discounted to present value using an appropriate rate of return or discount rate. The income approach is unique in its ability to account for the specific contribution to the overall value of various factors of production. Market Approach - the market approach considers the implied pricing in third-party transactions of comparable businesses or assets. Transactions are analyzed to identify pricing patterns or trends that can be used to infer value on the subject business or asset. Adjustments are made to the transaction data to account for relative differences between the subject and the comparable transactions. The primary strength of the market approach is that it offers relatively objective pricing evidence from the market at large and, aside from certain adjustments to the transaction data, requires few assumptions to be made. The market approach is most applicable to highly homogeneous assets or businesses for which a ready market exists. Cost Approach - the cost approach considers replacement cost as the primary indicator of value. The cost approach is based on the reasoning that a prudent investor would not pay more for the subject business or an asset than the cost to the investor to replace or re-create it. Historical cost data is often used to indicate the current cost of replacement or re-creation, with certain adjustments made for physical deterioration or obsolescence. Like the market approach, the cost approach makes fewer assumptions than the income approach, but the primary limitation inherent in the cost approach is its inability to capture the value of many categories of intangible assets. All three approaches will be considered to value our Company. Under the income approach, the DCF method was utilized. Under the market approach, the guideline public company method and the transaction method was utilized. We believe that the cost approach for the valuation of our Company while considered was rejected because this approach tends to misstate the fundamental economic value of an ongoing business enterprise.

The Bridge Notes mature one year from July 15, 2022, subject to a one-time three-month extension at our election (the "Maturity Date"). The Bridge Notes bear interest at a rate of 10% per annum payable on maturity. The Bridge Notes shall automatically convert into the securities of our Company sold in the Direct Listing or an initial public offering, as applicable, upon the closing of the Direct Listing or an initial public offering, as applicable, at a price per share equal to the lesser of (i) the price equal to $60,000,000 divided by the aggregate number of shares of our common stock outstanding immediately prior to the closing of the Direct Listing or an initial public offering, as applicable (assuming full conversion or exercise of all convertible and exercisable securities of our Company then outstanding, subject to certain exceptions), and (ii) 70% of the offering price of the shares (or whole units, as applicable) in the initial public offering or 70% of the initial listing price of the shares on a national securities exchange in the Direct Listing, as applicable (the "Conversion Price"). If the initial public offering is of units consisting of shares of common stock and warrants, the Bridge Notes shall convert into such units. If the Direct Listing or an initial public offering, as applicable, has not occurred on or before prior to the Maturity Date, the Bridge Notes shall be convertible, in whole or in part, into shares of our common stock at the option of the holder of the respective Bridge Notes at a price per share equal to $60,000,000 divided by the aggregate number of outstanding shares of common stock as of the Maturity Date (assuming full conversion or exercise of all convertible and exercisable securities of our Company then outstanding, subject to certain exceptions). Each holder of the Bridge Notes (other than LiveOne) may at such holder's option require us to redeem up to 45% of the principal amount of such holder's Bridge Notes (together with accrued interest thereon, but excluding the OID), in aggregate up to $3,000,000 for all of the Bridge Notes (other than those held by LiveOne), immediately prior to the completion of the Direct Listing or an initial public offering, as applicable, with such redemption to be made pro rata to the redeeming holders of the Notes (the "Optional Redemption").

Each Bridge Note contains a number of customary events of default, which include (i) our failure to pay amounts due under the Bridge Notes on the Maturity Date or upon a sale of our Company, (ii) material breach of any representation or warranty in the Bridge Subscription Agreements and related agreements, or (iii) until the date of the consummation of the Direct Listing or an initial public offering, as applicable (excluding any overallotment option exercise), if we default on any of our obligations under any other promissory note, indenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any arrangement of our Company in an amount exceeding $500,000, which is not cured as provided in the Direct Listing or an initial public offering Bridge Notes. In the event we fail to pay any amount when due under the Bridge Notes, the interest rate will increase to the lesser of 16% and shall continue at such rate so long as such uncured event of default continues. Our obligations under the Bridge Notes may be accelerated upon the occurrence of events of default.

In connection with the issuance of the Bridge Notes, each Bridge Investor received five-and-one-half-year warrants to purchase such number of Bridge Warrant Shares equal to the 100% of the principal amount of such investor's Bridge Note divided by the quotient of (i) $60,000,000 (the "Valuation Cap") divided by (ii) the Fully Diluted Capitalization (as defined in the Bridge Notes) immediately prior to the Direct Listing or an initial public offering, as applicable, at a per share exercise price (the "Exercise Price") equal to (A) if the Direct Listing or an initial public offering, as applicable has occurred on or before the Maturity Date, the lower of (x) the quotient of (I) the Valuation Cap divided by (II) the Fully Diluted Capitalization immediately prior to the Qualified Financing or the Qualified Event (each as defined in the Bridge Notes), as applicable, and (y) the purchase price per share or other whole unit in the Qualified Financing or the Qualified Event, as applicable, or (B) if the Direct Listing or an initial public offering, as applicable, has not occurred on or before the Maturity Date, the Voluntary Conversion Price (as defined in the Bridge Notes). Subject to certain exceptions, if at any time after July 15, 2022 and until the earlier of (i) ten days following the Maturity Date or (ii) the date upon which the Direct Listing or an initial public offering, as applicable, if any, is consummated, we issue or sell, or in accordance with the terms of the Bridge Warrants are deemed to have issued or sold, any common stock without consideration or for consideration per share less than the exercise price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then the exercise price in effect immediately prior to such issuance or sale (or deemed issuance or sale) shall be reduced (and in no event increased) to an exercise price equal to the lowest price per share at which any such share of common stock has been issued or sold (or is deemed to have been issued or sold) (the "Warrants Adjustment"). Upon a Bridge Investor's redemption of any Bridge Notes as provided above, then a portion of such investor's Bridge Warrants shall be forfeited and cancelled in accordance with the following formula: for each $1,000 of the principal amount of the Bridge Notes redeemed, Bridge Warrants to purchase 100% of the Bridge Warrant Shares issued per $1,000 of the principal amount of the Bridge Notes shall be immediately forfeited and cancelled.

We also agreed (i) not to effect the Direct Listing or an initial public offering, as applicable, unless immediately following such event LiveOne owns no less than 66% of our equity, unless in either case otherwise permitted by the written consent of the holders of the majority of the Bridge Notes (excluding LiveOne) (the "Majority Noteholders") and the senior lenders, as applicable, (ii) that until the Direct Listing or an initial public offering, as applicable, is consummated, LiveOne guaranteed the repayment of the Bridge Notes when due (other than the Bridge Notes issued to LiveOne) and any interest or other fees due thereunder, and (iii) that if we have not consummated the Direct Listing or an initial public offering, as applicable, by February 15, 2023, March 15, 2023 or April 15, 2023, unless in either case permitted by the written consent of the Majority Noteholders, we shall be required to redeem $1,000,000 of the then outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by the tenth calendar day of each month immediately following such respective date, up to an aggregate redemption of $3,000,000 over the course of such three months, each of which shall be distributed to the holders of the Bridge Notes (other than LiveOne) on a prorated basis (the "Early Redemption"). As of March 10, 2023, we have not yet consummated the Direct Listing and accordingly, we are currently required to redeem $1,000,000 of the outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by March 10, 2023 (subject to any cure period).

We also agreed to register the shares of our common stock issuable upon conversion of the Bridge Notes and exercise of the Bridge Warrants and the Placement Agent Warrants in connection with the Direct Listing or an initial public offering. The registration statement of which this prospectus is a part is being filed to satisfy such requirements. If we do not file such registration statement on or prior to the date that is nine months after July 15, 2022, we shall be required to prepay $1,000,000 of the Bridge Notes pro rata to the Bridge Notes holders (other than LiveOne), and if we do not file such registration statement on or prior to the date that is 12 months after July 15, 2022, we shall be required to prepay $2,000,000 of the Bridge Notes pro rata to the Note holders (other than LiveOne) (the "Reg St Redemption"). We shall not be required to redeem or repay more than a total of $3,000,000 of the principal amount of the Bridge Notes as a result of the Optional Redemption, the Early Redemption and/or the Reg St Redemption.

Furthermore, in connection with the closing of the Bridge Financing, the Bridge Investors and our directors and officers entered into lock-up agreements with our Company pursuant which they agreed, subject to certain Lock-Up Exceptions (as defined below), not to sell any shares of our common stock beneficially owned by them or securities convertible, exchangeable or exercisable into, shares of our common stock beneficially owned, until the earliest to occur, if any, of (i) the termination of the underwriting agreement with respect to an initial public offering before the sale of any securities to the underwriters of such initial public offering, (ii) the termination of the Direct Listing or an initial public offering, as applicable and (iii) with respect to the Bridge Investors, three months from the date of the consummation of the Direct Listing or an initial public offering, as applicable, and with respect to our officers and directors, six months from the date of the consummation of the Direct Listing or an initial public offering, as applicable (the "Restriction Period"). The "Lock-Up Exceptions" include: (a) transactions relating to shares of our common stock or other securities acquired in the open market after the completion of the Direct Listing or an initial public offering, as applicable, provided that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with such transfers; (b) bona fide gifts of shares of any class of our capital stock or any security convertible into common stock, in each case that are made exclusively between and among such holder or members of such holder's immediate family; (c) any transfer of shares of our common stock or any security convertible into our common stock by will or intestate succession upon the death of such holder; (d) transfer of shares of our common stock or any security convertible into our common stock to an immediate family member or any trust, limited partnership, limited liability company or other entity for the direct or indirect benefit of such holder or any immediate family member of such holder, subject to customary limitations, such as the transferee/donee agreeing to be bound by the terms of the lock-up agreement; (e) the transfer of shares to our Company to satisfy withholding obligations for any equity award granted pursuant to the terms of our stock option/incentive plans, such as upon exercise, vesting, lapse of substantial risk of forfeiture, or other similar taxable event, in each case on a "cashless" or "net exercise" basis (which, for the avoidance of doubt shall not include "cashless" exercise programs involving a broker or other third party), provided that as a condition of any transfer pursuant to this clause (e), that if such holder is required to file a report under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of common stock or any securities convertible into or exercisable or exchangeable for common stock during the Restriction Period, such holder shall include a statement in such report, and if applicable an appropriate disposition transaction code, to the effect that such transfer is being made as a share delivery or forfeiture in connection with a net value exercise, or as a forfeiture or sale of shares solely to cover required tax withholding, as the case may be; (f) transfers of shares of our common stock or any security convertible into or exercisable or exchangeable for our common stock pursuant to a bona fide third party tender offer made to all holders of the common stock, merger, consolidation or other similar transaction involving a change of control of our Company, including voting in favor of any such transaction or taking any other action in connection with such transaction, provided that in the event that such merger, tender offer or other transaction is not completed, the common stock and any security convertible into or exercisable or exchangeable for common stock shall remain subject to the restrictions set forth herein; (g) the exercise of warrants or the exercise of stock options granted pursuant to our stock option/incentive plans or otherwise outstanding on the date hereof; provided, that the restrictions shall apply to shares of our common stock issued upon such exercise or conversion; (h) the establishment of any contract, instruction or plan that satisfies all of the requirements of Rule 10b5-1 (a "Rule 10b5-1 Plan") under the Exchange Act; provided, however, that no sales of our common stock or securities convertible into, or exchangeable or exercisable for, common stock, shall be made pursuant to a Rule 10b5-1 Plan prior to the expiration of the Restriction Period; provided further, that we are not required to report the establishment of such Rule 10b5-1 Plan in any public report or filing with the SEC under the Exchange Act during the Restriction Period and does not otherwise voluntarily effect any such public filing or report regarding such Rule 10b5-1 Plan; and (i) any demands or requests for, exercise any right with respect to, or take any action in preparation of, the registration by our Company under the Securities Act of such holder's shares of our common stock, provided that no transfer of such holder's shares of our common stock registered pursuant to the exercise of any such right, and no registration statement shall be filed under the Securities Act, with respect to any of such holder's shares of common stock during the Restriction Period.

Joseph Gunnar & Co., LLC ("JG") acted as the sole placement agent for the Bridge Financing. We paid JG a cash fee equal to 10% of the gross proceeds of the Bridge Financing (other than any Bridge Notes sold to LiveOne), $50,000 in cash as a corporate finance advisory fee in connection with the anticipated advisory services to be provided by JG to us in connection with the Spin-Out and $75,000 for fees and expenses of JG's and certain Bridge Investors' respective legal counsel for the Bridge Financing, and (ii) agreed to issue to JG warrants covering a number of shares of our common stock equal to 10% of the total number of shares of our common stock underlying the Bridge Notes issued to the Bridge Investors (the "Placement Agent Warrants"). The Placement Agent Warrants will be non-exercisable for two months after July 15, 2022 and shall be exercisable and expire five years after such date. Other than with respect to any redemption terms, the terms of the Placement Agent Warrants are substantially the same as the terms of the Bridge Warrants, provided, that the Placement Agent Warrants may not be exercised until July 14, 2023. The Placement Agent Warrants are exercisable at a price per share equal to the exercise price of the Bridge Warrants. JG is entitled to customary demand and "piggyback" rights pursuant to FINRA Rule 5110.

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***Separation Agreement***

We intend to enter into a Separation Agreement with LiveOne before the Spin-Out. The Separation Agreement will set forth our agreements with LiveOne regarding the principal actions to be taken in connection with the Spin-Out. It will also set forth other agreements that govern aspects of our relationship with LiveOne following the Spin-Out. We have not yet finalized all the terms of this agreement, and we intend to include additional details on the terms of this agreement in an exhibit to the registration statement of which this prospectus is a part or in a supplement to this prospectus.

 

*Ongoing Commercial Relationships*. The Separation Agreement will contain provisions governing ongoing commercial relationships between us and LiveOne.

 

*Intercompany Arrangements*. All agreements, arrangements, commitments and understandings, including most intercompany accounts payable or accounts receivable, between us, on the one hand, and LiveOne, on the other hand, will terminate effective as of the Spin-Out, except specified agreements and arrangements that are intended to survive the Spin-Out.

 

*The Distribution*. The Separation Agreement will govern LiveOne's and our respective rights and obligations regarding the proposed Distribution. Prior to the Distribution, LiveOne will deliver all the Distribution Shares to the distribution agent. Following the Distribution Date, the distribution agent will electronically deliver the Distribution Shares to LiveOne stockholders entitled to them based on the Distribution Ratio. LiveOne's board of directors will have the sole and absolute discretion to determine the terms of, and whether to proceed with, the Direct Listing and/or the Distribution.

 

*Conditions*. The Separation Agreement will also provide that several conditions must be satisfied or waived by the senior lenders in their sole and absolute discretion before the Direct Listing and the Distribution can occur. For further information about these conditions, see "The Spin-Out — Conditions to the Spin-Out." LiveOne's board of directors may, in its sole and absolute discretion, change the Record Date and determine and/or change the Distribution Date and the terms of the Distribution and may at any time prior to the completion of the Spin-Out decide to abandon or modify the Direct Listing and/or the Distribution.

 

*Exchange of Information*. We and LiveOne will agree to provide each other with information reasonably necessary to comply with reporting, disclosure, filing or other requirements of any national securities exchange or governmental authority, for use in judicial, regulatory, administrative and other proceedings and to satisfy audit, accounting, litigation and other similar requests. We and LiveOne will also agree to use reasonable best efforts to retain such information in accordance with our respective record retention policies as in effect on the date of the Separation Agreement. Until the end of the first full fiscal year following the Spin-Out, each party will also agree to use its reasonable best efforts to assist the other with its financial reporting and audit obligations.

 

*Intellectual Property*. The Separation Agreement will contain provisions governing our use of LiveOne's trademarks and vice versa and other related matters following the Spin-Out.

 

*Termination*. LiveOne's board of directors, in its sole and absolute discretion, may terminate the Separation Agreement at any time prior to the Spin-Out.

 

 *Release of Claims*. We and LiveOne may each agree to release the other and each of the other's affiliates, successors and assigns and certain other persons, that prior to the Spin-Out have been the other's stockholders, directors, officers, employees, members, advisors, consultants, affiliates, agents and representatives, and their respective heirs, executors, administrators, successors and assigns, from certain claims against any of them that arise out of or relate to events, circumstances or actions occurring or failing to occur or any conditions existing at or prior to the time of the Spin-Out.

 

 *Indemnification*. We and LiveOne may each agree to indemnify the other and each of the other's current, former and future directors, officers, employees, members, advisors, consultants, affiliates, agents and representatives and each of the heirs, administrators, executors, successors and assigns of any of them, against certain liabilities, damages, losses, costs, expenses and obligations incurred in connection with the Spin-Out and our and LiveOne's respective businesses. The Separation Agreement will also specify procedures regarding claims subject to indemnification.

  ****

 ***Administrative Services Agreement***

We intend to enter into an Administrative Services Agreement pursuant to which LiveOne will provide us with specified services for a limited time to help ensure an orderly transition following the Spin-Out. The Administrative Services Agreement will specify the calculation of our costs for these services. The cost of these services will be negotiated between us and LiveOne and may not necessarily be reflective of prices that we could have obtained for similar services from an independent third party. We have not yet finalized all of the terms of this agreement or the schedule of services to be provided, and we intend to include additional details on the terms of this agreement in an exhibit to the registration statement of which this prospectus is a part or in a supplement to this prospectus.

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***Other Agreements***

Effective as of September 15, 2020, LiveOne completed the sale and issuance of its 8.5% Senior Secured Convertible Notes in the aggregate principal amount of $15.0 million to two certain existing institutional investors, for cash gross proceeds of $15.0 million. LiveOne's obligations under such notes are guaranteed under a Subsidiary Guarantee, dated as of the same date, entered into by all of LiveOne's subsidiaries (including our Company) (the "Guarantors") in favor of such investors. LiveOne's obligations under such notes and the Guarantors' obligations under the Subsidiary Guarantees are secured under a Security Agreement, dated as of the same date, and an Intellectual Property Security Agreement, dated as of the same date, by a lien on all of LiveOne's and the Guarantors' assets and intellectual property, subject to certain exceptions. The agreements with such senior lenders were subsequently amended in June 2021 and in July 2022.

Effective as of June 7, 2021, LiveOne entered into a Business Loan Agreement (the "Business Loan Agreement") with East West Bank (the "Senior Lender"), for a revolving credit facility collateralized by all of the assets of LiveOne and its subsidiaries (including our Company). The Business Loan Agreement provides for up to $7.0 million in borrowing capacity in the form of a secured first lien revolving credit facility with a maturity date of June 2, 2023. In connection with the Business Loan Agreement, LiveOne entered into a Promissory Note with the Senior Lender in the principal amount of $7.0 million (the "Promissory Note"). In connection with the Business Loan Agreement, LiveOne also entered into the following additional agreements with the Senior Lender: (i) Commercial Security Agreement pursuant to which LiveOne granted a continuing security interest in all of LiveOne's and its subsidiaries' assets to the Senior Lender, and (ii) an Assignment of Deposit Account agreement, including by LiveOne, our Company and certain subsidiaries of LiveOne and our Company.

**Other Agreements**

We have entered into a production agreement for a podcast and related show with an affiliate of Mr. Wachsberger, our director nominee.

**Related Party Transactions** 

As of December 31, 2022, LiveOne had outstanding 8.5% unsecured convertible notes payable (the "Trinad Notes") in the principal amount of approximately $5,297,000 issued to Trinad Capital, a fund controlled by Mr. Ellin, LiveOne's Chief Executive Officer, Chairman, director and principal stockholder, and our Executive Chairman and director.

On February 3, 2023, LiveOne entered into an exchange agreement (collectively, the "Exchange Agreements") with (i) Harvest Small Cap Partners Master, Ltd. ("HSCPM") in regard to that certain 8.5% Senior Secured Convertible Note in the aggregate amount of $10,503,965 issued by LiveOne on September 15, 2020, as amended on June 3, 2021 and July 6, 2022, to HSCPM (the "HSCPM Note"), (ii) Harvest Small Cap Partners, L.P. ("HSCP") in regard to that certain 8.5% Senior Secured Convertible Note in the aggregate amount of $4,496,035 issued by LiveOne on September 15, 2020, as amended on June 3, 2021 and July 6, 2022, to HSCP (the "HSCP Note"); and (iii) Trinad Capital (Trinad Capital collectively with HSCPM and HSCP, the "Holders") in regard to all promissory notes in the aggregate principal and interest amount of $6,177,218 issued by LiveOne to Trinad Capital (the "Trinad Notes" and collectively with the HSCPM Note and the HSCP Note, the "Notes"). Pursuant to the Exchange Agreements, the Holders exchanged the Notes, and with respect to Trinad Capital, together with interest, due and payable thereon, and relinquished any and all rights thereunder, for 21,177 shares of LiveOne's newly designated and issued Series A Perpetual Convertible Preferred Stock, par value $0.001 per share (the "Series A Preferred Stock"), with a stated value of $1,000 per share (the "Stated Value"), having the terms as set forth in LiveOne's Certificate of Designation of Preferences, Rights and Limitations of Series A Perpetual Convertible Preferred Stock filed by LiveOne on February 2, 2023 with the Secretary of State of the State of Delaware.

Pursuant to the Exchange Agreements, among other things, LiveOne agreed (i) that at any time that any of the shares of Series A Preferred Stock issued to the HSPM or HSCP (the "Harvest Funds") are outstanding, to directly or through LiveOne's 100% owned subsidiaries (as applicable), to own on a fully diluted basis at least 66% of the total equity and voting rights of any and all classes of securities of our Company, and (ii) to have us issue 162,338 shares of our commons stock to the Harvest Funds as the Harvest Funds would have been otherwise entitled to such shares under the terms of their Notes.

We have entered into a production agreement for a podcast and related show with an affiliate of Mr. Wachsberger, our director nominee.

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***Policy and Procedures Governing Related Person Transactions***

Our Board recognizes the fact that transactions with related persons present a heightened risk of conflicts of interest (or the perception thereof). Prior to the completion of the Spin-Out, our Board shall adopt a written policy on transactions with related persons that is in conformity with the requirements for companies having common stock that is listed on Nasdaq. This policy shall cover any transaction, arrangement, or relationship, or any series of similar transactions, arrangements, or relationships, that meets the disclosure requirements set forth in Item 404 under the Securities Act, in which we were or are to be a participant and in which a "related person," as defined in Item 404, had, has, or will have a direct or indirect material interest. In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including but not limited to whether the transaction is on terms comparable to those that could be obtained in an arm's length transaction with an unrelated third party and the extent of the related person's interest in the transaction. Such policy shall otherwise provide the procedures and requirements of approval of such related party transactions by our audit committee or our Board. All of the transactions described in this section occurred prior to the adoption of this policy.

 ****

***Legal Policies***

Until the later of LiveOne ceasing to be a "controlling person" of us as defined in the Securities Act and such date that LiveOne ceases to provide us with legal, financial or accounting services under the Administrative Services Agreement, we will comply with all LiveOne rules, policies and directives identified by LiveOne as critical to legal and regulatory compliance, to the extent such rules, policies and directives have been previously communicated to us, and will not adopt legal or regulatory policies or directives inconsistent with the policies identified by LiveOne as critical to legal and regulatory compliance.

**Indemnification of Directors and Officers**

Our Amended and Restated Bylaws will provide that we will indemnify our directors and officers to the fullest extent permitted by the DGCL. In addition, our Amended and Restated Certificate of Incorporation will provide that our directors and officers will not be liable for monetary damages for breach of fiduciary duty to the fullest extent permitted by the DGCL. In addition, we expect to enter into an indemnification agreement with each of our directors and executive officers in connection with the Direct Listing, which requires us to indemnify them. For more information regarding these agreements, see "Description of Capital Stock — Limitation on Liability of Directors and Indemnification."

**PRINCIPAL AND REGISTERED STOCKHOLDERS** 

The following table sets forth:

● certain information with respect to the beneficial ownership of our common stock as of March 10, 2023 for:

○ each of our executive officers;

○ each of our directors;

○ all of our directors and executive officers as a group; and

○ each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock; and

● the number of shares of our common stock held by LiveOne as a Registered Stockholder and the other Registered Stockholders and registered as common stock for resale by means of this prospectus.

This prospectus registers for resale shares of our common stock that are held by certain Registered Stockholders that include our officers, directors, affiliates and certain other stockholders with "restricted" securities under the applicable securities laws and regulations who, because of their status as affiliates of us pursuant to Rule 144 or because they acquired their capital stock from an affiliate or from us within the prior 12 months from the date of any proposed sale, would otherwise be unable to sell their securities pursuant to Rule 144 until we have been subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act for a period of at least 90 days. See "Shares Eligible for Future Sale" for further information regarding sales of such "restricted" securities if not sold pursuant to this prospectus.

Information concerning the Registered Stockholders may change from time to time and any changed information will be set forth in supplements to this prospectus, if and when necessary. Because the Registered Stockholders may sell all, some, or none of the shares of our common stock covered by this prospectus, we cannot determine the number of such shares of our common stock that will be sold by the Registered Stockholders, or the amount or percentage of shares of our common stock that will be held by the Registered Stockholders upon consummation of any particular sale. In addition, the Registered Stockholders listed in the table below may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time and from time to time, our shares of common stock in transactions exempt from the registration requirements of the Securities Act, after the date on which they provided the information set forth in the table below. See "Management" and "Certain Relationships and Related Party Transactions" for further information regarding the Registered Stockholders.

Certain of the Registered Stockholders are entitled to registration rights with respect to their shares of our common stock, as described in "Description of Capital Stock — Registration Rights."

We currently intend to use our reasonable efforts to keep the registration statement of which this prospectus forms a part effective for a period of 90 days after the effectiveness of the registration statement. Other than with LiveOne, including with respect to the Distribution, the Bridge Notes and the Bridge Warrants issued to LiveOne and the various agreements summarized in the section captioned Certain Relationships and Related Party Transactions, we are not party to any arrangement with any Registered Stockholder or any broker-dealer with respect to sales of shares of our common stock by the Registered Stockholders. However, we have engaged a financial advisor with respect to certain other matters relating to the listing of our common stock on The Nasdaq Capital Market. See "Plan of Distribution."

We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable. The information does not necessarily indicate beneficial ownership for any other purpose, including for purposes of Sections 13(d) and 13(g) of the Exchange Act.

For the purpose of computing the percentage ownership of a Registered Stockholder, (i) we have based percentage ownership of our common stock based on 23,300,611 shares of our common stock issued and outstanding as of March 10, 2023, assuming the conversion of the Bridge Notes in full (including the amount of accrued and unpaid interest calculated as of assumed date of March 10, 2023, if any, that is payable in shares of our common stock in connection with the conversion thereof), which shall be automatically converted as a result of the Direct Listing, subject to the Mandatory Redemption and the Optional Redemption (each as defined below), and assuming the issuance of 162,338 shares of our common stock to the Harvest Funds, (ii) we have deemed shares of our common stock underlying all of the Bridge Notes to be outstanding, have given no effect to the Mandatory Redemption that was triggered as of February 15, 2023, assumed that the Optional Redemption will not be exercised by any holder of the Bridge Notes and assumed the exercise of the Bridge Warrants or the Placement Agent Warrants only by such applicable person, as such warrants are currently exercisable or exercisable within 60 days of March 10, 2023, for the purpose of computing the percentage ownership of that person, and (iii) we did not deem the shares of our common stock underlying the other Bridge Warrants or the Placement Agent Warrants, as applicable, however, for the purpose of computing the percentage ownership of such Registered Stockholder.

Unless otherwise indicated, the business address of each such beneficial owner is c/o PodcastOne, 335 N. Maple Drive, Suite 127, Beverly Hills, CA 90210.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Beneficial Ownership Prior to the Effectiveness** <br> **of the Registration Statement**  | **Beneficial Ownership Prior to the Effectiveness** <br> **of the Registration Statement**  | **Beneficial Ownership Prior to the Effectiveness** <br> **of the Registration Statement**  | **Beneficial Ownership Prior to the Effectiveness** <br> **of the Registration Statement**  |
|  | **Number of<br> Shares of Common Stock<br> Beneficially<br> Owned†** | **Number of** <br> **Warrants** <br> **Beneficially<br> Owned**†#  | **Total<br> Number of<br> Shares of Common <br> Stock Being Registered<br> Pursuant to this<br> Prospectus** | **Percentage<br> Ownership<br> of Common<br> Stock††** |
| **<u>Executive Officers<sup>(1)</sup> and Directors<sup>(2)</sup>:</u>** | | | | |
|  Kit Gray | 4731 |  | 4731 | \* |
|  Rob Ellin<sup>(3)</sup> | 381474 |  | 381474 | 1.6% |
|  Aaron Sullivan | 1520 |  | 1520 | \* |
|  Sue McNamara | 782 |  | 782 | \* |
|  Jacqueline Stone | 4221 |  | 4221 | \* |
|  Jay Krigsman<sup>(4)</sup> | 21894 |  | 21894 | \* |
|  Ramin Arani |  |  |  |  |
|  Craig Foster |  |  |  |  |
|  Patrick Wachsberger | 127 |  | 127 | \* |
|  James Berk | 748 |  | 748 | \* |
|  All current directors and executive officers as a group (10 persons) | 415497 |  | 415497 | 1.8% |
|  **<u>Other 5% Stockholders:</u>** |  |  |  |  |
|  LiveOne, Inc.<sup>(5)</sup> | 20251726 | 1100000 | 4291726 | 83.0% |
|  **<u>Name of Selling Stockholders:</u>** |  |  |  |  |
|  3i, LP<sup>(6)</sup> | 75724 | 36667 | 75724 | \* |
|  Alpha Sherpa Capital Limited<sup>(7)</sup> | 75724 | 36667 | 75724 | \* |
|  Bigger Capital Fund LP<sup>(8)</sup> | 189311 | 91667 | 189311 | \* |
|  David Bliss<sup>(9)</sup> | 75724 | 36667 | 75724 | \* |
|  Cavalry Investment Fund LP<sup>(10)</sup> | 113586 | 55000 | 113586 | \* |
|  James Derrick Clore<sup>(11)</sup> | 75724 | 36667 | 75724 | \* |
|  Michael Daniels<sup>(12)</sup> | 56793 | 27500 | 56793 | \* |
|  District 2 Capital Fund LP<sup>(13)</sup> | 189311 | 91667 | 189311 | \* |
|  Scott Dols<sup>(14)</sup> | 378621 | 183333 | 378621 | 1.6% |
|  Charles M. Ellingburg<sup>(15)</sup> | 75724 | 36667 | 75724 | \* |
|  Firstfire Global Opportunities Fund LLC<sup>(16)</sup> | 151448 | 73333 | 151448 | \* |
|  James Foreman & Michelle Foreman<sup>(17)</sup> | 136304 | 66000 | 136304 | \* |
|  Thomas Genrich<sup>(18)</sup> | 151448 | 73333 | 151448 | \* |
|  Harbor Gates Capital, LLC<sup>(19)</sup> | 75724 | 36667 | 75724 | \* |
|  Brian Henry<sup>(20)</sup> | 37862 | 18333 | 37862 | \* |
|  Joseph Gunnar & Co., LLC<sup>(21)</sup> | 167833 | 167833 | 167833 | \* |
| Kantor Family Investments, Inc. <sup>(22)</sup> | 75724 | 36667 | 75724 | \* |
|  Mitchell Kersch<sup>(23)</sup> | 113586 | 55000 | 113586 | \* |
|  William Leonard & Monica Leonard<sup>(24)</sup> | 60579 | 29333 | 60579 | \* |
|  LiveOne, Inc. <sup>(5)</sup> | 20251726 | 1100000 | 4291726 | 83.0% |
|  Mercer Street Global Opportunity Fund, LLC<sup>(25)</sup> | 378621 | 183333 | 378621 | 1.6% |
|  Gary S. Mintz<sup>(26)</sup> | 37862 | 18333 | 37862 | \* |
|  John Murphy<sup>(27)</sup> | 75724 | 36667 | 75724 | \* |
|  John Nash<sup>(28)</sup> | 378621 | 183333 | 378621 | 1.6% |
|  Brett Nesland<sup>(29)</sup> | 37862 | 18333 | 37862 | \* |
|  Orca Capital GmbH<sup>(30)</sup> | 75724 | 36667 | 75724 | \* |
|  William Pullano<sup>(31)</sup> | 75724 | 36667 | 75724 | \* |
|  Elisha Rothman<sup>(32)</sup> | 75724 | 36667 | 75724 | \* |
|  Nicholas Seminario<sup>(33)</sup> | 37862 | 18333 | 37862 | \* |
|  Walleye Opportunities Master Fund Ltd. <sup>(34)</sup> | 378621 | 183333 | 378621 | 1.6% |
|  Warberg WF IX LP<sup>(35)</sup> | 75724 | 36667 | 75724 | \* |
|  Warberg WF X LP<sup>(36)</sup> | 75724 | 36667 | 75724 | \* |

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\* Indicates beneficial ownership of less than 1% of the outstanding shares of our common stock.

† Beneficial
 ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to shares of
 common stock. Shares of common stock subject to options, warrants and convertible debentures currently exercisable or convertible,
 or exercisable or convertible within 60 days, are counted as outstanding. The actual number of shares of common stock issuable upon
 the conversion of the Bridge notes is subject to adjustment depending on the amount of accrued and unpaid interest under the Bridge
 Notes that is converted into shares of our common stock, and could be materially more than the number estimated in the table. The
 actual number of shares of common stock issuable upon the exercise of the Bridge Warrants and the Placement Agent Warrants is subject
 to the Warrants Adjustment (as defined above), and could be materially more than the number estimated in the table.

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| | |
|:---|:---|
| (1) | Historically, we have not (i) had a formalized non-employee director compensation program, and subject to our board of directors' approval, we anticipate that in connection with the completion of the Spin-Out, we will award equity compensation grants to our Non-Employee Directors as more fully set forth in the section captioned "Management — 2022 Non-Employee Director Compensation," and (ii) adopted an equity compensation program for our executive officers separate from their equity awards made by LiveOne, and subject to our Board of Directors' approval, we anticipate that in connection with the completion of the Spin-Out, we will award equity compensation grants to our Executive Officers and certain other employees. |
| †† | Percentage of total voting power represents voting power with respect to all shares of our common stock, as a single class, based on 2,020,000 shares of our common stock, of which 20,000 shares has been added to the actual amount of 2,000,000 Distribution Shares to be issued in the Distribution to account for the rounding up of fractional shares of our common stock, and assuming a Distribution Ratio of one share of our common stock for every 45 shares of LiveOne common stock held by a LiveOne stockholder as of the Record Date, which ratio shall be subject to change and will be finalized prior to the Distribution. Shares of our common stock entitle the holder to one vote per share. For additional information regarding our common stock, see "Description of Capital Stock." |
| # | The Bridge Warrants and the Placement Agent Warrants are subject to certain beneficial ownership limitations that prohibit the holder thereof from exercising any portion thereof if, following the exercise, such holder's ownership of our common stock would exceed the relevant warrant's ownership limitation of either 4.99% or 9.99%.  |
| (2) | The shares set forth next to each officer and director are being registered as part of the Distribution Shares to be distributed by LiveOne in the Distribution, and accordingly to be distributed to the stockholders of LiveOne (including any officers or directors holdings shares of LiveOne common stock) based on the Distribution Ratio. |
| (3) | The securities are held by Robert Ellin on behalf of himself and his affiliates entitled to any Distribution Shares. Mr. Ellin has sole voting and dispositive power over the shares of our common stock held by him and/or his affiliates. Mr. Ellin disclaims beneficial ownership of the reported shares except for (i) his pecuniary interest therein, (ii) indirect interest of Mr. Ellin by virtue of being a member of Trinad Management, (iii) indirect interest of Mr. Ellin by virtue of being a shareholder of JJAT, (iv) indirect interest of Mr. Ellin by virtue of being a member of Trinad Capital, and (v) indirect interest of Mr. Ellin by virtue of being a stockholder of LiveOne. This shall not be deemed an admission that Mr. Ellin is the beneficial owner of these shares or any other securities reported herein for purposes of Section 16 of the Exchange Act, or for any other purpose. |
| (4) | The securities are directly held by Jay Krigsman and the Krigsman Family Trust (the "Trust"). Mr. Krigsman, a trustee of the Trust, holds shared voting and dispositive power over any shares of our common stock held by the Trust. Mr. Krigsman disclaims beneficial ownership in such shares held by the Trust, except for his pecuniary interest therein. |
| (5) | Consists of (i) 2,020,000 shares of our common stock, which includes 2,000,000 Distribution Shares to be issued as part of the Distribution and up to an additional 20,000 shares of our common stock to the extent that any Distribution Shares to be issued to LiveOne's stockholders of record in the Distribution are required to be rounded up, (ii) 1,171,726 shares of our common stock issuable upon conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to LiveOne, and (iii) 1,100,000 shares of our common stock issuable upon exercise of the Bridge Warrants issued to LiveOne. Robert Ellin, the CEO, Chairman and director of LiveOne and our Executive Chairman and director, has sole voting and dispositive power over the shares of our common stock held by, or issuable to, LiveOne. The principal business address of LiveOne is 269 S. Beverly Drive, #1450, Beverly Hills, CA 90212. Mr. Ellin disclaims beneficial ownership in such securities, except for his pecuniary interest therein. |
| (6) | Consists of (i) 39,057 shares of our common stock issuable upon conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Maier Tarlow, Manager of 3i, LP, has sole voting and dispositive power over the shares of our common stock held by, or issuable to, 3i, LP. The principal business address of 3i, LP is 140 Broadway, 38<sup>th</sup> Fl., New York, NY 10005. Mr. Tarlow disclaims beneficial ownership in such securities, except for his pecuniary interest therein. |
| (7) | Consists of (i) 39,057 shares of our common stock issuable upon conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Ludwig Donnert, the CEO of Alpha Sherpa Capital Limited, has sole voting and dispositive power over the shares of our common stock held by, or issuable to, Alpha Sherpa Capital Limited. The principal business address of Alpha Sherpa Capital Limited is Unit 501, 5F, The L Plaza, 367-375 Queen's Road Central, Hong Kong. Mr. Donnert disclaims beneficial ownership in such securities, except for his pecuniary interest therein. |
| (8) | Consists of (i) 97,644 shares of our common stock issuable upon conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and (ii) 91,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Michael Bigger, Managing Member of Bigger Capital Fund LP, has sole voting and dispositive power over the shares of our common stock held by, or issuable to, Bigger Capital Fund LP. The principal business address of Bigger Capital Fund LP is 11700 W Charleston Blvd 170-659, Las Vegas, NV 89135. Mr. Bigger disclaims beneficial ownership in such securities, except for his pecuniary interest therein. |
| (9) | Consists of (i) 39,057 shares of our common stock issuable upon conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities are directly held by David Bliss as a Registered Stockholder. The address for Mr. Bliss is 710 Pradera Way, San Ramon, CA 94583. Mr. Bliss disclaims beneficial ownership in such securities, except for his pecuniary interest therein. |

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&nbsp;&nbsp;&nbsp;&nbsp;(10) Consists of (i) 58,586 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 55,000 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Thomas
 Walsh, the Managing Member of Cavalry Investment Fund LP, has sole voting and dispositive power over the shares of our common stock
 held by, or issuable to, Cavalry Investment Fund LP. The principal business address of Cavalry Investment Fund LP is 82 E. Allendale
 Rd., Suite 5B, Saddle River, NJ 07458. Mr. Walsh disclaims beneficial ownership in such securities, except for his pecuniary interest
 therein.

