LiveOne, Inc. Fair Value Disclosure
Note 18 — 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):
| March 31, 2024 | ||||||||||||||||
| Fair | Hierarchy Level | |||||||||||||||
| Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Prepaid expenses - common stock issued subject to market adjustment at settlement | $ | - | $ | - | $ | - | $ | - | ||||||||
| Total | $ | - | $ | - | $ | - | $ | - | ||||||||
| Liabilities: | ||||||||||||||||
| Bifurcated embedded derivative on Series A Preferred Stock | $ | 607 | $ | - | $ | - | $ | 607 | ||||||||
| $ | 607 | $ | - | $ | - | $ | 607 | |||||||||
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 as of April 1, 2023 | $ | 3,698 | ||
| Change in fair value of bifurcated embedded derivatives, reported in earnings | 4,460 | |||
| Conversion of embedded derivatives to equity | (1,481 | ) | ||
| Conversion of warrant liability to non-controlling interest | (5,896 | ) | ||
| Change in fair value of contingent consideration liabilities, reported in earnings | (174 | ) | ||
| Balance as of March 31, 2024 | $ | 607 | ||
| Change in fair value of bifurcated embedded derivatives, | (607 | ) | ||
| Balance as of March 31, 2025 | $ | - | ||
The fair values of financial instruments not included in these tables are estimated to be equal to their carrying values as of March 31, 2025 and March 31, 2024. The Company’s estimates of the fair values were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values.
Cash equivalents and restricted cash equivalents primarily consisted of short-term interest-bearing money market funds with maturities of less than 90 days and time deposits. The estimated fair values were based on available market pricing information of similar financial instruments.
Due to their short maturity, the carrying amounts of the Company’s accounts receivable, accounts payable and accrued expenses approximated their fair values as of March 31, 2025 and March 31, 2024.
The Company’s notes payable and senior secured line of credit are not publicly traded and fair value is estimated to equal carrying value.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.