Exhibit 99.1

Table of Contents

Courtside Group, Inc. (d/b/a PodcastOne)

Consolidated Financial Report

December 31, 2019

Independent Auditor’s Report

Board of Directors

Courtside Group, Inc.

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Courtside Group, Inc. and its subsidiaries (d/b/a PodcastOne), which comprise the consolidated balance sheet as of December 31, 2019, the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Courtside Group, Inc. and its subsidiaries (d/b/a PodcastOne) as of December 31, 2019, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Los Angeles, California

March 25, 2020

See notes to consolidated financial statements.

See notes to consolidated financial statements.

Exhibit 99.2

Table of Contents

See notes to unaudited consolidated financial statements

See notes to unaudited consolidated financial statements

See notes to unaudited consolidated financial statements

See notes to unaudited consolidated financial statements

Courtside Group, Inc. (d/b/a PodcastOne)

Exhibit 99.3

Table of Contents

LiveXLive Media, Inc.’s Unaudited Pro Forma Condensed Combined Financial Information

Unaudited Pro Forma Condensed Combined Financial Information

The following unaudited pro forma condensed combined balance sheet of LiveXLive Media, Inc. (“the Company”) for the fiscal year ended March 31, 2020 is presented as if the acquisition of Courtside Group, Inc. (d/b/a PodcastOne) (collectively, “Courtside Group, Inc.” or “PodcastOne”) referred to herein as the “Acquisition” had occurred on March 31, 2020. The unaudited pro forma condensed combined statements of operations for the year ended March 31, 2020 is presented as if the Acquisition had occurred on April 1, 2019.

The accompanying unaudited pro forma condensed combined financial statements are based on the historical financial statements of the Company after giving pro forma effect to the Company’s acquisition of PodcastOne and its related assets, liabilities and personnel and gives effect to: (i) the equity consideration and (ii) the acquisition of Courtside Group, Inc. (d/b/a PodcastOne), from the stockholders of PodcastOne. PodcastOne operations and related financial information contained throughout the unaudited pro forma condensed combined financial statements herein constitute predominantly all of the historical audited annual and unaudited interim financial statements of LiveXLive Media. The equity consideration and the acquisition of PodcastOne are hereby referred to as the “Transaction”.

The unaudited pro forma condensed combined financial statements have been derived from and should be read in conjunction with the Company’s historical audited consolidated financial statements and historical unaudited interim condensed consolidated financial statements, including the notes thereto, and PodcastOne’s historical audited and interim unaudited consolidated financial statements, including the notes thereto. The financial statements of the Company for the year ended March 31, 2020, are included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on June 26, 2020. The statement of operations of PodcastOne for the twelve months ended March 31, 2020 was derived from PodcastOne’s historical audited consolidated statement of operations for the year ended December 31, 2019, as well as the unaudited interim consolidated statements of operations for the three months ended March 31, 2019 and March 31, 2020, which are included in exhibit 99.1 and exhibit 99.2 herein. Note 2 describes the method of calculating the statement of operations of PodcastOne for the twelve months ended March 31 2020, which is within 93 days of the Company’s fiscal year ended March 31, 2020 as required by Rule 11-02(c)(3) of Regulation S-X under the Securities Act of 1933.

The unaudited pro forma condensed combined financial statements include unaudited pro forma adjustments that are factually supportable and directly attributed to the Acquisition. The unaudited pro forma adjustments are expected to have a continuing impact on the consolidated results. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial statements.

The unaudited pro forma adjustments are based upon available information and certain assumptions that the Company’s management believe are reasonable. The unaudited pro forma condensed combined financial statements are presented for informational purposes only and are not necessarily indicative of the Company’s financial position or results of operations that would have occurred had the events been consummated as of the dates indicated. In addition, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the Company’s future operating results.

The Company’s management expects that the strategic and financial benefits of the acquisition of PodcastOne will result in certain cost saving opportunities, which have not been reflected in the accompanying unaudited pro forma condensed combined financial statements.