(11) Consists of (i) 39,057 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by James Derrick Clore as a Registered Stockholder. The address for Mr. Clore is 4606 W. 126th St., Zionsville,
 IN 46077.

(12) Consists of (i) 29,293 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 27,500 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by Michael Daniels as a Registered Stockholder. The address for Mr. Daniels is 70 Pine Street, New York, NY 10005.

(13) Consists of (i) 97,643 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 97,644 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Michael
 Bigger, Managing Member of the GP of District 2 Capital Fund LP, has sole voting and dispositive power over the shares of our common
 stock held by, or issuable to, District 2 Capital Fund LP. The principal business address of District 2 Capital Fund LP is 14 Wall
 St., 2<sup>nd</sup> Fl., Huntington, NY 11743. Mr. Bigger disclaims beneficial ownership in such securities, except for his pecuniary
 interest therein.

(14) Consists of (i) 195,288 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 183,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by Scott Dols as a Registered Stockholder. The address for Mr. Dols is 19822 Wetherby Lane, Lutz, FL 33549.

(15) Consists of (i) 39,057 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by Charles M. Ellingburg as a Registered Stockholder. The address for Mr. Ellingburg is 6 Fern Cove, Flowood, MS
 39232.

(16) Consists of (i) 78,115 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 73,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Eli Fireman,
 Managing Member of Firstfire Global Opportunities Fund LLC, has sole voting and dispositive power over the shares of our common stock
 held by, or issuable to, Firstfire Global Opportunities Fund LLC. The principal business address of Firstfire Global Opportunities
 Fund LLC is 1040 1<sup>st</sup> Avenue, Suite 190, New York, NY 10022. Mr. Fireman disclaims beneficial ownership in such securities,
 except for his pecuniary interest therein.

(17) Consists of (i) 70,304 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 66,000 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by James Foreman and Michelle Foreman, collectively as a Registered Stockholder. The address for Mr. Foreman and
 Ms. Foreman is 3723 Turnberry Circle, Houston, TX 77025.

(18) Consists of (i) 39,057 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by Thomas Genrich, as a Registered Stockholder. The address for Mr. Genrich is 7201 Rand Road 2222, Apt 2401, Austin,
 TX 78730.

(19) Consists of (i) 78,115 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 73,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Michael
 Sobeck, Manager of Harbor Gates Capital, LLC, has sole voting and dispositive power over the shares of our common stock held by,
 or issuable to, Harbor Gates Capital, LLC. The principal business address of Harbor Gates Capital, LLC is 53 Palmeras Street, Suite
 601, San Juan, Puerto Rick 00901. Mr. Sobeck disclaims beneficial ownership in such securities, except for his pecuniary interest
 therein.

(20) Consists of (i) 19,529 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 18,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by Brian Henry, collectively as a Registered Stockholder. The address for Mr. Henry is 570 Sea Oak Drive, Vero
 Beach, FL 32963.

(21) Represents shares of our common stock issuable upon exercise of
 the Placement Agent Warrants issued to the Registered Stockholder as the placement agent for the offering of the Bridge Notes. Stephan
 Stein, President of Joseph Gunnar & Co., LLC, has sole voting and dispositive power over the shares of our common stock held
 by, or issuable to, Joseph Gunnar & Co., LLC. The principal business address of Joseph Gunnar & Co., LLC is 1000 RXR Plaza,
 East Tower, 10<sup>th</sup> Fl., Uniondale, NY 10004. Mr. Stein disclaims beneficial ownership in such securities, except for his
 pecuniary interest therein.

&nbsp;&nbsp;&nbsp;&nbsp;(22) Consists of (i) 39,057 shares of our common stock
 issuable upon conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder,
 and (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Brian
 Kantor, President of Kantor Family Investments, Inc., has sole voting and dispositive power over the shares of our common stock held
 by, or issuable to, Kantor Family Investments, Inc. The principal business address of Kantor Family Investments, Inc. is 21290 N.E.
 23<sup>rd</sup> Avenue, Miami, FL 33180. Mr. Kantor disclaims beneficial ownership in such securities, except for his pecuniary interest
 therein.

&nbsp;&nbsp;&nbsp;&nbsp;(23) Consists of (i) 58,586 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 55,000 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by Mitchell Kersch, as a Registered Stockholder. The address for Mr. Kersch is 22 Glenwood Lane, Roslyn Heights,
 NY 11577.

(24) Consists of (i) 31,246 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 29,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by William Leonard and Monica Leonard, collectively as a Registered Stockholder. The address for Mr. Leonard and
 Ms. Leonard is 103 Roe Lane, Port Jefferson, NY 11777.

(25) Consists of (i) 195,288 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 183,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Jonathan
 Juchno, Managing Member of Mercer Street Global Opportunity Fund, LLC, has sole voting and dispositive power over the shares of our
 common stock held by, or issuable to, Mercer Street Global Opportunity Fund, LLC. The principal business address of Mercer Street
 Global Opportunity Fund, LLC is 1111 Brickell Avenue, Suite 2920, Miami, FL 33131. Mr. Juchno disclaims beneficial ownership in such
 securities, except for his pecuniary interest therein.

(26) Consists of (i) 19,529 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 18,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by Gary S. Mintz, as a Registered Stockholder. The address for Mr. Mintz is 822 E. Capitol Street NE, Washington,
 DC 20003.

(27) Consists of (i) 39,057 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by John Murphy, as a Registered Stockholder. The address for Mr. Murphy is 6514 Deane Hill Drive, Knoxville, TN
 37919.

(28) Consists of (i) 195,288 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 183,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by John Nash, as a Registered Stockholder. The address for Mr. Nash is 1780 S. Post Oak Lane, Houston, TX 77056.

(29) Consists of (i) 19,529 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 18,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by Brett Nesland, as a Registered Stockholder. The address for Mr. Nesland is 13835 N Tatum Ave., Phoenix, AZ 85032.

(30) Consists of (i) 39,057 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Wolfgang
 Burkhardt, Managing Member of Orca Capital GmbH, has sole voting and dispositive power over the shares of our common stock held by,
 or issuable to, Orca Capital GmbH. The principal business address of Orca Capital GmbH is Sperlring 2, Pfaffenhofen, 85276, Germany.
 Mr. Burkhardt disclaims beneficial ownership in such securities, except for his pecuniary interest therein.

(31) Consists of (i) 39,057 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by William Pullano, as a Registered Stockholder. The address for Mr. Pullano is 7050 Manse Street, Forest Hills,
 NY 11375.

(32) Consists of (i) 39,057 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by Elisha Rothman, as a Registered Stockholder. The address for Ms. Rothman is 3370 N.E. 190<sup>th</sup>Street,
 Apt. 3900, Aventura, FL 33180.

(33) Consists of (i) 19,529 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 18,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. The securities
 are directly held by Nicholas Seminario, as a Registered Stockholder. The address for Mr. Seminario is 84 Evergreen Ave., Bethpage,
 NY 11714.

(34) Consists of (i) 195,288 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 183,333 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. William
 England, Chief Investment Officer of the Member of Walleye Opportunities Master Fund Ltd, has sole voting and dispositive power over
 the shares of our common stock held by, or issuable to, Walleye Opportunities Master Fund Ltd. The principal business address of
 Walleye Opportunities Master Fund Ltd is 190 Elgin Ave., George Town, Grand Cayman KY-9008, Cayman Islands. Mr. England disclaims
 beneficial ownership in such securities, except for his pecuniary interest therein.

(35) Consists of (i) 39,057 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Daniel
 Warsh, Managing Member of each of Warberg WF IX LP, has sole voting and dispositive power over the shares of our common stock held
 by, or issuable to, Warberg WF IX LP. The principal business address of Warberg WF IX LP is 716 Oak Street, Winnetka, IL 60093. Mr.
 Warsh disclaims beneficial ownership in such securities, except for his pecuniary interest therein.

(36) Consists of (i) 39,057 shares of our common stock issuable upon
 conversion of principal and accrued interest of the Bridge Notes, as of March 10, 2023, issued to the Registered Stockholder, and
 (ii) 36,667 shares of our common stock issuable upon exercise of the Bridge Warrants issued to the Registered Stockholder. Daniel
 Warsh, Managing Member of each of Warberg WF X LP, has sole voting and dispositive power over the shares of our common stock held
 by, or issuable to, Warberg WF X LP. The principal business address of Warberg WF X LP is 716 Oak Street, Winnetka, IL 60093. Mr.
 Warsh disclaims beneficial ownership in such securities, except for his pecuniary interest therein.

**DESCRIPTION OF CAPITAL STOCK**

**General** 

The following description summarizes certain important terms of our capital stock, as they are expected to be in effect in connection with the effectiveness of the registration statement of which this prospectus forms a part. We expect to adopt an Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws that will become effective in connection with the effectiveness of the registration statement of which this prospectus forms a part, and this description summarizes the provisions that are expected to be included in such documents. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description of the matters set forth in this section titled "Description of Capital Stock," you should refer to our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of Delaware law.

As a result of the completion of the Spin-Out, we will be a "controlled company" within the meaning of the corporate governance standards of The Nasdaq Capital Market. See "Management — Controlled Company Exemption." Unless our board of directors determines otherwise, we will issue all shares of our capital stock in uncertificated form.

**Authorized Capital Stock**

Following the effectiveness of the registration statement of which this prospectus forms a part, after giving effect to the filing and effectiveness of our Amended and Restated Certificate of Incorporation and the adoption of our Amended and Restated Bylaws, our authorized capital stock will consist of:

● 100,000,000 shares of our common stock, par value $0.00001 per share; and

● 10,000,000 shares of our undesignated, blank check preferred stock, par value $0.00001 per share.

There were 20,000,000 shares of our common stock outstanding, held by one stockholder of record (LiveOne), and no shares of our preferred stock outstanding as of March 10, 2023. This excludes shares of our common stock underlying the Bridge Notes which are subject to conversion in connection with the consummation of the Spin-Out, and shares of our common stock underlying Bridge Warrants and the Placement Agent Warrants, as more fully set forth below. Pursuant to our Amended and Restated Certificate of Incorporation, our board of directors will have the authority, without stockholder approval except as required by Nasdaq rules, to issue additional shares of our capital stock. There will be 23,300,611 shares of our common stock issued and outstanding at the time of the completion of the Spin-Out.

**Common Stock** 

***Voting rights***

Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, including the election of directors, and do not have cumulative voting rights. Accordingly, the holders of a majority of the shares of our common stock entitled to vote in any election of directors can elect all of the directors standing for election.

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***Dividends***

 

Subject to preferences that may be applicable to any then outstanding preferred stock, the holders of our common stock are entitled to receive dividends, if any, as may be declared from time to time by our board of directors out of legally available funds.

***Liquidation***

In the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities, subject to the satisfaction of any liquidation preference granted to the holders of any outstanding shares of preferred stock.

***Rights and Preferences***

Holders of our common stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.

***No preemptive or similar rights***

Holders of shares of our common stock do not have preemptive, subscription, or redemption rights. There will be no redemption or sinking fund provisions applicable to our common stock.

 ****

***Fully paid and non-assessable***

All of our outstanding shares of our common stock are fully paid and non-assessable.

**Preferred Stock** 

Following the effectiveness of the registration statement of which this prospectus forms a part, after giving effect to the filing and effectiveness of our Amended and Restated Certificate of Incorporation, our Board of directors:

● shall have the authority, without further action by the stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereon and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding; and

● may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control that may otherwise benefit holders of our common stock and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock. As of March 10, 2023, there were no shares of our preferred stock outstanding, and we have no current plans to issue any shares of our preferred stock.

**Authorized and Unissued Capital Stock**

Delaware law does not require stockholder approval for any issuance of authorized shares. These additional shares may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions.

One of the effects of the existence of unissued and unreserved common stock or preferred stock may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive the stockholders of opportunities to sell their shares at prices higher than prevailing market prices.

**Bridge Notes**

As of March 10, 2023, we had outstanding Bridge Notes in the principal amount of $8,838,500 and accrued and unpaid interest thereon of approximately $576,319. As of March 10, 2023, 3,138,273 shares of our common stock were underlying the Bridge Notes assuming their conversion in full (including accrued and unpaid interest) in connection with the consummation of the Spin-Out. For the terms of the Bridge Notes, please see section above captioned "Certain Relationships And Related Party Transactions ⸺ Various Agreements Entered Into With LiveOne ⸺ Issuance of Bridge Notes and Bridge Warrants and Placement Agent Warrants."

As of March 10, 2023, there were no other convertible debt securities outstanding.

**Bridge Warrants** 

As of March 10, 2023, approximately 3,114,000 shares of our common stock were issuable upon the exercise of our outstanding Bridge Warrants and the Placement Agent Warrants at an exercise price per share equal to the Exercise Price. The warrants expire on January 15, 2028. For the terms of the Bridge Notes, please see section above captioned "Certain Relationships And Related Party Transactions ⸺ Various Agreements Entered Into With LiveOne ⸺ Issuance of Bridge Notes and Bridge Warrants and Placement Agent Warrants."

  ****

As of March 10, 2023, there were no other warrants outstanding.

**2022 Equity Incentive Plan**

For the terms of our 2022 Equity Incentive Plan, please see section above captioned "Executive Compensation ⸺ 2022 Equity Incentive Plan."

**Stock Options** 

As of March 10, 2023, there were no options outstanding.

**Restricted Stock Units**

As of March 10, 2023, there were no restricted stock units outstanding.

**Other Equity Awards**

Any other equity awards granted under our 2022 Plan generally settle in shares of our common stock. As of March 10, 2023, except as set forth above, there were no other equity wards made under our 2022 Plan.

**Choice of Forum** 

Our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws will provide that: (i) unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for: (A) any derivative action or proceeding brought on our behalf, (B) any action asserting a claim for or based on a breach of a fiduciary duty owed by any of our current or former directors, officers, other employees, agents, or stockholders to us or our stockholders, including without limitation a claim alleging the aiding and abetting of such a breach of fiduciary duty, (C) any action asserting a claim against us or any of our current or former directors, officers, other employees, agents, or stockholders arising pursuant to any provision of the DGCL or our Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (D) any action asserting a claim related to or involving us that is governed by the internal affairs doctrine; (ii) unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act and the rules and regulations promulgated thereunder; (iii) the exclusive forum provisions are intended to benefit and may be enforced by us, our officers and directors, the financial advisors to any offering giving rise to such complaint, and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering; (iv) any person or entity purchasing or otherwise acquiring or holding any interest in our shares of capital stock will be deemed to have notice of and consented to these provisions; and (v) failure to enforce the foregoing provisions would cause us irreparable harm, and we will be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions. Nothing in our Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws precludes stockholders that assert claims under the Exchange Act from bringing such claims in federal court, to the extent that the Exchange Act confers exclusive federal jurisdiction over such claims, subject to applicable law.

Although our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws will contain the choice of forum provision described above, it is possible that a court could find that such a provision is inapplicable for a particular claim or action or that such provision is unenforceable. For more information on the risks associated with our choice of forum provision, see "Risk Factors — Risks Related to Ownership of Our Common Stock — Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws will provide for an exclusive forum in the Court of Chancery of the State of Delaware for certain disputes between us and our stockholders, and that the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act."

**Anti-Takeover Provisions** 

Our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws will contain provisions that may delay, defer, or discourage another party from acquiring control of us. We expect that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors, which we believe may result in an improvement of the terms of any such acquisition in favor of our stockholders. However, they also give our board of directors the power to discourage acquisitions that some stockholders may favor. See "Risk Factors — Risks Related to Ownership of Our Common Stock — Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock."

 ****

***Stockholder Action and Special Meetings of Stockholders***

Our Amended and Restated Certificate of Incorporation will provide that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of our stockholders and may not be effected by any consent in writing by our stockholders. Our Amended and Restated Certificate of Incorporation will further provide that special meetings of our stockholders may be called only by a majority of our board of directors, thus prohibiting a stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders to take any action, including the removal of directors.

***Advance Notice Requirements for Stockholder Proposals and Director Nominations***

Our Amended and Restated Bylaws will provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our Amended and Restated Bylaws will also specify certain requirements regarding the form and content of a stockholder's notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that these provisions might also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of our company.

***Election and Removal of Directors; Filling Vacancies***

Our directors will be elected at each annual meeting of our stockholders. Because our stockholders do not have cumulative voting rights, our stockholders holding a majority of the shares of our voting shares will be able to elect all of our directors. Our Amended and Restated Certificate of Incorporation will provide for the removal of any of our directors only for cause and requires a stockholder vote by the holders of at least a 66 2/3% of the voting power of our then outstanding voting stock. Furthermore, any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size of the board, may only be filled by a resolution of our board of directors unless the board of directors determines that such vacancies shall be filled by the stockholders. This system of electing and removing directors and filling vacancies may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us because it generally makes it more difficult for stockholders to replace a majority of the directors.

 ****

***Supermajority Requirements for Amendments of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws***

Certain amendments to our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws will require the approval of 66 2/3% of the outstanding voting power of our capital stock.

 ****

***Authorized but Unissued Shares***

The authorized but unissued shares of our common stock and our preferred stock are available for future issuance without stockholder approval, subject to any limitations imposed by Nasdaq rules. These additional shares may be used for a variety of corporate finance transactions, acquisitions, and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could make more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger, or otherwise.

 ****

***Section 203 of the DGCL***

We will be subject to the provisions of Section 203 of the DGCL. This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a "business combination" with an "interested stockholder." In general, Section 203 defines an "interested stockholder" as an entity or person who, together with the person's affiliates and associates, beneficially owns 15% or more of the outstanding voting stock of the corporation.

A "business combination" includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 of the DGCL do not apply if:

● the business combination takes place more than three years after the interested stockholder became an "interested stockholder;"

● our board of directors approves the transaction that made the stockholder an "interested stockholder" prior to the date of the transaction;

● after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding, other than statutorily excluded shares of common stock; or

● on or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.

**Limitation on Liability of Directors and Indemnification** 

Our Amended and Restated Certificate of Incorporation will provide that our directors and officers will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director or an officer, except to the extent such exemption from liability or limitation is not permitted under the DGCL, as may be amended. The DGCL provides that a certificate of incorporation may not eliminate or limit the liability of a director or an officer:

● for any breach of the director's duty of loyalty to us or our stockholders;

● for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

● pursuant to Section 174 of the DGCL; or

● for any transaction from which the director derived an improper personal benefit.

Our Amended and Restated Bylaws will provide that we must indemnify our directors and officers to the fullest extent permitted by law. We will also be expressly authorized to advance certain expenses (including attorneys' fees) to our directors and officers and carry directors' and officers' insurance providing indemnification for our directors and officers for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers. In addition, in connection with the effectiveness of the registration statement of which this prospectus forms a part, we intend to enter into separate indemnification agreements with each of our directors and executive officers.

**Registration Rights** 

In connection with the Bridge Financing, we agreed to register the shares of our common stock issuable upon conversion of the Bridge Notes and exercise of the Bridge Warrants and the Placement Agent Warrants in connection with the Direct Listing or an initial public offering. The registration statement of which this prospectus is a part is being filed to satisfy such requirements. If we do not file such registration statement on or prior to the date that is nine months after July 15, 2022, we shall be required to prepay $1,000,000 of the Bridge Notes pro rata to the Bridge Notes holders (other than LiveOne), and if we do not file such registration statement on or prior to the date that is 12 months after July 15, 2022, we shall be required to prepay $2,000,000 of the Bridge Notes pro rata to the Note holders (other than LiveOne) (the "Reg St Redemption"). We shall not be required to redeem or repay more than a total of $3,000,000 of the principal amount of the Bridge Notes as a result of the Optional Redemption, the Early Redemption and/or the Reg St Redemption.

The registration of shares of our common stock issuable upon conversion of the Bridge Notes and exercise of the Bridge Warrants and the Placement Agent Warrants would enable the holders to sell these shares without restriction under the Securities Act when this registration statement is declared effective.

**Listing** 

We have applied to list our common stock on The Nasdaq Capital Market under the symbol "PODC."

**Transfer Agent and Registrar** 

The transfer agent and registrar for our common stock common stock will be Vstock Transfer, LLC. The transfer agent and registrar's address is 18 Lafayette Pl, Woodmere, NY 11598, and its telephone number is (212) 828-8436.

**SHARES ELIGIBLE FOR FUTURE SALE** 

Prior to the listing of our common stock on The Nasdaq Capital Market, there has been no public market for our common stock, and we cannot predict the effect, if any, that sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. Sales of substantial amounts of our common stock in the public market following our listing on The Nasdaq Capital Market or the perception that such sales could occur, could adversely affect the public price of our common stock and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate. We will have no input if and when any Registered Stockholder may, or may not, elect to sell its shares of common stock or the prices at which any such sales may occur. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect the trading prices of shares of our common stock prevailing from time to time.

Upon the effectiveness of the registration statement of which this prospectus forms a part, based on the number of shares of our common stock outstanding as of ______, 2023, we will have a total of ______ shares of our common stock outstanding, after giving effect to the Bridge Notes Conversion and the exercise of the Bridge Warrants and the Placement Agent Warrants.

Shares of our common stock will be deemed "restricted securities" (as defined in Rule 144 under the Securities Act). Restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which rules are summarized below. Following the listing of our common stock on The Nasdaq Capital Market, shares of our common stock may be sold either by the Registered Stockholders pursuant to this prospectus or by our other existing stockholders in accordance with Rule 144 of the Securities Act.

As further described below, until we have been a reporting company for at least 90 days, only non-affiliates who have beneficially owned their shares of common stock for a period of at least one year will be able to sell their shares of common stock under Rule 144, which is expected to include approximately ______ shares of our common stock issuable upon the conversion of the outstanding Bridge Notes and the exercise of outstanding Bridge Warrants and the Placement Agent Warrants immediately after the effectiveness of the registration statement of which this prospectus forms a part.

**Rule 144** 

In general, under Rule 144 as currently in effect, once we have been subject to the public company reporting requirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation, or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person would be entitled to sell those shares without complying with any of the requirements of Rule 144.

In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell, within any three-month period, a number of shares of common stock that does not exceed the greater of:

● 1% of the number of shares of our common stock then outstanding; and

● the average weekly trading volume of our common stock on The Nasdaq Capital Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.

Sales under Rule 144 by our affiliates or persons selling shares of our common stock on behalf of our affiliates are also subject to certain manner-of-sale provisions and notice requirements and to the availability of current public information about us.

**Rule 701** 

In general, under Rule 701, any of our employees, directors, officers, consultants, or advisors who purchases shares of capital stock from us in connection with a compensatory stock option plan or other written agreement before the effective date of the registration statement of which this prospectus forms a part is entitled to sell such shares 90 days after such effective date in reliance on Rule 144.

The SEC has indicated that Rule 701 will apply to typical stock options granted by a company before it becomes subject to the reporting requirements of the Exchange Act, along with the shares acquired upon exercise of such options, including exercises after a company becomes subject to the reporting requirements of the Exchange Act.

**Registration Rights** 

The holders of the Bridge Notes, the Bridge Warrants and the Placement Agent Warrants are entitled to certain rights with respect to the registration of those shares under the Securities Act. For a description of these registration rights, see "Description of Capital Stock — Registration Rights." If these shares are registered, in most cases they will be freely tradable without restriction under the Securities Act and a large number of shares may be sold into the public market.

**Registration Statement on Form S-8**

We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our common stock subject to any outstanding equity awards, as well as shares of our common stock reserved for future issuance under our 2022 Plan. We expect to file these registration statements as soon as permitted under the Securities Act. However, the shares registered on Form S-8 may be subject to the volume limitations and the manner of sale, notice, and public information requirements of Rule 144. See "Executive Compensation — Additional Narratives to 2022 Summary Compensation Table and Outstanding Equity Awards at 2022 Fiscal Year End — Equity Compensation Plans — 2022 Incentive Award Plan" for a description of our 2022 Plan.

**SALE PRICE HISTORY OF OUR CAPITAL STOCK** 

We have applied to list our common stock on The Nasdaq Capital Market. Prior to the listing of our common stock on The Nasdaq Capital Market, there has been no public market for our common stock. Our common stock also does not have a history of trading in private purchases. Since April 1, 2020, there have not been any private transactions of our common stock and shares of our common stock do not have a history of trading in private transactions other than the acquisition of our Company by LiveOne on July 1, 2020 and a private placement offering on July 15, 2022, of our Bridge Notes to certain accredited investors and institutional investors (collectively, the "Bridge Investors"), for gross proceeds of $8,835,000 pursuant to the Subscription Agreements entered into with the Bridge Investors. In connection with the sale of the Bridge Notes, the Bridge Investors received the Bridge Warrants to purchase a number of shares of our common stock as more fully discussed below, and we issued the Placement Agent Warrants to the placement agent. The Bridge Notes, the Bridge Warrants and the Placement Agent Warrants were issued as restricted securities in a private placement transaction exempt from the registration requirements of the Securities Act. Therefore, there is no recent price history for our common stock being sold in private transactions and accordingly, the sale price history or historical private sales will not be a factor affecting the current reference price to be determined by the Nasdaq Capital Market. Accordingly, this information has little or no relation to broader market demand for our common stock and thus the opening public price and subsequent public price of our common stock on The Nasdaq Capital Market. In addition, prior to the opening trade, there will not be a price at which underwriters initially sell shares of our common stock to the public as there would be in an underwritten initial public offering. The absence of a predetermined initial public offering price could impact the range of buy and sell orders collected by the Nasdaq Capital Market from various broker-dealers. Consequently, upon listing on the Nasdaq Capital Market, the trading price of our common stock may be more volatile than in an underwritten initial public offering and could decline significantly and rapidly. As a result, you should not place undue reliance on any of the prices in our historical transactions as they may differ materially from the opening public price and subsequent public price of our common stock on The Nasdaq Capital Market. See "Risk Factors — Risks Related to Ownership of Our Common Stock — Our stock price may be volatile, and could decline significantly and rapidly."

**PLAN OF DISTRIBUTION** 

The Registered Stockholders, and their pledgees, donees, transferees, assignees, or other successors in interest may sell their shares of common stock covered hereby pursuant to brokerage transactions on The Nasdaq Capital Market, or other public exchanges or registered alternative trading venues, at prevailing market prices at any time after the shares of common stock are listed for trading. Other than with LiveOne, including with respect to the Distribution, the Bridge Notes and the Bridge Warrants issued to LiveOne and the various agreements summarized in the section captioned Certain Relationships and Related Party Transactions, we are not party to any arrangement with any Registered Stockholder or any broker-dealer with respect to sales of shares of common stock by the Registered Stockholders, except we have engaged a financial advisor with respect to certain other matters relating to the registration of shares of our common stock and listing of our common stock, as further described below. As such, other than LiveOne's intent to effect the Distribution, we do not anticipate receiving notice as to if and when any Registered Stockholder may, or may not, elect to sell their shares of common stock or the prices at which any such sales may occur, and there can be no assurance that any Registered Stockholders will sell any or all of the shares of common stock covered by this prospectus.

We will not receive any proceeds from the sale of shares of common stock by the Registered Stockholders (except to the extent that any Warrants are exercised for cash). We will recognize costs related to this direct listing and our transition to a publicly-traded company consisting of professional fees and other expenses. We will expense these amounts in the period incurred and not deduct these costs from net proceeds to the issuer as they would be in an initial public offering.

We engaged the Financial Advisor as our financial advisor to advise and assist us with respect to certain matters relating to our listing. These matters include assisting us in defining our objectives with respect to the filing of the registration statement of which this prospectus forms a part, our preparation of the registration statement of which this prospectus forms a part, our preparation of investor communications and presentations in connection with investor education, and being available to consult with Nasdaq, including on the day that our shares of common stock are initially listed on The Nasdaq Capital Market.

In addition, the Financial Advisor will determine when shares of our common stock are ready to trade and to approve proceeding with the opening of trading at the Current Reference Price (as defined below). However, the Financial Advisor has not been engaged to participate in investor meetings or to otherwise facilitate or coordinate price discovery activities or sales of our common stock in consultation with us, except as described herein.

The Financial Advisor has conducted due diligence related to our operations and financials as well as the podcasting industry, and has therefore determined a significant basis for monitoring the trajectory of the company on the basis of its execution of its stated business plan, and its financial performance. Additionally, the Financial Advisor will continue to monitor strategic activities in the sector in which our Company's business is in, applying demonstrated transaction multiples to our financials to test relative valuation attributes. Additionally, the Financial Advisor has been provided a copy of a comprehensive independent third party valuation report obtained by LiveOne in connection with the Direct Listing. At the time of the determination for proceeding at the Current Reference Price, the Financial Advisor will schedule several calls as follows: (1) a business, legal, and intellectual property bringdown due diligence call to determine the current state of our Company, (2) a bringdown due diligence call with our auditors to reaffirm our financial performance, balance sheet strength, and to ensure no overhanging issues related to material changes or potential restatements, and (3) a final review of our financial model with our Interim Chief Financial Officer to determine strength of our current financial plan based both on cost management and viable business opportunities. Following the confirmation of the strength of our Company as described above and re-testing the application of the multiples for both strategic transactions and public comparables, the Financial Advisor will determine to proceed at the Current Reference Price. the Financial Advisor will look at a number of factors in selecting price bands for purposes of applying the price validation test and how the band situates around the Current Reference Price. The Financial Advisor will have regular discussions with company management leading up to the time of the anticipated listing. Some of the factors that the Financial Advisor will consider are quantitative and others are qualitative, and include but are not limited to, the following:

● The current market prices of shares and trading multiples (P/E, revenue, profitability, etc.) of similar companies in our peer group;

● The uniqueness of the Direct Listing (our Company is the only pure play company of its kind to be listed in the public markets);

● Overall market trends for the pricing of growth companies;

● Our trajectory: recent news flow, announcements, business developments, achievements, new products, etc.;

● Our management and personnel: previous successes, awards, accolades and accomplishments;

● Our financial performance and business model effectiveness and profitability;

● Our future growth potential;

● Perceived demand for our services and products; and

● Perceived (and actual) demand for shares of our common stock.

On the day that shares of our common stock are initially listed on The Nasdaq Capital Market, Nasdaq will begin accepting, but not executing, pre-opening buy and sell orders and will begin to continuously generate the indicative Current Reference Price on the basis of such accepted orders. During a ten-minute "Display Only" period, market participants may enter quotes and orders in common stock in Nasdaq's systems and such information is disseminated, along with other indicative imbalance information, to the Financial Advisor and other market participants by Nasdaq on its NOII and BookViewer tools. Following the "Display Only" period, a "Pre-Launch" period begins, during which the Financial Advisor, in its capacity as our designated financial advisor to perform the functions under Nasdaq Rule 4120(c)(8), must notify Nasdaq that our shares are "ready to trade." Once the Financial Advisor has notified Nasdaq that shares of our common stock are ready to trade, Nasdaq will calculate the Current Reference Price (as defined below) for shares of our common stock, in accordance with Nasdaq's rules. If the Financial Advisor then approves proceeding at the Current Reference Price, Nasdaq will conduct a price validation test in accordance with Nasdaq Rule 4120(c)(8). Prior to the conclusion of the "Pre-Launch" period, the Financial Advisor will select price bands for purposes of applying the price validation test, which are generally set at zero. Under the price validation test, Nasdaq compares the expected price (i.e. the price at which the Financial Advisor notified Nasdaq that the security is ready to trade) with the actual price calculated by Nasdaq, which is the Current Reference Price at the time of the price validation test, for the opening trade to assure that the difference between such prices, if any, is within the price bands previously selected by the Financial Advisor. If the price bands are set at zero then these prices must be identical. As part of conducting such price validation test, Nasdaq may consult with the Financial Advisor, if the price bands need to be modified, to select the new price bands for purposes of applying such test iteratively until the validation tests yield a price within such bands. Upon completion of such price validation checks the applicable orders that have been entered will then be executed at such price and regular trading of shares of our common stock on The Nasdaq Capital Market will commence.

Under Nasdaq's rules, the "Current Reference Price" means: (i) the single price at which the maximum number of orders to buy or sell shares of our common stock can be matched; (ii) if more than one price exists under clause (i), then the price that minimizes the number of shares of our common stock for which orders cannot be matched; (iii) if more than one price exists under clause (ii), then the entered price (i.e. the specified price entered in an order by a customer to buy or sell) at which shares of our common stock will remain unmatched (i.e. will not be bought or sold); and (iv) if more than one price exists under clause (iii), a price determined by Nasdaq after consultation with the Financial Advisor in its capacity as financial advisor. The Financial Advisor will exercise any consultation rights only to the extent that it may do so consistent with the anti-manipulation provisions of the federal securities laws, including Regulation M (to the extent applicable), or applicable relief granted thereunder. In determining the Current Reference Price, Nasdaq's algorithms will match orders that have been entered into and accepted by Nasdaq's system. This occurs with respect to a potential Current Reference Price when orders to buy shares of our common stock at an entered bid price that is greater than or equal to such potential Current Reference Price are matched with orders to sell a like number of shares of our common stock at an entered asking price that is less than or equal to such potential Current Reference Price.

To illustrate, as a hypothetical example of the calculation of the Current Reference Price, if Nasdaq's algorithms matched all accepted orders as described above, and two limit orders remained — a limit order to buy 500 shares of our common stock at an entered bid price of $10.01 per share and a limit order to sell 200 shares of our common stock at an entered asking price of $10.00 per share — the Current Reference Price would be determined as follows:

● Under clause (i), if the Current Reference Price is $10.00, then the maximum number of additional shares that can be matched is 200. If the Current Reference Price is $10.01, then the maximum number of additional shares that can be matched is also 200, which means that the same maximum number of additional shares would be matched at the price of either $10.00 or $10.01.

● Because more than one price under clause (i) exists, under clause (ii), the Current Reference Price would be the price that minimizes the imbalance between orders to buy or sell (i.e. minimizes the number of shares that would remain unmatched at such price). Selecting either $10.00 or $10.01 as the Current Reference Price would create the same imbalance in the limit orders that cannot be matched, because at either price 300 shares would not be matched.

● Because more than one price under clause (ii) exists, then under clause (iii), the Current Reference Price would be the entered price at which orders for shares of our common stock at such entered price will remain unmatched. In such case, choosing $10.01 would cause 300 shares of the 500 share limit order with the entered price of $10.01 to remain unmatched, compared to choosing $10.00, where all 200 shares of the limit order with the entered price of $10.00 would be matched, and no shares at such entered price remain unmatched. Thus, Nasdaq would select $10.01 as the Current Reference Price because orders for shares at such entered price will remain unmatched.

The above example (including the prices) is provided solely by way of illustration.

