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Note 10 - Stockholders' Equity
 9 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Equity [Text Block]

Note 10 — Stockholders’ Equity 

 

Spin-Out

 

Prior to the Spin-Out, LiveOne, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., canceled 127,984,230 shares of the Company’s common stock. As of December 31, 2024, LiveOne owned approximately 17.9 million shares of the Company’s common stock (not including any shares of common stock underlying the PC1 Warrants held by LiveOne), which constituted approximately 72% of the Company’s issued and outstanding shares of common stock as of December 31, 2024.

 

Pursuant to the Company’s Amended and Restated Certificate of Incorporation which was approved by the Company’s board of directors and LiveOne as the sole stockholder on December 15, 2022, which became effective on September 12, 2023, in connection with the completion of the Spin-Out, the Company is authorized to issue up to 110,000,000 shares, consisting of 100,000,000 shares of the Company’s common stock and 10,000,000 shares of the Company’s preferred stock, $0.00001 par value per share (the "preferred stock"). 


On September 8, 2023, the Company completed the Spin-Out and converted the outstanding PC1 Bridge Loan into 2,340,707 shares of common stock based on a fair value of $4.39 per share, which was the closing price of the stock on the date of conversion. The book value of the PC1 Bridge Loan and the bifurcated embedded derivative were converted into additional paid in capital, which equaled the fair value of the 2,340,707 shares issued for the conversion of the PC1 Bridge Loan. As a result of the completion of the Spin-Out and the PodcastOne shares becoming publicly traded, the Company reclassified its warrant liability to equity as a result of the strike price and number of warrants becoming fixed at $3.00 per share, which resulted in a $9.1 million increase to additional paid in capital. In addition, the Company's derivative liability was written to zero as the redemption feature was unexercised. 

 

Finder's Agreement

 

In  September 2023, the Company entered into a finder's fee arrangement pursuant to which the Company agreed to issue shares of its common stock at a price of $8.00 per share (subject to adjustment in certain limited circumstances) as a finder’s fee to a certain third party podcast platform in the event certain former and/or current podcast content creators of such platform entered into new podcasting agreements with the Company, with the amount of the fee to be based on the amount of revenues actually derived by the Company from such podcasts during a predetermined period. Payments made to such third party attributed to the Company entering into new podcast contracts were capitalized to content creator relationship intangibles. As of December 31, 2024, the Company has capitalized $3.2 million of payments made to such third party. During the three months ended December 31, 2024, the Company made an adjustment of $0.5 million to accrued common stock and content creator relationships to account for the settlement of the finder's fee agreement attributed to multiple third-party platforms. 

 

2016 Equity Incentive Plan

 

LiveOne’s board of directors and stockholders approved its 2016 Equity Incentive Plan, as amended (the “2016 Plan”) which reserved a total of 12,600,000 shares of LiveOne’s common stock for issuance. On September 17, 2020, LiveOne’s stockholders approved the amendment to the 2016 Plan to increase the number of shares available for issuance under the 2016 Plan by 5,000,000 shares increasing the total up to 17,600,000 shares, which increase was formally adopted by LiveOne on June 28, 2021. Incentive awards authorized under the 2016 Plan include, but are not limited to, nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and stock appreciation rights. If an incentive award granted under the 2016 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to LiveOne in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2016 Plan.

 

The Company’s employees were awarded options and restricted stock awards under the 2016 Plan, therefore an allocation of the share-based compensation was made to the Company from LiveOne. The Company recognized stock-based compensation expense of $0.1 million and $0.5 million during the nine months ended December 31, 2024 and 2023, respectively. The total tax benefit recognized related to share-based compensation expense was none for the nine months ended December 31, 2024 and 2023, respectively.

 

LiveOne Options Grants to the Company’s Employees

 

Stock option awards are granted with an exercise price equal to the fair market value of LiveOne’s common stock at the date of grant based on the closing market price of its common stock as reported on The Nasdaq Capital Market. The option awards generally vest over two to four years and are exercisable any time after vesting. The stock options expire ten years after the date of grant.

 

As of December 31, 2024, unrecognized compensation costs for unvested awards to the Company's employees was less than $0.1 million, which is expected to be recognized over a weighted-average service period of 1.12 years.