The acquisition of PodcastOne from the stockholders will be accounted for as a business combination using the acquisition method of accounting in accordance with Accounting Standards Codification Topic 805, Business Combinations, which will establish a new basis of accounting for all identifiable assets acquired and liabilities assumed at fair value as of the date control is obtained. Accordingly, the consideration transferred will be allocated to the underlying net assets in proportion to their respective fair values. The fair value of PodcastOne’s identifiable tangible and intangible assets acquired and liabilities assumed are based on a preliminary estimate of fair value. Any excess of the purchase price over the estimated fair values of the net assets acquired will be recorded as goodwill. The allocation of the purchase price to acquired assets and assumed liabilities based on their underlying fair values requires the extensive use of significant estimates and the Company’s judgment. The Company’s management believes the fair values recognized for the acquired assets and assumed liabilities are based on reasonable estimates and assumptions based on information currently available. As more fully described in the notes to the unaudited pro forma condensed combined financial statements, a preliminary allocation of the purchase price has been made (i) to recognize the value of identifiable intangible assets at fair value in the aggregate amount of approximately $9.2 million and (ii) establish a contingent consideration liability at fair value in the aggregate amount of $0.9 million. In addition to content library, the identifiable intangible assets also included the brand name. All other assets acquired and liabilities assumed have been recognized at their respective book values, which the Company’s management believes materially approximate their respective fair values. The excess of the estimated purchase price over the estimated fair value of the net assets acquired of $7.7 million has been preliminarily allocated to goodwill. The allocation of purchase price is preliminary at this time and will remain as such until the Company completes valuations and other studies to finalize the valuation of the net assets acquired. The final allocation of the purchase price is dependent on a number of factors, including the final valuation of the fair value of all tangible and intangible assets acquired and liabilities assumed as of the closing date of the acquisition of PodcastOne when additional information will be available. Such final adjustments, including changes to depreciable tangible and amortizable intangible assets, may be material.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the following information:

LiveXLive Media, Inc.

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

(Unaudited, in thousands, except share and per share amounts)

Note 1 – Description of the Transaction

On July 1, 2020, the Company completed the previously announced acquisition of Courtside Group, Inc. and its subsidiaries (d/b/a PodcastOne) (collectively, “PodcastOne”), from the stockholders of PodcastOne (the “Sellers”) for total consideration (net of cash acquired, and excluding acquisition-related costs, of $0.2 million) of $19.1 million of the Company’s common stock.

In addition, 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 in accordance with their respective pro rata percentage, within five business days of the second anniversary of the Closing Date. The Company accounts for contingent consideration according to ASC 805, Business Combinations (ASC 805). ASC 805 requires that contingent consideration be recognized at the acquisition-date fair value as part of the consideration transferred in the transaction. In the acquisition of PodcastOne, the Company valued the contingent consideration based on an analysis using a Black –Scholes cash flow model to determine the expected contingent consideration payment, which model determined that the aggregate present value of the expected contingent consideration liability was $0.9 million. This amount is preliminary and subject to change.

Pursuant to the terms of the Stock Purchase Agreement, the Company did not assume any outstanding options to acquire any shares of capital stock of PodcastOne and such options were terminated and cancelled in connection with the Acquisition.

Equity Consideration

The Company issued 5,363,636 shares of its common stock at a price of $3.57 per share, or $19.1 million in total consideration on July 1, 2020.

Note 2 – Basis of Pro Forma Presentation

PodcastOne had a fiscal year of December 31 as compared to the Company’s March 31 fiscal year. In order for the unaudited pro forma condensed consolidated statement of operations to be comparable to the Company’s, PodcastOne’s twelve-month period ended December 31, 2019 was used and was calculated as follows (in thousands):

Note 3 – Reclassifications

As part of the Company’s integration efforts, the Company will continue its process of evaluating whether there are any significant differences in accounting policies that would require adjustment or reclassification of PodcastOne’s results of operations in order to conform to the Company’s accounting policies and classifications. As a result of that ongoing evaluation, the Company may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial statements.

Effective for the quarter ended June 30, 2019, the Company adopted Accounting Standard Update ASU No. 2016-02, Leases. This ASU establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This ASU and all the related amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company adopted this guidance in the first quarter of fiscal 2020, the quarter ended June 30, 2019 using the optional transitional method afforded under ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. As a practical expedient, the Company has not separated lease components from nonlease components for its real property operating leases. Results for reporting periods beginning after the adoption date are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840.

