XML 27 R11.htm IDEA: XBRL DOCUMENT
v3.21.2

Business Combinations | 12 Months Ended
--- | ---
Mar. 31, 2021
Business Combinations [Abstract] |
Business Combinations | Note 4 — Business Combinations PodcastOne On July 1, 2020, the Company’s wholly owned subsidiary, LiveXLive PodcastOne, Inc., acquired 100% of the equity interests of PodcastOne for net consideration of $16.1 million consisting of 5,363,636 shares of the Company’s common stock with a fair value of $14.6 million net of a 24% discount for lack of marketability described below, contingent consideration with a fair value of $1.1 million and an additional true-up of 203,249 shares during the third quarter of fiscal 2021 valued at $0.4 million, net of a 24% discount for lack of marketability described below, that was issued as part of the final purchase price consideration. The shares of the Company’s common stock are subject to a twelve-month lock-up period and sales volume restrictions.
Fair Value of Consideration Transferred: |  |  |
Common stock |  | $ | 14,991 |
Contingent consideration |  |  | 1,100 |
Total |  | $ | 16,091 |
If, during the period commencing after May 7, 2020 and ending on July 1, 2022, for five consecutive trading days the closing market price of the Company’s common stock exceeds $5.00 per share, an additional aggregate payment of $3.0 million in cash shall be paid to the sellers of PodcastOne in accordance with their respective pro rata percentage within five business days of the second anniversary of the closing date (July 1, 2022). The fair value of this contingent consideration liability on the closing date of July 1, 2020 was estimated at $1.1 million using a Monte Carlo simulation and the significant unobservable input included a credit yield of 21.9%. During March 2021, the closing price of the Company’s common stock exceeded $5.00 per share for the requisite five consecutive days. The Company recorded a $1.3 million charge to Other income (expense) in the Consolidated Statement of Operations. The contingent consideration liability of $2.4 million is classified within Other Long-term Liabilities in the accompanying Consolidated Balance Sheet at March 31, 2021 (see Note 14 – Other Long-term Liabilities). Goodwill resulted from acquisition as it is intended to augment and diversify the Company’s single reportable segment. The Company accounted for the acquisition as a business combination. As a result of the acquisition of the stock of PodcastOne, the goodwill is not deductible for tax purposes. The following table summarizes the fair value of the assets assumed in the PodcastOne acquisition (in thousands):
Asset Type |  | Weighted Average Amortization Period (Years) |  |  | Fair Value |
Cash and cash equivalents |  |  |  |  |  | $ | 1,286 |
Accounts receivable |  |  |  |  |  |  | 3,951 |
Prepaid expense and other assets |  |  |  |  |  |  | 316 |
Property and equipment |  |  |  |  |  |  | 119 |
Content creator relationships |  |  | 1.6 |  |  |  | 772 |
Trade name |  |  | 10 |  |  |  | 1,010 |
Goodwill |  |  |  |  |  |  | 12,042 |
Accounts payable and accrued liabilities |  |  |  |  |  |  | (2,934 | )
Deferred tax asset |  |  |  |  |  |  | 972 |
Allowance for deferred tax asset |  |  |  |  |  |  | (972 | )
Note payable |  |  |  |  |  |  | (471 | )
Net assets acquired |  |  |  |  |  | $ | 16,091 |
The fair value of the assets acquired includes accounts receivable of $4.0 million. The gross amount due under contracts is $4.2 million, of which $0.2 million is expected to be uncollectible. The Company did not acquire any other class of receivable as a result of the acquisition of PodcastOne. CPS On December 22, 2020, the Company’s wholly owned subsidiary, LiveXLive Merchandising, Inc., acquired 100% of the equity interests of CPS for total consideration of 2,230,769 shares of the Company’s restricted common stock with a fair value of $6.4 million net of a 25% discount for lack of marketability described below. The shares of the Company’s common stock issued to the sellers are subject to a twelve-month lock-up period from the closing date, such that no such shares can be sold, transferred, assigned, hypothecated, or in any way disposed of, or any right or interest therein, whether voluntarily or by operation of law, or by gift or otherwise prior to the expiration of such period. The Company agreed to also issue up to approximately 577,000 additional shares of its restricted common stock, classified as contingent consideration, if CPS reports GAAP revenue of $20.0 million and $1.0 million of EBITDA (as defined in the purchase agreement) for its fiscal year ended December 31, 2020. Based on their likelihood of achievement, the number of shares reflect management’s current estimate and were valued at $1.7 million based on the Company’s stock price on the date of acquisition, net of a 25% discount for lack of marketability. The contingent consideration liability at March 31, 2021 of $2.5 million is included in accounts payable and accrued liabilities on the Consolidated Balance Sheet. The Company recorded a $0.9 million charge to Other income (expense) in the Consolidated Statement of Operations. The Company further agreed to issue up to approximately 110,000 additional shares of its restricted common stock to the extent CPS’ final working capital as determined by the parties exceeds $4.0 million. These number of shares reflect management’s current estimate based on achievement. These additional shares were valued at $0.3 million based on the Company’s stock price on the date of acquisition, net of a 25% discount for lack of marketability. This amount is included in additional paid in capital on the March 31, 2021 Consolidated Balance Sheet. Amounts recorded as consideration for the shares to be issued are provisional and subject to change.