 

The following table summarizes the activity of LiveOne’s options granted to the Company's employees during the nine months ended December 31, 2024:

 

      

Weighted-

 
      

Average

 
      

Exercise

 
  

Number of

  

Price per

 
  

Shares

  

Share

 

Outstanding as of March 31, 2024

  140,000  $1.87 

Granted

  -  $- 

Exercised

  -  $- 

Forfeited or expired

  (15,000) $4.20 

Outstanding as of December 31, 2024

  125,000  $1.59 

Exercisable as of December 31, 2024

  115,000  $1.31 

 

The weighted-average remaining contractual term for options to the Company's employees outstanding and options to the Company's employees exercisable as of December 31, 2024 was 7.04 years and 7.09 years, respectively. The intrinsic value of options to employees outstanding and options to employees exercisable was none and none, respectively, at December 31, 2024.

 

The fair value of stock options outstanding and exercisable at December 31, 2024 was $0.2 million and $0.2 million, respectively. The fair value of stock options outstanding and exercisable at  December 31, 2023 was $0.3 million and $0.1 million, respectively.

 

Restricted Stock Units Grants to the Company's Employees

 

As of December 31, 2024, unrecognized compensation costs for unvested LiveOne restricted stock units awards to the Company's employees was $0.1 million, which is expected to be recognized over a weighted-average service period of 1.58 years.

 

The following table summarizes the activity of LiveOne’s restricted stock units granted to the Company's employees during the nine months ended December 31, 2024:

 

  

Number of

 
  

Shares

 

Outstanding as of March 31, 2024

  182,500 

Granted

  50,000 

Vested

  (100,417)

Outstanding as of December 31, 2024

  132,083 

 

The fair value of restricted stock units that vested during the nine months ended December 31, 2024 and 2023 was $0.1 million and $0.1 million, respectively.

 

PodcastOne 2022 Equity Incentive Plan

 

On December 15, 2022, the Company’s board of directors and LiveOne as the sole stockholder, through its wholly owned subsidiary, LiveXLive PodcastOne, Inc., approved the Company’s 2022 Equity Incentive Plan (the “2022 Plan”) which reserved a total of 2,000,000 shares of the Company’s common stock for issuance. Incentive awards authorized under the 2022 Plan include, but are not limited to, nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Code and stock appreciation rights. If an incentive award granted under the 2022 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to the Company in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2022 Plan.

 

The following table summarizes the activity of the Company's restricted stock units issued to its employees under the 2022 Plan during the nine months ended December 31, 2024:

 

  

Number of

 
  

Shares

 

Nonvested as of March 31, 2024

  591,560 

Granted

  339,467 

Vested

  (228,335)

Forfeited or expired

  (13,250)

Nonvested as of December 31, 2024

  689,442 

 

As of December 31, 2024, the Company recognized $2.1 million of stock compensation for vested restricted stock units. Unrecognized compensation costs for unvested PodcastOne restricted stock units issued to employees was $1.8 million, which is expected to be recognized over a weighted-average service period of 0.26 years.

 

Authorized Common Stock and Authority to Create Preferred Stock

 

Pursuant to the Company’s Amended and Restated Certificate of Incorporation which was approved by the Company’s board of directors and LiveOne as the sole stockholder on December 15, 2023, became effective in connection with the completion of the Spin-Out, the Company is authorized to issue up to 110,000,000 shares, consisting of 100,000,000 shares of the Company’s common stock and 10,000,000 shares of the Company’s preferred stock. 

 

The Company may issue shares of preferred stock from time to time in one or more series, each of which will have such distinctive designation or title as shall be determined by the Company’s board of directors and will have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issue of such class or series of preferred stock as may be adopted from time to time by the Company’s board of directors. The Company’s board of directors will have the power to increase or decrease the number of shares of preferred stock of any series after the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased, the shares constituting such decrease will resume the status of authorized but unissued shares of preferred stock.

 

While the Company does not currently have any plans for the issuance of preferred stock, the issuance of such preferred stock could adversely affect the rights of the holders of common stock and, therefore, reduce the value of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the common stock until and unless the Company’s board of directors determines the specific rights of the holders of the preferred stock; however, these effects may include: restricting dividends on the common stock, diluting the voting power of the common stock, impairing the liquidation rights of the common stock, or delaying or preventing a change in control of the Company without further action by the stockholders.