The Company elected and applied the available transition practical expedients. By electing these practical expedients, the Company did:

As a private company and prior to the acquisition, PodcastOne was not required to adopt ASU No. 2016-02. However, as a result of the acquisition and for purposes of preparing the unaudited pro forma condensed combined statement of operations for the twelve months ended March 31, 2020, PodcastOne was required to adopt ASU No. 2016-02 effective for the quarter ended June 30, 2019 to conform to our adoption date. The adoption of this standard did not have a material effect on the results of PodcastOne during the preparation of the unaudited pro forma condensed combined financial statements.

During the preparation of the unaudited pro forma condensed combined financial statements, the Company was not aware of any material differences between accounting policies of the two companies, except for certain reclassifications necessary to conform to the Company’s financial presentation, and accordingly, the unaudited pro forma condensed combined statement of operations does not assume any material differences in accounting policies between the two companies.

Note 4 – Fair Value of Assets Acquired, Liabilities Assumed and Calculation of Goodwill

The total purchase price has been allocated in the accompanying unaudited pro forma condensed combined financial statements based on (i) the amounts reported in the historical statements of PodcastOne, or (ii) management’s preliminary estimates of fair value. Following initial discussions with third-party valuation consultants, the identifiable assets, which are preliminary, were determined to be the content library and brand name. The Company’s management reviewed various other asset allocations of similar market transactions and applied corresponding relative values of the intangibles compared to the purchase price. The estimated amortization periods are consistent with those used for similar market transactions and amortization is accounted for on a straight-line basis. The percentages assigned are an initial estimate and are subject to change once the detailed third-party purchase price accounting analysis is completed. 

The pro forma purchase price allocation presented below is still preliminary but has been developed based on an estimate of fair values of PodcastOne’s identifiable tangible and intangible assets acquired and liabilities assumed as of July 1, 2020. The final allocation of the purchase price will be determined within one year from the closing date of the PodcastOne acquisition. As such, the purchase price allocation may change, and such changes could result in a material change to the unaudited pro forma condensed combined financial statements.  

The preliminary allocation of PodcastOne’s tangible and intangible assets and liabilities under this methodology as if the acquisition on March 31, 2020, is as follows (in thousands):

The excess purchase price over the fair value of identifiable tangible and intangible assets acquired represents goodwill of $7.7 million as of July 1, 2020. Our preliminary estimate indicates that goodwill will not be deductible for income tax purposes.

Note 5 – Pro Forma Adjustments

The pro forma adjustments included in the accompanying information do not reflect the final Acquisition purchase consideration. The allocation of consideration to the various tangible and intangible assets acquired and liabilities assumed is preliminary and subject to change. This note should be read in conjunction with “Note 1 – Description of The Transactions,” “Note 2 – Basis of Pro Forma Presentation,” and “Note 3 – Reclassifications.” Adjustments included in the column “Acquisition” to the accompanying unaudited pro forma condensed combined balance sheet as of March 31, 2020 and statement of operations for the year ended March 31, 2020 are represented by the following:

Unaudited Pro Forma Condensed Combined Balance Sheet

To reflect the stock consideration payment of $19.1 million and estimated contingent consideration of $0.9 million upon the consummation of the Transaction. Adjustment also reflects the establishment of goodwill of $7.7 million estimated as a result of the preliminary purchase price allocation detailed above, and reflects the preliminary purchase price allocation recognition of certain intangible assets including content library and brand name in the amount of $9.2 million (see Note 4 above).

To reflect the elimination of PodcastOne’s equity balances in combination. Adjustment also reflects the change in working capital from March 31, 2020 to July 31, 2020.

Unaudited Pro Forma Condensed Combined Statement of Operations

The twelve-month adjustment represents $0.5 million stock-based compensation expense for 300,000 restricted stock units of the Company issued to a PodcastOne employee on July 1, 2020. The expense was calculated as though the award had been issued on April 1, 2019. The calculation is consistent with the accounting treatment for grants issued to the Company’s employees.

The adjustment represents the expense of $0.2 million of acquisition-related costs on the balance sheet with a corresponding increase to accounts payable. Such costs are one-time in nature and do not have any continuing impact on the combined entity for pro forma purposes.

These adjustments represent the increased amortization for the fair value of identified intangible assets with definite lives for the year ended March 31, 2020. The following tables show the pre-tax impact on the amortization expense (in thousands):

* Assumes straight-line amortization

The tax effect of the pro forma adjustments is zero due to tax benefits being fully offset by a valuation allowance.

