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Business Combinations

12 Months Ended

Mar. 31, 2020

Note 5 — Business Combinations

React Presents

On February 5, 2020, the Company's wholly owned subsidiary, LiveXLive Events, acquired React Presents and indirectly Spring Awakening, LLC, which is a wholly owned subsidiary of React Presents, for net consideration of $1.5 million consisting of (i) a $2 million convertible note payable with a fair value of $1.5 million and (ii) the assumption of React Presents' liabilities of $0.2 million resulting in a pre-tax bargain purchase gain of $0.5 million. The acquisition is intended to augment and diversify the Company's music operating segment. The Company accounted for the acquisition as a business combination. As the fair value of the net assets acquired were in excess of the consideration, a deferred tax liability was recorded and reduced the gain to $0.4 million.

The following table summarizes the fair value of the assets assumed in the React Presents acquisition (in thousands):

Asset Type	Fair Value
Cash	$	138
Accounts receivable		101
Prepaid expense and other assets		37
Property and equipment		17
Brands names		1,500
Non-compete agreement		250
Fan database		230
Accounts payable and accrued liabilities		(221	)
Deferred tax liability		(107	)
Gain on bargain purchase, net of tax		(404	)
Net assets acquired	$	1,541

Since the acquisition date, the amount of revenue for React Presents included in the Company's consolidated statements of operations for the year ended March 31, 2020 was $0.3 million. The net loss for React Presents included in the Company's consolidated statements of operations for the year ended March 31, 2020 was ($0.3) million. The Company incurred less than $0.1 million in transaction costs associated with the React Presents acquisition.

Supplemental Pro Forma Information (Unaudited)

The pro forma financial information as presented below is for informational purposes only and is not indicative of operations that would have been achieved from the acquisitions had they taken place at the beginning of the fiscal year ended March 31, 2019.

The following table presents the revenues, net loss and earnings per share of the combined company for the years ended March 31, 2020 and 2019 as if the acquisition of React Presents had been completed on April 1, 2018 (in thousands, except per share data).

	Year Ended March 31, (unaudited)
	2020			2019

Revenues	$	52,727		$	51,609
Net loss		(42,476	)		(40,662	)
Net loss per share – basic and diluted		(0.76	)		(0.78	)

The Company's unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflect amortization of intangible assets as a result of the acquisition along with interest expense associated with the promissory note issued as consideration. The pro forma results are not necessarily indicative of the results that would have been realized had the acquisitions been consummated as of the beginning of the periods presented. The pro forma amounts include the historical operating results of the Company, with adjustments directly attributable to the acquisitions.

Slacker

In the quarter ended December 31, 2018, the Company finalized its purchase price allocation for the acquisition of Slacker on December 29, 2017. As a result of obtaining the final valuation of the acquisition, the following changes have been recorded in the current period (in thousands):

Consideration	Final Fair Value			Preliminary Fair Value*			Change**
Cash	$	2,525		$	2,525		$	-
Less cash acquired		(113	)		(113	)		-
Net cash consideration		2,412			2,412			-
Equity at fair value		26,167			31,911			(5,744	)
Net consideration	$	28,579		$	34,323		$	(5,744	)

	Final Allocation			Preliminary Allocation*			Change**
Restricted cash	$	150		$	150		$	-
Accounts receivable		3,339			3,339			-
Prepaid expense and other assets		254			254			-
Deferred cost of sales		458			458			-
Property and equipment		400			400			-
Trademarks/tradenames		4,637			11,436			(6,799	)
Intellectual property		5,366			8,454			(3,088	)
Customer relationships		6,570			6,618			(48	)
Software		19,280			19,384			(104	)
Goodwill		9,672			5,377			4,295
Deferred tax asset		1,181			1,523			(342	)
Allowance for deferred tax asset		(1,181	)		(1,523	)		342
Assumed current portion of long-term debt		(3,907	)		(3,907	)		-
Assumed current liabilities		(17,640	)		(17,640	)		-
Net consideration	$	28,579		$	34,323		$	(5,744	)

(* Preliminary fair values recorded as of March 31, 2018.

**The fair value of equity consideration was changed by $5.7 million to reflect the lack of marketability from an 18-month lockout period. Changes in values of Tradenames and Intellectual property due to finalization of royalty rates.)

As a result of the Company finalizing its purchase price allocation for the acquisition of Slacker, amortization expense recorded in the consolidated statements of operations was reduced by $1.9 million in the third quarter of fiscal year ended March 31, 2019 of which $0.2 million related to a previous year.