The Financial Advisor, as the designated financial advisor under Nasdaq Rule 4120(c)(8), will determine when shares of our common stock are ready to trade and approve proceeding at the Current Reference Price primarily based on consideration of volume, timing, and price. In particular, the Financial Advisor will determine, based primarily on pre-opening buy and sell orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference Price. If the Financial Advisor does not approve proceeding at the Current Reference Price (for example, due to the absence of adequate pre-opening buy and sell interest), the Financial Advisor will request that Nasdaq delay the open until such a time that sufficient price discovery has been made to ensure a reasonable amount of volume crosses on the opening trade.

The Financial Advisor and our management will iterate on the price discovery process on a regular basis leading up to the Distribution and the Direct Listing, discussing the key quantitative and qualitative factors referred to above, and continuing to update the pricing model within lower and upper bands based on actual performance and current market conditions. It is anticipated that the Financial Advisor and our Company will conduct a pricing call to memorialize the accepted price for opening the listing for trading. As the number of Dividend Shares will determine the amount of shares in the non-affiliate float, and the value of such shares, it will be critical for us and the Financial Advisor to communicate to ensure all calculations are consistent, and that the Financial Advisor as our financial advisor and market maker has a firm understanding of where all of our shares are held among our stockholders at the time of the Direct Listing. Given the anticipated significant retained ownership of our Company by LiveOne and the shares of our common stock owned by our directors and officers and the Bridge Notes holders being subject to lockup agreements, and ownership of shares of our common stock by other significant shareholders of LiveOne as part of the Distribution, the Financial Advisor anticipates that approximately _____% of the shares of our outstanding common stock will be in the non-affiliate float, providing some comfort to how volatility and potential selling shareholders might immediately otherwise impact the fundamental valuation that is achieved through the iterative price discovery process.

Similar to a Nasdaq-listed underwritten initial public offering, in connection with the listing of shares of our common stock, the financial advisors and buyers and sellers (or their brokers) who have subscribed will have access to the Nasdaq Stock Market's Order Imbalance Indicator (sometimes referred to as the Net Order Imbalance Indicator), a widely available, subscription-based data feed, prior to submitting buy or sell orders. Nasdaq's electronic trading platform simulates auctions every second to calculate a Current Reference Price, the number of shares that can be paired off the Current Reference Price, the number of shares that would remain unexecuted at the Current Reference Price and whether a buy-side or sell-side imbalance exists, or whether there is no imbalance, in order to disseminate that information continuously to buyers and sellers via the Order Imbalance Indicator data feed.

However, because this is not an underwritten initial public offering, there will be no "book building" process (i.e., an organized process pursuant to which buy and sell interest is coordinated in advance to some prescribed level – the "book"). Moreover, prior to the opening trade, there will not be a price at which underwriters initially sold shares of our common stock to the public as there would be in an underwritten initial public offering. This lack of an initial public offering price could impact the range of buy and sell orders collected by The Nasdaq Capital Market from various broker-dealers. Consequently, the public price of shares of our common stock may be more volatile than in an underwritten initial public offering and could, upon listing on The Nasdaq Capital Market, decline significantly and rapidly. See "Risk Factors — Risks Related to Ownership of Our Common Stock."

In addition, in order to list on The Nasdaq Capital Market, we are also required to have at least three registered and active market makers. We understand that the Financial Advisor intends (but is not obligated) to act as registered and active market maker, although any such market-making, if commenced, may be discontinued at any time. Further, the Financial Advisor may assist interested registered stockholders with the establishment of brokerage accounts.

In addition to sales made pursuant to this prospectus, the shares of common stock covered by this prospectus may be sold by the Registered Stockholders in individually negotiated transactions exempt from the registration requirements of the Securities Act. Under the securities laws of some states, shares of common stock may be sold in such states only through registered or licensed brokers or dealers.

A Registered Stockholder may from time to time transfer, distribute (including distributions in kind by registered stockholders that are investment funds), pledge, assign, or grant a security interest in some or all the shares of common stock owned by it and, if it defaults in the performance of its secured obligations, the transferees, distributees, pledgees, assignees, or secured parties may offer and sell the shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of the Registered Stockholders to include the transferee, distributee, pledgee, assignee, or other successors in interest as Registered Stockholders under this prospectus. The Registered Stockholders also may transfer the shares in other circumstances, in which case the transferees, distributes, pledgees, or other successors in interest will be the registered beneficial owners for purposes of this prospectus.

A Registered Stockholder that is an entity may elect to make an in-kind distribution of common stock or warrants to its members, partners, or stockholders pursuant to the registration statement of which this prospectus forms a part by delivering a prospectus.

If any of the Registered Stockholders utilize a broker-dealer in the sale of the shares of common stock being offered pursuant to this prospectus, such broker-dealer may receive commissions in the form of discounts, concessions, or commissions from such Registered Stockholder or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal.

**LEGAL MATTERS** 

Foley Shechter Ablovatskiy LLP is our principal legal advisor and will pass upon the validity of our common stock issued to the Registered Stockholders and to be distributed in the Distribution.

**EXPERTS** 

The consolidated financial statements of Courtside Group, Inc. and subsidiaries as of March 31, 2022 and March 31, 2021, and for each of the fiscal years then ended, have been included herein and in the registration statement of which this prospectus forms a part in reliance upon the report of Macias Gini & O'Connell LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION**

We have filed with the SEC a Registration Statement on Form S-1 under the Securities Act, with respect to the shares of our common stock covered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules to the registration statement. Please refer to the registration statement and exhibits for further information with respect to the common stock covered by this prospectus. Statements contained in this prospectus regarding the contents of any contract or other document are only summaries. With respect to any contract or document that is filed as an exhibit to the registration statement, you should refer to the exhibit for a copy of the contract or document, and each statement in this prospectus regarding that contract or document is qualified by reference to the exhibit. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding companies, like us, that file documents electronically with the SEC. The address of that website is www.sec.gov.

Immediately upon the effectiveness of this registration statement of which this prospectus forms a part, we will become subject to the information and reporting requirements of the Exchange Act, and, in accordance with this law, will be required to file periodic reports, proxy statements, and other information with the SEC. These periodic reports, proxy statements, and other information will be available at the website of the SEC referred to above. We also maintain a website at www.podcastone.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained on, or that can be accessed through, these websites is not a part of this prospectus. We have included these website addresses in this prospectus solely as inactive textual references.

**INDEX TO FINANCIAL STATEMENTS**

**COURTSIDE GROUP, INC.**

**Index to Audited Financial Statements**

---

| | |
|:---|:---|
|  | **Page** |
| [Report of Independent Registered Public Accounting Firm](#f_001) | F-2 |
| [Consolidated Balance Sheets as of March 31, 2022 and March 31, 2021](#f_002) | F-3 |
| [Consolidated Statements of Operations for the Period from April 1, 2020 to June 30, 2020 (Predecessor) and July 1, 2020 to March 31, 2021 (Successor) and for the Year ended March 31, 2022](#f_003) | F-4 |
| [Consolidated Statements of Stockholders' Equity for the Period from April 1, 2020 to June 30, 2020 (Predecessor) and July 1, 2020 to March 31, 2021 (Successor) to March 31, 2021 and for the Year ended March 31, 2022](#f_004) | F-5 |
| [Consolidated Statements of Cash Flows for the Period from April 1, 2020 to June 30, 2020 (Predecessor) and July 1, 2020 to March 31, 2021 (Successor) and for the Year ended March 31, 2022](#f_005) | F-6 |
| [Notes to Consolidated Financial Statements](#f_006) | F-7 |

---

**Index to Condensed Unaudited Interim Financial Statements**

---

| | |
|:---|:---|
|  | **Page** |
| [Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2022 (Unaudited)](#f_007) | F-25 |
| [Condensed Consolidated Unaudited Interim Statements of Operations for the Nine months ended December 31, 2021 and 2022](#f_008) | F-26 |
| [Condensed Consolidated Unaudited Interim Statements of Stockholders' Equity (Deficit) for the Nine months ended December 31, 2021 and 2022](#f_009) | F-27 |
| [Condensed Consolidated Unaudited Interim Statements of Cash Flows for the Nine months ended December 31, 2021 and 2022](#f_010) | F-28 |
| [Notes to the Condensed Unaudited Interim Financial Statements](#f_011) | F-29 |

---

**Report of Independent Registered Public Accounting Firm**

To the Board of Directors and Shareholder of

Courtside Group, Inc.

 ***Opinion on the Financial Statements***

We have audited the accompanying restated consolidated balance sheets of Courtside Group, Inc. (a subsidiary of LiveOne, Inc.) (the "Company") as of March 31, 2022 and 2021, the related restated consolidated statements of operations, stockholders' equity, and cash flows for the year ended March 31, 2022 and for the period from July 1, 2020 to March 31, 2021 (Successor) and the period from April 1, 2020 to June 30, 2020 (Predecessor), and the related notes (collectively referred to as the "restated consolidated financial statements"). In our opinion, the restated consolidated financial statements present fairly, in all material respects, the restated consolidated financial position of the Company as of March 31, 2022 and 2021, and the restated consolidated results of its operations and its cash flows for the period from July 1, 2020 to March 31, 2021 (Successor) and for the period from April 1, 2020 to June 30, 2020 (Predecessor), in conformity with accounting principles generally accepted in the United States of America.

 ***Restatement***

As discussed in Note 3 to the restated consolidated financial statements, the 2022 and 2021 financial statements have been restated to correct an error. We have also audited the adjustments described in Note 3 that were applied to restate the 2022 and 2021 consolidated financial statements to correct errors. In our opinion, such adjustments are appropriate and have been properly applied. Our opinion is not modified in respect of this matter.

 ***Substantial Doubt About the Company's Ability to Continue as a Going Concern***

The accompanying restated consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the restated consolidated financial statements, the Company has suffered recurring losses from operations, negative cash flows from operations and has an accumulated deficit. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters also are described in Note 1. The restated consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 ***Basis for Opinion***

These restated consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's restated consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the restated consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the restated consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the restated consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Macias Gini & O'Connell LLP

We have served as the Company's auditor since 2022.

Los Angeles, California

March 13, 2023

**COURTSIDE GROUP, INC.**

**Consolidated Balance Sheets**

***(In thousands, except share and per share amounts)***

 ****

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br> **2022** | **March 31,**<br> **2021** |
|  | **(Restated)** | **(Restated)** |
|  **<u>Assets</u>** |  |  |
| **Current Assets** |  |  |
| &nbsp;&nbsp;&nbsp; Cash and cash equivalents | $1103 | $3374 |
| &nbsp;&nbsp;&nbsp; Accounts receivable, net | 7995 | 3988 |
| &nbsp;&nbsp;&nbsp; Prepaid expense and other current assets | 543 | 291 |
|  **Total Current Assets** | 9641 | 7653 |
| &nbsp;&nbsp;&nbsp; Property and equipment, net | 247 | 95 |
| &nbsp;&nbsp;&nbsp; Goodwill | 12041 | 12041 |
| &nbsp;&nbsp;&nbsp; Intangible Assets, net | 831 | 1334 |
| &nbsp;&nbsp;&nbsp; Related party receivable | 1167 | 4204 |
|  **Total Assets** | $23927 | $25327 |
| &nbsp;&nbsp;&nbsp; **<u>Liabilities and Stockholders' Equity</u>** |  |  |
|  **Current Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp; Accounts payable and accrued liabilities | $6998 | $5164 |
| &nbsp;&nbsp;&nbsp; Notes payable |  | 1098 |
| &nbsp;&nbsp;&nbsp; Related party payable | 3844 | 4902 |
|  **Total Liabilities** | 10842 | 11164 |
|  **Commitments and Contingencies** |  |  |
|  **Stockholders' Equity** |  |  |
| &nbsp;&nbsp;&nbsp; Common stock, $0.00001 par value; 200,000,000 shares authorized; 147,984,230 and 147,984,230 shares issued and outstanding, respectively |  |  |
| &nbsp;&nbsp;&nbsp; Additional paid in capital | 18784 | 16258 |
| &nbsp;&nbsp;&nbsp; Accumulated deficit | (5699) | (2095) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity | 13085 | 14163 |
|  **Total Liabilities and Stockholders' Equity** | $23927 | $25327 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**COURTSIDE GROUP, INC.**

**Consolidated Statements of Operations**

***(In thousands, except share and per share amounts)***

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended<br> March 31,<br> 2022<br> (Successor)** | **July 1,<br> 2020<br> to March 31, <br> 2021<br> (Successor)** | **April 1, <br> 2020<br> to June 30,<br> 2020<br> (Predecessor)** |
|  | **(Restated)** | **(Restated)** | |
| **Revenue:** | $32348 | $19675 | $4165 |
| **Operating expenses:** |  |  |  |
| &nbsp;&nbsp;&nbsp; Cost of sales | 26271 | 15368 | 2911 |
| &nbsp;&nbsp;&nbsp; Sales and marketing | 5155 | 3077 | 915 |
| &nbsp;&nbsp;&nbsp; Product development | 251 | 495 | 149 |
| &nbsp;&nbsp;&nbsp; General and administrative | 4871 | 2359 | 1354 |
| &nbsp;&nbsp;&nbsp; Amortization of intangible assets | 502 | 448 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 37050 | 21747 | 5329 |
| **Loss from operations** | (4702) | (2072) | (1164) |
| **Other income (expense):** |  |  |  |
| &nbsp;&nbsp;&nbsp; Interest expense, net | (5) | (4) | (1) |
| &nbsp;&nbsp;&nbsp; Forgiveness of PPP loans | 1103 |  |  |
| &nbsp;&nbsp;&nbsp; Other income (expense) | - | (23) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income (expense), net | 1098 | (27) | (1) |
| **Loss before provision (benefit) for income taxes** | (3604) | (2099) | (1165) |
| Provision (benefit) for income taxes | - | (4) | 4 |
| **Net loss** | $(3604) | $(2095) | $(1169) |
| **Net loss per share – basic and diluted** | $(0.02) | $(0.01) | $(0.01) |
| **Weighted average common shares – basic and diluted** | 147984230 | 147984230 | 147984230 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**COURTSIDE GROUP, INC.**

**Consolidated Statements of Stockholders' Equity**

***(In thousands, except share and per share amounts)***

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Successor (Restated)** | **Successor (Restated)** | **Successor (Restated)** | **Successor (Restated)** | **Successor (Restated)** | **Successor (Restated)** |
|  | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Additional Paid in Capital (as**<br> **restated)** | **Accumulated Deficit (as**<br> **restated)** | **Total <br> Stockholders'<br> Equity (as**<br> **restated)** |
|  **Balance as of July 1, 2020** | **147984230** | $**5** | $**11648** | $**(9355)** | $**2298** |
| &nbsp;&nbsp;&nbsp; Settlement of PodcastOne equity |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) | (11648) | 9.355 | (2298) |
| &nbsp;&nbsp;&nbsp; Contribution from LiveOne, Inc.(as restated) |  |  | 16091 |  | 16091 |
| &nbsp;&nbsp;&nbsp; Stock-based compensation |  |  | 167 |  | 167 |
| &nbsp;&nbsp;&nbsp; Net loss (as restated) | - | - | - | (2095) | (2095) |
|  **Balance as of March 31, 2021** | **147984230** | $**-** | $**16258** | $**(2095)** | $**14163** |
| &nbsp;&nbsp;&nbsp; Stock-based compensation |  |  | 2526 |  | 2526 |
| &nbsp;&nbsp;&nbsp; Net loss (as restated) | **-** | - | - | (3604) | (3604) |
|  **Balance as of March 31, 2022** | **147984230** | $**-** | $**18784** | $**(5699)** | $**13085** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Predecessor** | **Predecessor** | **Predecessor** | **Predecessor** | **Predecessor** | **Predecessor** |
|  | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Additional<br> Paid in**<br>**Capital** | **Accumulated**<br>**Deficit** | **Total<br> Stockholders'**<br>**Equity** |
| **Balance as of April 1, 2020** | 147984230 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5 | $11610 | $(8186) | $3429 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation |  |  | 38 |  | 38 |
| &nbsp;&nbsp;&nbsp;Net loss | - | - | - | (1169) | (1169) |
| **Balance as of June 30, 2020** | 147984230 | $5 | $11648 | $(9355) | $2298 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**COURTSIDE GROUP, INC.**

**Consolidated Statements of Cash Flows**

***(In thousands)***

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended<br> March 31,<br> 2022 (Successor)** | **July 1,<br> 2020<br> to March 31,<br> 2021<br> (Successor)** | **April 1,<br> 2020<br> to June 30,<br> 2020<br> (Predecessor)** |
|  **Cash Flows from Operating Activities:** | **(Restated)** | **(Restated)** |  |
| &nbsp;&nbsp;&nbsp; Net loss | $(3604) | $(2095) | $(1169) |
| &nbsp;&nbsp;&nbsp; Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 634 | 560 | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation | 2526 | 167 | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forgiveness of PPP Loans | (1103) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for doubtful accounts | 62 | 37 |  |
| &nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | (4068) | (74) | 292 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | (253) | 25 | 701 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred revenue |  | (660) | (292) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Related party receivable/payables | 1979 | 698 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and accrued liabilities | 1839 | 1628 | (31) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash (used in) provided by operating activities | (1988) | 286 | (436) |
|  **Cash Flows from Investing Activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash acquired in the acquisition of PodcastOne |  | 1286 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of property and equipment | (283) | (88) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash (used in) provided by investing activities | (283) | 1198 | - |
|  **Cash Flows from Financing Activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp; Proceeds from note payable | - | 604 | 471 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | - | 604 | 471 |
|  Net change in cash and cash equivalents | (2271) | 2088 | 35 |
|  Cash and cash equivalents, beginning of period | 3374 | 1286 | 1251 |
|  **Cash and cash equivalents, end of period** | $1103 | $3374 | 1286 |
|  **Supplemental disclosure of cash flow information:** |  |  |  |
| &nbsp;&nbsp;&nbsp; Cash paid for income taxes | $- | $- | $- |
| &nbsp;&nbsp;&nbsp; Cash paid for interest | $- | $- | $- |
|  **Supplemental disclosure of non-cash investing and financing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capital contribution from parent for acquisition of PodcastOne | $- | $16091 | $- |

---

The accompanying notes are an integral part of these consolidated financial statements.

**COURTSIDE GROUP, INC.**

**Notes to the Consolidated Financial Statements** 

**For the Period from April 1, 2020 to June 30, 2020 (Predecessor) and July 1, 2020 to March 31, 2021<br> (Successor) and for the Year Ended March 31, 2022** 

**Note 1 — Organization and Basis of Presentation**

*<u>Organization</u>*

Courtside Group, Inc. ("we," "us," "our", the "Company" or "PodcastOne") is a Delaware corporation headquartered in Beverly Hills, California and is doing business as PodcastOne. The Company is a leading podcast platform and publisher that makes its content available to audiences via all podcasting distribution platforms, including its website (www.podcastone.com), its PodcastOne app, Apple Podcasts, Spotify, Amazon Music and more.

The Company was incorporated in the State of Delaware on February 25, 2014, and is a wholly owned subsidiary of LiveOne, Inc. ("LiveOne"). On July 1, 2020, LiveOne through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., acquired the Company (see Note 4 – Business Combinations). The Company has two wholly owned subsidiaries, Courtside, LLC, a Delaware limited liability company, and PodcastOne Sales, LLC, a California limited liability company.

*<u>Successor and Predecessor Periods</u>*

References to "Successor" or "Successor Company" relate to the consolidated financial position and results of operations of the Company subsequent to July 1, 2020, the date when the acquisition of PodcastOne was completed by LiveOne. References to "Predecessor" relate to the consolidated financial position and results of operations of the Company between April 1, 2020 and June 30, 2020.

*<u>Basis of Presentation</u>*

The results of operations and financial position of the Company are consolidated with LiveOne's financial statements and that these financial statements have been derived as if the Company had operated on a standalone basis during the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021. The amounts recorded for related party transactions with LiveOne may not be considered arm's length transactions and therefore, the financial statements may not necessarily reflect the Company's results of operations, financial position and cash flows had the Company engaged in such transactions with an unrelated third party during the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021. Accordingly, the Company's historical financial information is not necessarily indicative of what the Company's results of operations, financial position and cash flows will be in the future, if and when the Company contracts at arm's length with unrelated third parties for services they receive from LiveOne.

The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the ASC and Accounting Standards Updates ("ASU") of the Financial Accounting Standards Board ("FASB").

*<u>Going Concern and Liquidity</u>*

The Company's financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

The Company's principal sources of liquidity have historically been its debt issuances and its cash and cash equivalents (which cash, cash equivalents amounted to $1.1 million as of March 31, 2022). The Company has an accumulated deficit of $5.7 million and had a working capital deficiency of $1.2 million as of March 31, 2022. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern within one year from the date that these financial statements are filed. The Company's 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 the Company be unable to continue as a going concern.

The Company's ability to continue as a going concern is dependent on its ability to execute its growth strategy and on its ability to raise additional funds. The continued spread of the novel coronavirus disease ("COVID-19") and uncertain market conditions may limit the Company's ability to access capital, may reduce demand for its services and may negatively impact its ability to retain key personnel. Management may seek additional funds, primarily through the issuance of equity and/or debt securities for cash to operate the Company's business. No assurance can be given that any future financing will be available or, if available, that it be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain terms that result in undue restrictions on its operations, in the case of debt financing or cause substantial dilution for its stockholders, in case of equity and/or convertible debt financing. If the Company is unable to obtain sufficient financing when needed, the Company 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.

*<u>Principles of Consolidation</u>*

The financial statements include the accounts of the Company and its wholly owned subsidiaries. Acquisitions are included in the Company's consolidated financial statements from the date of the acquisition. The Company uses purchase accounting for its acquisitions, which results in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. All intercompany balances and transactions have been eliminated in consolidation.

 

**Note 2 — Summary of Significant Accounting Policies**

 

*<u>COVID-19</u>*

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic. The global impact of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets creating increasing volatility and overall uncertainty. The Company began to experience modest adverse impacts of the COVID-19 pandemic in the fourth quarter of fiscal year ended March 31, 2020 and which became more adverse throughout the fiscal year ended March 31, 2021 and up to the third quarter of fiscal year ended March 31, 2022. Although the impact has subsided, the Company expects to continue experiencing modest adverse impacts throughout the fiscal year ending March 31, 2023. During the fiscal year ended March 31, 2021, the Company enacted several initiatives to counteract these near-term challenges, including salary reductions and obtaining a Paycheck Protection Program ("PPP") loan (see Note 8 - Notes Payable).

*<u>Use of Estimates</u>*

The preparation of the Company's consolidated financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue, allowance for doubtful accounts, the assigned value of acquired assets and assumed and contingent liabilities associated with business combinations and the related purchase price allocation, useful lives and impairment of property and equipment, intangible assets, goodwill and other assets. Actual results could differ materially from those estimates. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. Given the overall uncertainty surrounding the COVID-19 pandemic, there is a reasonable possibility that actual results could differ from those estimates and such differences could be material to the financial position and results of operations, specifically in assessing when the collectability of revenue related consideration is probable, and the impairment assessment of goodwill, indefinite lived assets or long-lived assets that are depreciated or amortized.

*<u>Revenue Recognition Policy</u>*

The Company accounts 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 the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company uses the expected value method to estimate the value of variable consideration on advertising 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 services are rendered as the amounts reflect the consideration the Company is entitled to and relate specifically to the Company's efforts to satisfy its 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.

*<u>Practical Expedients</u>*

The Company elected the practical expedient and recognized the incremental costs of obtaining a contract, if any, as an expense when incurred if the amortization period of the asset that would have been recognized is one year or less.

 *<u>Gross Versus Net Revenue Recognition</u>*

The Company reports revenue on a gross basis for agency contracts based on management's assessment of whether the Company acts as a principal or agent in the transaction and is evaluated on a transaction-by-transaction basis. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable but does not include any revenue sharing expenses. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service prior to transfer to the customer. The gross amount of revenue recognized is equal to the amounts received from our customer, gross of revenue sharing expenses owed to the content creators.

*<u>Advertising Revenue</u>*

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. The Company 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 the Company enters into barter transactions involving advertising provided in exchange for goods and services. Revenue from barter transactions is recognized based on delivery of impressions and in the same manner as described above. Services received are charged to expense when received or utilized. If services are received prior to the delivery of impressions, a liability is recorded. If delivery of impressions has occurred before the receipt of goods or services, a receivable is recorded. Barter revenue for the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021 was $4.3 million and $3.5 million, respectively.

*<u>Cost of Sales</u>*

Cost of sales consists of direct costs comprised of revenue sharing expenses owed to content creators and commissions.

 

*<u>Sales and Marketing</u>*

Sales and Marketing include the direct and indirect costs related to the Company's event advertising and marketing. Additionally, sales and marketing include merchandising advertising and royalty costs. Advertising expenses to promote the Company's services are expensed as incurred. Advertising expenses included in sales and marketing expense were $0.2 million and $0.1 million for the year ended March 31, 2022 and during the period July 1, 2020 to March 31, 2021, respectively.

 

 *<u>Allocation of Costs</u>*

The Company's consolidated financial statements include an allocation of costs that have been incurred by LiveOne on the Company's behalf. Such expenses incurred include, but are not limited to, salaries, benefits, share-based compensation expense, insurance, accounting, tax and legal services. Such expenses were allocated to the Company based upon certain assumptions and estimates that were made in order to allocate a reasonable share of such expenses to the Company, so that the Company's consolidated financial statements reflect substantially all costs of doing business. The authoritative guidance to allocate such costs is set forth in Staff Accounting Bulletin, or SAB Topic 1-B "*Allocations of Expenses and Related Disclosures in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity*."

Had the Company been operating on a stand-alone basis, the cost allocated would not be materially different for the year ended March 31, 2022 and the period July 1, 2020 to March 31, 2021, respectively.

 

*<u>Product Development</u>*

Product development costs not capitalized are primarily expenses for research and development, product and content development activities, including internal software development and improvement costs which have not been capitalized by the Company.

 

 

*<u>Stock-Based Compensation</u>*

Stock-based compensation is allocated to the Company from its parent LiveOne based on the amount of stock-based compensation granted to employees of the Company in the form of stock-based compensation of LiveOne in accordance with SAB Topic 1-B "*Allocations of Expenses and Related Disclosures in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity*."

LiveOne measures stock-based compensation cost 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 an accelerated basis. LiveOne accounts for awards with graded vesting as if each vesting tranche is valued as a separate award. LiveOne uses the Black-Scholes-Merton option pricing model to determine the grant date fair value of stock options. This model requires LiveOne 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. LiveOne uses a predicted volatility of its stock price during the expected life of the options that is based on the historical performance of LiveOne's stock price as well as including an estimate using guideline companies. The expected term is computed using the simplified method as LiveOne's best estimate given its lack of actual exercise history. LiveOne has 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 option. Management believes that the fair value of the stock options is more reliably measured than the fair value of the services received. Compensation expense resulting from granted restricted stock units and restricted stock awards is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Stock-based awards are comprised principally of stock options, restricted stock, restricted stock units ("RSUs"), and restricted stock awards ("RSAs"). Forfeitures are recognized as incurred. LiveOne records the fair value of these equity-based awards and expense at their cost ratably over related vesting periods.

*<u>Income Taxes</u>*

The Company accounts for income taxes using the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Company's consolidated statements of operations in the period that includes the enactment date.

*<u>Earnings (Loss) Per Share</u>*

Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted-average number of common shares and the dilutive effect of contingent shares outstanding during the period. Potentially dilutive contingent shares consist of stock options issued to employees, directors, vendors and consultants, restricted stock units, and convertible notes would be excluded from the diluted earnings per share calculation because their effect is anti-dilutive.

Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.

*<u>Business Combinations</u>*

The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the underlying net tangible and intangible assets acquired, based on their respective fair values. The excess of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management's judgment and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses and cash flows, weighted average cost of capital, discount rates, estimates of customer turnover rates, estimates of terminal values, and royalty rates.

*<u>Cash and Cash Equivalents</u>*

Cash and cash equivalents include all highly liquid investments with original maturities, when purchased, of three months or less.

The following table provides amounts included in cash and cash equivalents presented in the Company's consolidated statements of cash flows for the year ended March 31, 2022 and during the period from July 1, 2020 to March 31, 2021 (in thousands):

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| | | |
|:---|:---|:---|
|  | **March 31, <br> 2022** | **March 31,<br> 2021** |
| Total cash and cash equivalents | $1103 | $3374 |

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*<u>Allowance for Doubtful Accounts</u>*

The Company evaluates the collectability of its accounts receivable based on a combination of factors. Generally, it records specific reserves to reduce the amounts recorded to what it believes will be collected when a customer's account ages beyond typical collection patterns, or the Company becomes aware of a customer's inability to meet its financial obligations.

The Company believes that the credit risk with respect to trade receivables is limited due to the large and established nature of its largest customers and the nature of its membership receivables. At March 31, 2022, the Company had one customer that made up 33% of the total accounts receivable balance. At March 31, 2021, the Company had three customers that made up 16%, 11% and 11% of the total accounts receivable balance.

The Company's accounts receivable at March 31, 2022 and 2021 are as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2022** | **March 31,**<br>**2021** |
| &nbsp;&nbsp;&nbsp;Accounts receivable, gross | $8094 | $4025 |
| &nbsp;&nbsp;&nbsp;Less: Allowance for doubtful accounts | (99) | (37) |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | $7995 | $3988 |

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 *<u>Related Party Receivable and Payables</u>*

LiveOne has historically maintained a lending relationship with the Company in order to supplement the Company's working capital needs. As of March 31, 2022 and 2021, the net payable was $2.7 million and $0.7 million as a result of cash being transferred to the Company to pay for operating expenses. LiveOne does not charge interest on these borrowings.

*<u>Property and Equipment</u>*

Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve service potential are also capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal repairs and maintenance are expensed as incurred. The Company capitalizes certain costs related to the development of its platform and other software applications for internal use. In accordance with authoritative guidance, the Company begins to capitalize its costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. The Company stops capitalizing these costs when the software is substantially complete and ready for its intended use, including the completion of all significant testing. These costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally estimated to be three years. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditure will result in additional functionality and expense costs incurred for maintenance and minor upgrades and enhancements. Costs incurred prior to meeting these criteria together with costs incurred for training and maintenance are expensed as incurred and recorded within product development expenses in the Company's consolidated statements of operations.

Depreciation is recorded using the straight-line method over the assets' estimated useful lives, which are generally as follows: computer, machinery, and software equipment (3 to 5 years), furniture and fixtures (3 to 5 years), leasehold improvements are depreciated over the shorter of the estimated useful life or the lease term and capitalized software (3 years).

The Company evaluates the carrying value of its property and equipment if there are indicators of potential impairment. If there are indicators of potential impairment, the Company performs an analysis to determine the recoverability of the asset group carrying value by comparing the expected undiscounted future cash flows to the net book value of the asset group. If it is determined that the expected undiscounted future cash flows are less than the net book value of the asset group, the excess of the net book value over the estimated fair value is recorded in the Company's consolidated statements of operations. Fair value is generally estimated using valuation techniques that consider the discounted cash flows of the asset group using discount and capitalization rates deemed reasonable for the type of assets, as well as prevailing market conditions, appraisals, recent similar transactions in the market and, if appropriate and available, current estimated net sales proceeds from pending offers.

*<u>Goodwill and Indefinite-Lived Assets</u>*

Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is carried at cost. Acquired trademarks and trade names are assessed as indefinite lived assets if there are no foreseeable limits on the periods of time over which they are expected to contribute cash flows. Goodwill and indefinite-lived assets are not amortized, but are subject to an annual impairment testing, as well as between annual tests when events or circumstances indicate that the carrying value may not be recoverable. We perform our annual impairment testing at January 1 of each year.

The Company's annual goodwill impairment test is performed at the reporting unit level. The Company generally tests goodwill for possible impairment by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If a qualitative assessment is not used, or if the qualitative assessment is not conclusive, a quantitative impairment test is performed. If a quantitative test is performed, the Company determines the fair value of the related reporting unit and compares this value to the recorded net assets of the reporting unit, including goodwill. The fair value of the Company's reporting unit is determined using a market approach based on quoted prices in active markets. In the event the recorded net assets of the reporting unit exceed the estimated fair value of such assets, an impairment charge is recorded. Based on the Company's annual impairment assessment, no impairments of goodwill were identified during the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021, respectively.

Estimations and assumptions regarding, future performance, results of the Company's operations and comparability of its market capitalization and net book value will be used.

 

*<u>Intangible Assets with Finite Useful Lives</u>*

The Company has certain finite-lived intangible assets that were initially recorded at their fair value at the time of acquisition. These intangible assets consist of Intellectual Property and Content Creator Relationships resulting from business combinations. Intangible assets with finite useful lives are amortized using the straight-line method over their respective estimated useful lives, which are generally as follows: Brand and Trade Names (10 years), Customer, Content Creator (2 years).

The Company reviews all finite lived intangible assets for impairment when circumstances indicate that their carrying values may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess carrying value over the fair value in its consolidated statements of operations. In our assessment for potential impairment we identified triggering events due to the events resulting from the global COVID-19 pandemic which caused an overall advertising spend decrease from our advertising partners. No impairment losses have been recorded during the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021, respectively. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown, which may impair the Company's asset values, including intangible assets. 

 

*<u>Fair Value Measurements – Valuation Hierarchy</u>*

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (i.e., an exit price). The Company uses the three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company's own assumptions about the data market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized below:

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| | |
|:---|:---|
| Level 1 | Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| Level 2 | Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. |
| Level 3 | Valuation is based upon other unobservable inputs that are significant to the fair value measurement. |

---

The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. Proper classification of fair value measurements within the valuation hierarchy is considered each reporting period. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. There have been no transfers between levels.

*<u>Notes Payable – Paycheck Protection Program ("PPP") Loans</u>*

 

In response to the COVID-19 pandemic, the PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and administered by the U.S. Small Business Administration ("SBA"). Companies who met the eligibility requirements set forth by the PPP could qualify for PPP loans provided by local lenders, which supports payroll, rent and utility expenses ("qualified expenses"). If the loan proceeds are fully utilized to pay qualified expenses over the covered period, as further defined by the PPP, the full principal amount of the PPP loan may qualify for loan forgiveness, subject to potential reduction based on the level of full-time employees maintained by the organization during the covered period as compared to a baseline period. During the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021, the Company received confirmation from the SBA that $1.1 million and $0 million, respectively, in PPP loans (see Note 8 – Notes Payable) were forgiven.

As the loans were forgiven and the Company was released from being the primary obligor, the Company recognized income in the amount forgiven in accordance with ASC 470-20. The Company recognized a gain on forgiveness of the PPP loans of $1.1 million during the year ended March 31, 2022, and is included in total other expense, net in the accompanying consolidated statements of operations.

*<u>Concentration of Credit Risk</u>*

The Company maintains cash balances at commercial banks. Cash balances commonly exceed the $250,000 amount insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts, and management believes that the Company is not exposed to any significant credit risk with respect to such cash and cash equivalents.

*<u>Recently Issued Accounting Pronouncements</u>*

In June 2016, the FASB issued ASU No. 2016-13, *Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments*, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The guidance is effective for fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC's definition, and interim periods within those fiscal years. The Company is currently evaluating the impact this guidance will have on the Company's consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, *Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40).* The FASB issued this ASU to address issues identified as a result of the complexity associated with GAAP for certain financial instruments with characteristics of liabilities and equity. Complexity associated with the accounting is a significant contributing factor to numerous financial statement restatements and results in complexity for users attempting to understand the results of applying the current guidance. In addressing the complexity, the FASB focused on amending the guidance on convertible instruments and the guidance on the derivatives scope exception for contracts in an entity's own equity. For convertible instruments, the FASB decided to reduce the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The FASB concluded that eliminating certain accounting models simplifies the accounting for convertible instruments, reduces complexity for preparers and practitioners, and improves the decision usefulness and relevance of the information provided to financial statement users. In addition to eliminating certain accounting models, the FASB also decided to enhance information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance on the basis of feedback from financial statement users. The FASB decided to amend the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions. The FASB observed that the application of the derivatives scope exception guidance results in accounting for some contracts as derivatives while accounting for economically similar contracts as equity. The FASB also decided to improve and amend the related EPS guidance. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The FASB decided to allow entities to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact this ASU will have on its financial statements and related disclosures, as well as the timing of adoption and the application method.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statement presentation or disclosures.

 **Note 3 – Restatement of Prior Financial Information**

On July 1, 2020, LiveOne's wholly owned subsidiary, LiveXLive PodcastOne, Inc., acquired 100% of the equity interests of the Company for net consideration of $16.1 million consisting of 5,363,636 shares of LiveOne's common stock with a fair value of $14.6 million, contingent consideration with a fair value of $1.1 million and an additional true-up of 203,249 shares of LiveOne's common stock during the third quarter of fiscal 2021 valued at $0.4 million that was issued as part of the final purchase price consideration. As a result, LiveOne pushed down the contingent consideration to the Company on the date of acquisition in the amount of $1.1 million to the Company's financial statements and booked the marked to market change in value at each reporting period. In accordance with ASC 805-50-30-12, the liability for the contingent consideration should not have been pushed down as it was an obligation of LiveOne.

The Company has evaluated the financial statement impact in each of the previously filed reporting periods effected, and concluded that the correction of the error in the accounting for contingent consideration is quantitatively material to its previously filed financial statements. Accordingly, the Company has restated its consolidated financial statements as of March 31, 2022 and 2021 and for the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021 (Successor), in accordance with Accounting Standards Codification ("ASC") Topic 250, *Accounting Changes and Error Corrections*. The corresponding footnotes have been restated for the adjustments noted.

The effect of the correction of this error on the balance sheet as of March 31, 2022 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31, 2022<br> As Previously<br> Reported** | **Adjustments** | **March 31, 2022<br> As Restated** |
|  Contingent Consideration | $2965 | $(2965) | $— |
|  Total Liabilities | $13807 | $(2965) | $10842 |
|  Additional paid in capital | $17684 | $1100 | $18784 |
|  Accumulated deficit | $(7564) | $1865 | $(5699) |
|  Total Shareholders' Equity | $10120 | $2965 | $13085 |

---

The effect of the correction of this error on the statement of stockholders' equity as of March 31, 2022 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31, 2022<br> As Previously<br> Reported** | **Adjustments** | **March 31, 2022<br> As Restated** |
|  Net loss | $(4146) | $542 | $(3604) |
|  Additional paid in capital | $17684 | $1100 | $18784 |
|  Accumulated deficit | $(7564) | $1865 | $(5699) |
|  Total Shareholders' Equity | $10120 | $2965 | $13085 |

---

The effect of the correction of this error on the statement of operations for the twelve month period ended March 31, 2022 is summarized as follows (in thousands, except per share data):

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31, 2022<br> As Previously<br> Reported** | **Adjustments** | **March 31, 2022<br> As Restated** |
|  Change in fair value of contingent consideration | $(542) | $542 | $— |
|  Total other income (expense), net | $556 | $542 | $1098 |
|  Net loss | $(4146) | $542 | $(3604) |
|  Net loss per share (basic and diluted) | $(0.03) | $0.01 | $(0.02) |

---

The effect of the correction of this error on the operating activities of the statement of cash flows for the twelve-month period ended March 31, 2022 is summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31, 2022<br> As Previously<br> Reported** | **Adjustments** | **March 31, 2022<br> As Restated** |
|  Net loss | $(4146) | $542 | $(3604) |
|  Change in fair value of contingent consideration liability | $542 | $(542) | $— |
|  Net cash used in operating activities | $(1988) | $— | $(1988) |

---

The effect of the correction of this error on the balance sheet and the statement of stockholders' equity as of March 31, 2021 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31, 2021<br> As Previously<br> Reported (Successor)** | **Adjustments** | **March 31, 2021<br> As Restated (Successor)** |
|  Contingent Consideration | $2423 | $(2423) | $— |
|  Total Liabilities | $13587 | $(2423) | $11164 |
|  Additional paid in capital | $15158 | $1100 | $16258 |
|  Accumulated deficit | $(3418) | $1323 | $(2095) |
|  Total Shareholders' Equity | $11740 | $2423 | $14163 |

---

The effect of the correction of this error on the statement of stockholders' equity as of March 31, 2021 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31, 2021<br> As Previously<br> Reported** | **Adjustments** | **March 31, 2022<br> As Restated** |
|  Contribution form LiveOne, Inc | $14991 | $1100 | $16091 |
|  Net loss | $(3418) | $1323) | $(2095) |
|  Additional paid in capital | $15158 | $1100 | $16258 |
|  Accumulated deficit | $(3418) | $1323 | $(2095) |
|  Total Shareholders' Equity | $11740 | $2423 | $14163 |

---

The effect of the correction of this error on the statement of operations for the period from July 1, 2020 to March 31, 2021 is summarized as follows (in thousands, except per share data):

---

| | | | |
|:---|:---|:---|:---|
|  | **July 1, 2020<br> through<br> March 31, 2021 <br> As Previously<br> Reported (Successor)** | **Adjustments** | **July 1, 2020<br> through<br> March 31, 2021 <br> As Restated (Successor)** |
| Change in fair value of contingent consideration | $(1323) | $1323 | $— |
| Total other income (expense), net | $(1350) | $1323 | $(27) |
| Net loss | $(3418) | $1323 | $(2095) |
| Net loss per share (basic and diluted) | $(0.02) | $0.01 | $(0.01) |

---

The effect of the correction of this error on the operating activities of the statement of cash flows for the period from July 1, 2020 to March 31, 2021 is summarized as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **July 1, 2020<br> through<br> March 31, 2021 <br> As Previously<br> Reported (Successor)** | **Adjustments** | **July 1, 2020<br> through<br> March 31, 2021 <br> As Restated (Successor)** |
|  Net loss | $(3418) | $1323 | $(2095) |
|  Change in fair value of contingent consideration liability | $1323 | $(1323) | $— |
|  Net cash provided by operating activities | $286 | $— | $286 |

---

The correction of this error did not impact cash provided by (used in) investing activities, or cash provided by financing activities for the period July 1, 2020 through March 31, 2021.

 **Note 4 — Business Combinations**

On July 1, 2020, LiveOne's wholly owned subsidiary, LiveXLive PodcastOne, Inc., acquired 100% of the equity interests of the Company for net consideration of $16.1 million consisting of 5,363,636 shares of LiveOne's common stock with a fair value of $14.6 million, net of a 24% discount for lack of marketability described below, contingent consideration with a fair value of $1.1 million and an additional true-up of 203,249 shares of LiveOne's common stock during the third quarter of fiscal year ended March 31, 2021 valued at $0.4 million, net of a 24% discount for lack of marketability described below, that was issued as part of the final purchase price consideration. The shares of LiveOne's common stock were subject to a twelve-month lock-up period and remains subject to sales volume restrictions. In connection with the acquisition, the accounts of the Company were adjusted using the push down basis of accounting to recognize the allocation of the net assets acquired which was determined to be $16.1 million. In accordance with the push down basis of accounting, the Company's net assets were adjusted to their fair values as of the date of the acquisition based upon an independent appraisal.

 *Contingent Consideration recorded on LiveOne's books*

If, during the period commencing after May 7, 2020 and ending on July 1, 2022, for five consecutive trading days the closing market price of LiveOne's common stock exceeded $5.00 per share, an additional aggregate payment of $3.0 million in cash was to be paid to the sellers of PodcastOne in accordance with their respective pro rata percentage within five business days of the second anniversary of the closing date (July 1, 2022). The fair value of this contingent consideration liability on the closing date of July 1, 2020 was estimated at $1.1 million using a Monte Carlo simulation and the significant unobservable input included a credit yield of 21.9%. During the period from July 1, 2020 to March 2021, the closing price of LiveOne's common stock exceeded $5.00 per share for the requisite five consecutive days, therefore the contingent liability was valued at $2.4 million and $3.0 million as of March 31, 2021 and 2022, respectively. As of March 31, 2021, the contingent consideration liability was discounted based on the effective market rate as the liability would not be settled until July 2022.

Goodwill resulted from the acquisition as it is intended to augment and diversify LiveOne's revenue streams. The Company accounted for the acquisition as a business combination. As a result of the acquisition of the stock of PodcastOne, the goodwill is not deductible for tax purposes. The contingent consideration was not pushed down to the PodcastOne subsidiary at the time of the acquisition and for carve-out purposes as it was deemed an obligation of the Company's parent, LiveOne. The net consideration for the acquisition of the equity interests of $16.1 million was recorded as a contribution by LiveOne to the Company in the Consolidated Statement of Stockholders' Equity.

The following table summarizes the fair value of the assets acquired and liabilities assumed in the PodcastOne acquisition (in thousands):

---

| | | |
|:---|:---|:---|
| **Asset Type** | **Weighted<br> Average <br> Amortization<br> Period <br> (Years)** | **Fair Value** |
| Cash and cash equivalents |  | $1286 |
| Accounts receivable |  | 3951 |
| Prepaid expense and other assets |  | 317 |
| Property and equipment |  | 119 |
| Content creator relationships | 1.6 | 772 |
| Brand and trade names | 10 | 1010 |
| Goodwill |  | 12041 |
| Accounts payable and accrued liabilities |  | (2934) |
| Deferred tax asset |  | 972 |
| Allowance for deferred tax asset |  | (972) |
| Note payable |  | (471) |
| Net assets acquired |  | $16091 |

---

The fair value of the assets acquired includes accounts receivable of $4.0 million. The gross amount due under contracts is $4.2 million, of which $0.2 million is expected to be uncollectible. LiveOne did not acquire any other class of receivable as a result of the acquisition of PodcastOne.

As a result of the acquisition, LiveOne acquired 147,984,230 shares of the Company's common stock and eliminated the historical equity balances of the predecessor company which consisted of a balance of $11.6 million in additional paid in capital and $9.4 million of accumulated deficit.

 **Note 5 — Property and Equipment**

The Company's property and equipment at March 31, 2022 and 2021 was as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br> **2022** | **March 31,**<br> **2021** |
| Property and equipment, net |  |  |
| &nbsp;&nbsp;&nbsp; Computer, machinery, and software equipment | $109 | $96 |
| &nbsp;&nbsp;&nbsp; Furniture and fixtures | 14 | 14 |
| &nbsp;&nbsp;&nbsp; Leasehold improvements | 24 | 24 |
| &nbsp;&nbsp;&nbsp; Capitalized internally developed software | 343 | 72 |
| Total property and equipment | 490 | 206 |
| &nbsp;&nbsp;&nbsp; Less accumulated depreciation and amortization | (243) | (111) |
| Total property and equipment, net | $247 | $95 |

---

Depreciation expense was $0.1 million and $0.1 million for the year ended March 31, 2022 and during the period from July 1, 2020 to March 31, 2021, respectively.

 **Note 6 — Goodwill and Intangible Assets**

*<u>Goodwill</u>*

The Company currently has one reporting unit. The following table presents the changes in the carrying amount of goodwill for the year ended March 31, 2022 (in thousands):

---

| | |
|:---|:---|
|  | **Goodwill** |
| Balance as of March 31, 2021 | $12041 |
| &nbsp;&nbsp;&nbsp;Acquisitions | - |
| Balance as of March 31, 2022 | $12041 |

---

*<u>Finite-Lived Intangible Assets</u>*

The Company's finite-lived intangible assets were as follows as of March 31, 2022 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **Gross<br> Carrying<br> Value** | **Accumulated<br> Amortization** | **Net<br> Carrying<br> Value** |
| Content creator relationships | $772 | $772 | $- |
| Brand and trade names | 1010 | 179 | 831 |
| Total | $1782 | $951 | $831 |

---

The Company's finite-lived intangible assets were as follows as of March 31, 2021 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **Gross<br> Carrying<br> Value** | **Accumulated<br> Amortization** | **Net<br> Carrying<br> Value** |
| Content creator relationships | $772 | $370 | $402 |
| Brand and trade names | 1010 | 78 | 932 |
| Total | $1782 | $448 | $1334 |

---

The Company's amortization expense on its finite-lived intangible assets was $0.5 million and $0.4 million for the year ended March 31, 2022 and during the period from July 1, 2020 to March 31, 2021, respectively.

The Company expects to record amortization of intangible assets for fiscal years ending March 31, 2023 and future fiscal years as follows (in thousands):

---

| | |
|:---|:---|
| **For Years Ending March 31,** | |
| &nbsp;&nbsp;&nbsp;2023 | $101 |
| &nbsp;&nbsp;&nbsp;2024 | 101 |
| &nbsp;&nbsp;&nbsp;2025 | 101 |
| &nbsp;&nbsp;&nbsp;2026 | 101 |
| &nbsp;&nbsp;&nbsp;2027 | 101 |
| &nbsp;&nbsp;&nbsp;Thereafter | 326 |
|  | $831 |

---

 **Note 7 — Accounts Payable and Accrued Liabilities**

Accounts payable and accrued liabilities at March 31, 2022 and 2021 were as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **March,**<br>**2022** | **March 31,**<br>**2021** |
| Accounts payable | $2453 | $1917 |
| Accrued revenue share | 3391 | 2270 |
| Other accrued liabilities | 1554 | 977 |
|  | $6998 | $5164 |

---

Accrued revenue share can be attributed to monies owed to content creators who contribute their podcast or other media content for the Company to sell to consumers. The Company accrues a liability based on the percentage of revenue owed to each content creator at the time of sale.

 **Note 8 — Notes Payable**

*<u>PPP Loans</u>*

On July 1, 2020, LiveOne acquired the Company, which had previously obtained a PPP loan with a balance of $0.5 million as of March 31, 2021. In May 2021, the Company received confirmation from the SBA that the entire balance of such PPP loan was forgiven as a result of the Company's application and acceptance under the terms of the CARES Act.

On March 20, 2021, the Company received proceeds of $0.6 million from a second loan (the "Second PPP Loan") under the PPP of the CARES Act, which the Company intended to use to retain employees and for other qualifying expenses. The Second PPP Loan matures on March 20, 2026 and bears annual interest at a rate of 1.0%. In March 2022, the Company received confirmation from the SBA that the entire balance of the Second PPP Loan was forgiven as a result of the Company's application and acceptance under the terms of the CARES Act.

During the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021, the Company recorded a gain in other income of $1.1 million and $0, respectively.

 **Note 9 — Related Party Transactions**

During the year ended March 31, 2022 and during the period from July 1, 2020 to March 31, 2021, the Company was allocated expenses by LiveOne, its parent company, attributed to the overhead expenses incurred on behalf of the Company. The amount allocated to the Company from LiveOne for the year ended March 31, 2022 and during the period from July 1, 2020 to March 31, 2021, was $1.5 million and $0.5 million, respectively. As of March 31, 2022 and 2021, the Company had a related party payable owed to LiveOne of $3.8 million and $4.9 million, respectively which primarily consisted of expenses related to overhead expenses paid on behalf of the Company (See Note 2 – Significant of Significant Accounting Policies). As of March 31, 2022 and 2021, the Company had a related party receivable from LiveOne of $1.2 million and $4.2 million, respectively which primarily consisted of cash allocated to LiveOne.

On July 1, 2020, LiveOne made a contribution of $15.0 million to the Company to acquire PodcastOne.

During the year ended March 31, 2022, the Company entered into a production agreement for a podcast and related show with an affiliate of Mr. Wachsberger, the Company's director nominee.

 **Note 10 — Commitments and Contingencies**

*<u>Contractual Obligations</u>*

As of March 31, 2022, the Company is obligated under agreements with its content providers and other contractual obligations to make guaranteed payments as follows: $2.5 million for the fiscal year ending March 31, 2023, and $0.1 million for the fiscal year ending March 31, 2024.

On a quarterly basis, the Company records the greater of the cumulative actual content acquisition costs incurred or the cumulative minimum guarantee based on forecasted usage for the minimum guarantee period. The minimum guarantee period of time is the period that the minimum guarantee relates to, as specified in each agreement, which may be annual or a longer period. The cumulative minimum guarantee, based on forecasted usage, considers factors such as listening hours, revenue, members, and other terms of each agreement that impact the Company's expected attainment or recoupment of the minimum guarantees based on the relative attribution method.

*<u>Employment Agreements</u>*

As of March 31, 2022, the Company has employment agreements with two named executive officers that provide salary payments of $0.3 million and $0.4 million each and target bonus compensation of up to $0.4 million on an annual basis. The terms of the employment agreements were from January and February 2021 to January and February 2023.

*<u>Legal Proceedings</u>*

From time to time, the Company is involved in legal proceedings and other matters arising in connection with the conduct of its business activities. Many of these proceedings may be at preliminary stages and/or seek an indeterminate amount of damages. In the opinion of management, after consultation with legal counsel, such routine claims and lawsuits are not significant and we do not currently expect them to have a material adverse effect on our business, financial condition, results of operations, or liquidity.

*<u>Parent Company Debt</u>*

 

The senior credit facility and the Harvest Notes held by the Company's parent, LiveOne, contain provisions that limit the Company's operating activities, including covenant relating to the requirement to maintain a certain amount cash at LiveOne of $7.0 million (as maybe adjusted from time to time) and of Free Cash (defined as cash on hand without any restrictions) at LiveOne. If an event of default occurs and is continuing, the lenders may among other things, terminate their obligations thereunder, accelerate their debt and require LiveOne and/or the Company to repay all amounts thereunder. For example, on October 13, 2022, a judgement was entered in favor of SoundExchange, Inc. ("SX") against LiveOne and Slacker in the United States District Court Central District of California in the amount of approximately $9.8 million. In February 2023, the parties settled the dispute. LiveOne's debt agreements with the provider of its senior credit facility contains a covenant that if a material adverse change occurs in its financial condition, or such lender reasonably believes the prospect of payment or performance of their loan is materially impaired, the lender at its option may immediately accelerate its debt and require LiveOne and the Company to repay all outstanding amounts owed thereunder. If for any reason LiveOne fails to comply with the terms of its settlement agreement with SX, its senior credit facility provider may declare an event of default and at its option may immediately accelerate its debt and require LiveOne and the Company to repay all outstanding amounts owed under the senior credit facility, which would materially adversely impact the Company's business, operating results and financial condition.

In February 2023, the Harvest Notes were exchanged for Series A Preferred Stock of LiveOne (See Note 14 - Subsequent Events), and accordingly, the covenants in the Harvest Notes debt documents no longer apply to LiveOne or the Company.

As of March 31, 2022, the Company was in full compliance with these covenants.

 **Note 11 — Employee Benefit Plan**

The Company's parent LiveOne sponsors a 401(k) plan (the "401(k) Plan") covering all of the Company's employees. Employees are eligible to participate in the 401(k) Plan the first day of the calendar month following their date of hire. The Company may make discretionary matching contributions to the 401(k) Plan on behalf of its employees up to a maximum of 100% of the participant's elective deferral up to a maximum of 5% of the employees' annual compensation. The Company's matching contributions were not material to the financial statements for the year ended March 31, 2022 and during the period from July 1, 2020 to March 31, 2021, respectively.

 **Note 12 — Stockholders' Equity** 

*<u>LiveOne's 2016 Equity Incentive Plan</u>*

LiveOne's board of directors and stockholders approved its 2016 Equity Incentive Plan, as amended (the "2016 Plan") which reserved a total of 12,600,000 shares of LiveOne's common stock for issuance. On September 17, 2020, LiveOne's stockholders approved the amendment to the 2016 Plan to increase the number of shares available for issuance under the 2016 Plan by 5,000,000 shares increasing the total up to 17,600,000 shares, which increase was formally adopted by LiveOne on June 29, 2021. Incentive awards authorized under the 2016 Plan include, but are not limited to, nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and stock appreciation rights. If an incentive award granted under the 2016 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to LiveOne in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2016 Plan.

The Company's employees were awarded options and restricted stock awards under the 2016 Plan, therefore an allocation of the share-based compensation was made to the Company from LiveOne. The Company recognized stock-based compensation expense of $2.5 million, $0.2 million and $0.04 million during the year ended March 31, 2022, during the period from July 1, 2020 to March 31, 2021 and the period from April 1, 2020 to June 30, 2020, respectively. The total tax benefit recognized related to share-based compensation expense was $0 for the year ended March 31, 2022, during the period from July 1, 2020 to March 31, 2021 and during the period from April 1, 2020 to June 30, 2020, respectively.

*<u>Options Grants to the Company's Employees</u>*

Stock option awards are granted with an exercise price equal to the fair market value of LiveOne's common stock at the date of grant based on the closing market price of its common stock as reported on The Nasdaq Capital Market. The option awards generally vest over two to four years and are exercisable any time after vesting. The stock options expire ten years after the date of grant.

As of March 31, 2022, unrecognized compensation costs for unvested awards to employees was $0.2 million, which is expected to be recognized over a weighted-average service period of 1.59 years.

The following table provides information about LiveOne's option grants made to the Company's employees during the last two fiscal years:

---

| | | |
|:---|:---|:---|
|  | **Year ended March,** | **Year ended March,** |
|  | **2022** | **2021** |
| Number of options granted | 120000 | 165000 |
| Weighted-average exercise price per share | $0.92 | $4.10 |
| Weighted-average grant date fair value per share | $1.83 | $1.85 |

---

The grant date fair value of each of these option grants to employees was determined using the Black-Sholes-Merton option-pricing model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | **Year Ended March 31,** | **Year Ended March 31,** |
|  | **2022** | **2021** |
| Expected volatility | 77.36% - 84.98 | 53.97% - 73.61 |
| Dividend yield | -% | -% |
| Risk-free rate | 0.75% - 2.14 | 0.31% - 0.46 |
| Expected term (in years) | 5.18 – 6.85 | 5.31 – 7.0 |

---

The following table summarizes the activity of LiveOne's options issued to the Company's employees during the year ended March 31, 2022 and period from July 1, 2020 to March 31, 2020:

---

| | | |
|:---|:---|:---|
|  | **Number of Shares** | **Weighted-<br> Average<br> Exercise<br> Price per<br> Share** |
| Outstanding as of July 1, 2020 |  | $- |
| Granted | 165000 | 4.10 |
| Exercised |  |  |
| Forfeited or expired | - |  |
| Outstanding as of March 31, 2021 | 165000 | 4.10 |
| Granted | 120000 | 1.34 |
| Exercised |  |  |
| Forfeited or expired | - |  |
| Outstanding as of March 31, 2022 | 285000 | 2.93 |
| Exercisable as of March 31, 2022 | 285000 | $4.10 |

---

The weighted-average remaining contractual term for options to employees outstanding and options to employees exercisable as of March 31, 2022 was 6.05 years and 8.41 years, respectively. The intrinsic value of options to employees outstanding and options to employees exercisable was none and none, respectively, at March 31, 2022. The intrinsic value of options exercised was none and none, respectively, at March 31, 2022 and 2021.

The fair value of stock options outstanding and exercisable at March 31, 2022 was $0.9 million and $0.2 million, respectively. The fair value of stock options outstanding and exercisable at March 31, 2021 was $0.7 million and none, respectively.

*<u>Restricted Stock Units Grants</u>*

As of March 31, 2022, unrecognized compensation costs for unvested awards to employees was $0.5 million, which is expected to be recognized over a weighted-average service period of 1.84 years.

The following table provides information about LiveOne's restricted stock units grants made to the Company's employees during the last two fiscal years:

---

| | | |
|:---|:---|:---|
|  | **Year ended March 31,** | **Year ended March 31,** |
|  | **2022** | **2021** |
| Number of units granted | 500000 | 200000 |
| Weighted-average grant date fair value per share | $4.06 | $4.20 |

---

The following table summarizes the activity of LiveOne's restricted stock units issued to the Company's employees during the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021:

---

| | |
|:---|:---|
|  | **Number of Shares** |
| Outstanding as of July 1, 2020 |  |
| Granted | 205280 |
| Vested |  |
| Cancelled | (5280) |
| Outstanding as of March 31, 2021 | 200000 |
| Granted | 500000 |
| Vested | (321875) |
| Cancelled | - |
| Outstanding as of March 31, 2022 | 378125 |

---

The fair value of restricted stock units that vested during the year ended March 31, 2022 and 2021 was $1.5 million and $0.02 million, respectively.

*<u>Authorized Common Stock and Authority to Create Preferred Stock</u>*

The Company has the authority to issue up to 200,000,000 shares, consisting of 200,000,000 shares of the Company's common stock, $0.001 par value per share.

Pursuant to the Company's Amended and Restated Certificate of Incorporation which was approved by the Company's board of directors and LiveOne as the sole stockholder on December 15, 2022, the Company has the authority to issue up to 110,000,000 shares, consisting of 100,000,000 shares of the Company's common stock, $0.00001 par value per share, and 10,000,000 shares of the Company's preferred stock, $0.00001 par value per share (the "preferred stock").

The Company may issue shares of preferred stock from time to time in one or more series, each of which will have such distinctive designation or title as shall be determined by the Company's board of directors and will have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issue of such class or series of preferred stock as may be adopted from time to time by the Company's board of directors. The Company's board of directors will have the power to increase or decrease the number of shares of preferred stock of any series after the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased, the shares constituting such decrease will resume the status of authorized but unissued shares of preferred stock (See Note 14).

While the Company does not currently have any plans for the issuance of preferred stock, the issuance of such preferred stock could adversely affect the rights of the holders of common stock and, therefore, reduce the value of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the common stock until and unless the Company's board of directors determines the specific rights of the holders of the preferred stock; however, these effects may include: restricting dividends on the common stock, diluting the voting power of the common stock, impairing the liquidation rights of the common stock, or delaying or preventing a change in control of the Company without further action by the stockholders.

 **Note 13 — Income Tax Provision**

On March 27, 2020, the CARES Act was enacted in the United States. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property. The Company evaluated the provisions of the CARES Act and does not anticipate the associated impacts, if any, will have a material effect on its financial position.

The Company's income tax provision can be affected by many factors, including the overall level of pre-tax income, the mix of pre-tax income generated across the various jurisdictions in which the Company operates, changes in tax laws and regulations in those jurisdictions, changes in valuation allowances on its deferred tax assets, tax planning strategies available to the Company, and other discrete items.

The components of pretax loss and income tax (benefit) expense are as follows (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended<br> March 31,<br> 2022<br> (Successor)** | **July 1, <br> 2021<br> to March 31,<br> 2021<br> (Successor)** | **April 1, <br> 2020<br> to March 31,<br> 2021<br> (Predecessor)** |
| Loss before income taxes: |  |  |  |
| &nbsp;&nbsp;&nbsp; Domestic | $(3604) | $(2095) | $(1169) |
| &nbsp;&nbsp;&nbsp; Foreign | - | - | - |
| Total loss before income taxes | $(3604) | $(2095) | $(1169) |
| The provision (benefit) for income taxes consisted of the following: |  |  |  |
| Current |  |  |  |
| &nbsp;&nbsp;&nbsp; U.S. Federal | $- | $- | $- |
| &nbsp;&nbsp;&nbsp; State |  | (4) | 4 |
| &nbsp;&nbsp;&nbsp; Foreign | - | - | - |
| Total Current |  | (4) | 4 |
| Deferred: |  |  |  |
| &nbsp;&nbsp;&nbsp; U.S. Federal | (873) | (22) | (1597) |
| &nbsp;&nbsp;&nbsp; State | (6) | (2) | (98) |
| &nbsp;&nbsp;&nbsp; Foreign |  |  |  |
| &nbsp;&nbsp;&nbsp; Valuation allowance | 879 | 24 | 1695 |
| Total Deferred | - | - | - |
| Total (benefit) provision for income taxes | $- | $(4) | $4 |

---

The differences between income taxes expected at U.S. statutory income tax rates and the income tax provision are as follows (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended <br> March 31,<br> 2022<br> (Successor)** | **July 1, <br> 2020 <br> to March 31,<br> 2021<br> (Successor)** | **April 1, <br> 2020 <br> to June 30, <br> 2020<br> (Predecessor)** |
| Income taxes computed at Federal statutory rate | 21.00% | 21.00% | 21.00% |
| &nbsp;&nbsp;&nbsp; State income taxes | 0.14% | 0.85% | 8.05% |
| &nbsp;&nbsp;&nbsp; Nondeductible expenses | 3.25% | -0.88% | -11.95% |
| &nbsp;&nbsp;&nbsp; Change in valuation allowance | -24.39% | -20.98% | -145.45% |
| &nbsp;&nbsp;&nbsp; Other | 0.00% | 0.19% | 128.00% |
| Effective tax rate | $0.00% | $0.18% | -0.35% |

---

At March 31, 2022, the Company had available federal and state net operating loss carryforwards to reduce future taxable income of approximately $12.3 million and $2.6 million, respectively. The federal and state net operating loss carryforwards begin to expire on various dates beginning in 2034. Of the $12.3 million of federal net operating loss carryforwards, $3.5million was generated in tax years beginning before March 31, 2018 and is subject to the 20-year carryforward period ("pre-Tax Act losses"), the remaining $8.8 million can be carried forward indefinitely but is subject to the 80% taxable income limitation.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by the federal and state jurisdictions where applicable. There are currently no pending income tax examinations. The Company's tax years for 2017 and forward are subject to examination by the federal tax authorities and tax years for 2014 and forward are subject to examination by California tax authorities due to the carryforward of unutilized net operating losses.

The Company's policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of March 31, 2022 and 2021, the Company has not accrued interest or penalties related to uncertain tax positions.

Significant components of the Company's deferred income tax assets and (liabilities) are as follows as of (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Year Ended March 31,** | **Year Ended March 31,** |
|  | **2022** | **2021** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp; Net operating loss carryforwards | $2664 | $1842 |
| &nbsp;&nbsp;&nbsp; Reserves and allowances | 23 | 8 |
| &nbsp;&nbsp;&nbsp; Disallowed interest | 1 | 1 |
| &nbsp;&nbsp;&nbsp; Accrued liabilities | 63 | 138 |
| &nbsp;&nbsp;&nbsp; Other | (154) | (271) |
| &nbsp;&nbsp;&nbsp; Net deferred tax assets | 2597 | 1718 |
| Valuation allowance | (2597) | (1718) |
| Net deferred tax asset | $- | $- |

---

As the ultimate realization of the potential benefits of a portion of the Company's deferred tax assets is considered unlikely by management, the Company has offset the deferred tax assets attributable to those potential benefits through valuation allowances. Accordingly, the Company did not recognize any benefit from income taxes in the accompanying consolidated statements of operations to offset its pre-tax losses. The valuation allowance against deferred tax assets is $2.6 million and $1.7 million for the year ended March 31, 2022 and during the period from July 1, 2020 to Match 31, 2021, respectively. The valuation allowance increased by $0.9 million for the year ended March 31, 2022.

**Note 14 — Subsequent Events**

*<u>PodcastOne's Private Placement</u>*

On July 15, 2022 (the "Closing Date"), the Company completed a private placement offering (the "Financing") of unsecured convertible notes with an original issue discount of 10% (the "OID") in the aggregate principal amount of $8.8 million (the "Notes") to certain accredited investors and institutional investors (collectively, the "Purchasers"), for cash proceeds of $7.4 million, net of placement agent fees of $0.7 million, pursuant to the Subscription Agreements entered into with the Purchasers (the "Subscription Agreements"). In connection with the sale of the Notes, the Purchasers received warrants (the "Warrants") to purchase a number of shares (the "Warrant Shares") of PodcastOne's common stock, par value $0.00001 per share, as more fully discussed below. The Notes and the Warrants were issued as restricted securities in a private placement transaction exempt from the registration requirements of the Securities Act. As part of the Financing, LiveOne purchased $3 million worth of Notes. The Company intends to use the net proceeds of the Financing for working capital and general corporate purposes.

In connection with the Financing, LiveOne announced that it intends to spin-out PodcastOne as a separate public company before the end of its current fiscal year (March 31, 2023) and plans to dividend a portion of PodcastOne's common equity to LiveOne's stockholders as of a future to be determined record date, in each case subject to obtaining applicable approvals and consents, complying with applicable rules and regulations and satisfying applicable public market trading and listing requirements. Among other things, LiveOne agreed not to effect any Qualified Financing or Qualified Event (each as defined below), as applicable, unless PodcastOne's post-money valuation at the time of the Qualified Event is at least $150 million.

The Notes mature one year from the Closing Date, subject to a one-time three-month extension at PodcastOne's election (the "Maturity Date"). The Notes bear interest at a rate of 10% per annum payable on maturity. The Notes shall automatically convert into the securities of PodcastOne sold in a Qualified Financing or Qualified Event, as applicable, upon the closing of a Qualified Financing or Qualified Event, as applicable, at a price per share equal to the lesser of (i) the price equal to $60.0 million divided by the aggregate number of shares of PodcastOne's common stock outstanding immediately prior to the closing of a Qualified Financing or Qualified Event, as applicable (assuming full conversion or exercise of all convertible and exercisable securities then outstanding, subject to certain exceptions), and (ii) 70% of the offering price of the shares (or whole units, as applicable) in the Qualified Financing or 70% of the initial listing price of the shares on a national securities exchange in the Qualified Event, as applicable (the "Conversion Price"). A "Qualified Financing" means an initial public offering of PodcastOne's securities from which PodcastOne's trading market at the closing of such offering is a national securities exchange. If the initial public offering relating to the Qualified Financing is of units consisting of shares of PodcastOne's common stock and warrants, the Notes shall convert into such units. A "Qualified Event" means the direct listing of PodcastOne's securities on a national securities exchange. If a Qualified Financing or Qualified Event, as applicable, has not occurred on or before prior to the Maturity Date, the Notes shall be convertible, in whole or in part, into shares of common stock of PodcastOne at the option of the holder of the respective Notes at a price per share equal to $60,000,000 divided by the aggregate number of outstanding shares of PodcastOne's common stock as of the Maturity Date (assuming full conversion or exercise of all convertible and exercisable securities then outstanding, subject to certain exceptions) (the "Voluntary Conversion Date"). Each holder of the Notes (other than LiveOne) may at such holder's option require PodcastOne to redeem up to 45% of the principal amount of such holder's Notes (together with accrued interest thereon, but excluding the OID), in aggregate up to $3.0 million for all of the Purchasers' Notes (other than those held by LiveOne), immediately prior to the completion of the Qualified Financing or Qualified Event, as applicable, with such redemption to be made pro rata to the redeeming holders of the Notes (the "Optional Redemption").

In connection with the issuance of the Notes, each Purchaser received five-and-one-half-year warrants to purchase such number of Warrant Shares equal to the 100% of the principal amount of such Purchaser's Note divided by the quotient of (i) $60.0 million (the "Valuation Cap") divided by (ii) the Fully Diluted Capitalization (as defined in the Notes) immediately prior to the Qualified Financing or the Qualified Event, as applicable, at a per share exercise price (the "Exercise Price") equal to (A) if a Qualified Financing or the Qualified Event, as applicable has occurred on or before the Maturity Date, the lower of (x) the quotient of (I) the Valuation Cap divided by (II) the Fully Diluted Capitalization immediately prior to the Qualified Financing or the Qualified Event, as applicable, and (y) the purchase price per share or other whole unit in the Qualified Financing or the Qualified Event, as applicable, or (B) if a Qualified Financing or the Qualified Event, as applicable, has not occurred on or before the Maturity Date, the Voluntary Conversion Price. Subject to certain exceptions, if at any time after the Closing Date and until the earlier of (i) ten days following the Maturity Date or (ii) the date upon which a Qualified Financing or Qualified Event, as applicable, if any, is consummated, PodcastOne issues or sells, or in accordance with the terms of the Warrants is deemed to have issued or sold, any PodcastOne common stock without consideration or for consideration per share less than the Exercise Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then the Exercise Price in effect immediately prior to such issuance or sale (or deemed issuance or sale) shall be reduced (and in no event increased) to an Exercise Price equal to the lowest price per share at which any such share of PodcastOne's common stock has been issued or sold (or is deemed to have been issued or sold). Upon a Purchaser's redemption of any Notes as provided above, then a portion of such Purchaser's Warrants shall be forfeited and cancelled in accordance with the following formula: for each $0.01 million of the principal amount of the Notes redeemed, Warrants to purchase 100% of the Warrant Shares issued per $0.01 million of the principal amount of the Notes shall be immediately forfeited and cancelled.

The Company also agreed (i) not to effect the Direct Listing or an initial public offering, as applicable, unless immediately following such event LiveOne owns no less than 66% of our equity, unless in either case otherwise permitted by the written consent of the holders of the majority of the Bridge Notes (excluding LiveOne) (the "Majority Noteholders") and the senior lenders, as applicable, (ii) that until the Direct Listing or an initial public offering, as applicable, is consummated, LiveOne guaranteed the repayment of the Bridge Notes when due (other than the Bridge Notes issued to LiveOne) and any interest or other fees due thereunder, and (iii) that if we have not consummated the Direct Listing or an initial public offering, as applicable, by February 15, 2023, March 15, 2023 or April 15, 2023, unless in either case permitted by the written consent of the Majority Noteholders, the Company shall be required to redeem $1,000,000 of the then outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by the tenth calendar day of each month immediately following such respective date, up to an aggregate redemption of $3,000,000 over the course of such three months, each of which shall be distributed to the holders of the Bridge Notes (other than LiveOne) on a prorated basis (the "Early Redemption"). As of March 10, 2023, the Company has not yet consummated the Direct Listing and accordingly, we are currently required to redeem $1,000,000 of the outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by March 10, 2023 (subject to any cure period).

The Company also agreed to register the shares of our common stock issuable upon conversion of the Bridge Notes and exercise of the Bridge Warrants and the Placement Agent Warrants in connection with the Direct Listing or an initial public offering. The registration statement of which this prospectus is a part is being filed to satisfy such requirements. If the Company does not file such registration statement on or prior to the date that is nine months after July 15, 2022, the Company shall be required to prepay $1,000,000 of the Bridge Notes pro rata to the Bridge Notes holders (other than LiveOne), and if the Company does not file such registration statement on or prior to the date that is 12 months after July 15, 2022, we shall be required to prepay $2,000,000 of the Bridge Notes pro rata to the Note holders (other than LiveOne) (the "Reg St Redemption"). The Company shall not be required to redeem or repay more than a total of $3,000,000 of the principal amount of the Bridge Notes as a result of the Optional Redemption, the Early Redemption and/or the Reg St Redemption.

Furthermore, in connection with the closing of the Financing, the Purchasers and PodcastOne's directors and officers entered into lock-up agreements with PodcastOne pursuant which they agreed, subject to certain exceptions, not to sell any shares of PodcastOne's common stock beneficially owned by them or securities convertible, exchangeable or exercisable into, shares of common stock of PodcastOne beneficially owned, until the earliest to occur, if any, of (i) the termination of the underwriting agreement with respect to the Qualified Financing before the sale of any securities to the underwriters of the Qualified Financing, (ii) the termination of the Qualified Financing or Qualified Event, as applicable and (iii) with respect to the Purchasers, three months from the date of the consummation of the Qualified Financing or Qualified Event, as applicable, and with respect to PodcastOne's officers and directors, nine months from the date of the consummation of the Qualified Financing or Qualified Event, as applicable.

*<u>2022 Equity Incentive Plan</u>*

On December 15, 2022, the Company's board of directors and LiveOne as the sole stockholder, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., approved the Company's 2022 Equity Incentive Plan (the "2022 Plan") which reserved a total of 2,000,000 shares of the Company's common stock for issuance. Incentive awards authorized under the 2022 Plan include, but are not limited to, nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and stock appreciation rights. If an incentive award granted under the 2022 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to the Company in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2022 Plan. The Company has not issued any inventive awards under the 2022 Plan.

 

*<u>Common Stock Reduction and Issuance of Preferred Stock</u>*

In connection with the spin-out of the Company, LiveOne, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., canceled 127,984,230 shares of the Company's common stock. As of December 15, 2022, LiveXLive PodcastOne, Inc. owned 20,000,000 shares of the Company's common stock, which constituted 100% of the Company's issued and outstanding shares of common stock as of such date.

Pursuant to the Company's Amended and Restated Certificate of Incorporation which was approved by the Company's board of directors and LiveOne as the sole stockholder on December 15, 2022, the Company has the authority to issue up to 110,000,000 shares, consisting of 100,000,000 shares of the Company's common stock, $0.00001 par value per share, and 10,000,000 shares of the Company's preferred stock, $0.00001 par value per share (the "preferred stock").

*Harvest Notes and Trinad Notes Exchange for Series A Preferred Stock*

On February 3, 2023 (the "Effective Date"), LiveOne entered into an exchange agreement (collectively, the "Exchange Agreements") with (i) Harvest Small Cap Partners Master, Ltd. ("HSCPM") in regard to that certain 8.5% Senior Secured Convertible Note in the aggregate amount of $10,503,965 issued by the LiveOne on September 15, 2020, as amended on June 3, 2021 and July 6, 2022, to HSCPM (the "HSCPM Note"), (ii) Harvest Small Cap Partners, L.P. ("HSCP") in regard to that certain 8.5% Senior Secured Convertible Note in the aggregate amount of $4,496,035 issued by LiveOne on September 15, 2020, as amended on June 3, 2021 and July 6, 2022, to HSCP (the "HSCP Note" and together with the HSCPM Note, the "Harvest Notes"); and (iii) Trinad Capital (and collectively with HSCPM and HSCP, the "Holders") in regard to all promissory notes in the aggregate principal and interest amount of $6,177,218 issued by the Company to Trinad Capital (the "Trinad Notes" and collectively with the Harvest Notes, the "Notes"). Pursuant to the Exchange Agreements, the Holders exchanged the Notes, and with respect to Trinad Capital, together with interest, due and payable thereon, and relinquished any and all rights thereunder, for 21,177 shares of LiveOne's newly designated and issued Series A Perpetual Convertible Preferred Stock, par value $0.001 per share (the "Series A Preferred Stock"), with a stated value of $1,000 per share (the "Stated Value"), having the terms as set forth in LiveOne's Certificate of Designation of Preferences, Rights and Limitations of Series A Perpetual Convertible Preferred Stock (the "Certificate of Designation") filed by LiveOne on February 2, 2023 with the Secretary of State of the State of Delaware.

The Company has evaluated events and transactions that occurred subsequent to March 31, 2022 through March 13, 2023, the date the restated financial statements were available to be issued. There have been no other events or transactions during this time, which would have a material, effect on these financial statements.

**COURTSIDE GROUP, INC.**

**Condensed Consolidated Balance Sheets**

***(Unaudited, in thousands, except share and per share amounts)***

 ****

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **March 31,**<br> **2022** |
|  | (Unaudited) | (Audited) |
| **Assets** |  | (Restated) |
| **Current Assets** |  |  |
| &nbsp;&nbsp;&nbsp; Cash and cash equivalents | $3969 | $1103 |
| &nbsp;&nbsp;&nbsp; Accounts receivable, net | 6269 | 7995 |
| &nbsp;&nbsp;&nbsp; Prepaid expense and other current assets | 572 | 543 |
| **Total Current Assets** | 10810 | 9641 |
| &nbsp;&nbsp;&nbsp; Property and equipment, net | 243 | 247 |
| &nbsp;&nbsp;&nbsp; Goodwill | 12041 | 12041 |
| &nbsp;&nbsp;&nbsp; Intangible assets, net | 755 | 831 |
| &nbsp;&nbsp;&nbsp; Related party receivable | 4637 | 1167 |
| **Total Assets** | $28486 | $23927 |
|  **<u>Liabilities and Stockholders' Equity</u>** |  |  |
| **Current Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp; Accounts payable and accrued liabilities | $6281 | $6998 |
| &nbsp;&nbsp;&nbsp; Bridge loan, net | 5715 |  |
| &nbsp;&nbsp;&nbsp; Derivative liabilities | 3265 |  |
| &nbsp;&nbsp;&nbsp; Related party payable | 2405 | 3844 |
| **Total Liabilities** | 17666 | 10842 |
| **Commitments and Contingencies** |  |  |
| **Stockholders' Equity** |  |  |
| &nbsp;&nbsp;&nbsp; Preferred stock, $0.00001 par value; 10,000,000 shares authorized; no shares issued or outstanding |  |  |
| &nbsp;&nbsp;&nbsp; Common stock, $0.00001 par value; 100,000,000 and 200,000,000 shares authorized as of December 31, 2022 and March 31, 2022; 20,000,000 and 147,984,230 shares issued and outstanding as of December 31, 2022 and March 31, 2022, respectively |  |  |
| &nbsp;&nbsp;&nbsp; Additional paid in capital | 19535 | 18784 |
| &nbsp;&nbsp;&nbsp; Accumulated deficit | (8715) | (5699) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity | 10820 | 13085 |
| **Total Liabilities and Stockholders' Equity** | $28486 | $23927 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**COURTSIDE GROUP, INC.**

**Condensed Consolidated Statements of Operations**

***(Unaudited, in thousands, except share and per share amounts)***

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** |
|  | **2022** | **2021** |
| **Revenue:** | $25802 | $24131 |
| **Operating expenses:** |  |  |
| &nbsp;&nbsp;&nbsp; Cost of sales | 19954 | 19539 |
| &nbsp;&nbsp;&nbsp; Sales and marketing | 3931 | 3642 |
| &nbsp;&nbsp;&nbsp; Product development | 134 | 212 |
| &nbsp;&nbsp;&nbsp; General and administrative | 2723 | 3696 |
| &nbsp;&nbsp;&nbsp; Amortization of intangible assets | 76 | 431 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 26818 | 27520 |
| **Loss from operations** | (1016) | (3389) |
| **Other income (expense):** |  |  |
| &nbsp;&nbsp;&nbsp; Interest expense, net | (3043) | (4) |
| &nbsp;&nbsp;&nbsp; Change in fair value of derivatives | 1043 |  |
| &nbsp;&nbsp;&nbsp; Forgiveness of PPP loan |  | 499 |
| &nbsp;&nbsp;&nbsp; Other income (expense) | - | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income (expense), net | (2000) | 494 |
| **Income (loss) before provision for income taxes** | (3016) | (2895) |
| &nbsp;&nbsp;&nbsp; Provision for income taxes | - | - |
| **Net income (loss)** | $(3016) | $(2895) |
| **Net income (loss) per share – basic and diluted** | $(0.02) | $(0.02) |
| **Weighted average common shares – basic and diluted** | 140510698 | 147984230 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**COURTSIDE GROUP, INC.**

**Condensed Consolidated Statements of Stockholders' Equity** 

***(Unaudited, in thousands, except share and per share amounts)***

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Additional<br> Paid in**<br> **Capital** | **Accumulated**<br> **Deficit** | **Total<br> Stockholder'**<br> **Equity** |
|  **Balance as of March 31, 2022 (Restated)** | **147984230** | $**-** | $**18784** | $**(5699)** | $**13085** |
| &nbsp;&nbsp;&nbsp; Stock-based compensation |  |  | 751 |  | 751 |
| &nbsp;&nbsp;&nbsp; Cancellation of common stock | (127984230) |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Net income | - | - | - | (3016) | (3016) |
|  **Balance as of December 31, 2022** | **20000000** | $**-** | $**19535** | $**(8715)** | $**10820** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Additional Paid in**<br> **Capital** | **Accumulated**<br> **Deficit** | **Total Stockholders'**<br> **Equity** |
|  **Balance as of March 31, 2021 (Restated)** | **147984230** | $**-** | $**16258** | $**(2095)** | $**14163** |
| &nbsp;&nbsp;&nbsp; Stock-based compensation |  |  | 2175 |  | 2175 |
| &nbsp;&nbsp;&nbsp; Net loss | **-** | - | - | (2895) | (2895) |
|  **Balance as of December 31, 2021** | **147984230** | $**-** | $**18433** | $**(4990)** | $**13443** |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**COURTSIDE GROUP, INC.**

**Condensed Consolidated Statement of Cash Flows**

***(Unaudited, in thousands)***

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** |
|  | **2022** | **2021** |
| **Cash Flows from Operating Activities:** |  |  |
| &nbsp;&nbsp;&nbsp; Net income (loss) | $(3016) | $(2895) |
| &nbsp;&nbsp;&nbsp; Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 241 | 520 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation | 751 | 2175 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt discount | 2641 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in fair value of bifurcated embedded derivatives | (1043) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forgiveness of PPP loan |  | (499) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for doubtful accounts | (1) |  |
| &nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 1727 | (3454) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | (28) | (196) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Related party receivable/payables | (4909) | 1320 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and accrued liabilities | (711) | 2053 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in operating activities | (4348) | (976) |
|  **Cash Flows from Investing Activities:** |  |  |
| &nbsp;&nbsp;&nbsp; Purchases of property and equipment | (162) | (229) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (162) | (161) |
|  **Cash Flows from Financing Activities:** |  |  |
| &nbsp;&nbsp;&nbsp; Proceeds from bridge loan | 7376 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | 7376 | - |
| &nbsp;&nbsp;&nbsp; Net change in cash and cash equivalents | 2866 | (1205) |
| &nbsp;&nbsp;&nbsp; Cash and cash equivalents, beginning of period | 1103 | 3374 |
|  **Cash and cash equivalents, end of period** | $3969 | $2169 |
|  **Supplemental disclosure of cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp; Cash paid for income taxes | $- | $- |
| &nbsp;&nbsp;&nbsp; Cash paid for interest | $- | $- |
|  **Supplemental disclosure of non-cash investing and financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp; Fair value of warrant and derivative liability issued with debt instrument | $4308 | $- |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**COURTSIDE GROUP, INC.**

**Notes to the Condensed Consolidated Financial Statements (Unaudited)**

 **For the Nine Months Ended December 31, 2022 and 2021**

**Note 1 — Organization and Basis of Presentation**

*<u>Organization</u>*

Courtside Group, Inc. ("we," "us," "our", the "Company" or "PodcastOne") is a Delaware corporation headquartered in Beverly Hills, California and is doing business as PodcastOne. The Company is a leading podcast platform and publisher that makes its content available to audiences via all podcasting distribution platforms, including its website (www.podcastone.com), its PodcastOne app, Apple Podcasts, Spotify, Amazon Music and more.

The Company was incorporated in the State of Delaware on February 5, 2014, and is a wholly owned subsidiary of LiveOne, Inc. ("LiveOne") On July 1, 2020, LiveOne through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., acquired Courtside Group, Inc. (see Note 4 – Business Combinations). The Company has two wholly owned subsidiaries, Courtside, LLC, a Delaware limited liability company, and PodcastOne Sales, LLC, a California limited liability company.

*<u>Basis of Presentation</u>*

The results of operations and financial position of the Company are consolidated with LiveOne's financial statements and that these financial statements have been derived as if the Company had operated on a standalone basis during the nine months ended December 31, 2022 and 2021. The amounts recorded for related party transactions with LiveOne may not be considered arm's length transactions and therefore, the financial statements may not necessarily reflect the Company's results of operations, financial position and cash flows had the Company engaged in such transactions with an unrelated third party during the nine months ended December 31, 2022 and 2021. Accordingly, the Company's historical financial information is not necessarily indicative of what the Company's results of operations, financial position and cash flows will be in the future, if and when the Company contracts at arm's length with unrelated third parties for services they receive from LiveOne. The results for the nine months ended December 31, 2022 are not necessarily indicative of the results expected for the full fiscal year ending March 31, 2023 ("fiscal 2023"). The condensed consolidated balance sheet as of March 31, 2022 has been derived from the Company's audited balance sheet included in the accompanying prospectus.

The interim unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States ("GAAP") for interim financial information and in accordance with Article 10 of Regulation S-X. They do not include all the information and footnotes required by GAAP for complete audited financial statements. Therefore, these consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the accompanying prospectus.

*<u>Going Concern and Liquidity</u>*

The Company's condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

The Company's principal sources of liquidity have historically been its debt issuances and its cash and cash equivalents (which cash, cash equivalents amounted to $4.0 million as of December 31, 2022). The Company has an accumulated deficit of $8.7 million and had a working capital deficiency of $6.9 million as of December 31, 2022. As of March 10, 2023, the Company has not yet consummated the Direct Listing and accordingly, the Company is currently required to redeem $1,000,000 of the outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by March 10, 2023 (subject to any cure period). As a result it may be necessary for the Company to maintain cash balances to support the consolidated minimum requirement and use our available cash to redeem the applicable portion of the Bridge Notes, thus impacting cash available to support our liquidity in the future. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern within one year from the date that these financial statements are filed. The Company's condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company is looking for additional financing sources to attempt to secure additional interim financing by end of April 2023 after the completion of the Company's listing on a national exchange, which is needed to continue operations and satisfy its obligations. In the absence of additional sources of liquidity, management anticipates that existing cash resources will not be sufficient to meet current operating and liquidity needs beyond February 2024. There is no assurance that management will be able to obtain additional liquidity or be successful in raising additional funds or that such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company's existing stockholders. In addition, management is unable to determine at this time whether any of these potential sources of liquidity will be adequate to support the Company's future business operations. While we do not currently anticipate delays or hindrances to our current business operations and initiatives schedule due to liquidity constraints, without additional funding the Company may not be able to continue its current level of business operations in the future. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

*<u>Principles of Consolidation</u>*

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Acquisitions are included in the Company's condensed consolidated financial statements from the date of the acquisition. The Company uses purchase accounting for its acquisitions, which results in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. All intercompany balances and transactions have been eliminated in consolidation.

 

**Note 2 — Summary of Significant Accounting Policies**

 

*<u>COVID-19</u>*

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic. The global impact of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets creating increasing volatility and overall uncertainty. The Company began to experience modest adverse impacts of the COVID-19 pandemic in the fourth quarter of fiscal year ended March 31, 2020 and which became more adverse throughout the fiscal year ended March 31, 2021 and up to the third quarter of fiscal year ended March 31, 2022. Although the impact has subsided, the Company expects to continue experiencing modest adverse impacts throughout the fiscal year ending March 31, 2023. During the year ended March 31, 2021, the Company enacted several initiatives to counteract these near-term challenges, including salary reductions and obtaining a Paycheck Protection Program ("PPP") loan (see Note 8 - Notes Payable).

*<u>Use of Estimates</u>*

The preparation of the Company's condensed consolidated financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue, allowance for doubtful accounts, the assigned value of acquired assets and assumed and contingent liabilities associated with business combinations and the related purchase price allocation, useful lives and impairment of property and equipment, intangible assets, goodwill and other assets, the fair value of the Company's equity-based compensation awards and convertible debt and debt instruments, fair values of derivatives, and contingencies. Actual results could differ materially from those estimates. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. Given the overall uncertainty surrounding the COVID-19 pandemic, there is a reasonable possibility that actual results could differ from those estimates and such differences could be material to the financial position and results of operations, specifically in assessing when the collectability of revenue related consideration is probable, and the impairment assessment of goodwill, indefinite lived assets or long-lived assets that are depreciated or amortized.

*<u>Revenue Recognition Policy</u>*

The Company accounts 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 the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company uses the expected value method to estimate the value of variable consideration on advertising 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 services are rendered as the amounts reflect the consideration the Company is entitled to and relate specifically to the Company's efforts to satisfy its 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.

*<u>Practical Expedients</u>*

The Company elected the practical expedient and recognized the incremental costs of obtaining a contract, if any, as an expense when incurred if the amortization period of the asset that would have been recognized is one year or less.

 *<u>Gross Versus Net Revenue Recognition</u>*

The Company reports revenue on a gross basis for agency contracts based on management's assessment of whether the Company acts as a principal or agent in the transaction and is evaluated on a transaction-by-transaction basis. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable but does not include any revenue sharing expenses. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service prior to transfer to the customer. The gross amount of revenue recognized is equal to the amounts received from our customer, gross of revenue sharing expenses owed to the content creators.

*<u>Advertising Revenue</u>*

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. The Company 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 the Company enters into barter transactions involving advertising provided in exchange for goods and services. Revenue from barter transactions is recognized based on delivery of impressions and in the same manner as described above. Services received are charged to expense when received or utilized. If services are received prior to the delivery of impressions, a liability is recorded. If delivery of impressions has occurred before the receipt of goods or services, a receivable is recorded. Barter revenue for the nine months ended December 31, 2022 and 2021 was $5.1 million and $3.1 million, respectively.

*<u>Cost of Sales</u>*

Cost of sales consists of direct costs comprised of revenue sharing expenses owed to content creators and commissions.

 

*<u>Sales and Marketing</u>*

Sales and Marketing include the direct and indirect costs related to the Company's event advertising and marketing. Additionally, sales and marketing include merchandising advertising and royalty costs. Advertising expenses to promote the Company's services are expensed as incurred. Advertising expenses included in sales and marketing expense were $0.1 million and $0.1 million for the nine months ended December 31, 2022 and 2021, respectively.

 

 *<u>Allocation of Costs</u>*

The Company's consolidated financial statements include an allocation of costs that have been incurred by LiveOne on the Company's behalf. Such expenses incurred include, but are not limited to, salaries, benefits, share-based compensation expense, insurance, accounting, tax and legal services. Such expenses were allocated to the Company based upon certain assumptions and estimates that were made in order to allocate a reasonable share of such expenses to the Company, so that the Company's consolidated financial statements reflect substantially all costs of doing business. The authoritative guidance to allocate such costs is set forth in Staff Accounting Bulletin, or SAB Topic 1-B "*Allocations of Expenses and Related Disclosures in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity*."

Had the Company been operating on a stand-alone basis, the cost allocated would not be materially different for the nine months ended December 31, 2022 and 2021, respectively.

*<u>Product Development</u>*

Product development costs not capitalized are primarily expenses for research and development, product and content development activities, including internal software development and improvement costs which have not been capitalized by the Company.

 

 

*<u>Stock-Based Compensation</u>*

Stock-based compensation is allocated to the Company from its parent LiveOne based on the amount of stock-based compensation granted to employees of the Company in the form of stock-based compensation of LiveOne in accordance with SAB Topic 1-B "*Allocations of Expenses and Related Disclosures in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity*."

LiveOne measures stock-based compensation cost 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 an accelerated basis. LiveOne accounts for awards with graded vesting as if each vesting tranche is valued as a separate award. LiveOne uses the Black-Scholes-Merton option pricing model to determine the grant date fair value of stock options. This model requires LiveOne 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. LiveOne uses a predicted volatility of its stock price during the expected life of the options that is based on the historical performance of LiveOne's stock price as well as including an estimate using guideline companies. The expected term is computed using the simplified method as LiveOne's best estimate given its lack of actual exercise history. LiveOne has 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 option. Management believes that the fair value of the stock options is more reliably measured than the fair value of the services received. Compensation expense resulting from granted restricted stock units and restricted stock awards is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Stock-based awards are comprised principally of stock options, restricted stock, restricted stock units ("RSUs"), and restricted stock awards ("RSAs"). Forfeitures are recognized as incurred. LiveOne records the fair value of these equity-based awards and expense at their cost ratably over related vesting periods.

*<u>Income Taxes</u>*

The Company accounts for income taxes using the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Company's consolidated statements of operations in the period that includes the enactment date.

*<u>Earnings (Loss) Per Share</u>*

Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted-average number of common shares and the dilutive effect of contingent shares outstanding during the period. Potentially dilutive contingent shares consisting of stock options issued to employees, directors, vendors and consultants, restricted stock units, and convertible notes would be excluded from the diluted earnings per share calculation because their effect is anti-dilutive.

Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. The dilutive effect of the convertible debt would be adjusted by the interest expense for the period. In periods when we have a net loss, stock awards and convertible debt are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.

*<u>Business Combinations</u>*

The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the underlying net tangible and intangible assets acquired, based on their respective fair values. The excess of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management's judgment and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses and cash flows, weighted average cost of capital, discount rates, estimates of customer turnover rates, estimates of terminal values, and royalty rates.

*<u>Cash and Cash Equivalents</u>*

Cash and cash equivalents include all highly liquid investments with original maturities, when purchased, of three months or less.

The following table provides amounts included in cash and cash equivalents presented in the Company's condensed consolidated statements of cash flows for the nine months ended December 31, 2022 and as of March 31, 2021 (in thousands):

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| | | |
|:---|:---|:---|
|  | **December 31,<br> 2022** | **March 31, 2022** |
| Total cash and cash equivalents | $3969 | $1103 |

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*<u>Allowance for Doubtful Accounts</u>*

The Company evaluates the collectability of its accounts receivable based on a combination of factors. Generally, it records specific reserves to reduce the amounts recorded to what it believes will be collected when a customer's account ages beyond typical collection patterns, or the Company becomes aware of a customer's inability to meet its financial obligations.

The Company believes that the credit risk with respect to trade receivables is limited due to the large and established nature of its largest customers and the nature of its membership receivables.

The Company's accounts receivable at December 31, 2022 and March 31, 2022 are as follows (in thousands):

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| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **March 31,**<br> **2022** |
| Accounts receivable, gross | $6347 | $8094 |
| Less: Allowance for doubtful accounts | (78) | (99) |
| Accounts receivable, net | $6269 | $7995 |

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 *<u>Related Party Receivable and Payables</u>*

LiveOne has historically maintained a lending relationship with the Company in order to supplement the Company's working capital needs. As of December 31, 2022, the net receivable was $2.2 million as a result of cash being transferred to LiveOne as a result of the $8.8 million Bridge Loan proceeds. LiveOne and the Company do not charge interest on these borrowings.

 *<u>Property and Equipment</u>*

Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve service potential are also capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal repairs and maintenance are expensed as incurred. The Company capitalizes certain costs related to the development of its platform and other software applications for internal use. In accordance with authoritative guidance, the Company begins to capitalize its costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. The Company stops capitalizing these costs when the software is substantially complete and ready for its intended use, including the completion of all significant testing. These costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally estimated to be three years. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditure will result in additional functionality and expense costs incurred for maintenance and minor upgrades and enhancements. Costs incurred prior to meeting these criteria together with costs incurred for training and maintenance are expensed as incurred and recorded within product development expenses in the Company's consolidated statements of operations.

Depreciation is recorded using the straight-line method over the assets' estimated useful lives, which are generally as follows: computer, machinery, and software equipment (3 to 5 years), furniture and fixtures (3 to 5 years), leasehold improvements are depreciated over the shorter of the estimated useful life or the lease term and capitalized software (3 years).

The Company evaluates the carrying value of its property and equipment if there are indicators of potential impairment. If there are indicators of potential impairment, the Company performs an analysis to determine the recoverability of the asset group carrying value by comparing the expected undiscounted future cash flows to the net book value of the asset group. If it is determined that the expected undiscounted future cash flows are less than the net book value of the asset group, the excess of the net book value over the estimated fair value is recorded in the Company's consolidated statements of operations. Fair value is generally estimated using valuation techniques that consider the discounted cash flows of the asset group using discount and capitalization rates deemed reasonable for the type of assets, as well as prevailing market conditions, appraisals, recent similar transactions in the market and, if appropriate and available, current estimated net sales proceeds from pending offers.

 

*<u>Goodwill and Indefinite-Lived Assets</u>*

Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is carried at cost. Acquired trademarks and trade names are assessed as indefinite lived assets if there are no foreseeable limits on the periods of time over which they are expected to contribute cash flows. Goodwill and indefinite-lived assets are not amortized, but are subject to an annual impairment testing, as well as between annual tests when events or circumstances indicate that the carrying value may not be recoverable. The Company performs its annual impairment testing at January 1 of each year.

The Company's annual goodwill impairment test is performed at the reporting unit level. The Company generally tests goodwill for possible impairment by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If a qualitative assessment is not used, or if the qualitative assessment is not conclusive, a quantitative impairment test is performed. If a quantitative test is performed, the Company determines the fair value of the related reporting unit and compare this value to the recorded net assets of the reporting unit, including goodwill. The fair value of the Company's reporting unit is determined using a market approach based on quoted prices in active markets. In the event the recorded net assets of the reporting unit exceed the estimated fair value of such assets, an impairment charge is recorded. Based on the Company's annual impairment assessment, no impairments of goodwill were identified during the nine months ended December 31, 2022 and 2021, respectively.

Estimations and assumptions regarding, future performance, results of the Company's operations and comparability of its market capitalization and net book value will be used.

 

*<u>Intangible Assets with Finite Useful Lives</u>*

The Company has certain finite-lived intangible assets that were initially recorded at their fair value at the time of acquisition. These intangible assets consist of Intellectual Property and Content Creator Relationships resulting from business combinations. Intangible assets with finite useful lives are amortized using the straight-line method over their respective estimated useful lives, which are generally as follows: Brand and Trade Names (10 years), Customer, Content Creator (2 years).

The Company reviews all finite lived intangible assets for impairment when circumstances indicate that their carrying values may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess carrying value over the fair value in its consolidated statements of operations. In our assessment for potential impairment we identified triggering events due to the events resulting from the global COVID-19 pandemic which caused an overall advertising spend decrease from our advertising partners. No impairment losses have been recorded in the nine months ended December 31, 2022 and 2021. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown, which may impair the Company's asset values, including intangible assets. 

 

*<u>Fair Value Measurements - Valuation Hierarchy</u>*

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (i.e., an exit price). The Company uses the three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company's own assumptions about the data market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized below:

Level 1 Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.

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| | |
|:---|:---|
| Level 2 | Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. |

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Level 3 Valuation is based upon other unobservable inputs that are significant to the fair value measurement.

The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. Proper classification of fair value measurements within the valuation hierarchy is considered each reporting period. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The derivative liabilities are recognized at fair value on a recurring basis at December 31, 2022, and are Level 3 measurements. There have been no transfers between levels.

*<u>Notes Payable – Paycheck Protection Program ("PPP") Loans</u>*

 

In response to the COVID-19 pandemic, the PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and administered by the U.S. Small Business Administration ("SBA"). Companies who met the eligibility requirements set forth by the PPP could qualify for PPP loans provided by local lenders, which supports payroll, rent and utility expenses ("qualified expenses"). If the loan proceeds are fully utilized to pay qualified expenses over the covered period, as further defined by the PPP, the full principal amount of the PPP loan may qualify for loan forgiveness, subject to potential reduction based on the level of full-time employees maintained by the organization during the covered period as compared to a baseline period.

As the loans were forgiven and we were released from being the primary obligor, the Company recognized income in the amount forgiven in accordance with ASC 470-20.

*<u>Concentration of Credit Risk</u>*

The Company maintains cash balances at commercial banks. Cash balances commonly exceed the $250,000 amount insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts, and management believes that the Company is not exposed to any significant credit risk with respect to such cash and cash equivalents.

*<u>Debt with Warrants</u>*

In accordance with ASC Topic 470-20-25, when the Company issues debt with warrants, the Company treats the fair value of the warrants as a debt discount, recorded as a contra-liability against the debt, and amortizes the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations using the straight-line method. The offset to the contra-liability is recorded as either equity or liability in the Company's consolidated balance sheets depending on the accounting treatment of the warrants. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statements of operations.

*<u>Convertible Debt – Derivative Treatment</u>*

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.

If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using a Monte Carlo simulation model upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt using the straight-line method.

*<u>Recently Issued Accounting Pronouncements</u>*

In June 2016, the FASB issued ASU No. 2016-13, *Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments*, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The guidance is effective for fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC's definition, and interim periods within those fiscal years. The Company is currently evaluating the impact this guidance will have on the Company's consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, *Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40).* The FASB issued this ASU to address issues identified as a result of the complexity associated with GAAP for certain financial instruments with characteristics of liabilities and equity. Complexity associated with the accounting is a significant contributing factor to numerous financial statement restatements and results in complexity for users attempting to understand the results of applying the current guidance. In addressing the complexity, the FASB focused on amending the guidance on convertible instruments and the guidance on the derivatives scope exception for contracts in an entity's own equity. For convertible instruments, the FASB decided to reduce the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The FASB concluded that eliminating certain accounting models simplifies the accounting for convertible instruments, reduces complexity for preparers and practitioners, and improves the decision usefulness and relevance of the information provided to financial statement users. In addition to eliminating certain accounting models, the FASB also decided to enhance information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance on the basis of feedback from financial statement users. The FASB decided to amend the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions. The FASB observed that the application of the derivatives scope exception guidance results in accounting for some contracts as derivatives while accounting for economically similar contracts as equity. The FASB also decided to improve and amend the related EPS guidance. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The FASB decided to allow entities to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact this ASU will have on its financial statements and related disclosures, as well as the timing of adoption and the application method.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statement presentation or disclosures.

 **Note 3 – Restatement of Prior Financial Information**

On July 1, 2020, LiveOne's wholly owned subsidiary, LiveXLive PodcastOne, Inc., acquired 100% of the equity interests of the Company for net consideration of $16.1 million consisting of 5,363,636 shares of LiveOne's common stock with a fair value of $14.6 million, contingent consideration with a fair value of $1.1 million and an additional true-up of 203,249 shares of LiveOne's common stock during the third quarter of fiscal 2021 valued at $0.4 million, that was issued as part of the final purchase price consideration. As a result, LiveOne pushed down the contingent consideration to the Company on the date of acquisition in the amount of $1.1 million to the Company's financial statements and booked the marked to market change in value at each reporting period. In accordance with ASC 805-50-30-12, the liability for the contingent consideration should not have been pushed down as it was an obligation of LiveOne.

The Company has evaluated the financial statement impact in each of the previously filed reporting periods effected, and concluded that the correction of the error in the accounting for contingent consideration is quantitatively material to the previously issued financial statements. Accordingly, the Company has restated the consolidated financial statements as of March 31, 2022 and 2021 and for the year ended March 31, 2022 and the period from July 1, 2020 to March 31, 2021 (Successor), in accordance with Accounting Standards Codification ("ASC") Topic 250, *Accounting Changes and Error Corrections*. The corresponding footnotes have been restated for the adjustments noted.

The effect of the correction of this error on the balance sheet and the statement of stockholders' equity as of March 31, 2022 (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **March 31,<br> 2022<br> As Previously<br> Reported** | **Adjustments** | **March 31, 2022<br> As Restated** |
|  Contingent Consideration | $2965 | $(2965) | $— |
|  Total Liabilities | $13807 | $(2965) | $10842 |
|  Additional paid in capital | $17684 | $1100 | $18784 |
|  Accumulated deficit | $(7564) | $1865 | $(5699) |
|  Total Shareholders' Equity | $10120 | $2965 | $13085 |

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The effect of the correction of this error on the statement of operations for the twelve month period ended March 31, 2022 is summarized as follows (in thousands, except per share data):

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| | | | |
|:---|:---|:---|:---|
|  | **March 31,<br> 2022<br> As Previously<br> Reported** | **Adjustments** | **March 31, 2022<br> As Restated** |
|  Change in fair value of contingent consideration | $(542) | $542 | $— |
|  Total other income (expense), net | $556 | $542 | $1098 |
|  Net loss | $(4146) | $542 | $(3604) |
|  Net loss per share (basic and diluted) | $(0.03) | $0.01 | $(0.02) |

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The effect of the correction of this error on the operating activities of the statement of cash flows for the twelve-month period ended March 31, 2022 is summarized as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **March 31,<br> 2022<br> As Previously<br> Reported** | **Adjustments** | **March 31, 2022<br> As Restated** |
|  Net loss | $(4146) | $542 | $(3604) |
|  Change in fair value of contingent consideration liability | $542 | $(542) | $— |
|  Net cash used in operating activities | $(1988) | $— | $(1988) |

---

The correction of this error did not impact cash provided by (used in) investing activities, or cash provided by financing activities for the year ended March 31, 2022.

 **Note 4 — Business Combinations**

On July 1, 2020, LiveOne's wholly owned subsidiary, LiveXLive PodcastOne, Inc., acquired 100% of the equity interests of the Company for net consideration of $16.1 million consisting of 5,363,636 shares of LiveOne's common stock with a fair value of $14.6 million, net of a 24% discount for lack of marketability described below, contingent consideration with a fair value of $1.1 million and an additional true-up of 203,249 shares of LiveOne's common stock during the third quarter of fiscal 2021 valued at $0.4 million, net of a 24% discount for lack of marketability described below, that was issued as part of the final purchase price consideration. The shares of LiveOne's common stock were subject to a twelve-month lock-up period and remains subject to sales volume restrictions In connection with the acquisition, the accounts of the Company were adjusted using the push down basis of accounting to recognize the allocation of the net assets acquired which was determined to be $16.1 million. In accordance with the push down basis of accounting, the Company's net assets were adjusted to their fair values as of the date of the acquisition based upon an independent appraisal.

 *Contingent Consideration recorded on LiveOne's books* 

If, during the period commencing after May 7, 2020 and ending on July 1, 2022, for five consecutive trading days the closing market price of LiveOne's common stock exceeded $5.00 per share, an additional aggregate payment of $3.0 million in cash was to be paid to the sellers of PodcastOne in accordance with their respective pro rata percentage within five business days of the second anniversary of the closing date (July 1, 2022). The fair value of this contingent consideration liability on the closing date of July 1, 2020 was estimated at $1.1 million using a Monte Carlo simulation and the significant unobservable input included a credit yield of 21.9%. During the period from July 1, 2020 to March 2021, the closing price of LiveOne's common stock exceeded $5.00 per share for the requisite five consecutive days, therefore the contingent liability was valued at $2.4 million and $3.0 million as of March 31, 2021 and 2022, respectively. As of March 31, 2021, the contingent consideration liability was discounted based on the effective market rate as the liability would not be settled until July 2022.

Goodwill resulted from acquisition as it is intended to augment and diversify LiveOne's revenue streams. The Company accounted for the acquisition as a business combination. As a result of the acquisition of the stock of PodcastOne, the goodwill is not deductible for tax purposes. The contingent consideration was not pushed down to the PodcastOne subsidiary at the time of the acquisition and for carve-out purposes as it was deemed an obligation of the Company's parent, LiveOne. The net consideration for the acquisition of the equity interests of $16.1 million was recorded as a contribution by LiveOne to the Company in the Consolidated Statement of Stockholders' Equity.

The following table summarizes the fair value of the assets acquired and liabilities assumed in the PodcastOne acquisition (in thousands):

---

| | | |
|:---|:---|:---|
| **Asset Type** | **Weighted Average <br> Amortization<br> Period <br> (Years)** | **Fair Value** |
| Cash and cash equivalents |  | $1286 |
| Accounts receivable |  | 3951 |
| Prepaid expense and other assets |  | 316 |
| Property and equipment |  | 119 |
| Content creator relationships | 1.6 | 772 |
| Brand and trade names | 10 | 1010 |
| Goodwill |  | 12042 |
| Accounts payable and accrued liabilities |  | (2934) |
| Deferred tax asset |  | 972 |
| Allowance for deferred tax asset |  | (972) |
| Note payable |  | (471) |
| Net assets acquired |  | $16091 |

---

The fair value of the assets acquired includes accounts receivable of $4.0 million. The gross amount due under contracts is $4.2 million, of which $0.2 million is expected to be uncollectible. LiveOne did not acquire any other class of receivable as a result of the acquisition of PodcastOne.

As a result of the acquisition, LiveOne acquired 147,984,230 shares in the Company and eliminated the historical equity balances of the predecessor company which consisted of a balance of $11.6 million in additional paid in capital and $9.4 million of accumulated deficit.