Pro forma basic and diluted earnings per share (“EPS”) is calculated in conformity with the Company’s accounting policies included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2020. The Company assumed that all the common shares issued as part of the equity consideration used for the PodcastOne acquisition were included in the denominator when computing pro forma basic and diluted EPS.

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Exhibit 99.4

Management’s Discussion and Analysis of Financial Condition and
Results of Operations for the Three Months Ended March 31, 2020 and 2019

The following management’s discussion and analysis for the three months ended March 31, 2020 and 2019, and our financial condition, should be read in conjunction with the historical financial statements and the related notes thereto contained in this Report. The management’s discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” in this Form 8-K, that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.

The principal business of Courtside Group, Inc. (d/b/a PodcastOne) or “PodcastOne” is the production, distribution and marketing of podcasts.

Overview

The following discussion highlights PodcastOne’s results of operations and the principal factors that have affected our consolidated financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of our consolidated financial condition and results of operations presented herein. The following discussion and analysis is based on PodcastOne’s audited financial statements contained in this Report, which have been prepared in accordance with generally accepted accounting principles in the United States. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Strategy

PodcastOne’s long-term goal is to generate revenue from the audiences that view and listen to the podcasts we produce, distribute and market. Historically PodcastOne primarily produced only audio podcasts, but is expanding its offerings to video podcasts as well. The large audiences that view and listen to our podcasts are sold to national, regional and local advertisers.

Critical Accounting Policies, Estimates, and Judgments

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments, our commitments to strategic alliance partners and the timing of the achievement of collaboration milestones. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates identified above that are considered critical, we make many other accounting estimates in preparing our financial statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical.

Use of estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Our management evaluates the estimates on an ongoing basis, including, but not limited to, those related to bad debts, barter time, asset impairments, income taxes, stock compensation expense and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Opportunities, Challenges and Risks

Effects of COVID-19

An outbreak of a novel strain of coronavirus, COVID-19 in December 2019 subsequently became a pandemic after spreading globally, including the United States. While the COVID-19 pandemic did not materially adversely affect our financial results and business operations during the fiscal quarter ended March 31, 2020, it is expected to adversely impact parts of our business during the second quarter of fiscal year December 31, 2020. The extent to which COVID-19 impacts our results will depend on future developments, including new information which may emerge concerning the severity of the coronavirus and the actions taken by us and our partners to contain the coronavirus or treat its impact, among others. The impact of the suspension or cancellation of in-person live festivals, concerts or other live events, and any other continuing effects of COVID-19 on our business operations (such as general economic conditions and impacts on the advertising, sponsorship and ticketing marketplace and our partners), may result in a decrease in our revenues, and if the global COVID-19 epidemic continues for an extended period, our business, financial condition and results of operations could be materially adversely affected.

Basis of presentation and principles of consolidation

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). These consolidated financial statements include the accounts of Courtside Group, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Change in accounting principle—revenue recognition: We adopted the amended accounting guidance for revenue recognition on January 1, 2019, using the modified retrospective transition method, which allows the us to evaluate the impact of contract modifications as of the adoption date rather than evaluating the impact of the modifications at the time they occurred prior to the adoption date. As a result, we have changed our accounting policy for revenue recognition as described below. Except for the changes below, we have consistently applied the accounting policies to all periods presented in these consolidated financial statements.

Under certain practical expedients elected, we did not disclose the amount of consideration allocated to the remaining performance obligations or an explanation of when we expect to recognize that amount as revenue for all reporting periods presented before January 1, 2019.

We recognize revenue when it satisfies a performance obligation by transferring control over a service to a customer, in an amount that reflects the consideration to which it expects to be entitled in exchange for those services.

Revenues presented in the consolidated financial statements are reflected on a net basis, after the deduction of advertising agency fees by the advertising agencies. We also evaluate when it is appropriate to recognize revenue based on the gross amount invoiced to the customer or the net amount retained by the Company if a third party is involved.

Results for the reporting period beginning after January 1, 2019, are presented under the amended accounting guidance, while prior-period amounts are not adjusted and continue to be reported in accordance with our historical accounting guidance. Based upon management’s assessment, the impact of this guidance is not material to the Company’s financial position, results of operations, or cash flows through December 31, 2019.

