What changed in this filing

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Item 1A. Risk Factors

2026-05-28 compared with 2025-05-28 · 44 added, 32 removed, 338 unchanged (18% of the section changed)

22 unchanged sentences

Each of these initiatives requires sustained management focus, organization and coordination over significant periods of time.

Each of these initiatives also requires success in building relationships with third parties and in anticipating and keeping up with technological

developments and consumer preferences and may involve the implementation of new business models or distribution platforms.

Each of these initiatives also requires success in building relationships with third parties and in anticipating and keeping up with technological developments and consumer preferences and may involve the implementation of new business models or distribution platforms.

The results of our strategy and the success of our implementation of this strategy will not be known for some time in the future.

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● recessionary trends, inflation and instability of the financial markets;

● armed conflicts or political instability.

● armed conflicts or political instability, including ongoing conflicts in the Middle East and Ukraine.

We may not be able to insure or hedge against these risks, and we may not be able to ensure compliance with all of the applicable regulations without incurring additional costs, or at all.

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From time to time, we may enter into foreign exchange contracts to hedge the risk of unfavorable foreign currency exchange rate movements.

Any future outbreak of contagious disease or other widespread natural disaster could materially and adversely affect our business, cash flows, financial condition and results of operations.

Any future outbreak of contagious disease or other widespread natural disaster or prolonged geopolitical conflict could materially and adversely affect our business, cash flows, financial condition and results of operations.

A future pandemic could have an adverse effect on our business, cash flows, financial condition and results of operations.

An outbreak of contagious disease, pandemic or other widespread natural disaster could suspend live concert tours, adversely impacting our concert promotion business and its sale of tour merchandise and make it more difficult for artists to engage in marketing efforts around the release of their new recordings.

An outbreak of contagious disease, pandemic or other widespread natural disaster or prolonged geopolitical conflict could suspend live concert tours, adversely impacting our concert promotion business and its sale of tour merchandise and make it more difficult for artists to engage in marketing efforts around the release of their new recordings.

It could delay the release of new recordings by impeding the types of collaboration among artists, songwriters, producers, musicians, engineers and studios which are necessary for the delivery of those recordings.

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Failure to achieve and maintain effective internal control over financial reporting (“ICFR”) in accordance with Section 404 of the Sarbanes-Oxley Act could impair our ability to produce timely and accurate financial statements or to comply with applicable regulations and have a material adverse effect on our business, cash flows, financial condition and results of operations.

Our management determined that material weaknesses existed in the ICFR while preparing our consolidated financial statements as of March 31, 2025, 2024 and 2023.

Our management also evaluated the effectiveness of our disclosure controls and procedures and determined that, as of March 31, 2025, our disclosure controls and procedures were not effective.

Our management previously determined that material weaknesses existed in our ICFR while preparing our consolidated financial statements as of March 31, 2025, 2024 and 2023.

Our management has also evaluated the effectiveness of our disclosure controls and procedures and determined in prior fiscal years that our disclosure controls and procedures were not effective.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified relate to an ineffective control environment due to improper segregation of duties and a lack of qualified personnel to address certain complex accounting transactions and an ineffective risk assessment process resulting in improper design of control activities to address certain risks of material misstatement.

Matters impacting our ICFR may cause us to be unable to report our consolidated financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable Nasdaq listing rules, which may result in a breach of the covenants under our $450 million senior secured revolving credit facility (the “ Senior Credit Facility ”) or future financing arrangements.

The material weaknesses identified in prior fiscal years relate to an ineffective control environment due to improper segregation of duties and a lack of qualified personnel to address certain complex accounting transactions and an ineffective risk assessment process resulting in improper design of control activities to address certain risks of material misstatement.

Matters impacting our ICFR may in the future cause us to be unable to report our consolidated financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable Nasdaq listing rules, which may result in a breach of the covenants under our $550 million senior secured revolving credit facility (the “ Senior Credit Facility ”) or future financing arrangements.

There also could be a negative reaction in the financial markets due to a loss of investor confidence and the reliability of our consolidated financial statements.

Confidence in the reliability of our consolidated financial statements could also

suffer if we continue to report a material weakness in our ICFR.

