DEF: LiveOne Seeks Reverse Stock Split to Avoid Nasdaq Delisting Amidst Declining Shareholder Returns

LiveOne, Inc. is seeking stockholder approval for a reverse stock split to regain compliance with Nasdaq's minimum bid price rule, as the company faces increasing net losses and declining total shareholder returns.

Summary

• LiveOne, Inc. will hold its Annual Meeting of Stockholders on September 8, 2025, to vote on several key proposals.
• A primary proposal is to approve an amendment to the Certificate of Incorporation to effect a reverse stock split, ranging from one-for-three to one-for-ten, at the Board's discretion.
• The purpose of the reverse stock split is to regain compliance with Nasdaq's Bid Price Rule, which requires a minimum closing bid price of $1.00 per share, following a noncompliance notification received on March 28, 2025.
• The company has 180 calendar days from March 28, 2025, to regain compliance, with a potential for an additional 180-day period if other listing standards are met.
• Stockholders will also vote on the election of seven director nominees, the ratification of Macias Gini & OConnell LLP as the independent registered public accounting firm for the fiscal year ending March 31, 2026, and the approval of an adjournment of the Annual Meeting if necessary.
• As of the Record Date (July 14, 2025), there were 97,128,164 shares of common stock issued and outstanding.
• The company reported a GAAP Net Loss of $20,370 thousand for the fiscal year ended March 31, 2025, an increase from $11,966 thousand in fiscal year 2024 and $10,019 thousand in fiscal year 2023.
• The value of an initial $100 investment based on Total Shareholder Return declined to $17.48 by the end of fiscal year 2025, from $44.93 in fiscal year 2024 and $26.57 in fiscal year 2023.

Sentiment

Score: 3

Explanation: The document highlights significant negative financial performance (increasing net losses, declining TSR) and a critical regulatory compliance issue (Nasdaq delisting risk). While the company is taking steps to address the compliance, the underlying financial health and shareholder value trends are concerning. The proposed reverse stock split is a defensive measure to maintain listing, not an indicator of strong growth or positive operational momentum.

Positives

• The company is proactively addressing its Nasdaq listing non-compliance by proposing a reverse stock split to maintain its listing, which is deemed important for liquidity and capital raising.
• LiveOne maintains strong corporate governance practices, including a Code of Ethics, restrictive stock ownership and insider trading guidelines, and regular board self-assessments.
• The board of directors is committed to diversity, having appointed its first female member in fiscal year 2020 and Mr. Wright (a person of color) in fiscal year 2022, and continues to seek suitable diverse candidates.
• All board committee members are independent, and 6 of 7 directors are independent.
• The company has a structured annual bonus plan (ABP) tied to financial performance and individual objectives for employees and executive officers.

Negatives

• LiveOne is currently non-compliant with Nasdaq's Bid Price Rule, with its stock price below $1.00 for 30 consecutive business days, risking delisting.
• The company's GAAP Net Loss increased significantly to $20,370 thousand in fiscal year 2025, from $11,966 thousand in fiscal year 2024 and $10,019 thousand in fiscal year 2023, indicating worsening financial performance.
• Total Shareholder Return (TSR) has shown a substantial decline, with an initial $100 investment decreasing to $17.48 by the end of fiscal year 2025.
• The board of directors has discretion to abandon the proposed reverse stock split even if approved by stockholders, creating uncertainty.
• There are current vacancies for the chairpersons of the Audit Committee and Nominating Committee due to a director's resignation, which the company is actively seeking to fill.

Risks

• The reverse stock split may not result in a proportionate increase in the common stock price, potentially failing to regain Nasdaq compliance.
• Even if the stock price increases, there is no assurance it will remain at the level required for continued Nasdaq compliance.
• The reverse stock split may decrease the liquidity of the common stock due to a reduced number of outstanding shares and potentially fewer round lot holders.
• A higher market price post-split may not attract new investors, including institutional investors, or satisfy their investing guidelines, thus not necessarily improving trading liquidity.
• If delisted from Nasdaq, trading would likely move to over-the-counter markets, making it more difficult for investors to sell shares and potentially depressing the stock price.
• Delisting would subject the common stock to SEC rules regarding 'penny stocks,' imposing additional disclosure requirements and hindrances for investors.
• The effective increase in authorized but unissued shares resulting from the reverse split could be used by the board to thwart a takeover attempt, potentially discouraging beneficial mergers or acquisitions.

