LiveOne, Inc. — Form 10-K summary
Reporting period: Fiscal year ended March 31, 2022, compared with fiscal 2021. This is an annual filing, not a standalone fourth-quarter report. The company operates as a single segment across music memberships and streaming, live and virtual events, podcasts, and personalized merchandise. It acquired Gramophone in October 2021; fiscal 2022 includes CPS and PodcastOne for the full year, while the prior-year comparison includes acquisition-related timing differences.
Financial performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $117.0 million | $65.2 million |
| Gross profit | $20.2 million | $12.4 million |
| Operating loss | $37.9 million | $29.4 million |
| Net loss | $43.9 million | $41.8 million |
| Net loss per share | $0.56 | $0.61 |
| Cash used in operating activities | $9.1 million | $9.5 million |
| Cash and restricted cash at year-end | $13.2 million | $18.8 million |
Revenue increased 79%. Gross margin was approximately 17% versus 19% in FY2021; cost of sales rose 90%, faster than revenue. The filing also reports a $24.0 million non-GAAP contribution margin for FY2022, defined as revenue less cost of sales, versus $16.2 million. The consolidated operating loss includes $22.8 million of corporate expense; the operations portion of operating loss was $15.1 million. Total adjusted EBITDA, a non-GAAP measure, was negative $13.4 million versus negative $5.8 million, reflecting corporate costs; the operations-only figure was negative $0.9 million versus positive $0.03 million.
Revenue mix and growth: Memberships were $41.3 million (+23%); advertising $33.7 million (+62%); merchandising $15.4 million (+199%); sponsorship and licensing $7.1 million (+82%); and ticket/event revenue $19.5 million (+968%). Management attributed growth to OEM membership growth, PodcastOne advertising, the full-year contribution of CPS, and event-related revenue, especially the Social Gloves event and Spring Awakening. Those events had no comparable counterpart in the prior year.
Liquidity and debt: Current assets were $31.3 million against current liabilities of $60.1 million, a working-capital deficit of $28.8 million. Total liabilities were $87.7 million and stockholders’ deficit was $10.9 million. Debt was reported at $26.7 million net of discounts and fees; the debt maturity schedule lists $28.1 million before discounts. The company had drawn the full $7.0 million revolving facility, secured by substantially all company and subsidiary assets. Harvest Notes of $15.0 million principal and related-party convertible notes were due in June 2023 and May 2023, respectively. The company reported compliance with debt covenants at March 31, 2022.
Material changes, outlook and notable items
- LiveOne streamed 126 major music events and reported approximately 54 million views during FY2022, versus 146 events in FY2021. Membership services had more than 1.481 million paid members at year-end, but the count includes members subject to a contractual dispute for whom revenue was not being recognized; audio services had approximately 0.8 million monthly active users.
- Management expected to increase in-person event production as pandemic restrictions eased, with ticketing and event revenue—including sponsorship—expected to become a larger share of revenue. It also planned continued investment in product and engineering over the following 12–24 months and international expansion in FY2023. The filing provides no quantified revenue, earnings, or cash-flow guidance.
- COVID-19 continued to affect live events and advertising. Spring Awakening was held in October 2021; the planned June 2022 event was cancelled and management hoped to hold it in 2023. Management cautioned that future pandemic effects remained uncertain.
- Unusual financial items included $3.1 million of PPP loan forgiveness income, a $4.3 million loss on extinguishment of related-party debt, and $0.8 million of expense associated with exchanging a convertible note. A $1.2 million employee retention tax credit reduced payroll expense.
- The company and auditor disclosed substantial doubt about the company’s ability to continue as a going concern, citing recurring losses, $9.1 million of operating cash outflow, and the working-capital deficit. Management’s plans included cost reductions, improved operating results, and raising capital; there is no assurance these plans will succeed. A $150 million shelf registration was effective, but it is a capacity to offer securities, not committed financing.
- Management concluded disclosure controls and internal control over financial reporting were ineffective, with material weaknesses involving entity-level controls, complex debt and business-combination accounting, financial statement preparation, and revenue and inventory controls. Remediation was planned, but timing was uncertain. The financial statement audit opinion was unqualified; the auditor highlighted going-concern uncertainty and a critical audit matter concerning the Trinad debt amendment. The auditor did not opine on internal-control effectiveness.
- Legal and contractual exposures include a Wantickets-related lawsuit seeking approximately $10 million; management said loss was not probable but the outcome was uncertain. In June 2022, SoundExchange sued over alleged unpaid royalties and late fees; the amount was not clear from the filing, and the company said it believed its reserve was adequate. Accrued royalties to performing rights organizations were $1.2 million.
- One OEM customer, identified elsewhere in the filing as Tesla, accounted for 28% of FY2022 revenue ($32.3 million) versus 36% in FY2021. The customer can terminate its agreement, and management noted that certain membership revenue is subsidized by the OEM. Nasdaq had notified the company in December 2021 of a bid-price deficiency.
Most important facts for investors to verify
- Current cash, debt maturities, covenant headroom, refinancing options, and whether additional financing can be obtained without materially diluting shareholders.
- Progress toward remediating the disclosed material weaknesses and the reliability of reported revenue, royalty, and user metrics.
- The OEM relationship, customer concentration, disputed paid-member count, and the revenue treatment of those members.
- Repeatability and margins of event-related revenue, particularly revenue and costs tied to Social Gloves and the return of in-person festivals.
- Developments, potential financial exposure, and reserves for the Wantickets litigation, SoundExchange complaint, and royalty obligations.
- Subsequent events: the filing reports 1,186,221 shares repurchased after year-end through June 28, 2022, at an average $0.84 per share; verify their cash impact and the company’s liquidity after those purchases.