 **Note 5 — Property and Equipment**

The Company's property and equipment at December 31, 2022 and March 31, 2022 was as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **March 31,**<br> **2022** |
| Property and equipment, net |  |  |
| &nbsp;&nbsp;&nbsp; Computer, machinery, and software equipment | $109 | $109 |
| &nbsp;&nbsp;&nbsp; Furniture and fixtures | 14 | 14 |
| &nbsp;&nbsp;&nbsp; Leasehold improvements | 24 | 24 |
| &nbsp;&nbsp;&nbsp; Capitalized internally developed software | 505 | 343 |
| Total property and equipment | 652 | 490 |
| &nbsp;&nbsp;&nbsp; Less accumulated depreciation and amortization | (409) | (243) |
| Total property and equipment, net | $243 | $247 |

---

Depreciation expense was $0.1 million and $0.1 million for the nine months ended December 31, 2022 and 2021, respectively.

 **Note 6 — Goodwill and Intangible Assets**

*<u>Goodwill</u>*

The Company currently has one reporting unit. The following table presents the changes in the carrying amount of goodwill for the nine months ended December 31, 2022 (in thousands):

---

| | |
|:---|:---|
|  | **Goodwill** |
| Balance as of March 31, 2022 | $12041 |
| &nbsp;&nbsp;&nbsp; Acquisitions | - |
| Balance as of December 31, 2022 | $12041 |

---

*<u>Finite-Lived Intangible Assets</u>*

The Company's finite-lived intangible assets were as follows as of December 31, 2022 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **Gross<br> Carrying<br> Value** | **Accumulated<br> Amortization** | **Net<br> Carrying<br> Value** |
| Content creator relationships | $772 | $772 | $- |
| Brand and trade names | 1010 | 255 | 755 |
| &nbsp;&nbsp;&nbsp; Total | $1782 | $1027 | $755 |

---

The Company's finite-lived intangible assets were as follows as of March 31, 2022 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **Gross<br> Carrying<br> Value** | **Accumulated<br> Amortization** | **Net<br> Carrying<br> Value** |
| Content creator relationships | $772 | $772 | $- |
| Brand and trade names | 1010 | 179 | 831 |
| &nbsp;&nbsp;&nbsp;Total | $1782 | $951 | $831 |

---

The Company's amortization expense on its finite-lived intangible assets was $0.1 million and $0.4 million for the nine months ended December 31, 2022 and 2021, respectively.

The Company expects to record amortization of intangible assets for fiscal years ending March 31, 2023 and future fiscal years as follows (in thousands):

---

| | |
|:---|:---|
| **For Years Ending March 31,** | |
| 2023 (remaining three months) | $25 |
| 2024 | 101 |
| 2025 | 101 |
| 2026 | 101 |
| 2027 | 101 |
| Thereafter | 326 |
|  | $755 |

---

 **Note 7 — Accounts Payable and Accrued Liabilities**

Accounts payable and accrued liabilities at December 31, 2022 and March 31, 2022 were as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2022** | **March 31,**<br> **2022** |
| Accounts payable | $1057 | $2453 |
| Accrued revenue share | 3466 | 3391 |
| Other accrued liabilities | 1758 | 1154 |
|  | $6281 | $6998 |

---

Accrued revenue share can be attributed to monies owed to content creators who contribute their podcast or other media content for the Company to sell to consumers. The Company accrues a liability based on the percentage of revenue owed to each content creator at the time of sale.

 **Note 8 — Notes Payable**

*<u>PPP Loans</u>*

On July 1, 2020, LiveOne acquired PodcastOne, which had previously obtained a PPP loan with a balance of $0.5 million as of March 31, 2021. In May 2021, the Company received confirmation from the SBA that the entire balance of such PPP loans was forgiven as a result of the Company's application and acceptance under the terms of the CARES Act. The Company recorded a gain of $0.5 million from the forgiveness of the loan during the nine months ended December 31, 2021.

On March 20, 2021, the Company received proceeds of $0.6 million from a second loan (the "Second PPP Loan") under the PPP of the CARES Act, which the Company intended to use to retain employees and for other qualifying expenses. The Second PPP Loan matures on March 20, 2026 and bears annual interest at a rate of 1.0%. In March 2022, the Company received confirmation from the SBA that the entire balance of the Second PPP Loan was forgiven as a result of the Company's application and acceptance under the terms of the CARES Act.

 **Note 9 – PodcastOne Bridge Loan**

 

*<u>PodcastOne's Private Placement</u>*

On July 15, 2022 (the "Closing Date"), the Company 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 (collectively, the "Purchasers"), for cash proceeds of $7.4 million, net of placement agent fees of $0.7 million, pursuant to the Subscription Agreements entered into with the Purchasers (the "Subscription Agreements"). In connection with the sale of the PC1 Notes, the Purchasers received warrants (the "PC1 Warrants") to purchase a number of shares (the "PC1 Warrant Shares") of the Company's common stock. The PC1 Notes mature on July 15, 2023, subject to a one-time three-month extension at the Company's election (the "Maturity Date"). The PC1 Notes bear interest at a rate of 10% per annum payable on maturity. The PC1 Notes shall automatically convert into the securities of the Company sold in a Qualified Financing (an initial public offering of the Company's securities from which the Company's trading market at the closing of such offering is a national securities exchange) or Qualified Event (a direct listing of the Company's securities on a national securities exchange), as applicable, upon the closing of a Qualified Financing or Qualified Event, as applicable, at a price per share equal to the lesser of (i) the price equal to $60.0 million divided by the aggregate number of shares of the Company's common stock outstanding immediately prior to the closing of a Qualified Financing or Qualified Event, as applicable (assuming full conversion or exercise of all convertible and exercisable securities of the Company then outstanding, subject to certain exceptions), and (ii) 70% of the offering price of the shares (or whole units, as applicable) in the Qualified Financing or 70% of the initial listing price of the shares on a national securities exchange in the Qualified Event, as applicable. Each holder of the PC1 Notes (other than LiveOne) may at such holder's option require the Company to redeem up to 45% of the principal amount of such holder's PC1 Notes (together with accrued interest thereon, but excluding the OID), in aggregate up to $3,000,000 for all of the PC1 Notes (other than those held by LiveOne), immediately prior to the completion of a Qualified Financing or a Qualified Event, as applicable, with such redemption to be made pro rata to the redeeming holders of the PC1 Notes (the "Optional Redemption"). Upon a Purchaser's redemption of any PC1 Notes pursuant to the Optional Redemption right, then a portion of such Purchaser's PC1 Warrants shall be forfeited and cancelled in accordance with the following formula: for each $0.001 million of the principal amount of the PC1 Notes redeemed, PC1 Warrants to purchase 100% of the Warrant Shares issued per $0.001 million of the principal amount of the PC1 Notes shall be immediately forfeited and cancelled.

LiveOne also agreed (i) not to effect a Qualified Financing or a Qualified Event, as applicable, unless immediately following such event LiveOne owns no less than 66% of the Company's equity, unless in either case otherwise permitted by the written consent of the holders of the majority of the PC1 Notes (excluding LiveOne) (the "Majority Noteholders") and LiveOne's senior lender, as applicable, (ii) that until a Qualified Financing or a Qualified Event, as applicable, is consummated, LiveOne guaranteed the repayment of the PC1 Notes when due (other than the Bridge Notes issued to LiveOne) and any interest or other fees due thereunder, and (iii) that if the Company has not consummated a Qualified Financing or a Qualified Event, as applicable, by February 15, 2023, March 15, 2023 or April 15, 2023, as applicable, unless in either case permitted by the written consent of the Majority Noteholders, the Company shall be required to redeem $1,000,000 of the then outstanding PC1 Notes pro rata from the PC1 Notes holders (other than the PC1 Notes issued to LiveOne) by the tenth calendar day of each month immediately following such respective date, up to an aggregate redemption of $3,000,000 over the course of such three months, each of which shall be distributed to the holders of the PC1 Notes (other than LiveOne) on a prorated basis (the "Early Redemption").

The Company further agreed to register the shares of its common stock issuable upon conversion of the PC1 Notes and exercise of the PC1 Warrants in connection with a Qualified Financing or a Qualified Event. If the Company does not file such registration statement on or prior to April 15, 2023, the Company shall be required to prepay $1,000,000 of the PC1 Notes pro rata to the PC1 Notes holders (other than the Company), and if the Company does not file such registration statement on or prior to July 15, 2023, the Company shall be required to prepay $2,000,000 of the PC1 Notes pro rata to the PC1 Notes holders (other than the Company) (the "Reg St Redemption"). The Company shall not be required to redeem or repay more than a total of $3,000,000 of the principal amount of the PC1 Notes as a result of the Optional Redemption, the Early Redemption and/or the Reg St Redemption.

The Company also agreed (i) not to effect the Direct Listing or an initial public offering, as applicable, unless immediately following such event LiveOne owns no less than 66% of our equity, unless in either case otherwise permitted by the written consent of the holders of the majority of the Bridge Notes (excluding LiveOne) (the "Majority Noteholders") and the senior lenders, as applicable, (ii) that until the Direct Listing or an initial public offering, as applicable, is consummated, LiveOne guaranteed the repayment of the Bridge Notes when due (other than the Bridge Notes issued to LiveOne) and any interest or other fees due thereunder, and (iii) that if we have not consummated the Direct Listing or an initial public offering, as applicable, by February 15, 2023, March 15, 2023 or April 15, 2023, unless in either case permitted by the written consent of the Majority Noteholders, the Company shall be required to redeem $1,000,000 of the then outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by the tenth calendar day of each month immediately following such respective date, up to an aggregate redemption of $3,000,000 over the course of such three months, each of which shall be distributed to the holders of the Bridge Notes (other than LiveOne) on a prorated basis (the "Early Redemption"). As of March 10, 2023, the Company has not yet consummated the Direct Listing and accordingly, we are currently required to redeem $1,000,000 of the outstanding Bridge Notes (other than the Bridge Notes issued to LiveOne) by March 10, 2023 (subject to any cure period).

The Company also agreed to register the shares of our common stock issuable upon conversion of the Bridge Notes and exercise of the Bridge Warrants and the Placement Agent Warrants in connection with the Direct Listing or an initial public offering. The registration statement of which this prospectus is a part is being filed to satisfy such requirements. If the Company does not file such registration statement on or prior to the date that is nine months after July 15, 2022, the Company shall be required to prepay $1,000,000 of the Bridge Notes pro rata to the Bridge Notes holders (other than LiveOne), and if the Company does not file such registration statement on or prior to the date that is 12 months after July 15, 2022, we shall be required to prepay $2,000,000 of the Bridge Notes pro rata to the Note holders (other than LiveOne) (the "Reg St Redemption"). The Company shall not be required to redeem or repay more than a total of $3,000,000 of the principal amount of the Bridge Notes as a result of the Optional Redemption, the Early Redemption and/or the Reg St Redemption.

***Warrants***

The PC1 Warrants are classified as liabilities as they represent an obligation to deliver a variable number of shares of the Company's common stock in the future and are therefore required to be initially and subsequently measured at fair value each reporting period. The Company recorded a warrant liability in the amount of $2.6 million (and reduced the proceeds allocated to the PC1 Notes accordingly). The fair value of the PC1 Warrant liability is remeasured each reporting period using a Monte Carlo simulation model, and the change in fair value is recorded as an adjustment to the PC1 Warrant liability with the unrealized gains or losses reflected in other income (expense).

The fair value of the PC1 Warrants is measured in accordance with ASC 820 "Fair Value Measurement", using "Monte Carlo simulation" modeling, incorporating the following inputs:

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br> **2022**  | **July 15,<br> 2022** |
| Expected dividend yield | -% | -% |
| Expected stock-price volatility | 75.10% | 88.80% |
| Risk-free interest rate | 3.95% | 3.02% |
| Simulated share price | $2.74 | $5.33 |
| Exercise price | $2.74 | $5.22 |

---

Total unrealized gains of $0.8 million for warrant liabilities accounted for as derivatives have been recorded in other expense for the nine months ended December 31, 2022 in the accompanying condensed consolidated statements of operations.

***Redemption Features***

The Company determined that the redemption features associated with the PC1 Bridge Loan meet the accounting definition of an embedded derivative that must be separated from the PC1 Bridge Loan and initially and subsequently be reported as a liability (the "Redemption Liability") and measured at fair value. The fair value of the Redemption Liability was determined using a Monte Carlo simulation model.

The fair value of the redemption features are measured in accordance with ASC 820 "Fair Value Measurement", using "Monte Carlo simulation" modeling, incorporating the following inputs:

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br> **2022**  | **July 15,<br> 2022** |
| Simulations | 100000 | 100000 |
| Expected stock-price volatility | 61.00% | 64.60% |
| Risk-free interest rate | 4.69% | 3.10% |
| Conversion price | $1.92 | $5.22 |
| Stock price | $2.79 | $3.73 |

---

The fair value of the Redemption Liability of $1.7 million at July 15, 2022 was recorded as a derivative liability in the consolidated balance sheets. The fair value of the Redemption Liability at December 31, 2022 is $1.4 million. The $0.3 million change in the fair value of the Redemption Liability derivative is recorded as a gain and included in other expenses in the accompanying condensed consolidated statements of operations at December 31, 2022.

The resulting discount from the OID, underwriting fees, PC1 Warrants, and embedded Redemption Liability derivative of $5.8 million is being amortized to interest expense through July 15, 2023, the expected term of the Bridge Loan, using the effective interest method. Interest expense resulting from the amortization of the discount for the nine months ended December 31, 2022 was $2.6 million.

Interest expense with respect to the PC1 Bridge Loan for the nine months ended December 31, 2022 was $0.4 million. There are no covenants associated with the PC1 Notes.

 **Note 10 — Related Party Transactions**

As of December 31, 2022, the Company's parent, LiveOne, holds $3.0 million of the outstanding PC1 Notes.

During the nine months ended December 31, 2022 and 2021, the Company was allocated expenses by its parent company, LiveOne, attributed to the overhead expenses incurred on behalf of the Company. The amount allocated to the Company from LiveOne for the nine months ended December 31, 2022 and 2021, was $0.4 million and $1.1 million, respectively.

On July 1, 2020, LiveOne made a contribution of $15.0 million to the Company to acquire PodcastOne.

As of December 31, 2022 and March 31, 2022, the Company had a related party payable owed to LiveOne of $2.4 million and $3.8 million, respectively, which primarily consisted of expenses related to overhead expenses paid on behalf of the Company (See Note 2 – Significant of Significant Accounting Policies). As of December 31, 2022 and March 31, 2022, the Company had a related party receivable from LiveOne of $4.6 million and $1.2 million, respectively, which primarily consisted of cash allocated to LiveOne.

During the year ended March 31, 2022 and nine months ended December 31, 2022, the Company entered into a production agreement for a podcast and related show with an affiliate of Mr. Wachsberger, the Company's director nominee.

 **Note 11 — Commitments and Contingencies**

*<u>Contractual Obligations</u>*

As of December 31, 2022, the Company is obligated under agreements with content providers and other contractual obligations to make guaranteed payments as follows: $1.2 million for the fiscal year ending March 31, 2023 and $0.1 million for the fiscal year ending March 31, 2024.

On a quarterly basis, the Company records the greater of the cumulative actual content acquisition costs incurred or the cumulative minimum guarantee based on forecasted usage for the minimum guarantee period. The minimum guarantee period of time is the period that the minimum guarantee relates to, as specified in each agreement, which may be annual or a longer period. The cumulative minimum guarantee, based on forecasted usage, considers factors such as listening hours, revenue, members, and other terms of each agreement that impact the Company's expected attainment or recoupment of the minimum guarantees based on the relative attribution method.

*<u>Employment Agreements</u>*

As of December 31, 2022, the Company has employment agreements with two named executive officers that provide salary payments of $0.3 million and $0.4 million each annually and target bonus compensation of up to $0.4 million on an annual basis. The terms of the employment agreements were from January 2021 to December 31, 2022.

*<u>Legal Proceedings</u>*

From time to time, the Company is involved in legal proceedings and other matters arising in connection with the conduct of its business activities. Many of these proceedings may be at preliminary stages and/or seek an indeterminate amount of damages. In the opinion of management, after consultation with legal counsel, such routine claims and lawsuits are not significant, and we do not currently expect them to have a material adverse effect on our business, financial condition, results of operations, or liquidity.

*<u>Parent Company Debt</u>*

 

The senior credit facility and the Harvest Notes (as defined below) held by the Company's parent, LiveOne, contain provisions that limit our operating activities, including covenant relating to the requirement to maintain a certain amount cash at LiveOne (as maybe adjusted from time to time) and of Free Cash (defined as cash on hand without any restrictions) at LiveOne. If an event of default occurs and is continuing, the lenders may among other things, terminate their obligations thereunder, accelerate their debt and require LiveOne and/or the Company to repay all amounts thereunder. For example, on October 13, 2022, a judgement was entered in favor of SoundExchange, Inc. ("SX") against LiveOne and Slacker in the United States District Court Central District of California in the amount of approximately $9.8 million. In February 2023, LiveOne settled the dispute. LiveOne's debt agreements with the provider of its senior credit facility contains a covenant that if a material adverse change occurs in its financial condition, or such lender reasonably believes the prospect of payment or performance of their loan is materially impaired, the lender at its option may immediately accelerate its debt and require LiveOne and the Company to repay all outstanding amounts owed thereunder. If for any reason LiveOne fails to comply with the terms of its settlement agreement with SX, its senior credit facility provider may declare an event of default and at its option may immediately accelerate its debt and require LiveOne and the Company to repay all outstanding amounts owed under the senior credit facility, which would materially adversely impact the Company's business, operating results and financial condition. As of December 31, 2022, the Company was in full compliance with these covenants.

In February 2023, the Harvest Notes were exchange for Series A Preferred Stock of LiveOne (See Note 15 - Subsequent Events).

 **Note 12 — Employee Benefit Plan**

The Company's parent LiveOne sponsors a 401(k) plan (the "401(k) Plan") covering all the Company's employees. Employees are eligible to participate in the 401(k) Plan the first day of the calendar month following their date of hire. The Company may make discretionary matching contributions to the 401(k) Plan on behalf of its employees up to a maximum of 100% of the participant's elective deferral up to a maximum of 5% of the employees' annual compensation. The Company's matching contributions were not material to the consolidated financial statements for the nine months ended December 31, 2022 and 2021.

 **Note 13 — Stockholders' Equity** 

 *<u>Spin-Out</u>*

In connection with the anticipated Spin-Out of the Company, LiveOne, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., canceled 127,984,230 shares of the Company's common stock. As of December 15, 2022, LiveXLive PodcastOne, Inc. owned 20,000,000 shares of the Company's common stock, which constituted 100% of the Company's issued and outstanding shares of common stock as of such date.

Pursuant to the Company's Amended and Restated Certificate of Incorporation which was approved by the Company's board of directors and LiveOne as the sole stockholder on December 15, 2022, the Company has the authority to issue up to 110,000,000 shares, consisting of 100,000,000 shares of the Company's common stock, $0.00001 par value per share and 10,000,000 shares of the Company's preferred stock, $0.00001 par value per share.

*<u>2016 Equity Incentive Plan</u>*

LiveOne's board of directors and stockholders approved its 2016 Equity Incentive Plan, as amended (the "2016 Plan") which reserved a total of 12,600,000 shares of LiveOne's common stock for issuance. On September 17, 2020, LiveOne's stockholders approved the amendment to the 2016 Plan to increase the number of shares available for issuance under the 2016 Plan by 5,000,000 shares increasing the total up to 17,600,000 shares, which increase was formally adopted by LiveOne on June 29, 2021. Incentive awards authorized under the 2016 Plan include, but are not limited to, nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and stock appreciation rights. If an incentive award granted under the 2016 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to LiveOne in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2016 Plan.

*<u>Options Grants to the Company's Employees</u>*

Stock option awards are granted with an exercise price equal to the fair market value of LiveOne's common stock at the date of grant based on the closing market price of its common stock as reported on The Nasdaq Capital Market. The option awards generally vest over two to four years and are exercisable any time after vesting. The stock options expire ten years after the date of grant.

As of December 31, 2022, unrecognized compensation costs for unvested LiveOne awards to the Company's employees was $0.1 million, which is expected to be recognized over a weighted-average service period of 1.2 years.

The following table provides information about LiveOne's option grants made to the Company's employees during the last two fiscal years:

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** |
|  | **2022** | **2021** |
| Number of options granted | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | 15000 |
| Weighted-average exercise price per share | $- | $4.10 |
| Weighted-average grant date fair value per share | $- | $1.85 |

---

The grant date fair value of each of these option grants to employees was determined using the Black-Sholes-Merton option-pricing model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended<br> December 31,** | **Nine Months Ended<br> December 31,** |
|  | **2022** | **2021** |
| Expected volatility | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;73.61% |
| Dividend yield | -% | -% |
| Risk-free rate | -% | 0.46% |
| Expected term (in years) |  | 6.25 |

---

The following table summarizes the activity of LiveOne's options issued to the Company's employees during the nine months ended December 31, 2022:

---

| | | |
|:---|:---|:---|
|  | **Number of Shares** | **Weighted-<br> Average<br> Exercise<br> Price per<br> Share** |
| Outstanding as of April 1, 2021 | 165000 | $3.74 |
| Granted | 120000 | 4.10 |
| Exercised |  |  |
| Forfeited or expired | - |  |
| Outstanding as of March 31, 2022 | 285000 | 2.94 |
| Granted |  |  |
| Exercised |  |  |
| Forfeited or expired | - |  |
| Outstanding as of December 31, 2022 | 285000 | 2.94 |
| Exercisable as of December 31, 2022 | 88750 | 3.67 |

---

The weighted-average remaining contractual term for options to employees outstanding and options to employees exercisable as of December 31, 2022 was 8.23 years and 7.79 years, respectively. The intrinsic value of options to employees outstanding and options to employees exercisable was none and none, respectively, at December 31, 2022.

The fair value of stock options outstanding and exercisable at December 31, 2022 was $0.5 million and $0.2 million, respectively. The fair value of stock options outstanding and exercisable at December 31, 2021 was $0.4 million and $0.2 million, respectively.

*<u>Restricted Stock Units Grants</u>*

As of December 31, 2022, unrecognized compensation costs for unvested LiveOne awards to the Company's employees was $0.2 million, which is expected to be recognized over a weighted-average service period of 1.15 years.

The following table provides information about LiveOne's restricted stock units grants made to the Company's employees during the last two fiscal years:

---

| | | |
|:---|:---|:---|
|  | **Nine Months ended <br> December 31,** | **Nine Months ended <br> December 31,** |
|  | **2022** | **2021** |
| Number of units granted | 265000 | 425000 |
| Weighted-average grant date fair value per share | $1.10 | $4.63 |

---

The following table summarizes the activity of LiveOne's restricted stock units issued to the Company's employees during the nine months ended December 31, 2022:

---

| | |
|:---|:---|
|  | **Number of Shares** |
| Outstanding as of April 1, 2021 | 200000 |
| Granted | 500000 |
| Vested | (312500) |
| Cancelled | - |
| Outstanding as of March 31, 2022 | 387500 |
| Granted | 265000 |
| Vested | (289375) |
| Cancelled | (5000 ) |
| Outstanding as of December 31, 2022 | 358125 |

---

The fair value of restricted stock units that vested during the nine months ended December 31, 2022 and 2021 was $1.0 million and $0.4 million, respectively.

*<u>2022 Equity Plan</u>*

On December 15, 2022, the Company's board of directors and LiveOne as the sole stockholder, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., approved the Company's 2022 Equity Incentive Plan (the "2022 Plan") which reserved a total of 2,000,000 shares of the Company's common stock for issuance. Incentive awards authorized under the 2022 Plan include, but are not limited to, nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and stock appreciation rights. If an incentive award granted under the 2022 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to the Company in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2022 Plan. The Company has not issued any inventive awards under the 2022 Plan.

*<u>Authorized Common Stock and Authority to Create Preferred Stock</u>*

Pursuant to the Company's Amended and Restated Certificate of Incorporation which was approved by the Company's board of directors and LiveOne as the sole stockholder on December 15, 2022, the Company currently has the authority to issue up to 110,000,000 shares, consisting of 100,000,000 shares of the Company's common stock, $0.00001 par value per share, and 10,000,000 shares of the Company's preferred stock, $0.001 par value per share (the "preferred stock").

The Company may issue shares of preferred stock from time to time in one or more series, each of which will have such distinctive designation or title as shall be determined by the Company's board of directors and will have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issue of such class or series of preferred stock as may be adopted from time to time by the Company's board of directors. The Company's board of directors will have the power to increase or decrease the number of shares of preferred stock of any series after the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased, the shares constituting such decrease will resume the status of authorized but unissued shares of preferred stock.

While the Company does not currently have any plans for the issuance of preferred stock, the issuance of such preferred stock could adversely affect the rights of the holders of common stock and, therefore, reduce the value of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the common stock until and unless the Company's board of directors determines the specific rights of the holders of the preferred stock; however, these effects may include: restricting dividends on the common stock, diluting the voting power of the common stock, impairing the liquidation rights of the common stock, or delaying or preventing a change in control of the Company without further action by the stockholders.

 **Note 14 — Fair Value Measurements**

The following table presents the fair value of the Company's financial liabilities that are measured at fair value on a recurring basis (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | | **Hierarchy Level** | **Hierarchy Level** | **Hierarchy Level** |
|  | **Fair**<br> **Value** | **Level 1** | **Level 2** | **Level 3** |
| Liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Warrant liability on PodcastOne bridge loan | $1854 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $1854 |
| &nbsp;&nbsp;&nbsp; Bifurcated embedded derivative on PodcastOne bridge loan | 1411 | - | - | 1411 |
|  | $3265 | $- | $- | $3265 |

---

The following table presents a reconciliation of the Company's financial liabilities that are measured at Level 3 within the fair value hierarchy (in thousands):

---

| | |
|:---|:---|
|  | **Amount** |
| Balance at March 31, 2022 | $- |
| Embedded derivative and warrant issued in connection with PodcastOne Bridge Loan | 4308 |
| Change in fair value of bifurcated embedded derivatives, reported in earnings | (1043) |
| Balance as of December 31, 2022 | $3265 |

---

Due to their short maturity, the carrying amounts of the Company's accounts receivable, accounts payable, accrued expenses and other long-term liabilities approximated their fair values as of December 31, 2022 and March 31, 2022.

The Company has estimated the fair value of contingent consideration related to the acquisitions of PodcastOne based on the number of shares issuable based on the achievement of certain provisions within the purchase agreement, as detailed in Note 4 – Business Combinations, using the quoted price of the LiveOne's common stock on the balance sheet date.

 **Note 15 — Subsequent Events**

On February 3, 2023 (the "Effective Date"), LiveOne entered into an exchange agreement (collectively, the "Exchange Agreements") with (i) Harvest Small Cap Partners Master, Ltd. ("HSCPM") in regard to that certain 8.5% Senior Secured Convertible Note in the aggregate amount of $10,503,965 issued by the LiveOne on September 15, 2020, as amended on June 3, 2021 and July 6, 2022, to HSCPM (the "HSCPM Note"), (ii) Harvest Small Cap Partners, L.P. ("HSCP") in regard to that certain 8.5% Senior Secured Convertible Note in the aggregate amount of $4,496,035 issued by LiveOne on September 15, 2020, as amended on June 3, 2021 and July 6, 2022, to HSCP (the "HSCP Note" and together with the HSCPM Note, the "Harvest Notes"); and (iii) Trinad Capital (and collectively with HSCPM and HSCP, the "Holders") in regard to all promissory notes in the aggregate principal and interest amount of $6,177,218 issued by the Company to Trinad Capital (the "Trinad Notes" and collectively with the Harvest Notes, the "Notes"). Pursuant to the Exchange Agreements, the Holders exchanged the Notes, and with respect to Trinad Capital, together with interest, due and payable thereon, and relinquished any and all rights thereunder, for 21,177 shares of LiveOne's newly designated and issued Series A Perpetual Convertible Preferred Stock, par value $0.001 per share (the "Series A Preferred Stock"), with a stated value of $1,000 per share (the "Stated Value"), having the terms as set forth in LiveOne's Certificate of Designation of Preferences, Rights and Limitations of Series A Perpetual Convertible Preferred Stock (the "Certificate of Designation") filed by LiveOne on February 2, 2023 with the Secretary of State of the State of Delaware.

The Company has evaluated events and transactions that occurred subsequent to December 31, 2022 through March 13, 2023, the date the financial statements were available to be issued. There have been no other events or transactions during this time, which would have a material, effect on these financial statements.

![](image_001.jpg)

**, 2023** 

**Through and including , 2023 (the 25th day after the listing date of our common stock), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus.** 

**PART II** 

**INFORMATION NOT REQUIRED IN PROSPECTUS** 

**Item 13.** **Other Expenses of Issuance and Distribution** 

The following table sets forth the costs and expenses payable by the Registrant in connection with this registration statement and the listing of the Registrant's common stock. All amounts shown are estimates except for the SEC registration fee and The Nasdaq Capital Market listing fee.

---

| | |
|:---|:---|
|  | **Amount<br> Paid or<br> to Be Paid** |
| SEC registration fee | $76.49 |
| Nasdaq Capital Market listing fee | 75000 |
| Printing expenses | 25000 |
| Legal fees and expenses | 200000 |
| Accounting fees and expenses | 355000 |
| Transfer agent and registrar fees and expenses | 15000 |
| Other advisor fees | 50000 |
| Miscellaneous expenses | 100000 |
| &nbsp;&nbsp;&nbsp; **Total** | $820076.49 |

---

**Item 14.** **Indemnification of Directors and Officers**

As permitted by Section 102 of the Delaware General Corporation Law (the "DGCL"), we expect to adopt provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, which will become effective in connection with the effectiveness of this registration statement, that limit or eliminate the personal liability of our officers and directors for a breach of their fiduciary duty as a director and/or officer, as applicable. For example, the fiduciary duty of care generally requires that, when acting on behalf of the corporation, directors exercise an informed business judgment based on all material information reasonably available to them. Consequently, a director will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for:

● any breach of the director's duty of loyalty to us or our stockholders;

● any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

● any act related to unlawful stock repurchases, redemptions, or other distributions or payment of dividends; or

● any transaction from which the director derived an improper personal benefit.

These limitations of liability do not affect the availability of equitable remedies such as injunctive relief or rescission. Our Amended and Restated Certificate of Incorporation will also authorize us to indemnify our officers, directors, and other agents to the fullest extent permitted under Delaware law.

As permitted by Section 145 of the DGCL, our Amended and Restated Bylaws will provide that:

● we may indemnify our directors, officers, and employees to the fullest extent permitted by the DGCL, subject to limited exceptions;

● we may advance expenses to our directors, officers, and employees in connection with a legal proceeding to the fullest extent permitted by the DGCL, subject to limited exceptions; and

● the rights provided in our Amended and Restated Bylaws are not exclusive.

Our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws will provide for the indemnification provisions described above and elsewhere herein. We have entered or will enter into, and intend to continue to enter into, separate indemnification agreements with our directors and officers that may be broader than the specific indemnification provisions contained in the DGCL. These indemnification agreements generally require us, among other things, to indemnify our officers and directors against certain liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct. These indemnification agreements also generally require us to advance any expenses incurred by the directors or officers as a result of any proceeding against them as to which they could be indemnified. These indemnification provisions and the indemnification agreements may be sufficiently broad to permit indemnification of our officers and directors for liabilities, including reimbursement of expenses incurred, arising under the Securities Act of 1933, as amended (the "Securities Act").

We have purchased and currently intend to maintain insurance on behalf of each and every person who is or was a director or officer of our Company against any loss arising from any claim asserted against him or her and incurred by him or her in any such capacity, subject to certain exclusions.

**Item 15.** **Recent Sales of Unregistered Securities** 

Set forth below is information regarding all securities issued by the Registrant without registration under the Securities Act since April 1, 2019. The Registrant believes that each of these transactions was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2), Regulation D or Rule 701 of the Securities Act or as transactions not involving the sale of securities.

*Equity Plan-Related Issuances* 

Since April 1, 2019, under our 2022 Equity Incentive Plan, we have granted to our employees, consultants, and other service providers (i) options to purchase an aggregate of 0 shares of our common stock at a weighted-average exercise price of $0 per and (ii) 0 restricted stock units.

 

*Sales of Convertible Notes and Warrants* 

On July 15, 2022, we completed a private placement offering (the "Bridge Financing") of our unsecured convertible notes with an original issue discount of 10% (the "OID") in the aggregate principal amount of $8,838,500 (the "Bridge Notes") to certain accredited investors and institutional investors (collectively, the "Bridge Investors"), for gross proceeds of $8,035,000 pursuant to the Subscription Agreements entered into with the Bridge Investors. In connection with the issuance of the Bridge Notes, each Bridge Investor received five-and-one-half-year warrants to purchase such number of shares of our common stock (the "Bridge Warrant Shares") equal to the 100% of the principal amount of such investor's Bridge Note divided by the quotient of (i) $60,000,000 (the "Valuation Cap") divided by (ii) the Fully Diluted Capitalization (as defined in the Bridge Notes) immediately prior to a direct listing or an initial public offering, as applicable, at a per share exercise price equal to (A) if a direct listing or an initial public offering, as applicable, has occurred on or before the maturity date of the Bridge Noes, the lower of (x) the quotient of (I) the Valuation Cap divided by (II) the Fully Diluted Capitalization immediately prior to the direct listing or the initial public offering, as applicable, and (y) the purchase price per share or other whole unit in the direct listing or the initial public offering, as applicable, or (B) if the direct listing or the initial public offering, as applicable, has not occurred on or before the maturity date, the Voluntary Conversion Price (as defined in the Bridge Notes). As part of the Bridge Financing, LiveOne purchased $3 million worth of Bridge Notes.

The offers, sales, and issuances of the securities described in paragraph above were deemed to be exempt under Section 4(a)(2) of the Securities Act, Rule 506 of Regulation D or Rule 701 under the Securities Act as a transaction by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Certain recipients of securities in these transactions were accredited investors within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access to information about us. No underwriters were involved in these transactions.

**Item 16.** **Exhibits and Financial Statement Schedules** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Exhibits

---

| | |
|:---|:---|
| **Exhibit<br> Number** | **Description** |
| 3.1\* | [Certificate of Incorporation of the Registrant, as currently in effect.](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex3-1_courtside.htm) |
| 3.2\* | [Certificate of Amendment to the Certificate of Incorporation of the Registrant, as currently in effect.](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex3-2_courtside.htm) |
| 3.3\* | [Form of Amended and Restated Certificate of Incorporation of the Registrant, to be effective in connection with the effectiveness of the registration statement of which this prospectus forms a part.](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex3-3_courtside.htm) |
| 3.4\* | [Bylaws of the Registrant, as currently in effect.](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex3-4_courtside.htm) |
| 3.5\* | [Form of Amended and Restated Bylaws of the Registrant, to be effective in connection with the effectiveness of the registration statement of which this prospectus forms a part.](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex3-5_courtside.htm) |
| 4.1\* | [Form of 10% Original Issued Discount Convertible Promissory Note, dated July 15, 2022, issued by the Registrant to the Purchasers](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex4-2_courtside.htm). |
| 4.2\* | [Form of Warrants, dated July 15, 2022, issued by the Registrant to the Purchasers.](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex4-3_courtside.htm) |
| 5.1\*\* | [Opinion of Foley Shechter Ablovatskiy LLP.](ea173966ex5-1_courtside.htm) |
| 10.1\* | [Form of Subscription Agreement, dated as of July 15, 2022, between the Registrant and the Purchasers](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex10-1_courtside.htm). |
| 10.2\* | [The Registrant's 2022 Equity Incentive Plan](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex10-2_courtside.htm). |
| 10.3†\*\* | [Form of Director Option Agreement under the 2022 Equity Incentive Plan.](ea173966ex10-3_courtside.htm) |
| 10.4†\*\* | [Form of Employee Option Agreement under the 2022 Equity Incentive Plan.](ea173966ex10-4_courtside.htm) |
| 10.5†\* | [Employment Agreement, dated as of February 10, 2021, between the Registrant and Kit Gray](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex10-5_courtside.htm). |
| 10.6†\*\* | [Form of Indemnification Agreement between the Registrant and each of its directors and executive officers.](ea173966ex10-6_courtside.htm) |
| 10.7\*\* | [Form of Lock-Up Agreement between the Registrant and each of its directors and executive officers.](ea173966ex10-7_courtside.htm) |
| 10.8\*\* | [Form of Lock-Up Agreement between the Registrant and each of the Purchasers.](ea173966ex10-8_courtside.htm) |
| 10.9# | Form of Administrative Services Agreement. |
| 10.10# | Form of Separation Agreement. |
| 21.1\* | [List of Subsidiaries of the Registrant](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex21-1_courtside.htm). |
| 23.1\*\* | [Consent of Macias Gini & O'Connell LLP, independent registered public accounting firm.](ea173966ex23-1_courtside.htm) |
| 23.2\*\* | [Consent of Foley Shechter Ablovatskiy LLP (included in Exhibit 5.1).](ea173966ex5-1_courtside.htm) |
| 24.1\*\* | [Powers of Attorney (contained on the signature page hereto).](#POA_001) |
| 99.1\* | [Consent of Ramin Arani](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex99-1_courtside.htm). |
| 99.2\* | [Consent of Craig Foster](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex99-2_courtside.htm). |
| 99.3\* | [Consent of Jay Krigsman](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex99-3_courtside.htm). |
| 99.4\* | [Consent of Patrick Wachsberger](http://www.sec.gov/Archives/edgar/data/1940177/000121390022082965/ea170591ex99-4_courtside.htm). |
| 107\*\* | [Fee Table](ea173966ex-fee_courtside.htm) |

---

---

| | |
|:---|:---|
| \* | Previously filed |
| \*\* | Filed herewith |
| † | Indicates a management contract or compensatory plan. |
| # | To be filed by amendment. |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Financial Statement Schedules.