Confidence in the reliability of our consolidated financial statements could also suffer if we report a material weakness in our ICFR in the future .

This could materially adversely affect our business, cash flows, financial condition and results of operations and lead to a decline in the market price of our Common Stock and Warrants.

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We are aware of a number of judicial decisions and legislative proposals that could bring about major reforms in worker classification.

Although we believe that the songwriter and recording artist with which we partner are properly characterized as independent contractors, tax or other regulatory authorities may in the future challenge our characterization of these relationships.

If such regulatory authorities or state, federal or foreign courts were to determine that our songwriter and recording artist are employees, and not independent contractors, we would be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes and to pay unemployment and other related payroll taxes.

Although we believe that the songwriters and recording artists with which we partner are properly characterized as independent contractors, tax or other regulatory authorities may in the future challenge our characterization of these relationships.

If such regulatory authorities or state, federal or foreign courts were to determine that our songwriters and recording artists are employees, and not independent contractors, we would be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes and to pay unemployment and other related payroll taxes.

We would also be liable for unpaid past taxes and subject to penalties.

As a result, any determination that our songwriter and recording artist are our employees could have a material adverse effect on our business, cash flows, financial condition and results of operations.

As a result, any determination that our songwriters and recording artists are our employees could have a material adverse effect on our business, cash flows, financial condition and results of operations .

If streaming adoption or revenues grow less rapidly or level off, our prospects, business, cash flows, financial condition and results of operations may be adversely affected.

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In addition, the need to maintain the corporate infrastructure demanded of a public company may also divert management’s attention from implementing our business strategy, which could prevent us from improving our business, financial condition, cash flows and results of operations.

We have made, and will continue to make, changes to our internal control over financial reporting, including

information technology controls, and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company.

We have made, and will continue to make, changes to our internal control over financial reporting, including information technology controls, and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company.

However, the measures that we take may not be sufficient to satisfy our obligations as a public company.

1 unchanged sentence

In addition, we cannot predict or estimate the amount of additional costs we may incur to comply with these requirements.

We anticipate that these costs will continue to increase our administration expenses, particularly when we are required to include our independent registered public accounting firm’s attestation report on ICFR.

We anticipate that these costs will continue to increase our administration expenses, particularly our legal, accounting and financial compliance costs as a result of our loss of “emerging growth company” status and our compliance with the additional requirements that we were previously exempt from as an “emerging growth company” including the requirement to include our independent registered public accounting firm’s attestation report on ICFR.

Our substantial indebtedness could adversely affect our business, cash flows, financial condition and results of operations.

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Digital piracy could adversely impact our business, cash flows, financial condition and results of operations.

A substantial portion of our revenue comes from the distribution of music, which is potentially subject to unauthorized consumer copying and widespread digital dissemination without an economic return to us, including as a result of “stream-ripping.” In its Engaging with Music 2023 report, the IFPI surveyed over 43,000 people to examine the ways in which music consumers aged 16 to 64 engaged with recorded music across 26 countries.

Of those surveyed, 29% had used illegal or unlicensed methods to listen to or download music and 20% had used an unlicensed mobile app to illegally download music.

A substantial portion of our revenue comes from the distribution of music, which is potentially subject to unauthorized consumer copying and widespread digital dissemination without an economic return to us, including as a result of “stream- ripping.” In its Global Music Report 2025, the IFPI noted the danger of “streaming manipulation,” a process by which bad actors upload tracks to digital music services that are produced using generative AI tools and then use “bots” to generate artificial streams of those tracks, which ultimately diverts royalties from legitimate copyright holders.

Organized industrial piracy may also lead to decreased revenues.

The impact of digital piracy on legitimate music revenues and subscriptions is hard to quantify, but we believe that illegal file sharing and other forms of unauthorized activity, including stream manipulation, have a substantial negative impact on music revenues.

The impact of digital piracy on legitimate music revenues and subscriptions is hard to quantify, but we believe that illegal file sharing and other forms of unauthorized activity, including streaming manipulation, have a substantial negative impact on music revenues.