Fair Value of Consideration Transferred: |  |  |
Common stock |  | $ | 6,391 |
Additional paid-in capital – common stock to be issued |  |  | 313 |
Contingent consideration |  |  | 1,654 |
Total |  | $ | 8,358 |
Goodwill resulted from acquisition as it is intended to augment and diversify the Company’s single reportable segment. The Company accounted for the acquisition as a business combination. As a result of the acquisition of the stock of CPS, the goodwill is not deductible for tax purposes. The initial accounting for the CPS acquisition is incomplete and subject to change, which may be significant. The Company recorded provisional amounts and may allocate additional value to identified intangible assets and inventory. The following table summarizes the fair value of the assets assumed in the CPS acquisition (in thousands):
Asset Type |  | Weighted Average Amortization Period (Years) |  |  | Fair Value |
Cash and cash equivalents |  |  |  |  |  | $ | 1,132 |
Accounts receivable |  |  |  |  |  |  | 6,153 |
Inventories |  |  |  |  |  |  | 2,600 |
Prepaid expense |  |  |  |  |  |  | 29 |
Property and equipment |  |  |  |  |  |  | 585 |
Wholesale relationship |  |  | 6 |  |  |  | 2,500 |
Domain name |  |  | 10 |  |  |  | 400 |
Customer list |  |  | 5 |  |  |  | 172 |
Goodwill |  |  |  |  |  |  | 905 |
Other assets |  |  |  |  |  |  | 53 |
Right of use asset |  |  |  |  |  |  | 1,086 |
Lease liability |  |  |  |  |  |  | (1,086 | )
Accounts payable |  |  |  |  |  |  | (5,067 | )
Deferred tax liability |  |  |  |  |  |  | (388 | )
Other liabilities |  |  |  |  |  |  | (716 | )
Net assets acquired |  |  |  |  |  | $ | 8,358 |
The fair value of the assets acquired includes accounts receivable of $6.2 million. The gross amount due under contracts is $6.5 million, of which $0.4 million is expected to be uncollectible. The Company did not acquire any other class of receivable as a result of the acquisition of CPS. The Company recorded a tax benefit of $0.4 million for the release of valuation allowance on the Company’s net operating losses to support acquired deferred tax liabilities. The Company is required to establish a deferred tax liability for book tax basis differences of acquired assets and liabilities which would result in the utilization of available net operating losses. The decrease in valuation allowance resulted in a tax benefit of $0.4 million which was recorded in the Company’s Consolidated Statement of Operations for fiscal year ended March 31, 2021. Revenue of $19.7 million and $5.2 million and net loss of $2.9 million and $0.3 million was included in the Company’s Consolidated Statements of Operations from the date of acquisition for the fiscal year ended March 31, 2021 for PodcastOne and CPS, respectively. The Company incurred less than $0.1 million in transaction costs associated with the PodcastOne and CPS acquisitions, respectively, which were expensed and included in General and Administrative in the Consolidated Statement of Operations for fiscal year ended March 31, 2021. Fiscal 2020 Transaction 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 |
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 $0.6 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 years ended March 31, 2021 and 2020, respectively. The following table presents the revenues, net loss and earnings per share of the combined company for the years ended March 31, 2021 and 2020 as if the acquisition of CPS had been completed on April 1, 2019 (in thousands, except per share data).
|  | Year Ended March 31, (unaudited) |
|  | 2021 |  |  | 2020 |
Revenues |  | $ | 83,050 |  |  | $ | 57,823 |
Net loss |  |  | (41,801 | ) |  |  | (42,025 | )
Net loss per share – basic and diluted |  | $ | (0.61 | ) |  | $ | (0.72 | )
The following table presents the revenues, net loss and earnings per share of the combined company for the years ended March 31, 2021 and 2020 as if the acquisition of PodcastOne had been completed on April 1, 2019 (in thousands, except per share data).
|  | Year Ended March 31, (unaudited) |
|  | 2021 |  |  | 2020 |
Revenues |  | $ | 69,953 |  |  | $ | 63,985 |
Net loss |  |  | (42,656 | ) |  |  | (40,398 | )
Net loss per share – basic and diluted |  |  | (0.62 | ) |  | $ | (0.65 | )
The following table presents the revenues, net loss and earnings per share of the combined company for the year ended March 31, 2020 as if the acquisition of React Presents had been completed on April 1, 2019 (in thousands, except per share data).
|  | Year Ended March 31, (unaudited) |
|  | 2020 |
Revenues |  | $ | 52,727 |
Net loss |  |  | (42,476 | )
Net loss per share – basic and diluted |  |  | (0.76 | )
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. 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 acquisition which included amortization of acquired intangible assets of $1.7 million and $2.4 million in the year ended March 31, 2021 and 2020, respectively and transaction costs of $0.2 million included in the year ended March 31, 2020.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration