PodcastOne, Inc. Fair Value Disclosure
Note 11 — 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 as of March 31, 2023 (in thousands):
| March 31, 2023 |
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| Fair |
Hierarchy Level |
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| Value |
Level 1 |
Level 2 |
Level 3 |
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| Liabilities: |
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| Warrant liability on PodcastOne bridge loan |
$ | 2,817 | $ | - | $ | - | $ | 2,817 | ||||||||
| Bifurcated embedded derivative on PodcastOne bridge loan |
1,950 | - | - | 1,950 | ||||||||||||
| $ | 4,767 | $ | - | $ | - | $ | 4,767 | |||||||||
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, 2023 | $ | 4,767 | ||
| Change in fair value of bifurcated embedded derivatives, reported in earnings | 7,603 | |||
| Reclassification of warrant liability to equity | (9,116 | ) | ||
| Conversion of bifurcated embedded derivative into common stock | (3,254 | ) | ||
| Balance as of March 31, 2024 | $ | - | ||
Due to their short maturity, the carrying amounts of the Company’s accounts receivable, accounts payable, accrued liabilities and other long-term liabilities approximated their fair values as of March 31, 2024 and 2023, respectively.
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.