No financial statement schedules are provided because the information called for is not applicable or is shown in the financial statements or notes thereto.

**Item 17.** **Undertakings** 

The undersigned Registrant hereby undertakes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) To include any prospectus required by Section 10(a)(3) of the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

**SIGNATURES** 

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Los Angeles, State of California, on March 13, 2023.

---

| | |
|:---|:---|
| **Courtside Group, Inc.** | **Courtside Group, Inc.** |
| By: | /s/ *Kit Gray* |
| Name: | Kit Gray |
| Title: | President (Principal Executive Officer) |

---

We, the undersigned directors and officers of the Registrant, hereby severally constitute and appoint Kit Gray, Robert S. Ellin and Aaron Sullivan, and each of them singly, our true and lawful attorneys, with full power to them, and to each of them singly, to sign for us and in our names in the capacities indicated below, the registration statement on Form S-1 filed herewith, and any and all pre-effective and post-effective amendments to said registration statement, and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of equity securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of us might or could do in person, and hereby ratifying and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| */*s*/ Aaron Sullivan* | Interim Chief Financial Officer | March 13, 2023 |
| Aaron Sullivan | (Interim Principal Accounting Officer) |  |
| */*s*/ Robert Ellin* | Executive Chairman and Director | March 13, 2023 |
| Robert Ellin |  |  |
| */*s*/ James Berk* | Director | March 13, 2023 |
| James Berk |  |  |

---

## Exhibit 5.1

**Exhibit 5.1**

![](ex5-1_001.jpg)

1180 Avenue of the Americas \| 8th Floor

New York, New York 10036

Dial: 212.335.0466

Fax: 917.688.4092

info@foleyshechter.com

www.foleyshechter.com

March 13, 2023

Courtside Group, Inc.<br> 335 North Maple Drive, Suite 127

Beverly Hills, CA 90210

Re: Courtside Group, Inc.'s Registration Statement on Form S-1 (File No. 333-269028)

Ladies and Gentlemen:

We have acted as counsel to Courtside Group, Inc., a Delaware corporation (the "Company"), in connection with the preparation and filing on December 27, 2022 with the U.S. Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations promulgated thereunder, of the Company's Registration Statement on Form S-1 (File No. 333-269028) (as so filed and as amended, the "Registration Statement"), including the prospectus which forms a part of the Registration Statement (the "Prospectus"), for the registration of the offer and sale from time to time by the selling stockholders of the Company named in the Registration Statement (the "Selling Stockholders") of up to 8,272,273 shares of the Company's common stock, par value $0.00001 per share (the "Common Stock"), all of which are being offered by certain stockholders (the "Registered Stockholders") of the Company, consisting of: (i) 2,020,000 shares (of Common Stock the "Dividend Shares") all of which are being offered by LiveOne, Inc., the Company's parent ("LiveOne"), as a Registered Stockholder; and (ii) 6,252,273 shares of Common Stock, consisting of: (x) 3,138,273 shares of Common Stock (the "Conversion Shares") issuable upon conversion of the Company's convertible promissory notes in an aggregate principal amount of $8,838,500, plus accrued and unpaid interest thereon held by certain Registered Stockholders (the "Notes"), (y) 2,946,167 shares of Common Stock (the "Warrant Shares") issuable upon the exercise of warrants (the "Warrants") that were issued to certain Registered Stockholders in connection with the Notes, and (z) 167,833 shares of Common Stock (the "Placement Agent Warrant Shares" and, together with the Conversion Shares and the Warrant Shares, the "Shares") issuable upon the exercise of warrants (the "Placement Agent Warrants") that were issued to the placement agent in connection with the offering of the Notes and the Warrants. The Dividend Shares are to be distributed by LiveOne in accordance with, and upon the terms and subject to the satisfaction of the conditions as described in the Prospectus. The Shares are to be issued by the Company in accordance with, and upon the terms and subject to the satisfaction of the conditions set forth in the Subscription Agreements, dated as of July 15, 2022, by and between the Company and certain Selling Stockholders (the "Subscription Agreements"), and related Notes, Warrants and Placement Agent Warrants as described in the Prospectus. This opinion is being furnished in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act, and no opinion is expressed herein as to any matter pertaining to the contents of the Registration Statement or the Prospectus, other than as expressly stated herein with respect to the listing of the Dividend Shares and the Shares.

As such counsel, we have examined the Registration Statement, the Prospectus, the Subscription Agreements, the Notes, the Warrants, the Placement Agent Warrants and such documents and considered such legal matters as we have deemed necessary and relevant as the basis for the opinion set forth below. With respect to such examination, we have assumed the following: (i) the authenticity of original documents and the genuineness of all signatures; (ii) the conformity to the originals of all documents submitted to us as copies; and (iii) the truth, accuracy and completeness of the information, representations and warranties contained in the records, documents, instruments and certificates we have reviewed. As to questions of fact material to this opinion, we have, to the extent deemed appropriate, relied upon certain representations of certain officers and employees of the Company without having independently verified such factual matters.

Subject to the foregoing and the other matters set forth herein, it is our opinion that, as of the date hereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Dividend Shares have been duly authorized by all necessary corporate action of the Company, and, upon (i) the due execution by the Company and registration by its registrar of such Dividend Shares, and (ii) the issuance and delivery of such Dividend Shares, the Dividend Shares will be validly issued, fully paid and non-assessable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Conversion Shares have been duly authorized by all necessary corporate action of the Company, and, upon (i) the due execution by the Company and registration by its registrar of such Conversion Shares, (ii) the issuance and delivery of such Conversion Shares upon conversion of the Notes in accordance with the terms thereof and (iii) receipt by the Company of the consideration therefor in accordance with the terms of the Notes, the Conversion Shares will be validly issued, fully paid and non-assessable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The Warrant Shares have been duly authorized by all necessary corporate action of the Company, and, upon (i) the due execution by the Company and registration by its registrar of such Warrant Shares, (ii) the issuance and delivery of such Warrant Shares upon exercise of the Warrants in accordance with the terms thereof and (iii) receipt by the Company of the consideration therefor in accordance with the terms of the Warrants, the Warrant Shares will be validly issued, fully paid and non-assessable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The Placement Agent Warrant Shares have been duly authorized by all necessary corporate action of the Company, and, upon (i) the due execution by the Company and registration by its registrar of such Placement Agent Warrant Shares, (ii) the issuance and delivery of such Placement Agent Warrant Shares upon exercise of the Placement Agent Warrants in accordance with the terms thereof and (iii) receipt by the Company of the consideration therefor in accordance with the terms of the Placement Agent Warrants, the Placement Agent Warrant Shares will be validly issued, fully paid and non-assessable.

Our opinions set forth herein are limited to the laws of the State of New York, all applicable provisions of the Delaware constitution (and all applicable judicial and regulatory determinations) and the General Corporation Law of the State of Delaware (the "DGCL"), and, to the extent that judicial or regulatory orders or decrees or consents, approvals, licenses, authorizations, validations, filings, recordings or registrations with governmental authorities are relevant, to those required under such laws (all of the foregoing being referred to as "Covered Law"). We do not express any opinion with respect to the law of any jurisdiction other than Covered Law or as to the effect of any such non-Covered Law on the opinions herein.

In rendering the foregoing opinion, we have assumed that the Company will comply with all applicable notice requirements regarding uncertificated shares provided in the DGCL. This opinion is for your benefit in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable provisions of the Securities Act.

We hereby consent to the use of this opinion as an exhibit to the Registration Statement, to the use of our name as your counsel and to all references made to us in the Registration Statement and in the Prospectus forming a part thereof. In giving this consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the SEC promulgated thereunder.

Please note that we are opining only as to the matters expressly set forth herein, and no opinion should be inferred as to any other matters. This opinion is expressed as of the date hereof unless otherwise expressly stated and is based upon currently existing statutes, rules, regulations and judicial decisions, and we disclaim any obligation to advise you of any change in any of these sources of law or subsequent legal or factual developments which might affect any matters or opinions set forth herein.

---

| |
|:---|
| Sincerely yours, |
| /s/ *Foley Shechter Ablovatskiy LLP* |

---

## Exhibit 10.3

**Exhibit 10.3**

**<u>STOCK OPTION AGREEMENT</u>**

**COURTSIDE GROUP, INC.**

THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into as of the ___ day of ______________, 202__ (the "Date of Grant"),

BETWEEN: **COURTSIDE GROUP, INC.**, a company incorporated pursuant to the laws of the State of Delaware (the "Company"),

AND: **[_______________],** of ________________________________ (the "Optionee").

**WHEREAS:**

A. The Board of Directors of the Company (the "Board") has approved and adopted the Courtside Group, Inc. 2022 Equity Incentive Plan (the "2022 Plan"), pursuant to which the Board is authorized to grant to employees and other selected service providers and persons, including members of the Board, stock options to purchase common shares of the Company (the "Common Stock");

B. The 2022 Plan provides for the granting of stock options that either (i) are intended to qualify as "Incentive Stock Options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or (ii) do not satisfy the requirements for qualification under Section 422 of the Code ("Nonstatutory Stock Options"); and

C. The Board has authorized the grant to Optionee of options to purchase a total of **[_______________] ([____])** shares of Common Stock (the "Options"), which Options are intended to be (select one):

☐ Incentive Stock Options; <br>☒ Nonstatutory Stock Options

NOW THEREFORE, the Company agrees to offer to the Optionee the option to purchase, upon the terms and conditions set forth herein and in the Plan, [__________] **(**[____]**)** shares of Common Stock. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the 2022 Plan.

1. <u>Exercise Price.</u> The exercise price of the options shall be **US$**[_____] per share.

2. <u>Limitation on the Number of Shares.</u> If the Options granted hereby are Incentive Stock Options, the number of shares which may be acquired upon exercise thereof is subject to the limitations set forth in Section 6(a) of the 2022 Plan.

3. <u>Vesting Schedule.</u> The Options shall vest in accordance with <u>Exhibit A</u> attached hereto.

4. <u>Options not Transferable.</u> Subject to Section 13 of the 2022 Plan, the Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner (whether by operation of law or otherwise) other than by will or by the laws of descent or distribution or, in the case of a Nonstatutory Stock Option, pursuant to a qualified domestic relations order, and shall not be subject to execution, attachment or similar process; *provided, however* , that if the Options represent a Nonstatutory Stock Option, such Option is transferable without payment of consideration to immediate family members of the Optionee or to trusts or partnerships established exclusively for the benefit of the Optionee and Optionee's immediate family members. Upon any attempt to transfer, pledge, hypothecate or otherwise dispose of any Option or of any right or privilege conferred by the 2022 Plan contrary to the provisions thereof, or upon the sale, levy or attachment or similar process upon the rights and privileges conferred by the 2022 Plan, such Option shall thereupon terminate and become null and void.

5. <u>Investment Intent.</u> By accepting the Options, the Optionee represents and agrees that none of the shares of Common Stock purchased upon exercise of the Options will be distributed in violation of applicable federal and state laws and regulations. In addition, the Company may require, as a condition of exercising the Options, that the Optionee execute an undertaking, in such a form as the Company shall reasonably specify, that the Stock is being purchased only for investment and without any then-present intention to sell or distribute such shares.

6. <u>Termination of Employment and Options.</u> Vested Options shall terminate, to the extent not previously exercised, upon the occurrence of the first of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Expiration.</u> [__________] ([____]) years from the Date
of Grant.

&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Termination for Cause.</u> The date of the first discovery
by the Company of any reason for the termination of an Optionee's employment or contractual relationship with the Company or any
related company for cause (as determined in the sole discretion of the Administrator (as defined in the 2022 Plan)), and, if an Optionee's
employment is suspended pending any investigation by the Company as to whether the Optionee's employment should be terminated for
cause, the Optionee's rights under this Agreement and the 2022 Plan shall likewise be suspended during the period of any such investigation.

&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Termination Due to Death or Disability.</u> Subject to Section
6(d)(iii) of the 2022 Plan, the expiration of six (6) months from the date of the death of the Optionee or cessation of an Optionee's
employment or contractual relationship by reason of Disability (within the meaning of Section 22(e) of the Code) (but in no event later
than the expiration of the term of such Option as set forth in this Agreement). Subject to Section 6(d)(iv) of the 2022 Plan, if an Optionee's
employment or contractual relationship is terminated by death, any Option held by the Optionee shall be exercisable only by the person
or persons to whom such Optionee's rights under such Option shall pass by the Optionee's will or by the laws of descent and
distribution.

&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Termination For Any Other Reason.</u> If the Optionee's
employment or contractual relationship terminates for reasons other than those described in the preceding Sections 6(b) or 6(c), then
the Option shall terminate, to the extent not previously exercised, in accordance with Section 6(a).

Each unvested Option granted pursuant hereto shall terminate immediately upon termination of the Optionee's employment or contractual relationship with the Company for any reason whatsoever, including Disability unless vesting is accelerated in accordance with the 2022 Plan.

7. <u>Stock.</u> In the case of any stock split, stock dividend or like change in the nature of shares of Stock covered by this Agreement, the number of shares and exercise price shall be proportionately adjusted as set forth in Section 14(a) of the 2022 Plan.

8. <u>Exercise of Option.</u> Options shall be exercisable, in full or in part, at any time after vesting, until termination; *provided, however,* that any Optionee who is subject to the reporting and liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended, with respect to the Common Stock shall be precluded from selling or transferring any Common Stock or other security underlying an Option during the six (6) months immediately following the grant of that Option. If less than all of the shares included in the vested portion of any Option are purchased, the remainder may be purchased at any subsequent time prior to the expiration of the Option term. Only whole shares may be issued pursuant to an Option, and to the extent that an Option covers less than one (1) share, it is unexercisable.

Each exercise of the Option shall be by means of delivery of a notice of election to exercise (which may be in the form attached hereto as <u>Exhibit B)</u> to the Chief Financial Officer of the Company at its principal executive office, specifying the number of shares of Common Stock to be purchased and accompanied by payment in cash by certified check or cashier's check in the amount of the full exercise price for the Common Stock to be purchased. In addition to payment in cash by certified check or cashier's check, an Optionee or transferee of an Option may pay for all or any portion of the aggregate exercise price by complying with one or more of the following alternatives:

&nbsp;&nbsp;&nbsp;&nbsp;(a) by
delivering to the Company shares of Common Stock previously held by such person, duly endorsed for transfer to the Company, or by the
Company withholding shares of Common Stock otherwise deliverable pursuant to exercise of the Option, which shares of Common Stock received
or withheld shall have a fair market value at the date of exercise (as determined by the Administrator) equal to the aggregate purchase
price to be paid by the Optionee upon such exercise; or

&nbsp;&nbsp;&nbsp;&nbsp;(b) by
complying with any other payment mechanism approved by the Administrator at the time of exercise.

It is a condition precedent to the issuance of shares of Common Stock that the Optionee execute and/or deliver to the Company all documents and withholding taxes required in accordance with Section 15 of the 2022 Plan.

9. <u>Holding period for Incentive Stock Options.</u> In order to obtain the tax treatment provided for Incentive Stock Options by Section 422 of the Code, the shares of Common Stock received upon exercising any Incentive Stock Options received pursuant to this Agreement must be sold, if at all, after a date which is later of two (2) years from the date of this Agreement is entered into or one (1) year from the date upon which the Options are exercised. The Optionee agrees to report sales of shares prior to the above determined date to the Company within one (1) business day after such sale is concluded. The Optionee also agrees to pay to the Company, within five (5) business days after such sale is concluded, the amount necessary for the Company to satisfy its withholding requirement required by the Code. Nothing in this Section 9 is intended as a representation that Common Stock may be sold without registration under state and federal securities laws or an exemption therefrom or that such registration or exemption will be available at any specified time.

10. <u>Resale restrictions may apply.</u> Any resale of the shares of Common Stock received upon exercising any Options will be subject to resale restrictions contained in the securities legislation applicable to the Optionee. The Optionee acknowledges and agrees that the Optionee is solely responsible (and the Company is not in any way responsible) for compliance with applicable resale restrictions.

11. <u>Subject to 2022 Plan.</u> The terms of the Options are subject to the provisions of the 2022 Plan, as the same may from time to time be amended, and any inconsistencies between this Agreement and the 2022 Plan, as the same may be from time to time amended, shall be governed by the provisions of the 2022 Plan, a copy of which has been delivered to the Optionee, and which is available for inspection at the principal offices of the Company.

12. <u>Professional Advice.</u> The acceptance of the Options and the sale of Common Stock issued pursuant to the exercise of Options may have consequences under federal and state tax and securities laws which may vary depending upon the individual circumstances of the Optionee. Accordingly, the Optionee acknowledges that he or she has been advised to consult his or her personal legal and tax advisor in connection with this Agreement and his or her dealings with respect to Options. Without limiting other matters to be considered with the assistance of the Optionee's professional advisors, the Optionee should consider: (a) whether upon the exercise of Options, the Optionee will file an election with the Internal Revenue Service pursuant to Section 83(b) of the Code and the implications of alternative minimum tax pursuant to the Code; (b) the merits and risks of an investment in the underlying shares of Common Stock; and (c) any resale restrictions that might apply under applicable securities laws.

13. <u>No Employment Commitment.</u> The grant of the Options shall in no way constitute any form of agreement or understanding binding on the Company or any Related Company, express or implied, that the Company or any Related Company will employ or contract with the Optionee, for any length of time, nor shall it interfere in any way with the Company's or, where applicable, a Related Company's right to terminate Optionee's employment at any time, which right is hereby reserved.

14. <u>Entire Agreement.</u> This Agreement is the only agreement between the Optionee and the Company with respect to the Options, and this Agreement and the 2022 Plan supersede all prior and contemporaneous oral and written statements and representations and contain the entire agreement between the parties with respect to the Options.

15. <u>Notices.</u> Any notice required or permitted to be made or given hereunder shall be mailed or delivered personally to the addresses set forth below, or as changed from time to time by written notice to the other:

---

| | |
|:---|:---|
| The Company: | Courtside Group, Inc. |
|  | 335 North Maple Drive, Suite 127 |
|  | Beverly Hills, CA 90210 |
|  | Attention: President |
| With a copy to: | Foley Shechter Ablovatskiy LLP |
|  | 1180 Avenue of the Americas, 8th Floor |
|  | New York, NY 10036 |
|  | Attention: Sasha Ablovatskiy, Esq. |
| The Optionee: | [name] |
|  | [address] |

---

[*Signature page follows*]

---

| | |
|:---|:---|
| **COURTSIDE GROUP, INC.** | **COURTSIDE GROUP, INC.** |
| Per: | |
|  | Authorized Signatory |
| (Name of Optionee - Please type or print) | (Name of Optionee - Please type or print) |
| (Signature and, if applicable, Office) | (Signature and, if applicable, Office) |

---

**EXHIBIT A**

**<u>TERMS OF THE OPTION</u>**

---

| | |
|:---|:---|
| **Name of the Optionee:** | [__________] |
| **Date of Grant:** | [__________] |
| **Designation:** | Nonstatutory Stock Options |
| 1. Number of Options granted: | [__________] |
| 2. Exercise Price: | $[___] per share |
| 3. Vesting Dates: | [__________] |
| 4. Expiration Date: | [__________] |

---

**EXHIBIT B**

To: Courtside Group, Inc. <br> 335 North Maple Drive, Suite 127 Beverly Hills, CA 90210 Attention: President

**<u>Notice of Election to Exercise</u>**

This Notice of Election to Exercise shall constitute proper notice under the Courtside Group, Inc.'s (the "<u>Company</u>") 2022 Equity Incentive Plan (the "<u>2022 Plan</u>") pursuant to Section 8 of that certain Stock Option Agreement (the "<u>Agreement</u>") dated as of the [___] day of [______], 202__, between the Company and the undersigned.

The undersigned hereby elects to exercise Optionee's option to purchase __________________ shares of the common stock of the Company at a price of US$[__] per share, for aggregate consideration of US$__________, on the terms and conditions set forth in the Agreement and the 2022 Plan. Such aggregate consideration, in the form specified in Section 8 of the Agreement, accompanies this notice.

The Optionee hereby directs the Company to issue, register and deliver the certificates representing the shares as follows:

---

| | |
|:---|:---|
| Optionee Information: | Delivery Instructions: |
| Name to appear on certificates | Name |
| Address | Address |
|  | Telephone Number |

---

DATED at ____________________________________, the _______ day of ________________________, 202__.

---

| |
|:---|
| (Name of Optionee - Please type or print) |
| (Signature and, if applicable, Office) |
| (Address of Optionee) |
| (City, State, and Zip Code of Optionee) |

---

## Exhibit 10.4

**Exhibit 10.4**

**<u>STOCK OPTION AGREEMENT</u>**

**COURTSIDE GROUP, INC.**

This **STOCK OPTION AGREEMENT** (this "Agreement") is entered into as of the ___ day of ______________, 202__ (the "Date of Grant")

BETWEEN: **Courtside Group, Inc.**, a company incorporated pursuant to the laws of the State of Delaware (the "Company"),

AND: **[_______________],** of ________________________________ (the "Optionee").

**WHEREAS:**

A. The Board of Directors of the Company (the "Board") has approved and adopted the Courtside Group, Inc. 2022 Equity Incentive Plan (the "2022 Plan"), pursuant to which the Board is authorized to grant to employees and other selected service providers and persons, including members of the Board, stock options to purchase common shares of the Company (the "Common Stock");

B. The 2022 Plan provides for the granting of stock options that either (i) are intended to qualify as "Incentive Stock Options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or (ii) do not satisfy the requirements for qualification under Section 422 of the Code ("Nonstatutory Stock Options"); and

C. The Board has authorized the grant to Optionee of options to purchase a total of **[_______________] ([____])** shares of Common Stock (the "Options"), which Options are intended to be (select one):

☐ Incentive Stock Options

☐ Nonstatutory Stock Options

NOW THEREFORE, the Company agrees to offer to the Optionee the option to purchase, upon the terms and conditions set forth herein and in the Plan, [__________] **(**[____]**)** shares of Common Stock. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the 2022 Plan.

1. <u>Exercise Price.</u> The exercise price of the options shall be US**$**[_____] per share.

2. <u>Limitation on the Number of Shares.</u> If the Options granted hereby are Incentive Stock Options, the number of shares which may be acquired upon exercise thereof is subject to the limitations set forth in Section 6(a) of the 2022 Plan.

3. <u>Vesting Schedule.</u> The Options shall vest in accordance with <u>Exhibit A</u> attached hereto, provided however that, in the event that an Optionee is party to a written employment agreement with the Company pursuant to which service-based vesting requirements applicable to Options are excused, in whole or in part, upon the occurrence of a Change in Control (a "Change in Control Vesting Accelerator"), then Exhibit A shall be deemed to incorporate by reference such provisions.

4. <u>Options not Transferable.</u> Subject to Section 13 of the 2022 Plan, the Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner (whether by operation of law or otherwise) other than by will or by the laws of descent or distribution or, in the case of a Nonstatutory Stock Option, pursuant to a qualified domestic relations order, and shall not be subject to execution, attachment or similar process; *provided, however*, that if the Options represent a Nonstatutory Stock Option, such Option is transferable without payment of consideration to immediate family members of the Optionee or to trusts or partnerships established exclusively for the benefit of the Optionee and Optionee's immediate family members. Upon any attempt to transfer, pledge, hypothecate or otherwise dispose of any Option or of any right or privilege conferred by the 2022 Plan contrary to the provisions thereof, or upon the sale, levy or attachment or similar process upon the rights and privileges conferred by the 2022 Plan, such Option shall thereupon terminate and become null and void.

5. <u>Investment Intent.</u> By accepting the Options, the Optionee represents and agrees that none of the shares of Common Stock purchased upon exercise of the Options will be distributed in violation of applicable federal and state laws and regulations. In addition, the Company may require, as a condition of exercising the Options, that the Optionee execute an undertaking, in such a form as the Company shall reasonably specify, that the Stock is being purchased only for investment and without any then-present intention to sell or distribute such shares.

6. <u>Termination of Employment and Options.</u> Vested Options shall terminate, to the extent not previously exercised, upon the occurrence of the first of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Expiration.</u> [__________] ([____]) years from the Date of Grant.

&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Termination for Cause.</u> The date of the first discovery by the Company of any reason for the termination of an Optionee's employment or contractual relationship with the Company or any related company for cause (as determined in the sole discretion of the Administrator (as defined in the 2022 Plan)), and, if an Optionee's employment is suspended pending any investigation by the Company as to whether the Optionee's employment should be terminated for cause, the Optionee's rights under this Agreement and the 2022 Plan shall likewise be suspended during the period of any such investigation.

&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Termination Due to Death or Disability.</u> Subject to Section 6(d)(iii) of the 2022 Plan, the expiration of six (6) months from the date of the death of the Optionee or cessation of an Optionee's employment or contractual relationship by reason of Disability (within the meaning of Section 22(c) of the Code) (but in no event later than the expiration of the term of such Option as set forth in this Agreement). Subject to Section 6(d)(iv) of the 2022 Plan, if an Optionee's employment or contractual relationship is terminated by death, any Option held by the Optionee shall be exercisable only by the person or persons to whom such Optionee's rights under such Option shall pass by the Optionee's will or by the laws of descent and distribution.

&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Termination On or After a Change in Control.</u> If the Optionee's employment or contractual relationship terminates for reasons other than those described in the preceding Sections 6(b) or 6(c) on or after the occurrence of a Change of Control due to an involuntary termination within the meaning of Treasury Regulation Section 1.409A-1(n) (including, without limitation, termination by the Optionee for "good reason" within the meaning of Section 1.409a-1(n)(2)), then the Option shall terminate, to the extent not previously exercised, in accordance with Section 6(a).

&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Termination for Any Other Reason.</u> Subject to Section 6(d) of the 2022 Plan, the expiration of three (3) months from the date of an Optionee's termination of employment or contractual relationship with the Company or any affiliated company or subsidiary of the Company (a "Related Corporation") for any reason whatsoever other than termination of service for cause, death, Disability, or on or after a Change in Control.

Each unvested Option granted pursuant hereto shall terminate immediately upon termination of the Optionee's employment or contractual relationship with the Company for any reason whatsoever, including Disability unless vesting is accelerated in accordance with the 2022 Plan.

7. <u>Stock.</u> In the case of any stock split, stock dividend or like change in the nature of shares of Stock covered by this Agreement, the number of shares and exercise price shall be proportionately adjusted as set forth in Section 14(a) of the 2022 Plan.

8. <u>Exercise of Option.</u> Options shall be exercisable, in full or in part, at any time after vesting, until termination; *provided, however,* that any Optionee who is subject to the reporting and liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended, with respect to the Common Stock shall be precluded from selling or transferring any Common Stock or other security underlying an Option during the six (6) months immediately following the grant of that Option. If less than all of the shares included in the vested portion of any Option are purchased, the remainder may be purchased at any subsequent time prior to the expiration of the Option term. Only whole shares may be issued pursuant to an Option, and to the extent that an Option covers less than one (1) share, it is unexercisable.

Each exercise of the Option shall be by means of delivery of a notice of election to exercise (which may be in the form attached hereto as <u>Exhibit B)</u> to the Chief Financial Officer of the Company at its principal executive office, specifying the number of shares of Common Stock to be purchased and accompanied by payment in cash by certified check or cashier's check in the amount of the full exercise price for the Common Stock to be purchased. In addition to payment in cash by certified check or cashier's check, an Optionee or transferee of an Option may pay for all or any portion of the aggregate exercise price by complying with one or more of the following alternatives:

&nbsp;&nbsp;&nbsp;&nbsp;(a) by delivering to the Company shares of Common Stock previously held by such person, duly endorsed for transfer to the Company, or by the Company withholding shares of Common Stock otherwise deliverable pursuant to exercise of the Option, which shares of Common Stock received or withheld shall have a fair market value at the date of exercise (as determined by the Administrator) equal to the aggregate purchase price to be paid by the Optionee upon such exercise; or

&nbsp;&nbsp;&nbsp;&nbsp;(b) by complying with any other payment mechanism approved by the Administrator at the time of exercise.

It is a condition precedent to the issuance of shares of Common Stock that the Optionee execute and/or deliver to the Company all documents and withholding taxes required in accordance with Section 15 of the 2022 Plan.

9. <u>Holding period for Incentive Stock Options.</u> In order to obtain the tax treatment provided for Incentive Stock Options by Section 422 of the Code, the shares of Common Stock received upon exercising any Incentive Stock Options received pursuant to this Agreement must be sold, if at all, after a date which is later of two (2) years from the date of this Agreement is entered into or one (1) year from the date upon which the Options are exercised. The Optionee agrees to report sales of shares prior to the above determined date to the Company within one (1) business day after such sale is concluded. The Optionee also agrees to pay to the Company, within five (5) business days after such sale is concluded, the amount necessary for the Company to satisfy its withholding requirement required by the Code. Nothing in this Section 9 is intended as a representation that Common Stock may be sold without registration under state and federal securities laws or an exemption therefrom or that such registration or exemption will be available at any specified time.

10. <u>Resale restrictions may apply.</u> Any resale of the shares of Common Stock received upon exercising any Options will be subject to resale restrictions contained in the securities legislation applicable to the Optionee. The Optionee acknowledges and agrees that the Optionee is solely responsible (and the Company is not in any way responsible) for compliance with applicable resale restrictions.

11. <u>Subject to 2022 Plan.</u> The terms of the Options are subject to the provisions of the 2022 Plan, as the same may from time to time be amended, and any inconsistencies between this Agreement and the 2022 Plan, as the same may be from time to time amended, shall be governed by the provisions of the 2022 Plan, a copy of which has been delivered to the Optionee, and which is available for inspection at the principal offices of the Company.

12. <u>Professional Advice.</u> The acceptance of the Options and the sale of Common Stock issued pursuant to the exercise of Options may have consequences under federal and state tax and securities laws which may vary depending upon the individual circumstances of the Optionee. Accordingly, the Optionee acknowledges that he or she has been advised to consult his or her personal legal and tax advisor in connection with this Agreement and his or her dealings with respect to Options. Without limiting other matters to be considered with the assistance of the Optionee's professional advisors, the Optionee should consider: (a) whether upon the exercise of Options, the Optionee will file an election with the Internal Revenue Service pursuant to Section 83(b) of the Code and the implications of alternative minimum tax pursuant to the Code; (b) the merits and risks of an investment in the underlying shares of Common Stock; and (c) any resale restrictions that might apply under applicable securities laws.

13. <u>No Employment Commitment.</u> The grant of the Options shall in no way constitute any form of agreement or understanding binding on the Company or any Related Company, express or implied, that the Company or any Related Company will employ or contract with the Optionee, for any length of time, nor shall it interfere in any way with the Company's or, where applicable, a Related Company's right to terminate Optionee's employment at any time, which right is hereby reserved.

14. <u>Entire Agreement.</u> This Agreement is the only agreement between the Optionee and the Company with respect to the Options, and this Agreement and the 2022 Plan supersede all prior and contemporaneous oral and written statements and representations and contain the entire agreement between the parties with respect to the Options.

15. <u>Notices.</u> Any notice required or permitted to be made or given hereunder shall be mailed or delivered personally to the addresses set forth below, or as changed from time to time by written notice to the other:

---

| | |
|:---|:---|
| The Company: | Courtside Group, Inc. |
|  | 335 North Maple Drive, Suite 127 |
|  | Beverly Hills, CA 90210 |
|  | Attention: Chief Financial Officer |
| With a copy to: | Foley Shechter Ablovatskiy LLP |
|  | 1180 Avenue of the Americas, 8th Floor |
|  | New York, NY 10036 |
|  | Attention: Sasha Ablovatskiy, Esq. |
| The Optionee: | [name] |
|  | [address]<br> [address]<br>|

---

[*Signature page follows*]

**COURTSIDE GROUP, INC.**

Per: <br> Authorized Signatory

  <br> (Name of Optionee - Please type or print)

  <br> (Signature and, if applicable, Office)

**EXHIBIT A**

**<u>TERMS OF THE OPTION</u>**

---

| | |
|:---|:---|
| **Name of the Optionee:** | [__________] |
| **Date of Grant:** | [__________] |
| **Designation:** | [Nonstatutory] Stock Options |
| 1. Number of Options Granted: | [__________] |
| 2. Exercise Price: | $[___] per share |
| 3. Vesting Dates: | [__________] |
| 4. Expiration Date: | [__________] |

---

**EXHIBIT B**

---

| | |
|:---|:---|
| To: | Courtside Group, Inc. |
|  | 335 North Maple Drive, Suite 127 |
|  | Beverly Hills, CA 90210 |
|  | Attention: President |

---

**<u>Notice of Election to Exercise</u>**

This Notice of Election to Exercise shall constitute proper notice under the Courtside Group, Inc.'s (the "<u>Company</u>") 2022 Equity Incentive Plan (the "<u>2022 Plan</u>") pursuant to Section 8 of that certain Stock Option Agreement (the "<u>Agreement</u>") dated as of the [___] day of [______], 202__, between the Company and the undersigned.

The undersigned hereby elects to exercise Optionee's option to purchase __________________ shares of the common stock of the Company at a price of US$[__] per share, for aggregate consideration of US$__________, on the terms and conditions set forth in the Agreement and the 2022 Plan. Such aggregate consideration, in the form specified in Section 8 of the Agreement, accompanies this notice.

The Optionee hereby directs the Company to issue, register and deliver the certificates representing the shares as follows:

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| | |
|:---|:---|
| Optionee Information: | Delivery Instructions: |
| Name to appear on certificates | Name |
| Address | Address |
|  | Telephone Number |

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DATED at ____________________________________, the _______ day of ________________________, 202__.

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| |
|:---|
| (Name of Optionee - Please type or print) |
| (Signature and, if applicable, Office) |
| (Address of Optionee) |
| (City, State, and Zip Code of Optionee) |

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## Exhibit 10.6

**Exhibit 10.6** 

**<u>INDEMNIFICATION AND ADVANCEMENT AGREEMENT</u>**

This Indemnification and Advancement Agreement (this "<u>Agreement</u>") is effective as of , 20__ by and between Courtside Group, Inc. (dba PodcastOne), a Delaware corporation (the "<u>Company</u>"), and , [a member of the Board of Directors/an officer/an employee/an agent] of the Company ("<u>Indemnitee</u>"). This Agreement supersedes and replaces any and all previous agreements between the Company and Indemnitee covering indemnification and advancement.

**RECITALS** 

WHEREAS, the Board of Directors of the Company (the "<u>Board</u>") believes that highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers, or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification and advancement of expenses against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

WHEREAS, the Board has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Company's Amended and Restated Bylaws (the "<u>Bylaws</u>") and Amended and Restated Certificate of Incorporation (the "<u>Certificate of Incorporation</u>") as now or hereafter in effect require indemnification of the directors, officers, employees and agents of the Company, as determined by the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the "<u>DGCL</u>"). The Bylaws, Certificate of Incorporation and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification and advancement of expenses;

WHEREAS, the uncertainties relating to such insurance, to indemnification, and to advancement of expenses may increase the difficulty of attracting and retaining such persons;

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws, Certificate of Incorporation and any resolutions adopted pursuant thereto, and is not a substitute therefor, nor diminishes or abrogates any rights of Indemnitee thereunder; and

WHEREAS, Indemnitee does not regard the protection available under the Bylaws, the Certificate of Incorporation, the DGCL and insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as an officer or director without adequate additional protection, and the Company desires Indemnitee to serve or continue to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified and be advanced expenses.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1. <u>Services to the Company.</u> Indemnitee agrees to serve as [a director/an officer/an employee/an agent] of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law). This Agreement does not create any obligation on the Company to continue Indemnitee in such position and is not an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.

Section 2. <u>Definitions.</u> As used in this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "<u>Agent</u>" means any person who is authorized by the Company or an Enterprise to act for or represent the interests of the Company or an Enterprise, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A "<u>Change in Control</u>" occurs upon the earliest to occur after the date of this Agreement of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. *Corporate Transactions*. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity; provided, that (x) for purposes of determining whether a Change of Control has occurred under this Agreement, the acquisition and/or disposition of capital stock and/or convertible or voting securities of the Company Beneficially Owned by LiveOne, Inc. and/or its affiliates will not be considered a Change of Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. *Liquidation*. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. *Other Events*. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. For purposes of this Agreement, the following terms have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) "<u>Beneficial Owner</u>" has the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner excludes any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) "<u>Exchange Act</u>" means the Securities Exchange Act of 1934, as amended from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) "<u>Person</u>" has the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person excludes (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "<u>Corporate Status</u>" describes the status of a person who is or was acting as a director, officer, employee, fiduciary, or Agent of the Company or an Enterprise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "<u>Disinterested Director</u>" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "<u>Enterprise</u>" means any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other entity for which Indemnitee is or was serving at the request of the Company as a director, officer, employee, or Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "<u>Expenses</u>" includes all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including, without limitation, the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 14(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee's rights under this Agreement, by litigation or otherwise. The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee's counsel as being reasonable in the good faith judgment of such counsel will be presumed conclusively to be reasonable. Expenses, however, do not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "<u>Independent Counsel</u>" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" does not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The term "<u>Proceeding</u>" includes any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative, or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of Indemnitee's Corporate Status or by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee's part while acting pursuant to Indemnitee's Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement. A Proceeding also includes a situation the Indemnitee believes in good faith may lead to or culminate in the institution of a Proceeding.

