SCHEDULE: LiveOne Boosts PodcastOne Stake to 71.8%

LiveOne, Inc. has increased its beneficial ownership in PodcastOne, Inc. to 71.8% through recent share acquisitions and financing activities.

Summary

• LiveOne, Inc. (the "Reporting Person") beneficially owns 19,761,050 shares of PodcastOne, Inc. common stock, representing approximately 71.8% of the outstanding shares.
• This ownership includes 18,661,050 direct shares and 1,100,000 Bridge Warrants.
• LiveOne acquired 237,113 shares of PodcastOne on June 11, 2025, as settlement for intercompany balances owed for services rendered.
• Since March 15, 2024, LiveOne has acquired a total of 1,712,326 shares of PodcastOne through intercompany balance settlements.
• LiveOne and PodcastOne entered into a Securities Purchase Agreement on May 19, 2025, for LiveOne to sell $16.75 million in principal amount of Original Issue Discount Senior Secured Convertible Debentures for a cash purchase price of $15.25 million.
• An additional $11.0 million in debentures may be sold if certain conditions related to LiveOne's stock price or Free Cash Flow are met.
• The debentures mature on May 19, 2028, accrue interest at 11.75% per year, and are convertible into LiveOne's common stock at $2.10 per share.
• LiveOne's obligations under these debentures are guaranteed by certain wholly-owned subsidiaries, including PodcastOne, and secured by a lien on all of LiveOne's and the guarantors' assets.

Sentiment

Score: 5

Explanation: The filing is primarily a factual disclosure of beneficial ownership and financing activities. While the high-interest, asset-secured debt introduces some financial risk, the capital raised and LiveOne's increased control over PodcastOne could be seen as strategic positives. The overall sentiment is neutral, reflecting a balance of capital infusion and associated debt obligations.

Positives

• LiveOne has consolidated a significant majority ownership (71.8%) in PodcastOne, providing strong control over its strategic direction.
• The recent capital raise through convertible debentures provides LiveOne with $15.25 million in cash, with potential for an additional $11.0 million, which can be used for operational needs or strategic initiatives.

Negatives

• The convertible debentures carry a high annual interest rate of 11.75%.
• The debentures are secured by a lien on all of LiveOne's and its guarantors' (including PodcastOne's) assets, increasing financial risk and potentially limiting future financing options.
• The debentures include various prepayment premiums and acceleration clauses upon events of default, which could lead to significant financial obligations for LiveOne.
• The conversion of debentures into LiveOne's common stock at $2.10 per share could lead to future dilution for LiveOne's existing shareholders.

Risks

• LiveOne's obligations under the recently issued convertible debentures can be accelerated upon the occurrence of certain customary events of default, requiring immediate payment of the outstanding principal, accrued interest, and applicable prepayment premiums.
• The debentures are secured by a lien on all of LiveOne's and its guarantors' assets, including PodcastOne's assets, which means these assets could be seized by creditors in case of default.
• The potential future issuance of additional debentures or conversion of existing debentures could lead to dilution for LiveOne's shareholders.

Future Outlook

LiveOne intends to continually evaluate its investment in PodcastOne and may engage in discussions regarding PodcastOne's operations, strategic direction, and potential transactions such as debt or equity capital raising, acquisitions, mergers, combinations, and other strategic transactions. LiveOne reserves the right to change its purpose and take further actions, including causing strategic or corporate transactions involving PodcastOne or disposing of its shares.

Management Comments

• LiveOne intends to evaluate its investment in the shares on a continual basis.
• LiveOne may engage in communications with stockholders, officers, or directors of PodcastOne and others, including discussions regarding PodcastOne's operations and strategic direction.
• LiveOne may pursue ideas that could result in debt or equity capital raising transactions, acquisitions, mergers, combinations, and other strategic transactions.

Industry Context

This filing highlights the ongoing consolidation and strategic maneuvering within the digital audio and entertainment industry, specifically podcasting. LiveOne, as a broader music, entertainment, and technology platform, is solidifying its control over a key content vertical (podcasting) through increased ownership and strategic financing. This reflects a trend where larger media entities seek to integrate and control content creation and distribution channels to leverage synergies and expand market share. The use of convertible debt is a common financing mechanism in growth-oriented sectors, balancing capital needs with future equity considerations.

Comparison to Industry Standards

• The acquisition of a majority stake (71.8%) by a parent company (LiveOne) in its spun-out subsidiary (PodcastOne) is a common strategy to maintain control and integrate operations, similar to how major media conglomerates like SiriusXM (which acquired Stitcher) or Spotify (which acquired Gimlet Media and Anchor) have integrated podcasting assets.
• The 11.75% interest rate on the convertible debentures is relatively high, suggesting either a higher perceived risk by investors or a premium paid for the flexibility of convertible debt in the current market environment. This rate is higher than typical corporate bonds for established, investment-grade companies but can be common for growth-stage or mid-cap companies in the media tech space, especially when secured by assets.
• The terms for potential additional debentures, tied to VWAP ($4.20) or Free Cash Flow ($3 million for three consecutive quarters, increasing), are specific performance-based triggers, which are common in structured financing deals to align investor interests with company performance milestones.

Related Party Transactions

• LiveOne's acquisition of PodcastOne on July 1, 2020, making it a wholly-owned subsidiary.
• PodcastOne's private placement of Bridge Notes on July 15, 2022, where LiveOne was a holder.
• The settlement of PodcastOne's intercompany balances owed to LiveOne through the issuance of PodcastOne common stock (1,712,326 shares since March 15, 2024, including 237,113 shares on June 11, 2025).
• The May 19, 2025, Securities Purchase Agreement where LiveOne sold convertible debentures, and PodcastOne (as a wholly-owned subsidiary) guaranteed LiveOne's obligations and provided a lien on its assets.

Stakeholder Impact

• Shareholders (PodcastOne): LiveOne's increased majority ownership (71.8%) solidifies its control, potentially limiting the influence of minority shareholders. PodcastOne's assets are now collateral for LiveOne's debentures, increasing risk for PodcastOne's operations if LiveOne defaults.
• Shareholders (LiveOne): The capital raise provides funding but introduces significant debt at a high interest rate. Future conversion of debentures could lead to dilution of LiveOne's common stock.
• Creditors (LiveOne & PodcastOne): The new debentures are senior secured, meaning they have priority claims on LiveOne's and PodcastOne's assets in case of default, potentially impacting the recovery prospects of other unsecured creditors.
• Management (PodcastOne): Operations and strategic decisions will be heavily influenced by LiveOne's majority ownership and its stated intent to evaluate and potentially direct strategic transactions.

Next Steps

• LiveOne intends to continually evaluate its investment in PodcastOne.
• LiveOne may engage in communications with PodcastOne stockholders, officers, or directors regarding operations and strategic direction.
• LiveOne may cause or introduce strategic or corporate transactions involving PodcastOne or its subsidiaries.
• LiveOne may acquire or dispose of additional shares or securities of PodcastOne in the future.
• Potential sale of an additional $11.0 million in convertible debentures by LiveOne if specific performance conditions are met.
• Holders of the Initial Debentures have monthly redemption rights starting August 2025.
• LiveOne has the option to prepay the Initial Debentures after May 19, 2026.

Key Dates

Recommendation

The filing indicates LiveOne is solidifying its control over PodcastOne and has secured significant capital through convertible debentures. While the capital infusion is positive for operations, the high interest rate (11.75%) and the asset-backed nature of the debt introduce considerable financial risk and potential future dilution for LiveOne shareholders. The strategic intent to evaluate and potentially engage in further transactions suggests ongoing corporate activity. Given the mixed financial implications and the strategic consolidation, a 'hold' recommendation is appropriate as investors should monitor how the new capital is deployed and the impact of the debt structure on future profitability and equity value before making further investment decisions.

Keywords

PodcastOne, LiveOne, SEC Filing, Schedule 13D, Beneficial Ownership, Convertible Debentures, Capital Raise, Majority Stake, Media, Entertainment, Podcasting, NASDAQ