Revenue: We recognize revenue when or as it satisfies a performance obligation by transferring a promised service to a customer. Our primary source of revenue is podcast advertising revenue, which is recognized, net of agency commissions, when the podcast containing the advertisements is released and the performance obligation is satisfied. We recognize revenue based on the Standard Broadcast Calendar that ends on the last Sunday in each reporting period. For the year ended December 31, 2019, we recognized revenue related to podcasts released from December 31, 2018, through December 29, 2019. To a lesser extent, we generate revenue from performance-based advertising and subscription services. Subscription services revenue is generated through the sale of a premium version of our PodcastOne service. Subscription revenue is recognized over the subscription term, which is generally less than 12 months, as the performance obligation is satisfied

Barter transactions: Periodically, we engage in barter transactions that exchange advertising for advertising. We recognize revenue from barter transactions as its products are delivered or services are performed. The related barter expense is recognized as the products or services are utilized by the Company, the majority of which is in the same accounting period as the related barter revenue. We include the value of such exchanges in both net revenue and operating expenses. The valuation of barter time is based upon the estimated fair value of the advertising time provided for the services received.

Operating expenses: Operating expenses consist of general and administrative, partner participation expenses and depreciation and amortization. Included in our operating expenses are stock-based compensation and depreciation expenses associated with our capital expenditures.

General and administrative: General and administrative expenses consist primarily of personnel costs from our executive, legal, finance, human resources and information technology organizations and facilities related expenditures, as well as third party professional fees, insurance and bad debt expenses. Professional fees are largely comprised of outside legal, accounting, audit, information technology consulting and legal settlements.

Contract costs: Incremental costs of obtaining a contract primarily relate to sales commissions, which are included in selling, general and administrative expenses, and are generally commensurate with sales. These costs are generally expensed when incurred because the period of benefit is one year or less.

Partner participation expenses: Certain distribution arrangements require us to pay our podcast partners based on a share of the advertising revenue received by us with respect to the partner’s podcast. Revenue share obligations are accrued when advertisements have been aired and partners are paid upon receipt of payment from the customer.

Depreciation and amortization: We determine the appropriate useful life of intangible assets by performing an analysis of expected cash flows based on our historical experience of intangible assets of similar quality and value. Amortization as a percentage of revenue will depend upon a variety of factors, such as the amounts and mix of our identifiable intangible assets acquired in business combinations.

Stock-based compensation: Included in our operating expenses are expenses associated with stock-based compensation, which are allocated and included in general and administrative expenses. Stock-based compensation expense is largely comprised of costs associated with stock options and restricted stock units granted to employees and certain non-employees including directors and consultants. We record the fair value of these equity-based awards and expense at their cost ratably over related vesting periods. In addition, stock-based compensation expense includes the cost of warrants to purchase common stock issued to certain non-employees

Other income: Other income principally consists of certain unrealized transaction gains and losses on foreign currency denominated assets and liabilities. We typically invest our available cash balances in money market funds and short-term United States Treasury obligations.

Significant customers: Our three largest customers, in the aggregate, accounted for approximately 11% of our revenues for the year ended December 31, 2019. Amounts due from these customers represented approximately 4% of accounts receivable as of December 31, 2019.

Fair value of financial instruments: The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates fair value due to the short-term maturities of these instruments.

Income taxes: We account for income taxes under the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. We record a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. We classify interest and penalties recognized on uncertain tax positions as a component of tax expense. The Company files income tax returns in the U.S. federal jurisdiction and various states. Based on management’s assessment of many factors, including past experience and complex judgments about future events, we do not currently anticipate significant changes in its uncertain tax positions over the next 12 months. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The income tax expense represents the taxes payable for the period and the change during the period in deferred tax assets and liabilities. Our historical NOL’s may be limited as a result of the acquisition.

Recently issued accounting standards: In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), which requires all lessees to recognize the assets and liabilities that arise from leases, except for those leases with a term less than 12 months, in which case the lessee may elect to not recognize an asset or liability associated with the lease and may recognize the lease expense on a straight-line basis over the term of the lease. Accounting for lessors remains generally the same as under superseded Topic 840. For private companies, this ASU is effective for fiscal years beginning after December 31, 2020, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which provides new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable. The new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Entities are required to apply this update on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. We are currently evaluating the impact on our financial position and results of operations.

The following table sets forth our results of operations, as a percentage of revenue, for the periods presented:

Revenues — Our primary source of revenue is podcast advertising revenue, which is recognized, net of agency commissions, when the podcast containing the advertisements is released and the performance obligation is satisfied. We recognize revenue based on the Standard Broadcast Calendar that ends on the last Sunday in each reporting period. For the three months ended March 31, 2020, podcast advertising revenue was $4.9 million a decrease of 0.3 million or 6% from the comparable 2019 period. To a lesser extent, we generate revenue from performance-based advertising and subscription services. Performance-based advertising revenue is generated through the sale of banner and sponsorship advertisements. Revenue is recognized from performance-based advertising when we receive third-party verification reports supporting the number of actions performed in the period and the performance obligation is satisfied. For the three months ended March 31, 2020, revenue from performance-based advertising was $0.1 million a decrease of 0.1 million or 36% from the comparable 2019 period. Subscription services revenue is generated through the sale of a premium version of the Company’s PodcastOne service. Subscription revenue is recognized over the subscription term, which is generally less than 12 months, as the performance obligation is satisfied. For the three months ended March 31, 2020, subscription revenue was $0.1 million which is comparable to the 2019 period. Additionally, in the three months ended March 31, 2020 we recognized $0.2 million of other operating revenue which we did not have in the comparable prior period.

Expenses — Expenses are comprised of general and administrative, partner participation expense and depreciation and amortization as described below.

General and Administrative Expenses — General and administrative expenses include personnel costs, rent, outside legal and accounting, consulting and advisory fees and non-cash stock compensation. In addition, general and administrative expenses include employee benefit expenses, advertising, and miscellaneous other general operating expenses to support the podcast production business. For the three months ended March 31, 2020, general and administrative expenses were $2.5 million, which was consistent with the prior year period, a decrease of 0.1 million or 3%.

Partner Participation Expense — Certain distribution arrangements require the Company to pay its podcast partners based on a share of the advertising revenue received by the Company with respect to the partner’s podcast. Revenue share obligations are accrued when advertisements have been aired and partners are paid upon receipt of payment from the customer. For the three months ended March 31, 2020, total partner participation expense was $2.9 million, an increase of $0.1 million or 5% from the comparable 2019 period.

Depreciation and Amortization — For the three months ended March 31, 2020, depreciation and amortization was less than $0.1 million, consistent with $0.1 million for the three months ended March 31, 2019.

Interest Income — For the three months ended March 31, 2020 and 2019, interest income was less than $0.1 million.

Net Loss — As a result of the foregoing, for the three months ended March 31, 2020 and 2019, PodcastOne recorded a net loss of $0.8 million and $0.6 million, respectively.

Financial Condition, Liquidity and Capital Resources

Cash and Working Capital

For the three months ended March 31, 2020 and 2019, we incurred net losses of $0.8 million and $0.6 million, respectively. As of March 31, 2020, we had working capital of $3.0 million, an accumulated deficit of $9.6 million and stockholders’ equity of $3.1 million. We incurred a net loss of $0.6 million for the year ended December 31, 2019.

Liquidity and Capital Resources

As of March 31, 2020, our principal sources of liquidity were our cash and accounts and notes receivable in the amounts of $1.0 million and $4.2 million, respectively. 16

Net Cash (Used in) Provided by Operating Activities

For the three months ended March 31, 2020

Net cash used in our operating activities of ($0.4) million primarily resulted from our net loss during the period of ($0.8) million, which included non-cash charges of $0.1 million largely comprised of, depreciation and amortization and stock-based compensation. This was partially offset by $0.3 million from changes in our working capital, primarily from timing of accounts receivable and accounts payable.

For the three months ended March 31, 2019

Net cash provided by our operating activities of $0.4 million primarily resulted from our net loss during the period of ($0.6) million, which included non-cash charges of $0.1 million largely comprised of, depreciation and amortization and stock-based compensation, and $0.9 million from changes in our working capital, primarily from timing of accounts receivable and accounts payable.

Net Cash Used in Investing Activities

For the three months ended March 31, 2020 and 2019

Net cash used in investing activities was less than $0.1 million and $0.1 million during the three months ended March 31, 2020 and March 31, 2019 and primarily related to capital expenditures.

Net Cash Used in Financing Activities

For the three months ended March 31, 2020 and 2019

Net cash used in financing activities was less than $0.1 million during the three months ended March 31, 2020 and March 31, 2019, and primarily related to repurchases of the Company’s common stock.

Off-Balance Sheet Arrangements

As of March 31, 2020, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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