Section 3. <u>Indemnity in Third-Party Proceedings.</u> The Company will indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding had no reasonable cause to believe that Indemnitee's conduct was unlawful.

Section 4. <u>Indemnity in Proceedings by or in the Right of the Company.</u> The Company will indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. The Company will not indemnify Indemnitee for Expenses under this Section 4 related to any claim, issue or matter in a Proceeding for which Indemnitee has been finally adjudged by a court to be liable to the Company, unless, and only to the extent that, the Delaware Court of Chancery or any court in which the Proceeding was brought determines upon application by Indemnitee that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

Section 5. <u>Indemnification for Expenses of a Party Who is Wholly or Partly Successful.</u> Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with any Proceeding the extent that Indemnitee is successful, on the merits or otherwise. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, will be deemed to be a successful result as to such claim, issue or matter.

Section 6. <u>Indemnification for Expenses of a Witness.</u> Notwithstanding any other provision of this Agreement and to the fullest extent permitted by applicable law, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with any Proceeding to which Indemnitee is not a party but to which Indemnitee is a witness, deponent, interviewee, or otherwise asked to participate.

Section 7. <u>Partial Indemnification.</u> If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company will indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

Section 8. <u>Additional Indemnification.</u> Notwithstanding any limitation in Sections 3, 4, or 5, the Company will indemnify Indemnitee to the fullest extent permitted by applicable law (including, but not limited to, the DGCL and any amendments to or replacements of the DGCL adopted after the date of this Agreement that expand the Company's ability to indemnify its officers and directors) if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor).

Section 9. <u>Exclusions.</u> Notwithstanding any provision in this Agreement, the Company is not obligated under this Agreement to make any indemnification payment to Indemnitee in connection with any Proceeding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except to the extent provided in Section 16(b) of the Exchange Act and except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law, (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the "<u>Sarbanes-Oxley Act</u>"), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), or (iii) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including, but not limited to, any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Proceeding or part of any Proceeding is to enforce Indemnitee's rights to indemnification or advancement, of Expenses, including a Proceeding (or any part of any Proceeding) initiated pursuant to Section 14 of this Agreement, (ii) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

Section 10. <u>Advances of Expenses.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company will advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee or any Proceeding (or any part of any Proceeding) initiated by Indemnitee if (i) the Proceeding or part of any Proceeding is to enforce Indemnitee's rights to obtain indemnification or advancement of Expenses from the Company or Enterprise, including a proceeding initiated pursuant to Section 14 or (ii) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation. The Company will advance the Expenses within sixty (60) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Advances will be unsecured and interest free. Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company, thus Indemnitee qualifies for advances upon the execution of this Agreement and delivery to the Company. No other form of undertaking is required other than the execution of this Agreement. The Company will make advances without regard to Indemnitee's ability to repay the Expenses and without regard to Indemnitee's ultimate entitlement to indemnification under the other provisions of this Agreement.

Section 11. <u>Procedure for Notification of Claim for Indemnification or Advancement.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Indemnitee will notify the Company in writing of any Proceeding with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. Indemnitee will include in the written notification to the Company a description of the nature of the Proceeding and the facts underlying the Proceeding and provide such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. Indemnitee's failure to notify the Company will not relieve the Company from any obligation it may have to Indemnitee under this Agreement, and any delay in so notifying the Company will not constitute a waiver by Indemnitee of any rights under this Agreement. The Secretary of the Company will, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification or advancement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company will be entitled to participate in the Proceeding at its own expense.

Section 12. <u>Procedure Upon Application for Indemnification.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Unless a Change of Control has occurred, the determination of Indemnitee's entitlement to indemnification will be made:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by written opinion provided by Independent Counsel selected by the Board; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. if so directed by the Board, by the stockholders of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If a Change in Control has occurred, the determination of Indemnitee's entitlement to indemnification will be made by written opinion provided by Independent Counsel selected by Indemnitee (unless Indemnitee requests such selection be made by the Board).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The party selecting Independent Counsel pursuant to subsection (a)(iii) or (b) of this Section 12 will provide written notice of the selection to the other party. The notified party may, within fifteen (15) days after receiving written notice of the selection of Independent Counsel, deliver to the selecting party a written objection to such selection; <u>provided</u>, <u>however</u>, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 2 of this Agreement, and the objection will set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit. If, within thirty (30) days after the later of (i) submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof and (ii) the final disposition of the Proceeding, Independent Counsel has not been selected or, if selected, any objection to has not been resolved, either the Company or Indemnitee may petition the Delaware Court for the appointment as Independent Counsel of a person selected by such court or by such other person as such court designates. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel will be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Indemnitee will cooperate with the person, persons or entity making the determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. The Company will advance and pay any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making the indemnification determination irrespective of the determination as to Indemnitee's entitlement to indemnification and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Company promptly will advise Indemnitee in writing of the determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied and providing a copy of any written opinion provided to the Board by Independent Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If it is determined that Indemnitee is entitled to indemnification, the Company will make payment to Indemnitee within thirty (30) days after such determination.

Section 13. <u>Presumptions and Effect of Certain Proceedings.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination will, to the fullest extent not prohibited by law, presume Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company will, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, will be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the determination of the Indemnitee's entitlement to indemnification has not made pursuant to Section 12 within sixty (60) days after the later of (i) receipt by the Company of Indemnitee's request for indemnification pursuant to Section 11(a) and (ii) the final disposition of the Proceeding for which Indemnitee requested Indemnification (the "<u>Determination Period</u>"), the requisite determination of entitlement to indemnification will, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee will be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. The Determination Period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, the Determination Period may be extended an additional fifteen (15) days if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 12(a)(iv) of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of <u>nolo</u> <u>contendere</u> or its equivalent, will not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) For purposes of any determination of good faith, Indemnitee will be deemed to have acted in good faith if Indemnitee acted based on the records or books of account of the Company, its subsidiaries, or an Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Company, its subsidiaries, or an Enterprise in the course of their duties, or on the advice of legal counsel for the Company, its subsidiaries, or an Enterprise or on information or records given or reports made to the Company or an Enterprise by an independent certified public accountant or by an appraiser, financial advisor or other expert selected with reasonable care by or on behalf of the Company, its subsidiaries, or an Enterprise. Further, Indemnitee will be deemed to have acted in a manner "not opposed to the best interests of the Company," as referred to in this Agreement if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan. The provisions of this Section 13(d) is not exclusive and does not limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Enterprise may not be imputed to Indemnitee for purposes of determining Indemnitee's right to indemnification under this Agreement.

Section 14. <u>Remedies of Indemnitee.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Indemnitee may commence litigation against the Company in the Delaware Court of Chancery to obtain indemnification or advancement of Expenses provided by this Agreement in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) the Company does not advance Expenses pursuant to Section 10 of this Agreement, (iii) the determination of entitlement to indemnification is not made pursuant to Section 12 of this Agreement within the Determination Period, (iv) the Company does not indemnify Indemnitee pursuant to Section 5 or 6 or the second to last sentence of Section 12(d) of this Agreement within sixty (60) days after receipt by the Company of a written request therefor, (v) the Company does not indemnify Indemnitee pursuant to Section 3, 4, 7, or 8 of this Agreement within sixty (60) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder. Alternatively, Indemnitee, at Indemnitee's option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee must commence such Proceeding seeking an adjudication or an award in arbitration within one hundred eighty (180) days following the date on which Indemnitee first has the right to commence such Proceeding pursuant to this Section 14(a); <u>provided</u>, <u>however</u>, that the foregoing clause does not apply in respect of a Proceeding brought by Indemnitee to enforce Indemnitee's rights under Section 5 of this Agreement. The Company will not oppose Indemnitee's right to seek any such adjudication or award in arbitration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 will be conducted in all respects as a *de novo* trial, or arbitration, on the merits and Indemnitee may not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14 the Company will have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be and will not introduce evidence of the determination made pursuant to Section 12 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is entitled to indemnification, the Company will be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company is, to the fullest extent not prohibited by law, precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and will stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee shall not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee's rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company, to the fullest extent permitted by law, will (within sixty (60) days after receipt by the Company of a written request therefor) advance to Indemnitee such Expenses which are incurred by Indemnitee in connection with any action concerning this Agreement, Indemnitee's right to indemnification or advancement of Expenses from the Company, or concerning any directors' and officers' liability insurance policies maintained by the Company and will indemnify Indemnitee against any and all such Expenses unless the court determines that each of the Indemnitee's claims in such Proceeding were made in bad faith or were frivolous or are prohibited by law.

Section 15. <u>Non-exclusivity; Survival of Rights; Insurance; Subrogation.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The indemnification and advancement of Expenses provided by this Agreement are not exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Bylaws, the Certificate of Incorporation, any agreement, a vote of stockholders or a resolution of directors, or otherwise. The indemnification and advancement of Expenses provided by this Agreement may not be limited or restricted by any amendment, alteration or repeal of this Agreement in any way with respect to any action taken or omitted by Indemnitee in Indemnitee's Corporate Status occurring prior to any amendment, alteration or repeal of this Agreement. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Bylaws, Certificate of Incorporation, or this Agreement, it is the intent of the parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy is cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or employment of any other right or remedy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of Expenses and/or insurance provided by one or more Persons with whom or which Indemnitee may be associated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. The Company hereby acknowledges and agrees:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Company is the indemnitor of first resort with respect to any request for indemnification or advancement of Expenses made pursuant to this Agreement concerning any Proceeding arising from or related to Indemnitee's Corporate Status with the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any obligation of any other Persons with whom or which Indemnitee may be associated to indemnify Indemnitee and/or advance Expenses to Indemnitee in respect of any proceeding are secondary to the obligations of the Company's obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the Company will indemnify Indemnitee and advance Expenses to Indemnitee hereunder to the fullest extent provided herein without regard to any rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated or insurer of any such Person; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. In the event any other Person with whom or which Indemnitee may be associated or their insurers advances or extinguishes any liability or loss for Indemnitee, the payor has a right of subrogation against the Company or its insurers for all amounts so paid which would otherwise be payable by the Company or its insurers under this Agreement. In no event will payment by any other Person with whom or which Indemnitee may be associated or their insurers affect the obligations of the Company hereunder or shift primary liability for the Company's obligation to indemnify or advance of Expenses to any other Person with whom or which Indemnitee may be associated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. Any indemnification or advancement of Expenses provided by any other Person with whom or which Indemnitee may be associated is specifically in excess over the Company's obligation to indemnify and advance Expenses or any valid and collectible insurance (including, but not limited to, any malpractice insurance or professional errors and omissions insurance) provided by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Company, the Company will obtain a policy or policies covering Indemnitee to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies, including coverage in the event the Company does not or cannot, for any reason, indemnify or advance Expenses to Indemnitee as required by this Agreement. If, at the time of the receipt of a notice of a claim pursuant to this Agreement, the Company has director and officer liability insurance in effect, the Company will give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Company will thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. Indemnitee agrees to assist the Company efforts to cause the insurers to pay such amounts and will comply with the terms of such policies, including selection of approved panel counsel, if required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company's obligation to indemnify or advance Expenses hereunder to Indemnitee for any Proceeding concerning Indemnitee's Corporate Status with an Enterprise will be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such Enterprise. The Company and Indemnitee intend that any such Enterprise (and its insurers) be the indemnitor of first resort with respect to indemnification and advancement of Expenses for any Proceeding related to or arising from Indemnitee's Corporate Status with such Enterprise. The Company's obligation to indemnify and advance Expenses to Indemnitee is secondary to the obligations the Enterprise or its insurers owe to Indemnitee. Indemnitee agrees to take all reasonably necessary and desirable action to obtain from an Enterprise indemnification and advancement of Expenses for any Proceeding related to or arising from Indemnitee's Corporate Status with such Enterprise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In the event of any payment made by the Company under this Agreement, the Company will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee from any Enterprise or insurance carrier. Indemnitee will execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

Section 16. <u>Duration of Agreement.</u> This Agreement continues until and terminates upon the later of (a) six (6) years after the date that Indemnitee ceases to have a Corporate Status and (b) one (1) year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement relating thereto. The indemnification and advancement of Expenses rights provided by or granted pursuant to this Agreement are binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise, and inure to the benefit of Indemnitee and Indemnitee's spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

Section 17. <u>Severability.</u> If any provision or provisions of this Agreement is held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will not in any way be affected or impaired thereby and remain enforceable to the fullest extent permitted by law; (b) such provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will be construed so as to give effect to the intent manifested thereby.

Section 18. <u>Interpretation.</u> Any ambiguity in the terms of this Agreement will be resolved in favor of Indemnitee and in a manner to provide the maximum indemnification and advancement of Expenses permitted by law. The Company and Indemnitee intend that this Agreement provide to the fullest extent permitted by law for indemnification in excess of that expressly provided, without limitation, by the Bylaws, the Certificate of Incorporation, vote of the Company stockholders or Disinterested Directors or applicable law.

Section 19. <u>Enforcement.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director or officer of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Bylaws, the Certificate of Incorporation and applicable law, and is not a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

Section 20. <u>Modification and Waiver.</u> No supplement, modification or amendment of this Agreement is binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement will be deemed or constitutes a waiver of any other provisions of this Agreement nor will any waiver constitute a continuing waiver.

Section 21. <u>Notice by Indemnitee.</u> Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company does not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

Section 22. <u>Notices.</u> All notices, requests, demands and other communications under this Agreement will be in writing and will be deemed to have been duly given if (a) delivered by hand to the other party, (b) sent by reputable overnight courier to the other party or (c) sent by facsimile transmission or electronic mail, with receipt of oral confirmation that such communication has been received:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee provides to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If to the Company to:

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| | | |
|:---|:---|:---|
| Name: | Courtside Group, Inc. | Courtside Group, Inc. |
|  | Address: | 335 North Maple Drive, Suite 127 |
|  |  | Beverly Hills, CA 90210 |
|  | Attention: | President |
|  | Email: | _________________ |

---

or to any other address as may have been furnished to Indemnitee by the Company.

Section 23. <u>Contribution.</u> To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

Section 24. <u>Applicable Law and Consent to Jurisdiction.</u> This Agreement and the legal relations among the parties are governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or Proceeding arising out of or in connection with this Agreement may be brought only in the Delaware Court of Chancery and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or Proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or Proceeding in the Delaware Court and (iv) waive, and agree not to plead or to make, any claim that any such action or Proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

Section 25. <u>Identical Counterparts.</u> This Agreement may be executed in one or more counterparts, each of which will for all purposes be deemed to be an original but all of which together constitutes one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;Section 26. <u>Headings.</u> The headings of this Agreement are inserted for convenience only and do not constitute part of this Agreement or affect the construction thereof.

[*Signature Page to Follow*]

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

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| | |
|:---|:---|
| **COURTSIDE GROUP, INC.** | **INDEMNITEE** |
| By: |  |
| Name: | Name: |
| Office: | Address: |

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[Signature Page to Indemnification Agreement]

## Exhibit 10.7

**Exhibit 10.7**

**COURTSIDE GROUP, INC.**

**(DBA PODCASTONE)<br> LOCK-UP AGREEMENT (DIRECTORS AND OFFICERS)**

Re: Subscription Agreement, dated July 15, 2022 (the "<u>Subscription Agreement</u>"), by and between Courtside Group, Inc. and the purchasers signatory thereto (the "<u>Purchasers</u>")

Ladies and Gentlemen:

The undersigned irrevocably agrees with the Company that, from the date hereof until six (6) months following the date of the closing of the Qualified Financing or Qualified Event (as defined in the Subscription Agreement) entered into by and between Courtside Group, Inc. (dba PodcastOne) (the "<u>Company</u>") and the Purchasers (such period, the "<u>Restriction Period</u>"), the undersigned will not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the undersigned or any affiliate) of the undersigned or any person in privity with the undersigned or any affiliate of the undersigned), directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>"), with respect to, any shares of common stock of the Company or securities convertible, exchangeable or exercisable into, shares of common stock of the Company beneficially owned, held or hereafter acquired by the undersigned (the "<u>Securities</u>"). Beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. In order to enforce this covenant, the Company shall impose irrevocable stop-transfer instructions preventing the transfer agent of the Company from effecting any actions in violation of this letter agreement.

The foregoing paragraph shall not apply to (a) transactions relating to shares of Common Stock or other securities acquired in the open market after the completion of the Qualified Financing or the Qualified Event, as applicable, *provided* that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with such transfers; (b) bona fide gifts of shares of any class of the Company's capital stock or any security convertible into Common Stock, in each case that are made exclusively between and among the undersigned or members of the undersigned's immediate family (for purposes of this letter agreement, "immediate family" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin), or affiliates of the undersigned, including its partners (if a partnership) or members (if a limited liability company); (c) any transfer of shares of Common Stock or any security convertible into Common Stock by will or intestate succession upon the death of the undersigned; (d) transfer of shares of Common Stock or any security convertible into Common Stock to an immediate family member or any trust, limited partnership, limited liability company or other entity for the direct or indirect benefit of the undersigned or any immediate family member of the undersigned; *provided* that, in the case of clauses (b) - (d) above, it shall be a condition to any such transfer that (i) the transferee/donee agrees to be bound by the terms of this letter agreement (including, without limitation, the restrictions set forth in the preceding sentence) to the same extent as if the transferee/donee were a party hereto, (ii) each party (donor, donee, transferor or transferee) shall not be required by law (including without limitation the disclosure requirements of the Securities Act of 1933, as amended, (the "<u>Securities Act</u>") and the Exchange Act) to make, and shall agree to not voluntarily make, any filing or public announcement of the transfer or disposition prior to the expiration of the Restriction Period referred to above, and (iii) the undersigned notifies the Company at least two (2) business days prior to the proposed transfer or disposition; (e) the transfer of shares to the Company to satisfy withholding obligations for any equity award granted pursuant to the terms of the Company's stock option/incentive plans, such as upon exercise, vesting, lapse of substantial risk of forfeiture, or other similar taxable event, in each case on a "cashless" or "net exercise" basis (which, for the avoidance of doubt shall not include "cashless" exercise programs involving a broker or other third party), *provided* that as a condition of any transfer pursuant to this clause (e), that if the undersigned is required to file a report under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock during the Restriction Period, the undersigned shall include a statement in such report, and if applicable an appropriate disposition transaction code, to the effect that such transfer is being made as a share delivery or forfeiture in connection with a net value exercise, or as a forfeiture or sale of shares solely to cover required tax withholding, as the case may be; (f) transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock pursuant to a bona fide third party tender offer made to all holders of the Common Stock, merger, consolidation or other similar transaction involving a change of control (as defined below) of the Company, including voting in favor of any such transaction or taking any other action in connection with such transaction, *provided* that in the event that such merger, tender offer or other transaction is not completed, the Common Stock and any security convertible into or exercisable or exchangeable for Common Stock shall remain subject to the restrictions set forth herein; (g) the exercise of warrants or the exercise of stock options granted pursuant to the Company's stock option/incentive plans or otherwise outstanding on the date hereof; *provided*, that the restrictions shall apply to shares of Common Stock issued upon such exercise or conversion; (h) the establishment of any contract, instruction or plan that satisfies all of the requirements of Rule 10b5-1 (a "<u>Rule 10b5-1 Plan</u>") under the Exchange Act; *provided*, *however*, that no sales of Common Stock or securities convertible into, or exchangeable or exercisable for, Common Stock, shall be made pursuant to a Rule 10b5-1 Plan prior to the expiration of the Restriction Period; *provided further*, that the Company is not required to report the establishment of such Rule 10b5-1 Plan in any public report or filing with the Commission under the Exchange Act during the Restriction Period and does not otherwise voluntarily effect any such public filing or report regarding such Rule 10b5-1 Plan; and (i) any demands or requests for, exercise any right with respect to, or take any action in preparation of, the registration by the Company under the Securities Act of the undersigned's shares of Common Stock, provided that no transfer of the undersigned's shares of Common Stock registered pursuant to the exercise of any such right, and no registration statement shall be filed under the Securities Act, with respect to any of the undersigned's shares of Common Stock during the Restriction Period. For purposes of clause (f) above, "change of control" shall mean the consummation of any bona fide third party tender offer, merger, purchase, consolidation or other similar transaction the result of which is that any "person" (as defined in Section 13(d)(3) of the Exchange Act), or group of persons, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) of a majority of total voting power of the voting stock of the Company.

It is understood that, if the Company notifies the undersigned that does not intend to proceed with the Qualified Financing or the Qualified Event, as applicable, if the underwriting agreement with respect to the Qualified Financing (an "<u>Underwriting Agreement</u>") does not become effective, or if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to the delivery of the Common Stock in the Qualified Financing, the undersigned will be released from its obligations under this letter agreement. The undersigned understands that the Company and the underwriters of the Qualified Financing will proceed with the Qualified Financing or the will proceed with the Qualified Event, as applicable, in reliance on this letter agreement. Whether or not the Qualified Financing or the Qualified Event, as applicable, actually occurs depends on a number of factors, including market conditions. Any Qualified Financing will only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriters.

This letter agreement shall automatically terminate upon the earliest to occur, if any, of (1) the termination of the Underwriting Agreement before the sale of any securities to the underwriters of the Qualified Financing or (2) the termination of the Qualified Financing or the Qualified Event, as applicable.

The undersigned hereby represents that the undersigned has the power and authority to execute, deliver and perform this letter agreement and that, upon request of the Company, the undersigned will execute any additional documents necessary in connection with the enforcement hereof, that the undersigned has received adequate consideration therefor and that the undersigned will indirectly benefit from the closing of the transactions contemplated by the Subscription Agreement.

This letter agreement may not be amended or otherwise modified in any respect without the written consent of each of the Company and the undersigned. This letter agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to the principles of conflict of laws. The undersigned hereby irrevocably submits to the exclusive jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in Manhattan, for the purposes of any suit, action or proceeding arising out of or relating to this letter agreement, and hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that (i) it is not personally subject to the jurisdiction of such court, (ii) the suit, action or proceeding is brought in an inconvenient forum, or (iii) the venue of the suit, action or proceeding is improper. The undersigned hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by receiving a copy thereof sent to the Company at the address in effect for notices to it under the Subscription Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The undersigned hereby waives any right to a trial by jury. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

This letter agreement shall be binding on successors and assigns of the undersigned with respect to the Securities and any such successor or assign shall enter into a similar agreement for the benefit of the Company.

\*\*\* SIGNATURE PAGE FOLLOWS\*\*\*

This letter agreement may be executed in two or more counterparts, all of which when taken together may be considered one and the same agreement.

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| |
|:---|
| Signature |
| Print Name |
| Position in Company, if any |
| Address for Notice: |

---

By signing below, the Company agrees to enforce the restrictions on transfer set forth in this letter agreement.

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| | |
|:---|:---|
| **Courtside Group, Inc.** | **Courtside Group, Inc.** |
| By: |  |
| Name: | Kit Gray |
| Title: | President |

---

## Exhibit 10.8

**Exhibit 10.8**

**COURTSIDE GROUP, INC.**

**(DBA PODCASTONE)<br> LOCK-UP AGREEMENT (SUBSCRIBERS)**

Re: Subscription Agreement, dated July 15, 2022 (the "<u>Subscription Agreement</u>"), by and between Courtside Group, Inc. and the purchasers signatory thereto (the "<u>Purchasers</u>")

Ladies and Gentlemen:

The undersigned irrevocably agrees with the Company that, from the date hereof until 90 days following the date of the closing of the Qualified Financing or Qualified Event (as defined in the Subscription Agreement) entered into by and between Courtside Group, Inc. (dba PodcastOne) (the "<u>Company</u>") and the Purchasers (such period, the "<u>Restriction Period</u>"), the undersigned will not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the undersigned or any affiliate) of the undersigned or any person in privity with the undersigned or any affiliate of the undersigned), directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>"), with respect to, any shares of common stock of the Company or securities convertible, exchangeable or exercisable into, shares of common stock of the Company beneficially owned, held or hereafter acquired by the undersigned (the "<u>Securities</u>"). Beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. In order to enforce this covenant, the Company shall impose irrevocable stop-transfer instructions preventing the transfer agent of the Company from effecting any actions in violation of this letter agreement.

The foregoing paragraph shall not apply to (a) transactions relating to shares of Common Stock or other securities acquired in the open market after the completion of the Qualified Financing or Qualified Financing, as applicable, *provided* that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with such transfers; (b) bona fide gifts of shares of any class of the Company's capital stock or any security convertible into Common Stock, in each case that are made exclusively between and among the undersigned or members of the undersigned's immediate family (for purposes of this letter agreement, "immediate family" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin), or affiliates of the undersigned, including its partners (if a partnership) or members (if a limited liability company); (c) any transfer of shares of Common Stock or any security convertible into Common Stock by will or intestate succession upon the death of the undersigned; (d) transfer of shares of Common Stock or any security convertible into Common Stock to an immediate family member or any trust, limited partnership, limited liability company or other entity for the direct or indirect benefit of the undersigned or any immediate family member of the undersigned; *provided* that, in the case of clauses (b) - (d) above, it shall be a condition to any such transfer that (i) the transferee/donee agrees to be bound by the terms of this letter agreement (including, without limitation, the restrictions set forth in the preceding sentence) to the same extent as if the transferee/donee were a party hereto, (ii) each party (donor, donee, transferor or transferee) shall not be required by law (including without limitation the disclosure requirements of the Securities Act of 1933, as amended, (the "<u>Securities Act</u>") and the Exchange Act) to make, and shall agree to not voluntarily make, any filing or public announcement of the transfer or disposition prior to the expiration of the Restriction Period referred to above, and (iii) the undersigned notifies the Company at least two (2) business days prior to the proposed transfer or disposition; (e) the transfer of shares to the Company to satisfy withholding obligations for any equity award granted pursuant to the terms of the Company's stock option/incentive plans, such as upon exercise, vesting, lapse of substantial risk of forfeiture, or other similar taxable event, in each case on a "cashless" or "net exercise" basis (which, for the avoidance of doubt shall not include "cashless" exercise programs involving a broker or other third party), *provided* that as a condition of any transfer pursuant to this clause (e), that if the undersigned is required to file a report under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock during the Restriction Period, the undersigned shall include a statement in such report, and if applicable an appropriate disposition transaction code, to the effect that such transfer is being made as a share delivery or forfeiture in connection with a net value exercise, or as a forfeiture or sale of shares solely to cover required tax withholding, as the case may be; (f) transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock pursuant to a bona fide third party tender offer made to all holders of the Common Stock, merger, consolidation or other similar transaction involving a change of control (as defined below) of the Company, including voting in favor of any such transaction or taking any other action in connection with such transaction, *provided* that in the event that such merger, tender offer or other transaction is not completed, the Common Stock and any security convertible into or exercisable or exchangeable for Common Stock shall remain subject to the restrictions set forth herein; (g) the exercise of warrants or the exercise of stock options granted pursuant to the Company's stock option/incentive plans or otherwise outstanding on the date hereof; *provided*, that the restrictions shall apply to shares of Common Stock issued upon such exercise or conversion; (h) the establishment of any contract, instruction or plan that satisfies all of the requirements of Rule 10b5-1 (a "<u>Rule 10b5-1 Plan</u>") under the Exchange Act; *provided*, *however*, that no sales of Common Stock or securities convertible into, or exchangeable or exercisable for, Common Stock, shall be made pursuant to a Rule 10b5-1 Plan prior to the expiration of the Restriction Period; *provided further*, that the Company is not required to report the establishment of such Rule 10b5-1 Plan in any public report or filing with the Commission under the Exchange Act during the Restriction Period and does not otherwise voluntarily effect any such public filing or report regarding such Rule 10b5-1 Plan; and (i) any demands or requests for, exercise any right with respect to, or take any action in preparation of, the registration by the Company under the Securities Act of the undersigned's shares of Common Stock, provided that no transfer of the undersigned's shares of Common Stock registered pursuant to the exercise of any such right, and no registration statement shall be filed under the Securities Act, with respect to any of the undersigned's shares of Common Stock during the Restriction Period. For purposes of clause (f) above, "change of control" shall mean the consummation of any bona fide third party tender offer, merger, purchase, consolidation or other similar transaction the result of which is that any "person" (as defined in Section 13(d)(3) of the Exchange Act), or group of persons, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) of a majority of total voting power of the voting stock of the Company. Furthermore and notwithstanding anything contained herein, in the event that the following conditions are both met at any time following the conclusion of the Measuring Period as defined below, the Restriction Period shall immediately terminate (an "<u>Early Termination</u>"): (a) the closing price of the Common Stock reflects a price per share equal to or greater than 25% of the price per share (or unit, if units are offered in the Qualified Financing) at which the Qualified Financing is made and (b) the Common Stock trades at a volume greater than $1,000,000 per Trading Day for five (5) consecutive Trading Days. For purposes hereof, the term "<u>Measuring Period</u>" means the earlier of (i) 45 days from the closing of the Qualified Financing or (ii) the full delivery of the over-allotment to the Company by the underwriter in the Qualified Financing.

It is understood that, if the Company notifies the undersigned that does not intend to proceed with the Qualified Financing or Qualified Event, as applicable, if the underwriting agreement with respect to the Qualified Financing (an "<u>Underwriting Agreement</u>") does not become effective, or if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to the delivery of the Common Stock in the Qualified Financing, the undersigned will be released from its obligations under this letter agreement. The undersigned understands that the Company and the underwriters of the Qualified Financing will proceed with the Qualified Financing or will proceed with the Qualified Event, as applicable, in reliance on this letter agreement. Whether or not the Qualified Financing or Qualified Event, as applicable, actually occurs depends on a number of factors, including market conditions. Any Qualified Financing will only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriters.

This letter agreement shall automatically terminate upon the earliest to occur, if any, of (1) the termination of the Underwriting Agreement before the sale of any securities to the underwriters of the Qualified Financing or (2) the termination of the Qualified Financing or Qualified Event, as applicable.

The undersigned hereby represents that the undersigned has the power and authority to execute, deliver and perform this letter agreement and that, upon request of the Company, the undersigned will execute any additional documents necessary in connection with the enforcement hereof, that the undersigned has received adequate consideration therefor and that the undersigned will indirectly benefit from the closing of the transactions contemplated by the Subscription Agreement.

This letter agreement may not be amended or otherwise modified in any respect without the written consent of each of the Company and the undersigned. This letter agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to the principles of conflict of laws. The undersigned hereby irrevocably submits to the exclusive jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in Manhattan, for the purposes of any suit, action or proceeding arising out of or relating to this letter agreement, and hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that (i) it is not personally subject to the jurisdiction of such court, (ii) the suit, action or proceeding is brought in an inconvenient forum, or (iii) the venue of the suit, action or proceeding is improper. The undersigned hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by receiving a copy thereof sent to the Company at the address in effect for notices to it under the Subscription Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The undersigned hereby waives any right to a trial by jury. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

This letter agreement shall be binding on successors and assigns of the undersigned with respect to the Securities and any such successor or assign shall enter into a similar agreement for the benefit of the Company.

\*\*\* SIGNATURE PAGE FOLLOWS\*\*\*

This letter agreement may be executed in two or more counterparts, all of which when taken together may be considered one and the same agreement.

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By signing below, the Company agrees to enforce the restrictions on transfer set forth in this letter agreement.

**Courtside Group, Inc.**

By:   <br> Name: <br> Title:

## Exhibit 23.1

**Exhibit 23.1**

**Consent of Independent Registered Public Accounting Firm**

We hereby consent to the use in this Amendment No.1 to the Registration Statement of Courtside Group, Inc. on Form S-1 (No. 333-269028) of our report dated March 13, 2023, relating to the audit of the restated consolidated financial statements of Courtside Group, Inc. (dba PodcastOne) (a subsidiary of LiveOne, Inc.), which appears in the Prospectus, which is a part of this Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ Macias Gini & O'Connell LLP

Los Angeles, California

March 13, 2023

## Ex-Filing

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Exhibit 107**

**Calculation of Filing Fee Tables**

**FORM S-1**

(Form Type)

**COURTSIDE GROUP, INC.**

(Exact Name of Registrant as Specified in its Charter)

<u>Table 1: Newly Registered and Carry Forward Securities</u>

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| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Security<br> Type** | **Security<br> Class<br> Title** | **Fee<br> Calculation<br> or Carry<br> Forward<br> Rule** | **Amount<br> Registered** | **Proposed<br> Maximum<br> Offering<br> Price Per<br> Unit** | **Proposed Maximum<br> Aggregate<br> Offering<br> Price<sup>(1)</sup>** | **Fee<br> Rate** | **Amount of<br> Registration<br> Fee** | **Carry<br> Forward<br> Form<br> Type** | **Carry<br> Forward<br> File<br> Number** | **Carry<br> Forward<br> Initial<br> effective<br> date** | **Filing Fee<br> Previously<br> Paid In<br> Connection<br> with<br> Unsold<br> Securities<br> to be<br> Carried<br> Forward** |
| **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** | **Newly Registered Securities** |
| Fees to Be Paid | Equity | Common stock, par value $0.00001 per share | (1)2020000<sup>(2)</sup> |  | (1) | $169498 | 0.0001102 | $18.68 |  |  |  |  |
| Fees to Be Paid | Equity | Common stock, par value $0.00001 per share | (1)6084440<sup>(3)</sup> |  | (1) | $510545 | 0.0001102 | $56.26 |  |  |  |  |
| Fees to Be Paid | Equity | Warrants to Purchase common stock, par value $0.00001 per share | (1)167833<sup>(4)</sup> |  | (1) | $14083 | 0.0001102 | $1.55 |  |  |  |  |
| Fees Previously Paid |  |  |  |  |  | $— |  | $— |  |  |  |  |
|  |  |  |  |  |  | Carry Forward Securities | Carry Forward Securities |  |  |  |  |  |
| **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** | $— | 0.0001102 | $76.49 |  |  |  |  |
| **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** |  |  | $68.84 |  |  |  |  |
| **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** |  |  | $— |  |  |  |  |
| **Net Fee Due** | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** |  |  | $7.65 |  |  |  |  |

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(1) Estimated solely
 for purposes of calculating the registration fee pursuant to Rule 457(a) of the Securities Act. Given that there is no proposed maximum
 offering price per share of common stock, the registrant calculates the proposed maximum aggregate offering price, by analogy to
 Rule 457(f)(2), based on the book value per share of common stock the registrant registers, which is calculated from its unaudited
 balance sheet as of September 30, 2022. Given that the registrant's shares of common stock are not traded on an exchange or
 over-the-counter, the registrant did not use the market prices of its common stock in accordance with Rule 457(c).

(2) Represents 2,000,000 dividend
 shares of the registrant's common stock being registered as a result of the Distribution by LiveOne, Inc., a Delaware corporation,
 plus an additional 20,000 shares of the registrant common stock to be issued as a result of rounding up any fractional shares to
 be issued in the Distribution. Pursuant to Rule 416 under the Securities Act of 1933, as amended (the "Securities Act"),
 the registrant is also registering such additional indeterminate number of shares of common stock as may become issuable as a result
 of stock splits or stock dividends.

(3) Represents 6,084,440 shares
 of the registrant's common stock consisting of: (i) 3,138,273 shares of common stock issuable upon conversion of convertible
 notes, plus the amount of accrued and unpaid interest, if any, that is payable in shares of our common stock in connection with the
 conversion thereof, and (ii) 2,946,167 shares of common stock issuable upon the exercise of warrants, in each case, pursuant to a
 Securities Purchase Agreement (the "Purchase Agreement"), dated July 15, 2022, between the registrant and certain selling
 stockholders named in the registration statement, from time to time, upon the terms and subject to the satisfaction of the conditions
 set forth in the Purchase Agreement. Pursuant to Rule 416 under the Securities Act of 1933, as amended (the "Securities Act"),
 the registrant is also registering such additional indeterminate number of shares of common stock as may become issuable as a result
 of stock splits or stock dividends.

(4) Represents 167,833 shares
 of the registrant's common stock issuable upon the exercise of placement agent warrants issued to Joseph Gunnar & Co.,
 LLC as a selling stockholder named in the registration statement or its designees from time to time. Pursuant to Rule 416 under the
 Securities Act of 1933, as amended (the "Securities Act"), the registrant is also registering such additional indeterminate
 number of shares of common stock as may become issuable as a result of stock splits or stock dividends. Pursuant to Rule 416 under
 the Securities Act of 1933, as amended (the "Securities Act"), the registrant is also registering such additional indeterminate
 number of shares of common stock as may become issuable as a result of stock splits or stock dividends.