Future Outlook

The company intends to monitor its common stock bid price and assess options to maintain its Nasdaq Capital Market listing, hoping the proposed reverse stock split will enable it to regain compliance with the minimum bid price requirement. A new employment agreement with Robert S. Ellin is anticipated in the near future.

Management Comments

• We believe it is currently most effective to have the Chairman of the board of directors and Chief Executive Officer positions be held by the same individual.
• Mr. Ellin, desiring to continue to demonstrate confidence in our Company and to assist our then near term objectives in light of the ongoing COVID-19 coronavirus pandemic, agreed to have 50% of his monthly base salary from August 1, 2020 to August 15, 2020, and 100% of his monthly base salary from August 16, 2020 through December 31, 2020 paid in equity of our Company.
• Mr. Ellin, desiring to continue to demonstrate confidence in our Company and to assist our objective to achieve annual cost and expense reductions, agreed to continue to forego his monthly cash base salary through December 31, 2022 in exchange for equity of our Company.

Industry Context

The document primarily focuses on corporate governance and financial compliance rather than broader industry trends. It mentions the company's business uniqueness and specialized experience needed in its leaders, implying a niche in the digital media and entertainment sector, including podcasting and streaming.

Management Changes

Corporate Governance

Related Party Transactions

• Trinad Capital (fund wholly owned by Robert S. Ellin, CEO, Chairman, Director, and principal stockholder) previously held $5,879,000 in aggregate principal amount of Trinad Notes, which were convertible into common stock at $3.00 per share.
• On February 3, 2023, Trinad Capital exchanged its promissory notes (aggregate principal and interest of $6,177,218) for 21,177 shares of Series A Perpetual Convertible Preferred Stock, with a stated value of $1,000 per share.
• In consideration for the exchange, Trinad Capital received 200,000 shares of common stock.
• On April 1, 2024, Trinad Capital converted 3,395.09 shares of Series A Preferred Stock into 1,616,709 shares of common stock at $2.10 per share and received 535,399 three-year warrants to purchase common stock at $2.10 per share.
• As of July 1, 2025, Trinad Capital holds 4,298.80 shares of Series A Preferred Stock, having received 598.70 shares as dividend payments between April 1, 2024, and July 1, 2025.
• During the fiscal years ended March 31, 2025, and 2024, the company issued or reserved 102,359 shares (value $0.2 million) and 123,425 shares (value $0.1 million), respectively, to relatives of the Chief Executive Officer for services performed.
• A subsidiary issued a $0.3 million promissory note to an affiliate of Robert Ellin in September 2022, which was paid off in full in October 2022.
• The company participated in a production agreement for a podcast and related show with an affiliate of Patrick Wachsberger (director), incurring no costs in fiscal years 2025 or 2024.

Stakeholder Impact

• Shareholders face potential dilution from the reverse stock split (due to authorized shares not being reduced proportionally) and future equity issuances. Risk of delisting from Nasdaq could significantly reduce liquidity and depress share price. Voting rights are impacted by the proposals.
• Employees' compensation includes base salary, bonuses, and equity awards (restricted stock units, stock options), aligning their interests with company performance.
• Creditors' positions are impacted by the conversion of promissory notes into preferred stock and warrants, restructuring the company's debt.
• Management's strategic objectives and the company's public market standing are directly tied to the proposed reverse stock split and efforts to regain Nasdaq compliance.

Next Steps

• Hold the Annual Meeting of Stockholders on September 8, 2025, to vote on the proposed matters.
• The Board of Directors will determine whether to implement the reverse stock split and at what ratio (within 1-for-3 to 1-for-10) if approved by stockholders.
• The company intends to continue monitoring its common stock bid price and assess options for maintaining its Nasdaq listing.
• The company is conducting a search to find well-qualified candidates to fill the vacant chairman positions on the Audit Committee and Nominating Committee.
• The Compensation Committee intends to undertake a formal review of director compensation during the 2026 fiscal year, potentially retaining an expert consulting firm.
• A new employment agreement with Robert S. Ellin is anticipated in the near future.
• The company intends to adopt a written Related-Person Transactions Policy.

Key Dates

Recommendation

Keywords

LiveOne, reverse stock split, Nasdaq compliance, delisting risk, proxy statement, corporate governance, financial performance, net loss, total shareholder return, director election, auditor ratification, executive compensation, related party transactions, LVO