If we fail to obtain appropriate relief through the judicial process or the complete enforcement of judicial decisions issued in our favor (or if judicial decisions are not in our favor), if we are unsuccessful in our efforts to lobby governments to enact and enforce stronger legal penalties for copyright infringement or if we fail to develop effective means of protecting and enforcing our intellectual property (whether copyrights or other intellectual property rights such as patents, trademarks and trade secrets) or our music entertainment-related products or services, our business, cash flows, financial condition, results of operations and prospects may suffer.

The development, deployment, and use of Artificial Intelligence (AI), including Generative AI, presents challenges for protecting our intellectual property and the rights of our artists and songwriters and could adversely affect our business and results of operation.

As with many technological innovations, AI and machine learning technologies, also presents additional risks and challenges that could affect our business.

AI and machine learning technologies are complex and rapidly evolving and the potential for AI-generated music has also introduced new challenges for protecting our intellectual property and other rights of our artists and songwriters.

with an uncertain regulatory environment, these challenges include new forms of intellectual property infringement through the unauthorized reproduction of copyrighted works and the name, images, likeness and voices of our artists and songwriters to “train” AI applications and to create unauthorized derivative works.

As with many technological innovations, AI, including generative AI, and machine learning technologies, also presents additional risks and challenges that could affect our business.

AI and machine learning technologies are complex and rapidly evolving and the potential for AI-generated music, vocals, lyrics and other derivative works has also introduced new challenges for protecting our intellectual property and other rights of our artists and songwriters.

In addition, the increasing availability of widely accessible AI tools has made it easier for third parties to generate, distribute and monetize synthetic or AI-generated content that may imitate or replicate the style, voice or other distinctive attributes of our artists.

Along with a rapidly evolving and uncertain legal and regulatory environment in the U.S.

and internationally, these challenges include new forms of intellectual property infringement through the unauthorized reproduction of copyrighted works and the name, images, likeness and voices of our artists and songwriters to “train” AI applications and to create unauthorized derivative works.

This issue is the subject of litigation in the U.S.

If third parties are legally permitted to use our copyrighted materials without our consent to train an AI model that could create vast quantities of new musical works to compete with and dilute the impact of our copy protected material on digital music services, it could have a significant adverse effect on our business.

If third parties are legally permitted to use our copyrighted materials without our consent to train an AI model that could create vast quantities of new musical works to compete with and dilute the impact of our copy protected material on digital music services or other distribution platforms, it could have a significant adverse effect on our business.

If we or our service providers do not maintain the security of information relating to our customers, employees and vendors and our music, security information breaches through cyber security attacks or otherwise could damage our reputation with customers, employees, vendors and artists, and we could incur substantial additional costs, become subject to litigation and our results of operations and financial condition could be adversely affected.

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We maintain security measures with respect to such information, but despite these measures, such information may still be vulnerable to security breaches by computer hackers and others that attempt to penetrate the security measures that we have in place.

A compromise of our security systems (through cyber-attacks, which are rapidly evolving and sophisticated or otherwise) that results in personal information being obtained by unauthorized persons or other bad acts could adversely affect our reputation with our customers, potential customers, employees, artists and vendors, as well as our business, cash flows, financial condition and results of operations, and could result in litigation against us or the imposition of governmental penalties.

A compromise of our security systems (through cyber-attacks, which are rapidly evolving and sophisticated or otherwise) that results in personal information being obtained by unauthorized persons or other bad actors could materially adversely affect our reputation with our customers, potential customers, employees, artists and vendors, as well as our business, cash flows, financial condition and results of operations, and could result in litigation against us or the imposition of governmental penalties.

Unauthorized persons have also attempted to redirect payments to or from us.

If any such attempt were successful, we could lose and fail to recover the redirected funds, which loss could be material.

The increasing sophistication and resources of cyber criminals make it difficult to keep up with new threats and could result in a breach of security.

For example, AI tools, including generative AI models and machine learning, develop rapidly, and threat actors use them to identify currently unknown vulnerabilities and create sophisticated attack methods that are increasingly automated, coordinated and more difficult to defend against.

This may necessitate has necessitated and may in the future necessitate ongoing enhancements to our cybersecurity systems and infrastructure.

We may also be subject to cyber-attacks that target our music, including not-yet-released music.

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Evolving laws and regulations concerning data privacy may result in increased regulation and different industry standards, which could result in monetary penalties, increase the costs of operations or limit our activities.

