PodcastOne, Inc. Commitments Disclosure

Note 8 — Commitments and Contingencies

 

Contractual Obligations

 

As of March 31, 2025, the Company is obligated under agreements with its content providers and other contractual obligations to make guaranteed payments as follows: $1.3 million, $0.1 million and $0.1 million for the fiscal year ending March 31, 2026, 2027 and 2028, respectively.

 

On August 28, 2023, the Company entered into a new two-year employment contract with its President for $0.4 million per year effective January 1, 2023.

 

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. 

 

On  January 15, 2025, the Company entered into a three-year Enterprise Service and Advertising Agreement (the “Agreement”) with ART19 LLC (“ART19”), a subsidiary of Amazon.com, Inc. to move the existing network of PodcastOne programming to the ART19 hosting platform. The Agreement is expected to drive additional monetization opportunities across the Company’s vast library of popular podcasts. Pursuant to the Agreement ART19 is required to pay the Company a minimum guarantee of $15.0 million over the term of the Agreement based on the Company achieving certain minimum impressions amount, which guarantee is subject to adjustment as provided in the Agreement, including if the Company achieves higher minimum impressions amounts. In addition, the Agreement provides for a revenue share split between the Company and ART19 based on gross sales revenue achieved by the Company under the Agreement. During the year ended March 31, 2025 the Company recognized revenue of $0.8 million from the Agreement.

 

On October 23, 2024, the Company entered into an investor relations consulting agreement with MZHCI, LLC. The contract called for a three month commitment at $9,000 per month then on a month to month basis after January 1, 2025 and terminated effective as of April 2025. The consulting agreement also called for 7,500 shares of the Company's common stock to be issued monthly as long as the Company was a customer of MZHCI, LLC.

 

Legal Proceedings 

 

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, except as set forth below, 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.

 

 

Parent Company Debt

 

The senior credit facility held by the Company’s parent, LiveOne, contains provisions that limit the Company’s operating activities, including covenant relating to the requirement to maintain a certain amount cash at LiveOne of $5.0 million (maybe adjusted from time to time). If an event of default occurs and is continuing, the senior lender  may among other things, terminate its obligations thereunder, accelerate its 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. On  September 8, 2023 and effective as of  August 22, 2023, LiveOne entered into a new Business Loan Agreement with the senior credit facility provider to convert the senior credit facility into an assets backed loan credit facility, which shall continue to be collateralized by a first lien on all of the assets of LiveOne and its subsidiaries (the “ABL Credit Facility”). The Business Loan Agreement provides LiveOne with borrowing capacity of up to the Borrowing Base (as defined in the Business Loan Agreement). Pursuant to the Business Loan Agreement, the requirement that LiveOne and its related entities shall at all times maintain a certain minimum deposit with the senior credit facility provider was reduced from $7,000,000 to $5,000,000.

 

On  January 28, 2025, LiveOne entered into the 2025 Business Loan Agreement with the senior lender to update certain terms of the ABL Credit Facility, including to reduce the principal amount outstanding under the Promissory Note to $3,750,000, reflecting LiveOne’s repayment of $3,250,000 of the principal amount of the Promissory Note as of such date, and to extend the maturity date of the Promissory Note to  November 20, 2025. Pursuant to the 2025 Change in Terms Agreement entered into in connection with the 2025 Business Loan Agreement, LiveOne agreed to repay the remaining outstanding principal amount of the Promissory Note in 9 equal monthly payments of $400,000 each beginning  February 20, 2025, and the final 10th payment of $151,291.67 on  November 20, 2025. Pursuant to the 2025 Business Loan Agreement, the requirement that LiveOne and its related entities shall at all times maintain a certain minimum cash deposit with the senior lender is maintained at $5,000,000. The ABL Credit Facility continues to be collateralized by a first lien on all of the assets of LiveOne and its subsidiaries, including the Company. Borrowings under the ABL Credit Facility are subject to certain covenants as set forth in the 2025 Business Loan Agreement and bear interest at a rate equal to the “Money Rate” column of The Wall Street Journal (Western Edition) as determined by the Senior Lender plus 2.50%, resulting in the initial rate of 10.00% and provided, that it shall not be less than 7.50%. LiveOne  may prepay at any time without penalty all or a portion of the amount owed to the Senior Lender. The 2025 Business Loan Agreement includes customary events of default and various financial and other covenants with which LiveOne must comply in order to maintain borrowing availability, including maintaining required minimum liquidity amount and Borrowing Base capacity. The occurrence of an event of default could result in the acceleration of all obligations of LiveOne to the senior lender with respect to indebtedness, whether under the 2025 Business Loan Agreement or otherwise. Other covenants include, but are not limited to, covenants limiting or restricting LiveOne’s ability to incur indebtedness, incur liens, enter into mergers or consolidations involving debt, dispose of assets, make loans and investments and pay dividends. In connection with the 2025 Business Loan Agreement, the Promissory Note continues in effect except as modified by the 2025 Business Loan Agreement and the 2025 Change in Terms Agreement.    

 

In connection with the issuance of the Debentures (as defined in Note 12 — Subsequent Events), LiveOne repaid the outstanding principal amount of the ABL Credit Facility and terminated such facility and all agreements related to it.