We engage in a wide array of online activities globally and are thus subject to a broad range of related laws and regulations including, for example, those relating to privacy, consumer protection, data retention and data protection, online behavioral advertising, geo-location tracking, text messaging, e-mail advertising, mobile advertising, content regulation, defamation, age verification, the protection of children online, social media and other Internet, mobile and online-related prohibitions and restrictions.

We engage in a wide array of online activities globally and are thus subject to a broad range of related laws and regulations including, for example, those relating to privacy, consumer protection, data retention and data protection, online behavioral advertising, geo-location tracking, text messaging, e-mail advertising, mobile advertising, content regulation, defamation, age verification, the protection of children online, social media, AI, and other Internet, mobile and online-related prohibitions and restrictions.

The regulatory framework for privacy and data security issues worldwide has become increasingly burdensome and complex, and is likely to continue to be so for the foreseeable future.

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The presence of these additional Founder Shares trading in the public market may have an adverse effect on the market price of our Common Stock.

We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Common Stock or Warrants less attractive to investors which may result in a less active trading market for our Common Stock or Warrants.

We are an emerging growth company, as defined in the JOBS Act.

For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We will remain an emerging growth company until the earlier of (i)(x) March 31, 2026, (y) the date on which we have total annual gross revenue of at least $1.235 billion, or (z) the date on which we are deemed to be a large accelerated filer, which means the market value of shares of our Common Stock and Warrants that are held by non-affiliates exceeds $700 million as of the prior September 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Stockholder activism or unsolicited acquisition proposals could disrupt our business, divert management’s attention and adversely affect our ability to execute our long-term strategy.

Activist investors may from time to time threaten or commence proxy contests, “vote no” campaigns, or take other actions, including advancing shareholder proposals, or otherwise attempting to effect changes and assert influence over our Board and management and the Company may, from time to time, receive unsolicited acquisition proposals.

For example, in February 2026, Irenic submitted a non-binding indication of interest to acquire all of our outstanding common equity.

In March 2026, the Company received a separate non-binding proposal from Wesbild/Richmond.

Responding to activist shareholders or unsolicited acquisition proposals can be costly and time-consuming and may significantly divert the time and attention of our Board and management team from executing our business strategy, as well as generate substantial legal, advisory, and public relations costs.

If an unsolicited acquisition proposal were to result in a transaction, we may not realize the long-term value of our strategic plan as a standalone public company.

Alternatively, actual or perceived stockholder activism or the perception that the Company may be involved in a potential transaction could cause significant volatility in the market price of our Common Stock.

Any of these factors could materially adversely affect our business, cash flows, financial condition and results of operations.

As of March 31, 2026, we no longer qualify as an emerging growth company, but remain a smaller reporting company, which permits us to continue to take advantage of certain scaled disclosure requirements, and we cannot be certain if our use of such scaled disclosure requirements will make our Common Stock or Warrants less attractive to investors which may result in a less active trading market for our Common Stock or Warrants.

As of March 31, 2026 (the last day of the fiscal year following the fifth anniversary of our initial public offering), we ceased to be an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”).

As a result, we are no longer able to rely on certain exemptions from various reporting and governance requirements that were previously available to us, including the exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.

We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Even after we no longer qualify as an emerging growth company, we may continue to qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in this Annual Report on Form 10-K and other periodic reports and proxy statements.

We elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we were not subject to the same new or revised accounting standards as other public companies during the period we were an emerging growth company.

As a result, our financial statements while we were an emerging growth company may not be comparable to companies that complied with new or revised accounting pronouncements as of public company effective dates.

Because the worldwide market value of our common stock held by non-affiliates, or “public float”, is below $250 million, we continue to qualify as a “smaller reporting company” as defined under the Exchange Act.

As a “smaller reporting company,” this allows us to take advantage of many of the same scaled disclosure requirements available to emerging growth companies, including scaled executive compensation disclosures.

We have elected to utilize the accommodations available to smaller reporting companies.

Until we cease to be a smaller reporting company, the scaled disclosure in our SEC filings will result in less information about our company being available than for public companies that are not smaller reporting companies.

We cannot predict if investors will find our Common Stock or Warrants less attractive because we may rely on these exemptions.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors