Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2020 | Aug. 07, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | LiveXLive Media, Inc. | |
Entity Central Index Key | 0001491419 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 69,422,552 | |
Entity File Number | 001-38249 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 10,391 | $ 5,702 |
Restricted cash | 6,735 | 6,735 |
Accounts receivable, net | 3,745 | 3,889 |
Prepaid expense and other assets | 1,594 | 1,396 |
Total Current Assets | 22,465 | 17,722 |
Property and equipment, net | 3,436 | 3,397 |
Goodwill | 9,672 | 9,672 |
Intangible assets, net | 21,947 | 23,198 |
Other assets | 107 | 127 |
Total Assets | 57,627 | 54,116 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 36,975 | 30,723 |
Accrued royalties | 13,348 | 13,071 |
Current portion of notes payable | 1,227 | 331 |
Deferred revenue | 1,111 | 949 |
Current portion of unsecured convertible notes, net | 5,206 | |
Current portion of senior secured convertible debentures, net | 7,969 | 2,720 |
Total Current Liabilities | 65,836 | 47,794 |
Lease liabilities, noncurrent | 23 | 45 |
Senior secured convertible debentures, net | 6,505 | |
Notes payable, net | 1,257 | |
Unsecured convertible notes, net | 1,719 | 6,794 |
Deferred income taxes | 108 | 108 |
Total Liabilities | 68,943 | 61,246 |
Commitments and Contingencies | ||
Stockholders’ Deficit | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding | ||
Common stock, $0.001 par value; 500,000,000 shares authorized; 59,575,491 and 58,984,382 shares issued and outstanding, respectively | 59 | 59 |
Additional paid in capital | 124,278 | 120,932 |
Accumulated deficit | (135,653) | (128,121) |
Total stockholders’ deficit | (11,316) | (7,130) |
Total Liabilities and Stockholders’ Deficit | $ 57,627 | $ 54,116 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2020 | Mar. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 500,000,000 | 500,000,000 |
Common stock, issued | 59,575,491 | 58,984,382 |
Common stock, outstanding | 59,575,491 | 58,984,382 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||
Revenue: | $ 10,507 | $ 9,498 |
Operating expenses: | ||
Cost of sales | 7,661 | 9,013 |
Sales and marketing | 1,346 | 1,711 |
Product development | 2,086 | 2,423 |
General and administrative | 3,985 | 4,825 |
Amortization of intangible assets | 1,251 | 1,788 |
Total operating expenses | 16,329 | 19,760 |
Loss from operations | (5,822) | (10,262) |
Other income (expense): | ||
Interest expense, net | (2,078) | (870) |
Other income | 370 | 166 |
Total other expense | (1,708) | (704) |
Loss before provision for income taxes | (7,530) | (10,966) |
Provision for income taxes | 2 | |
Net loss | $ (7,532) | $ (10,966) |
Net loss per share - basic and diluted | $ (0.13) | $ (0.21) |
Weighted average common shares - basic and diluted | 59,166,271 | 52,319,872 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Stockholders' (Deficit) Equity (Unaudited) - USD ($) $ in Thousands | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Balance at Mar. 31, 2019 | $ 52 | $ 98,605 | $ (89,194) | $ 9,463 |
Balance, shares at Mar. 31, 2019 | 52,275,236 | |||
Shares issued for services to consultants | 768 | 768 | ||
Shares issued for services to consultants, shares | 102,897 | |||
Stock-based compensation | 2,531 | 2,531 | ||
Net loss | (10,966) | (10,966) | ||
Balance at Jun. 30, 2019 | $ 52 | 101,904 | (100,160) | 1,796 |
Balance, shares at Jun. 30, 2019 | 52,378,133 | |||
Balance at Mar. 31, 2020 | $ 59 | 120,932 | (128,121) | (7,130) |
Balance, shares at Mar. 31, 2020 | 58,984,382 | |||
Shares issued to consultants and vendors | 1,497 | 1,497 | ||
Shares issued to consultants and vendors, shares | 559,857 | |||
Stock-based compensation | 1,849 | 1,849 | ||
Vested employee restricted stock units | ||||
Vested employee restricted stock units, share | 31,252 | |||
Net loss | (7,532) | (7,532) | ||
Balance at Jun. 30, 2020 | $ 59 | $ 124,278 | $ (135,653) | $ (11,316) |
Balance, shares at Jun. 30, 2020 | 59,575,491 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (7,532) | $ (10,966) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,974 | 2,172 |
Common stock issued to consultants | 1,780 | 746 |
Stock-based compensation | 1,792 | 2,391 |
Amortization of debt discount | 390 | 143 |
Change in fair value of bifurcated embedded derivatives | (371) | (140) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 144 | 122 |
Prepaid expenses and other current assets | (189) | (198) |
Deferred revenue | 162 | (17) |
Accounts payable and accrued liabilities | 6,262 | 3,220 |
Net cash provided by (used in) operating activities | 4,412 | (2,527) |
Cash Flows from Investing Activities: | ||
Purchases of property and equipment | (705) | (498) |
Net cash used in investing activities | (705) | (498) |
Cash Flows from Financing Activities: | ||
Repayment of senior secured convertible debentures | (1,161) | (664) |
Proceeds from notes payable | 2,143 | |
Net cash provided by (used in) financing activities | 982 | (664) |
Net change in cash, cash equivalents and restricted cash | 4,689 | (3,689) |
Cash, cash equivalents and restricted cash, beginning of period | 12,437 | 13,939 |
Cash, cash equivalents and restricted cash, end of period | 17,126 | 10,250 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | ||
Cash paid for interest | 406 | 441 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Fair value of options issued to employees, capitalized as internally-developed software | 58 | $ 140 |
Common stock issued upon settlement of accounts payable | $ 734 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Note 1 — Organization and Basis of Presentation Organization LiveXLive Media, Inc. ("LiveXLive") together with its subsidiaries ("we," "us," "our" or the "Company") is a Delaware corporation headquartered in West Hollywood, California. The Company is a global platform for livestream and on-demand audio, video and podcast content in music, comedy and pop culture. On February 5, 2020, the Company acquired (i) React Presents, LLC a Delaware limited liability company ("React Presents"), and it became a wholly owned subsidiary of LiveXLive Events, LLC, a wholly owned subsidiary and (ii) indirectly Spring Awakening, LLC, which is a wholly owned subsidiary of React Presents, a producer, promoter and manager of in person live music festivals and events. On July 1, 2020, the Company acquired 100% of the issued and outstanding equity interests of PodcastOne in exchange for the issuance of 5,363,636 shares of the Company's common stock. Basis of Presentation The presented financial information includes the financial information and activities of React Presents for the three month ended June 30, 2020 (91 days) and June 30, 2019 (0 days). The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company's audited consolidated financial statements for the fiscal year ended March 31, 2020, and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company's interim unaudited condensed consolidated financial statements for the three months ended June 30, 2020. The results for the three months ended June 30, 2020 are not necessarily indicative of the results expected for the full fiscal year ending March 31, 2021 ("fiscal 2021"). The condensed consolidated balance sheet as of March 31, 2020 has been derived from the Company's audited balance sheet included in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") on June 26, 2020 (the "2020 Form 10-K"). The interim unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete audited financial statements. Therefore, these financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the 2020 Form 10-K. Going Concern and Liquidity The Company's condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The Company's principal sources of liquidity have historically been its debt and equity issuances and its cash and cash equivalents (which cash, cash equivalents and restricted cash amounted to $17.1 million as of June 30, 2020). As reflected in its condensed consolidated financial statements included elsewhere herein, the Company has a history of losses, and incurred a net loss of $7.5 million during the quarter ended June 30, 2020 and had a working capital deficiency of $43.4 million as of June 30, 2020. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern within one year from the date that these financial statements are filed. The Company's condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company is currently seeking additional funds, primarily through the issuance of equity and/or debt securities for cash to operate its business. In July 2020, the Company (i) sold 1,820,000 shares of its common stock to a current institutional investor and another investor for gross proceeds of $7.5 million, (ii) issued 2,415,459 shares of its common stock to satisfy a $10.0 million vendor payment obligation and (iii) provided notice to its senior secured debenture creditors of its intent to repay its loan in full by August 31, 2020. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain terms that result in undue restrictions on its operations, in the case of debt financing or cause substantial dilution for its stockholders, in case of equity and/or convertible debt financing. The Company may also have to consider reducing certain overhead costs through the reduction of salaries and other means and settle liabilities through negotiation. There can be no assurance that the Company's attempts at any or all of these endeavors will be successful. The Company's ability to continue as a going concern is dependent on its ability to execute its growth strategy and on its ability to raise additional funds. The continued spread of COVID-19 and uncertain market conditions may limit the Company's ability to access capital, may reduce demand for its services, and may negatively impact its ability to retain key personnel. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Acquisitions are included in the Company's condensed consolidated financial statements from the date of the acquisition. The Company uses purchase accounting for its acquisitions, which results in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. All intercompany balances and transactions have been eliminated in consolidation. Reclassifications Certain amounts in the Company's previously issued financial statements have been reclassified to conform to the current year presentation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 — Summary of Significant Accounting Policies COVID-19 In March 2020, the World Health Organization declared the outbreak of the novel coronavirus disease ("COVID-19") as a pandemic. The global impact of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets creating increasing volatility and overall uncertainty. The Company began to experience modest adverse impacts of the COVID-19 pandemic in the fourth quarter of fiscal year ended March 31, 2020 and this impact is expected to become more adverse and to continue throughout at least the first half of the fiscal year ending March 31, 2021, and possibly longer. The Company's event and programmatic advertising revenues were directly impacted in the first quarter of 2021 with all on-premise in-person live music festivals and events postponed and mixed demand from historical programmatic advertising partners. Further, one of the Company's larger customers also experienced a temporary halt to its production as a result of COVID-19, which in turn could adversely impact the Company's near-term subscriber growth in 2021. During the quarter ended June 30, 2020, the Company enacted several initiatives to counteract these near-term challenges, including salary reductions, obtaining a Paycheck Protection Program loan (see Note 7 - Notes Payable) and pivoting its live music production to 100% digital. The Company began producing, curating, and broadcasting digital music festivals and events across its platform which has resulted in the growth in the number of live events streamed, related sponsorship revenue and overall viewership. However, there is uncertainty as to the duration and overall impact of the COVID-19 pandemic, which could result in an adverse material change in a future period to the Company's results of operations, financial position and liquidity. Use of Estimates The preparation of the Company's condensed consolidated financial statements in conformity with the United States of America ("US") generally accepted accounting principles ("GAAP") requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue, allowance for doubtful accounts, the assigned value of acquired assets and assumed and contingent liabilities associated with business combinations and the related purchase price allocation, useful lives and impairment of property and equipment, intangible assets, goodwill and other assets, the fair value of the Company's equity-based compensation awards and convertible debt and debenture instruments, fair values of derivatives, and contingencies. Actual results could differ materially from those estimates. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. Given the overall uncertainty surrounding the COVID-19 pandemic, there is a reasonable possibility that actual results could differ from those estimates and such differences could be material to the financial position and results of operations, specifically in assessing when the collectability of revenue related consideration is probable, and the impairment assessment of goodwill, indefinite lived assets or long-lived assets that are depreciated or amortized. Revenue Recognition Policy The Company accounts for a contract with a customer when an approved contract exists, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of substantially all of the consideration is probable. Revenue is recognized when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company uses the expected value method to estimate the value of variable consideration on advertising and with original equipment manufacturer contracts to include in the transaction price and reflect changes to such estimates in periods in which they occur. Variable consideration for these services is allocated to and recognized over the related time period such advertising and subscription services are rendered as the amounts reflect the consideration the Company is entitled to and relate specifically to the Company's efforts to satisfy its performance obligation. The amount of variable consideration included in revenue is limited to the extent that it is probable that the amount will not be subject to significant reversal when the uncertainty associated with the variable consideration is subsequently resolved. Practical Expedients The Company elected the practical expedient and did not restate contracts that began and were completed within the same annual reporting period. The Company elected the practical expedient and recognized the incremental costs of obtaining a contract, if any, as an expense when incurred if the amortization period of the asset that would have been recognized is one year or less. Gross Versus Net Revenue Recognition The Company reports revenue on a gross or net basis based on management's assessment of whether the Company acts as a principal or agent in the transaction. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service prior to transfer to the customer. Where applicable, the Company has determined that it acts as the principal in all of its subscription service streams and may act as principal or agent for its ticketing/live events, advertising and licensing revenue streams. The Company's revenue is principally derived from the following services: Subscription Services Subscription services revenue substantially consist of monthly to annual recurring subscription fees, which are primarily paid in advance by credit card or through direct billings arrangements. The Company defers the portions of monthly to annual recurring subscription fees collected in advance and recognizes them in the period earned. Subscription revenue is recognized in the period of services rendered. The Company's subscription revenue consists of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. As a result, the Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes subscription revenue straight-line through the subscription period. Subscription Services consist of: Direct subscriber, mobile service provider and mobile app services The Company generates revenue for subscription services on both a direct basis and through subscriptions sold through certain third-party mobile service providers and mobile app services (collectively the "Mobile Providers"). For subscriptions sold through the Mobile Providers, the subscriber executes an on-line agreement with Slacker outlining the terms and conditions between Slacker and the subscriber upon purchase of the subscription. The Mobile Providers promote the Slacker app through their e-store, process payments for subscriptions, and retain a percentage of revenue as a fee. The Company reports this revenue gross of the fee retained by the Mobile Providers, as the subscriber is Slacker's customer in the contract and Slacker controls the service prior to the transfer to the subscriber. Subscription revenues from monthly subscriptions sold directly through Mobile Providers are subject to such Mobile Providers' refund or cancellation terms. Revenues from Mobile Providers are recognized net of any such adjustments for variable consideration, including refunds and other fees. The Company's payment terms vary based on whether the subscription is sold on a direct basis or through Mobile Providers. Subscriptions sold on a direct basis require payment before the services are delivered to the customer. The payment terms for subscriptions sold through Mobile Providers vary, but are generally payable within 30 days. Third-Party Original Equipment Manufacturers The Company generates revenue for subscription services through subscriptions sold through a third-party Original Equipment Manufacturer (the "OEM"). For subscriptions sold through the OEM, the OEM executes an agreement with Slacker outlining the terms and conditions between Slacker and the OEM upon purchase of the subscription. The OEM installs the Slacker app in their equipment and provides the Slacker service to the OEM's customers. The monthly fee charged to the OEM is based upon a fixed rate per vehicle, multiplied by the variable number of total vehicles which have the Slacker application installed. The number of customers, or the variable consideration, is reported by OEMs and resolved on a monthly basis. The Company's payment terms with OEM are up to 30 days. Advertising Revenue Advertising revenue primarily consist of revenues generated from the sale of audio, video, and display advertising space to third-party advertising exchanges. Revenues are recognized based on delivery of impressions over the contract period to the third-party exchanges, either when an ad is placed for listening or viewing by a visitor or when the visitor "clicks through" on the advertisement. The advertising exchange companies report the variable advertising revenue performed on a monthly basis which represents the Company's efforts to satisfy the performance obligation. Licensing Revenue Licensing revenue primarily consists of sales of licensing rights to digitally stream its live music services in certain geographies (e.g. China). Licensing revenue is recognized when the Company satisfies its performance obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, which is typically when the live event has aired. Any license fees collected in advance of an event are deferred until the event airs. The Company reports licensing revenue on a gross basis as the Company acts as the principal in the underlying transactions. Sponsorship Revenue Sponsorship revenue primarily consists of sales of sponsorship programs that provide sponsors with opportunities to reach our customers. Sponsorship revenue is recognized when the Company satisfies its performance obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, over the term of the agreement, which is typically as the event airs. Any sponsorship fees collected in advance of the contract term (typically an event) are deferred until the event airs. The Company reports sponsorship revenue on a gross basis as the Company acts as the principal in the underlying transactions. Ticket/Event Revenue Ticket/Event revenue is primarily from the sale of tickets and promoter fees earned from venues or other co-promoters under one of several formulas, including a fixed guaranteed amount and/or a percentage of ticket sales or event profits. Revenue from the promotion or production of an event is recognized at a point in time when the show occurs. Revenue collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue collected from sponsorship agreements, which is not related to a single event, is classified as deferred revenue and recognized over the term of the agreement or operating season as the benefits are provided to the sponsor. Revenue from the Company's ticketing operations primarily consists of service fees charged at the time a ticket for an event is sold in either the primary or secondary markets, including both online pay-per-view ("PPV") ticket sales as well as tickets physically purchased through a ticket sale vendor. For primary tickets sold to the Company's PPV and festival events the revenue for the associated ticket charges collected in advance of the event is recorded as deferred revenue until the event occurs. Cost of Sales Cost of Sales principally consist of royalties paid for the right to stream video, music and non-music content to the Company's customers and the cost of securing the rights to produce and stream live events from venues and promoters. Royalties are calculated using negotiated and regulatory rates documented in content license agreements and are based on usage measures or revenue earned. Music royalties to record labels, professional rights organizations and music publishers relate to the consumption of music listened to on Slacker's radio services. As of June 30, 2020 and 2019, the Company accrued $12.6 million and $10.2 million of royalties, respectively, due to artists from use of Slacker's radio services. Sales and Marketing Sales and Marketing include the direct and indirect costs related to the Company's product and event advertising and marketing. Product Development Product development costs primarily are expenses for research and development, product and content development activities, including internal software development and improvement costs which have not been capitalized by the Company. Stock-Based Compensation Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period, on an accelerated basis. The Company accounts for awards with graded vesting as if each vesting tranche is valued as a separate award. The Company uses the Black-Scholes-Merton option pricing model to determine the grant date fair value of stock options. This model requires the Company to estimate the expected volatility and the expected term of the stock options which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected employee stock option exercise behavior. The Company uses a predicted volatility of its stock price during the expected life of the options that is based on the historical performance of the Company's stock price as well as including an estimate using guideline companies. The expected term is computed using the simplified method as the Company's best estimate given its lack of actual exercise history. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the stock. Stock-based awards are comprised principally of stock options, restricted stock, restricted stock units ("RSUs"), restricted stock awards ("RSAs") and warrant grants. Forfeitures are recognized as incurred. Stock option awards issued to non-employees are accounted for at grant date fair value determined using the Black-Scholes-Merton option pricing model. Management believes that the fair value of the stock options is more reliably measured than the fair value of the services received. The Company records the fair value of these equity-based awards and expense at their cost ratably over related vesting periods. Income Taxes The Company accounts for income taxes using 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 financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Company's Statements of Operations in the period that includes the enactment date. Net Income (Loss) Per Share Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted-average number of common shares and the dilutive effect of contingent shares outstanding during the period. Potentially dilutive contingent shares, which primarily consist of stock options issued to employees, directors and consultants, restricted stock units, warrants issued to third parties and accounted for as equity instruments and convertible notes would be excluded from the diluted earnings per share calculation because their effect is anti-dilutive. At June 30, 2020 and 2019, the Company had 167,363 warrants outstanding, 4,383,334 and 5,031,668 options outstanding, respectively, 5,685,697 and 1,613,814 restricted stock units outstanding, respectively, 0 restricted stock awards outstanding and 3,995,241 and 2,949,425 shares of common stock issuable, respectively, underlying the Company's convertible notes and convertible debentures. Business Combinations The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the underlying net tangible and intangible assets acquired, based on their respective fair values. The excess of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management's judgment and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses and cash flows, weighted average cost of capital, discount rates, estimates of customer turnover rates and estimates of terminal values. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with original maturities, when purchased, of three months or less. The following table provides amounts included in cash, cash equivalents and restricted cash presented in the Company's condensed consolidated statements of cash flows for the three months ended June 30, 2020 and 2019 (in thousands): 2020 2019 Cash and cash equivalents $ 10,391 $ 10,015 Restricted cash 6,735 235 Total cash and cash equivalents and restricted cash $ 17,126 $ 10,250 Restricted Cash and Cash Equivalents The Company maintains certain letters of credit agreements with its banking provider, which are secured by cash for periods of less than one year, as well as an account control agreement associated with the Company's senior secured convertible debentures whereby the Company is required to have a minimum cash on hand of $6.5 million. As of each of June 30, 2020 and March 31, 2020, the Company had restricted cash of $6.7 million. Allowance for Doubtful Accounts The Company evaluates the collectability of its accounts receivable based on a combination of factors. Generally, it records specific reserves to reduce the amounts recorded to what it believes will be collected when a customer's account ages beyond typical collection patterns, or the Company becomes aware of a customer's inability to meet its financial obligations. There were no impairment losses recorded on receivables for the three months ended June 30, 2020 and 2019. The Company believes that the credit risk with respect to trade receivables is limited due to the large and established nature of its largest customers and the nature of its subscription receivables. At June 30, 2020, the Company had two customers that made up 22% and 61% of the total gross accounts receivable balance. At March 31, 2020, the Company had two customers that made up 22% and 57% of the total gross accounts receivable balance. The Company's accounts receivable at June 30, 2020 and March 31, 2020 is as follows (in thousands): June 30, March 31, 2020 2020 Accounts receivable, gross $ 3,755 $ 4,109 Less: Allowance for doubtful accounts (10 ) (220 ) Accounts receivable, net $ 3,745 $ 3,889 Property and Equipment Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve service potential are also capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal repairs and maintenance are expensed as incurred. Depreciation is recorded using the straight-line method over the assets' estimated useful lives, which are generally as follows: buildings and improvements (5 years), furniture and equipment (3 to 5 years) and computer equipment and software (3 to 5 years). Leasehold improvements are depreciated over the shorter of the estimated useful life, based on the estimates above, or the lease term. The Company evaluates the carrying value of its property and equipment if there are indicators of potential impairment. The Company performs an analysis to determine the recoverability of the asset group carrying value by comparing the expected undiscounted future cash flows to the net book value of the asset group. If it is determined that the expected undiscounted future cash flows are less than the net book value of the asset group, the excess of the net book value over the estimated fair value is recorded in the Company's consolidated statements of operations. Fair value is generally estimated using valuation techniques that consider the discounted cash flows of the asset group using discount and capitalization rates deemed reasonable for the type of assets, as well as prevailing market conditions, appraisals, recent similar transactions in the market and, if appropriate and available, current estimated net sales proceeds from pending offers. Capitalized Internal-Use Software The Company capitalizes certain costs incurred to develop software for internal use. Costs incurred in the preliminary stages of development are expensed as incurred. Once software has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized costs are recorded as part of property and equipment. Costs related to minor enhancements, maintenance and training are expensed as incurred. Capitalized internal-use software costs are amortized on a straight-line basis over their two- to five-year estimated useful lives. The Company evaluates the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. During the three months ended June 30, 2020 and 2019, the Company capitalized $0.8 million and $0.7 million of internal use software, respectively. Goodwill Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company evaluates goodwill for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. The Company conducts its annual impairment analysis in the fourth quarter of each fiscal year. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit's carrying amount, including goodwill, to the fair value of the reporting unit. Estimations and assumptions regarding the number of reporting units, future performances, results of the Company's operations and comparability of its market capitalization and net book value will be used. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is measured by the resulting amount. Because the Company has one reporting unit, as part of the Company's qualitative assessment an entity-wide approach to assess goodwill for impairment is utilized. In the Company's assessment for potential impairment the Company identified triggering events due to the events resulting from the global COVID-19 pandemic. No impairment losses have been recorded in the three months ended June 30, 2020 and 2019. The Company's reporting unit is the same as its operating segment and reporting segment as described in Note 15 - Business Segment and Geographic Reporting. Intangible Assets with Indefinite Useful Lives The Company's indefinite-lived intangible assets consist of trademarks and trade names. The Company evaluates indefinite-lived intangible assets for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. The Company conducts its annual impairment analysis in the fourth quarter of each fiscal year. In our assessment for potential impairment as of June 30, 2020, we identified triggering events due to the events resulting from the global COVID-19 pandemic which caused the temporary halting of car production of our OEM partner as well as overall advertising spend decrease from our advertising partners. No impairment losses have been recorded in the three months ended June 30, 2020 and 2019. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown, which may impair the Company's asset values, including intangible assets. Intangible Assets with Finite Useful Lives The Company has certain finite lived intangible assets that were initially recorded at their fair value at the time of acquisition. These intangible assets consist of Non-Compete, Fan Database, Brands, Intellectual Property, Customer Relationships, and Capitalized Software Development Costs resulting from business combinations. Intangible assets with finite useful lives are amortized using the straight-line method over their respective estimated useful lives, which are generally as follows: Non-Compete (3 years), Fan Database (3 years), Brands (15-16 years), Intellectual Property (15 years), Customer Relationships (1.5-5 years), Domain Names (5 years), and Software (5 years). The Company reviews all finite-lived intangible assets for impairment when circumstances indicate that their carrying values may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess carrying value over the fair value in its consolidated statements of operations. No impairment losses have been recorded in the three months ended June 30, 2020 and 2019. Deferred Revenue and Costs Deferred revenue consists substantially of amounts received from customers in advance of the Company's performance service period. Deferred revenue is recognized as revenue on a systematic basis that is proportionate to the period that the underlying services are rendered, which in certain arrangements is straight line over the remaining contractual term or estimated customer life of an agreement. In the event the Company receives cash in advance of providing its music services, the Company will also defer an amount of such future royalty and costs to 3rd party music labels, publishers and other providers on its balance sheets. Deferred costs are amortized to expense concurrent with the recognition of the related revenue and the expense is included in cost of sales. Fair Value Measurements - Valuation Hierarchy Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (i.e., an exit price). The Company uses the three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company's own assumptions about the data market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized below: Level 1 Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. Level 3 Valuation is based upon other unobservable inputs that are significant to the fair value measurement. The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. Proper classification of fair value measurements within the valuation hierarchy is considered each reporting period. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. Concentration of Credit Risk The Company maintains cash balances at commercial banks. Cash balances commonly exceed the $250,000 amount insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts, and management believes that the Company is not exposed to any significant credit risk with respect to such cash and cash equivalents. Adoption of New Accounting pronouncements In August 2018, the FASB issued ASU No. 2018-15. Intangibles - Goodwill and Other – Internal-Use Software, In November 2018, the FASB issued ASU 2018-18 which clarified the interaction between Topic 808 and Topic 606, which makes targeted improvements for collaborative arrangements as follows: a) clarifies that certain transactions between collaborative arrangement participants are within the scope of ASC 606 when the collaborative arrangement participant is a customer in the context of a unit of account. b) adds unit-of-account (i.e., distinct good or service) guidance to ASC 808 to align with the guidance in ASC 606 to determine whether the collaborative arrangement, or a part of the arrangement, is within the scope of ASC 606. And c) specifies that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, if the collaborative arrangement participant is not a customer, an entity is precluded from presenting the transaction together with revenue recognized under ASC 606. The ASU was effective for public business entities for fiscal years ending after December 15, 2019. For all other entities, the ASU was effective for annual reporting per |
Revenue
Revenue | 3 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 3 — Revenue The following table represents a disaggregation of revenue from contracts with customers for the three months ended June 30, 2020 and 2019 (in thousands): Three Months Ended 2020 2019 Revenue Subscription services $ 8,870 $ 8,565 Advertising, licensing and sponsorship 1,426 933 Ticket/Event 211 - Total Revenue $ 10,507 $ 9,498 For some contracts, the Company may invoice up front for services recognized over time or for contracts in which the Company has unsatisfied performance obligations. Payment terms and conditions vary by contract type, although terms generally cover monthly payments. In the circumstances where the timing of invoicing differs from the timing of revenue recognition, the Company has determined its contracts do not include a significant financing component. The Company has elected to apply the optional exemption under ASC 606-10-50-14 and not provide disclosure of the amount and timing of performance obligations as the performance obligations are part of a contract that has an original expected duration of one year or less. The following table summarizes the significant changes in contract liabilities balances during the three months ended June 30, 2020 (in thousands): Contract Liabilities Balance as of March 31, 2020 $ 949 Revenue recognized that was included in the contract liability at beginning of period (689 ) Increase due to cash received, excluding amounts recognized as revenue during the period 851 Balance as of June 30, 2020 $ 1,111 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4 — Property and Equipment The Company's property and equipment at June 30, 2020 and March 31, 2020 was as follows (in thousands): June 30, March 31, 2020 2020 Property and equipment, net Production equipment $ 54 $ 54 Computer, machinery, and software equipment 670 707 Furniture and fixtures 41 41 Leasehold improvements 41 41 Capitalized internally developed software 6,415 5,617 Total property and equipment 7,221 6,460 Less accumulated depreciation and amortization (3,785 ) (3,063 ) Total property and equipment, net $ 3,436 $ 3,397 Depreciation expense was $0.7 million and $0.4 million for the three months ended June 30, 2020 and 2019, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 5 — Goodwill and Intangible Assets Goodwill The Company currently has one reporting unit. The following table presents the changes in the carrying amount of goodwill for the three months ended June 30, 2020 (in thousands): Goodwill Balance as of March 31, 2020 $ 9,672 Acquisitions - Impairment losses - Balance as of June 30, 2020 $ 9,672 Indefinite-Lived Intangible Assets The following table presents the changes in the carrying amount of indefinite-lived intangible assets in the Company's reportable segment for the three months ended June 30, 2020 (in thousands): Tradenames Balance as of March 31, 2020 $ 4,637 Acquisitions - Impairment losses - Balance as of June 30, 2020 $ 4,637 Finite-Lived Intangible Assets The Company's finite-lived intangible assets were as follows as of June 30, 2020 (in thousands): Gross Accumulated Net Software $ 19,280 $ 9,638 $ 9,642 Intellectual property (patents) 5,366 894 4,472 Customer relationships 6,570 5,259 1,311 Domain names 29 14 15 Brand names 1,500 43 1,457 Non-compete agreement 250 35 215 Fan database 230 32 198 Total $ 33,225 $ 15,915 $ 17,310 The Company's finite-lived intangible assets were as follows as of March 31, 2020 (in thousands): Gross Accumulated Net Software $ 19,280 $ 8,674 $ 10,606 Intellectual property (patents) 5,366 805 4,561 Customer relationships 6,570 5,128 1,442 Domain names 29 13 16 Brand names 1,500 17 1,483 Non-compete agreement 250 14 236 Fan database 230 13 217 Total $ 33,225 $ 14,664 $ 18,561 The Company's amortization expense on its finite-lived intangible assets was $1.3 million and $1.8 million for the three months ended June 30, 2020 and 2019, respectively. The Company expects to record amortization of intangible assets for fiscal years ending March 31, 2021 and future fiscal years as follows (in thousands): For Years Ending March 31, 2021 (remaining nine months) $ 3,756 2022 5,008 2023 3,885 2024 461 2025 461 Thereafter 3,739 $ 17,310 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 3 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities | Note 6 — Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities at June 30, 2020 and March 31, 2020 were as follows (in thousands): June 30, March 31, 2020 2020 Accounts payable $ 31,980 $ 26,703 Accrued liabilities 4,911 3,938 Lease liabilities, current 84 82 $ 36,975 $ 30,723 |
Notes Payable
Notes Payable | 3 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 7 — Notes Payable June 30, March 31, 2020 2020 Senior promissory note $ 336 $ 331 PPP loan 1,998 - SBA loan 150 - 2,484 331 Less: Current portion of Notes payable (1,227 ) (331 ) Notes payable $ 1,257 $ - On December 31, 2014, the Company converted accounts payable into a Senior Promissory Note (the "Note") in the aggregate principal amount of $0.2 million. The Note bears interest at 6% per annum and interest is payable on a quarterly basis commencing March 31, 2015 or the Company may elect that the amount of such interest be added to the principal sum outstanding under this Note. The payables arose in connection with professional services rendered by attorneys for the Company prior to and through December 31, 2014, and the Note had an original maturity date of December 31, 2015, which was extended to September 30, 2016 or such later date as the lender may agree to in writing. In February 2018, the Note holder filed a claim for collection of the Note (see Note 13 – Commitments and Contingencies). In February 2019, as part of a settlement agreement, the parties agreed to the repayment of the Note on or before June 30, 2019. The Note has not been extended and is currently past due. In addition, the holder of the Note obtained a judgement against the Company for nonpayment of the Note in the State of Delaware in August 2019 and a judgement lien against the Company in the State of California in the third fiscal quarter ended December 31, 2019. As of June 30, 2020, and March 31, 2020, the balance due under the Note was $0.3 million and $0.3 million, respectively, which includes $0.1 million and $0.1 million of accrued interest, respectively. On April 13, 2020, the Company received the proceeds from a loan in the amount of less than $2.0 million, pursuant to the Paycheck Protection Program of the CARES Act ("PPP"). The loan matures on April 13, 2022 and bears interest at a rate of 1% per annum. Commencing in November 2020, the Company is required to pay the lender equal monthly payments of principal and interest as required to fully amortize by the maturity date the principal amount outstanding on the loan as of such date. The loan is evidenced by a promissory note, dated as of April 13, 2020 which contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. The loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. All or a portion of the loan may be forgiven by the U.S. Small Business Administration (the "SBA") upon application by the Company beginning 60 days but not later than 120 days after loan approval and upon documentation of expenditures in accordance with the SBA requirements. In the event the loan, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal. While the Company intends to apply for the forgiveness of the loan, there is no assurance that the Company will obtain forgiveness of the loan in whole or in part. The Company intends to use the proceeds from the loan for qualifying expenses. The application for these funds requires the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further requires the Company to take into account its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria. On June 17, 2020, the Company received the proceeds from a loan in the amount of less than $0.2 million from the SBA. Installment payments, including principle and interest, begin 12-months from the date of the promissory note. The balance is payable 30-years from the date of the promissory note, and bears interest at a rate of 3.75% per annum. |
Senior Secured Convertible Debe
Senior Secured Convertible Debentures | 3 Months Ended |
Jun. 30, 2020 | |
Senior Secured Convertible Debentures [Abstract] | |
Senior Secured Convertible Debentures | Note 8 — Senior Secured Convertible Debentures June 30, March 31, 2020 2020 Senior Secured Convertible Debentures Senior Secured Convertible Debentures $ 8,956 $ 10,118 Accrued interest - 101 Fair Value of Embedded Derivatives 220 524 Less: Discount (1,207 ) (1,518 ) Net 7,969 9,225 Less: Senior Secured Convertible Debentures, current (7,969 ) (2,720 ) Senior Secured Convertible Debentures, long-term $ - $ 6,505 On June 29, 2018, the Company entered into a Securities Purchase Agreement (the "SPA"), with JGB Partners, LP, JGB Capital, LP and JGB (Cayman) Finlaggan Ltd. (each, a "Purchaser" and collectively, the "Purchasers") pursuant to which the Company sold, in a private placement transaction (the "Financing"), for an aggregate cash purchase price of $10.0 million, $10.64 million in aggregate principal amount, of its 12.75% Original Issue Discount Senior Secured Convertible Debentures due June 29, 2021 (the "June 2018 Debentures"). In conjunction with the Financing, the Company (i) recorded issuance costs of $1.1 million against the liability and (ii) used $3.5 million of the proceeds to pay off 100% of the Company's revolving line of credit. Issuance costs are being amortized to interest expense over the term of the June 2018 Debentures. The June 2018 Debentures mature on June 29, 2021, accrue interest at 12.75% per year, and are convertible into shares of common stock of the Company at a conversion price of $10.00 per share at the holder's option, subject to certain customary adjustments such as stock splits, stock dividends and stock combinations (the "Conversion Price"). Commencing with the calendar month of December 2018 (subject to the following sentence), the holders of the June 2018 Debentures will have the right, at their option, to require the Company to redeem an aggregate of up to $0.2 million of the outstanding principal amount of the Debentures per month. For the month of December 2018, the holders may not submit a redemption notice for such redemption prior to December 28, 2018. The Company will be required to promptly, but in any event no more than two trading days after a holder delivers a redemption notice to the Company, pay the applicable redemption amount in cash or, at the Company's election and subject to certain conditions, in shares of common stock. At the Company's election and subject to certain limitations, the Company may also pay interest in shares of its common stock. If the Company elects to pay the redemption amount or interest in shares of its common stock, then, subject to the next sentence, the shares will be delivered based on a price equal to the lesser of (a) a 10% discount to the average of the three lowest daily volume weighted average prices of the Company's common stock over the prior 20 trading days, or (b) the Conversion Price, subject to a certain minimum price per share and if certain conditions are met. Subject to the satisfaction of certain conditions, at any time after June 28, 2019, the Company may elect to prepay all, but not less than all, of the June 2018 Debentures for a prepayment amount equal to the outstanding principal balance of the June 2018 Debentures plus all accrued and unpaid interest thereon, together with a Prepayment Premium equal to the amount as discussed further below. The Company's obligations under the June 2018 Debentures can be accelerated upon the occurrence of certain customary events of default. In the event of default and acceleration of the Company's obligations, the Company would be required to pay the applicable prepayment amount described above. The Company's obligations under the June 2018 Debentures have been guaranteed under a Subsidiary Guarantee (the "Subsidiary Guarantee") by its wholly owned subsidiaries, Slacker, LiveXLive, Corp. and LXL Studios, Inc. (the "Guarantors"). The Company's obligations under the June 2018 Debentures and the Guarantors' obligations under the Subsidiary Guarantee are secured under a Security Agreement by a lien on all of the Company's and the Guarantors' assets, subject to certain exceptions. On February 11, 2019, the Company amended the SPA with the Purchasers to obtain additional financing, increasing the cash purchase price of the Debentures by $3.0 million, $3.2 million in aggregate principal amount, of its 12.75% Original Issue Discount Senior Secured Convertible Debentures due June 29, 2021 (the "February 2019 Debentures" and together with the June 2018 Debentures, the "Debentures"). In conjunction with the additional financing, the Company (i) recorded issuance costs of $0.1 million against the liability, (ii) modified certain financial liquidity covenants in the Debentures, (iii) modified the definition of "Monthly Allowance" by increasing it from $170,000 to $221,000, and (iv) amended the definition of "Prepayment Amount" to mean, with respect to any payment of the Debentures prior to the maturity date, the entire outstanding principal balance (including any original issue discount) of the Debenture, all accrued and unpaid interest thereon, together with a prepayment premium (the "Prepayment Premium") equal to the following: (a) if the Debentures are prepaid on or after the original issuance date, but on or prior to December 31, 2019, all remaining regularly scheduled interest to be paid on the Debentures from the date of such payment of the Debentures to, but excluding, December 31, 2019, plus 10% of the entire outstanding principal balance of the Debentures, (b) if the Debentures are prepaid after December 31, 2019, but on or prior to June 30, 2020, 10% of the entire outstanding principal balance of the Debentures; (c) if the Debentures are prepaid after June 30, 2020, but on or prior to December 31, 2020, 8% of the entire outstanding principal balance of the Debentures; and (d) if the Debentures are prepaid on or after December 31, 2020, but prior to the maturity date, 6% of the entire outstanding principal balance of the Debentures. The terms of the February 2019 Debentures were otherwise the same as the June 2019 Debentures. The Company evaluated the amendment and the modification was not required to be accounted for as an extinguishment as the instruments are not considered substantially different under ASC 470-50, Debt – Modifications and Extinguishment. For the quarter ended June 30, 2019, the Company entered into an amendment agreement with its senior lender ("Q1 2020 Waiver") allowing for, amongst other things, the lenders to have access to the Company's daily cash balances, provided for a cash payment of $150,000, and required the Company to close an equity financing that was completed in July 2019. The Company evaluated the amendment and the modification was not required to be accounted for as an extinguishment as the instruments are not considered substantially different under ASC 470-50, Debt – Modifications and Extinguishment. For the quarter ended December 31, 2019 the Company entered into an amendment agreement with its senior lender ("Q3 2020 Waiver") to waive a covenant breach, and in exchange for the Q3 2020 Waiver, JGB received (i) 400,000 free trading shares of the Company's common stock via a Section 3(a)(9) exchange of $10,000 worth of JGB's debentures originally issued on June 28, 2018, (ii) a reduction in the convertible price from $10.00 per share to $5.00 per share, (iii) an incremental $1.0 million in aggregate principle Debenture payments equally over six months beginning in February 2020 and (d) $6.5 million of cash deposited into a locked bank account (to be released when and if debt is fully paid down). The Company evaluated the amendment and the modification was not required to be accounted for as an extinguishment as the instruments are not considered substantially different under ASC 470-50, Debt – Modifications and Extinguishment. The outstanding principal balance of the Debentures at June 30, 2020 was $9.0 million, which included $0 of accrued interest, and at March 31, 2020 was $10.2 million, which included $0.1 million of accrued interest. The Debentures contain customary affirmative and restrictive covenants and representations and warranties, including limitations on indebtedness, liens, investments, dispositions of assets, organizational document amendments, issuance of disqualified stock, change of control transactions, stock repurchases, indebtedness repayments, dividends, the creation of subsidiaries, affiliate transactions, deposit accounts and certain other matters. The Company must also maintain a specified minimum cash balance, meet certain financial targets, and maintain minimum amounts of liquidity. As of June 30, 2020 and March 31, 2020, the Company was in compliance with these financial covenants. The Company has evaluated the Debentures and has identified two derivative instruments which are bifurcated from the underlying Debentures relating to provisions around an event of default and mandatory prepayments upon divestitures exceeding certain thresholds. At June 30, 2020, the Company performed a fair value analysis using a risk neutral model on the default event derivative instrument using the following assumptions: Coupon Rate: 12.75%, Term: 1.00 years, Volatility: 114.6%, Market Rate: 21.9% and Probability of Default: 41.23%. The Company determined that as of the assessment date, the fair value is $0.2 million. The change in fair value of $0.3 million is recorded in other income (expense) on the Company's consolidated statements of operations for the three months ended June 30, 2020. At March 31, 2020, the Company performed a fair value analysis using a risk neutral model on the default event derivative instrument using the following assumptions: Coupon Rate: 12.75%, Term: 1.25 years, Volatility: 101.4%, Market Rate: 27.4% and Probability of Default: 51.31%. The Company determined that as of the assessment date, the fair value was $0.5 million. The change in fair value of less than $0.1 million was recorded in other income (expense) on the Company's consolidated statements of operations for the year ended March 31, 2020. As of the date of this Quarterly Report, the Debentures holders have sent monthly redemption notices for December 2018 through June 2020 (inclusive). The Company has repaid $0.3 million of principal in January 2019 and $0.2 million of principal in each month in February 2019 through January 2020 (inclusive) and $0.4 million in February 2020 through June 2020 (inclusive). On July 31, 2020, the Company provided a redemption notice to its senior lender of its intent to pay off the senior secured debentures in full by August 31, 2020. |
Unsecured Convertible Notes
Unsecured Convertible Notes | 3 Months Ended |
Jun. 30, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
Unsecured Convertible Notes | Note 9 — Unsecured Convertible Notes The Company's unsecured convertible notes payable at June 30, 2020 and March 31, 2020 were as follows (in thousands): June 30, March 31, 2020 2020 Unsecured Convertible Notes - Related Party (A) 7.5% Unsecured Convertible Note - Due May 31, 2021 $ 4,187 $ 4,120 (B) 7.5% Unsecured Convertible Notes - Due May 31, 2021 1,052 1,035 Less: Discount (33 ) (41 ) Net 5,206 5,114 Unsecured Convertible Promissory Note $ 2,000 $ 2,000 Accrued Interest 64 24 Less: Discount (419 ) (485 ) Fair Value of Embedded Derivatives 74 141 Net 1,719 1,680 Unsecured Convertible Notes, Net 6,925 6,794 Less: Unsecured Convertible Notes, Current (5,206 ) - Unsecured Convertible Notes, Net, Long-term $ 1,719 $ 6,794 Total principal maturities of the Company's long-term borrowings, including the senior secured convertible debentures, unsecured convertible notes, and notes payable are $0.9 million for the year ending March 31, 2021 (remaining nine months) and $16.9 million for the year ending March 31, 2022. For the year ending March 31, 2023 and thereafter, the Company's principal maturities are less than $0.1 million per year consisting of obligations to repay the PPP and SBA loans. Unsecured Convertible Notes – Related Party As of June 30, 2020 and March 31, 2020, the Company had outstanding 7.5% (effective as of April 1, 2018, previously 6%) unsecured convertible notes payable (the "Trinad Notes") issued to Trinad Capital Master Fund Ltd. ("Trinad Capital"), a fund controlled by Mr. Ellin, the Company's Chief Executive Officer, Chairman, director and principal stockholder, as follows: (A) The first Trinad Note was issued on February 21, 2017, to convert aggregate principal and interest of $3.6 million under the first senior promissory note and second senior promissory note with Trinad Capital previously issued on December 31, 2014 and April 8, 2015, respectively. The first Trinad Note was due on March 31, 2018 and was extended to May 31, 2019 and further extended to May 31, 2021 (as discussed below). At June 30, 2020, the balance due of $4.2 million, which included $0.6 million of accrued interest, was outstanding under the first Trinad Note. At March 31, 2020, the balance due of $4.1 million, which included $0.5 million of accrued interest, was outstanding under the first Trinad Note. (B) Between October 27, 2017 and December 18, 2017, the Company issued six unsecured convertible notes payable to Trinad Capital for aggregate total principal amount of $0.9 million. The notes were due on various dates through December 31, 2018 and were extended to May 31, 2019 and further extended to May 31, 2021 (as discussed below). For the three months ended June 30, 2020, the Company amortized less than $0.1 million of discount to interest expense, and the unamortized discount as of June 30, 2020 was less than $0.1 million. As of June 30, 2020, $0.1 million of accrued interest was added to the principal balance. On March 30, 2018, the Company entered into an Amendment of Notes Agreement (the "Amendment Agreement") with Trinad Capital pursuant to which the maturity date of all of the Company's 6% unsecured convertible notes was extended to May 31, 2019. In consideration of the maturity date extension, the interest rate payable under the notes was increased from 6.0% to 7.5% beginning on April 1, 2018, and the aggregate amount of accrued interest due under all of the Trinad Notes as of March 31, 2018 of $0.3 million was paid. The Company evaluated the Amendment Agreement and the modification was not required to be accounted for as an extinguishment as the instruments are not considered substantially different under ASC 470-50, Debt – Modifications and Extinguishment. On March 31, 2019, the Company entered into a further Amendment of Notes Agreement (the "Second Amendment Agreement") with Trinad Capital in which the maturity dates of all of the Trinad Notes were all extended to May 31, 2021. The Company evaluated the Second Amendment Agreement and the modification was required to be accounted for as Troubled Debt Restructuring under ASC 470-50, Debt – Modifications and Extinguishment The Company may not redeem the any of the Trinad Notes prior to May 31, 2021 without Trinad Capital's consent. Unsecured Convertible Promissory Note On February 5, 2020, React Presents issued a two-year $2.0 million Convertible Promissory Note (the "Note"), bearing annual interest at 8%. The purpose of the Note was to fund the acquisition of React Presents. All unpaid and outstanding principal and any unpaid and accrued interest are due on February 5, 2022. The Note is convertible by the holder at any time prior to maturity in part or in whole with the unpaid interest and principal convertible at a conversion price equal to $4.50 per share of the Company's common stock, subject to certain protective adjustments. The Note may be prepaid in whole or in part in cash without penalty at any time prior to maturity. Any such prepayment will be applied to accrued interest first and then the principal. The Company has evaluated the Note and has determined that it includes two derivative instruments which are bifurcated from the underlying Debentures relating to provisions around an event of default and change of control. The Company has performed a fair value analysis using a binomial lattice calculation on the event of default derivative instrument using the following assumptions. Coupon Rate: 8.0%, Term: 2.0 years, Volatility: 100.0%, Market Rate: 27.7% and Probability of Default: 33.1%. The Company determined that at issuance, the fair value of the instruments was $0.1 million. The Company has recorded the fair value of the derivatives and corresponding debt discount within the unsecured convertible notes payable on the Company's consolidated balance sheet. At June 30, 2020, the Company performed a fair value analysis using a binomial lattice calculation on the derivative instruments using the following assumptions: Coupon Rate: 8.0%, Term: 1.60 years, Volatility: 99.7%, Market Rate: 34.9% and Probability of Default: 41.23%. The Company determined that as of the assessment date, the fair value is $0.1 million. The change in fair value of less than $0.1 million is recorded in other income (expense) on the Company's consolidated statements of operations for the three months ended June 30, 2020. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 10 — Related Party Transactions As of June 30, 2020 and March 31, 2020, the amount due to related parties was $0 and $0 in the aggregate, respectively, payable to Mr. Ellin, the Company's Chief Executive Officer, Chairman, director and principal stockholder. This amount was provided to the Company for working capital as needed and is unsecured, noninterest bearing advance with no formal terms of repayment. As of June 30, 2020 and March 31, 2020, the Company had unsecured convertible Trinad Notes outstanding which were issued to Trinad Capital as described in Note 10 – Unsecured Convertible Notes. |
Leases
Leases | 3 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | Note 11 — Leases The Company leases a space at a location under a non-cancellable operating lease with a remaining lease term of 1.5 years, expiring in fiscal year 2022. Upon adoption of ASU 2016-02 and its related Updates (ASC 842, Leases), the Company recorded $0.2 million of right-of-use assets in other assets in the consolidated balance sheet and operating lease liabilities in accounts payable and accrued liabilities and lease liabilities, noncurrent in the consolidated balance sheet. Short term leases Slacker leases its San Diego premises under operating leases expiring on December 31, 2020. Rent expense for the operating lease totaled $0.1 million and $0.1 million for the three months ended June 30, 2020 and 2019, respectively. React Presents leases its Chicago, Illinois premises under an operating lease expiring October 9, 2020. Rent expense for the operating leases totaled less than $0.1 million for the three month period ending June 30, 2020. Remaining lease commitments at June 30, 2020 is $0.2 million. Operating lease costs for the three months ended June 30, 2020 consisted of the following (in thousands): June 30, 2020 Fixed rent cost 23 Short term lease cost 88 Total operating lease cost $ 111 Supplemental balance sheet information related to leases was as follows (in thousands): Operating leases June 30, Operating lease right-of-use assets $ 107 Total operating lease right-of-use assets 107 Operating lease liability, current $ 84 Operating lease liability, noncurrent 23 Total operating lease liabilities $ 107 Maturities of operating lease liabilities as of March 31, 2021 were as follows (in thousands): For Years Ending March 31, 2021 (remaining nine months) $ 70 2022 47 Total lease payments 117 Less: imputed interest (10 ) Present value of operating lease liabilities $ 107 Significant judgments Discount rate – the Company's lease is discounted using the Company's incremental borrowing rate of 12.75% as the rate implicit in the lease is not readily determinable. Options – the lease term is the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs. Lease and non-lease components – Non lease components were considered and determined not to be material Month to month arrangements Beginning on August 1, 2017, the Company was given the right to occupy approximately 5,200 square feet of office space in West Hollywood, California. The space was provided to the Company by an unrelated third party and is fully furnished. The Company compensated the landlord in cash at the rate of approximately $38 thousand per month for months that the Company occupies the space. The Company or the third party had the right to terminate the arrangement at any time without prior notice, and the Company terminated this arrangement, effective April 30, 2019. On May 1, 2019 the Company entered into a month to month agreement with a third party to lease certain office space in Los Angeles, California for $20 thousand per month. This agreement was subsequently amended on October 1, 2019 to $14 thousand per month with a termination date of December 31, 2019. Effective January 1, 2020, the Company was given the right to occupy approximately 5,200 square feet of office space in West Hollywood, California. The space was provided to the Company by an unrelated third party and is fully furnished. The Company compensates the landlord in cash at the rate of approximately $40 thousand per month for months that the Company occupies the space, provided, that the Company and the temporary trustee of landlord's assets agreed that such payments shall be $22.4 thousand per month for the months of December 2019 and January 2020. The Company or the third party has the right to terminate the arrangement at any time without prior notice. Rent expense for the month to month arrangements totaled less than $0.1 million for the three month period ended June 30, 2020 and $0.1 million for the three month period ended June 30, 2019. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12 — Commitments and Contingencies Promotional Rights Certain of the Company's content acquisition agreements contain minimum guarantees, and require that the Company makes upfront minimum guarantee payments. As of June 30, 2020, the Company has licenses, production and/or distribution agreements to make guaranteed payments as follows: $2.2 million for the fiscal year ending March 31, 2021, $2.0 million for the fiscal year ending March 31, 2022 and $0.9 million for the fiscal year ending March 31, 2023. These agreements also provide for a revenue share that ranges between 35% and 50% of net revenues. In addition, there are other licenses, production and/or distribution agreements that provide for a revenue share of 50% on net revenues; however, without a requirement to make future minimum guaranteed payments irrespective to the execution and results of the planned events. Contractual Obligations As of June 30, 2020, the Company is obligated under agreements with Content Providers and other contractual obligations to make guaranteed payments as follows: $1.2 million for the fiscal year ending March 31, 2021, $0.8 million for the fiscal year ending March 31, 2022 and $0.1 million for the fiscal year ending March 31, 2023. On a quarterly basis, the Company records the greater of the cumulative actual content acquisition costs incurred or the cumulative minimum guarantee based on forecasted usage for the minimum guarantee period. The minimum guarantee period is the period of time that the minimum guarantee relates to, as specified in each agreement, which may be annual or a longer period. The cumulative minimum guarantee, based on forecasted usage, considers factors such as listening hours, revenue, subscribers and other terms of each agreement that impact the Company's expected attainment or recoupment of the minimum guarantees based on the relative attribution method. Several of the Company's content acquisition agreements also include provisions related to the royalty payments and structures of those agreements relative to other content licensing arrangements, which, if triggered, could cause the Company's payments under those agreements to escalate. In addition, record labels, publishers and performing rights organizations with whom the Company has entered into direct license agreements have the right to audit the Company's content acquisition payments, and any such audit could result in disputes over whether the Company has paid the proper content acquisition costs. However, as of June 30, 2020, the Company does not believe it is probable that these provisions of its agreements discussed above will, individually or in the aggregate, have a material adverse effect on its business, financial position, results of operations or cash flows. Legal Proceedings On February 8, 2018, Wynn Las Vegas, LLC ("Wynn") filed a claim in the District Court, Clark County, Nevada against LXL Tickets claiming total damages in excess of $0.6 million (the "Wynn Claim Amount") as a result of alleged breach of contract, breach of covenant of good faith and fair dealing and unjust enrichment with respect to that certain Second Amendment and Extension of the Wantickets.com Presale Agreement entered into by and between Wantickets and Wynn on or about December 31, 2016 (the "Wantickets-Wynn Agreement"). In connection with this action, on June 21, 2017, Wynn filed suit in the Eighth Judicial District Court, Clark County, Nevada against RNG Tickets, LLC (d/b/a Wantickets) and Wantickets. That litigation is still pending and active. RNG Tickets has not filed a responsive pleading in the case and Wantickets RDM has defaulted. The Company believes that Wynn's position is that LXL Tickets acquired Wantickets, including Wantickets' obligations under the Wantickets-Wynn Agreement (and not just certain assets and liabilities of Wantickets), and as such LXL Tickets should be liable to Wynn for the Wynn Claim Amount pursuant to the Wantickets-Wynn Agreement. The Company further believes that this action against LXL Tickets is without merit and intends to vigorously defend itself against any obligations or liability to Wynn with respect to such claims. In October 2018, pursuant to the terms of the APA (as defined below), the Company submitted a formal demand to Wantickets, Mr. Schnaier and Danco to indemnify the Company, among other things, for its costs and expenses incurred in connection with this matter. In April 2019, the parties agreed to informally stay the proceeding for the time being and extend discovery deadlines. On March 27, 2020, Wynn filed an amended complaint adding Schnaier, Danco and Gamtix, LLC (parties unrelated to the Company) as additional defendants in this matter. On July 29, 2020, Wynn submitted a written discovery request to LXL Tickets in this matter. As of June 30, 2020, the potential range of loss related to this matter was not material. In March 2018, Manatt Phelps & Phillips, LLP ("Manatt") served the Company with a complaint filed on February 22, 2018 in the Supreme Court of the State of California County of Los Angeles against the Company. The complaint alleges, among other things, breach of contract and breach of promissory note. Plaintiff is seeking damages of $0.2 million, plus interest, attorneys' fees and costs and other such relief as the court may award. On April 12, 2018, the Company filed an answer that generally denied all the claims in the complaint. On February 19, 2019, in connection with the settlement of the plaintiff's Delaware action (as discussed below), the parties settled this matter agreeing that the Company would repay this note and accrued interest in full by June 30, 2019. Such settlement was approved by the court on March 4, 2019, and the plaintiff dismissed this action against the Company without prejudice. No additional consideration was paid by the Company to the plaintiff related to this settlement. At June 30, 2020 the promissory note has not been paid and is currently past due. On October 11, 2018, Manatt filed a complaint in the Court of Chancery of the State of Delaware against the Company alleging that we have improperly refused to remove the restrictive legend from the shares of the Company's common stock owned by the plaintiff (the "Manatt DE Action"). Plaintiff is seeking declaratory judgment that all of the statutory prerequisites for removal of the restrictive legend have been met and injunctive relief requiring us to remove such restrictive legend, plus damages and losses suffered by the plaintiff as a result of our alleged conduct, including interest, attorneys' fees and costs and other such relief as the court may award. On February 19, 2019, the parties entered into a settlement agreement and agreed to release each other from all claims and damages relating to this matter, pending the repayment by the Company of the promissory note discussed above by June 30, 2019 and the sale of such shares by Manatt in compliance with such order. The parties further agreed that within three days after the later of (i) Manatt's sale of all of their shares pursuant to the court's order in compliance therewith, and (ii) the note repayment by such due date, Manatt would dismiss this Delaware action and the California action with prejudice. Such settlement was approved by the court on March 4, 2019. Other than the repayment of the note and accrued interest in full, no additional consideration was paid by the Company to the plaintiff related to this settlement. Pursuant to the terms of the settlement agreement, as a result of the note due to Manatt described above having not been paid as of June 30, 2019 and is currently being past due, in August 2019, Manatt obtained a judgement in the Court of Chancery of the State of Delaware against the Company for the amount of $0.3 million, which represents principal and all accrued and unpaid interest on the note through July 5, 2019. The judgement amount will continue to accrue interest at the 6% applicable rate from July 6, 2019 through the date of the judgment's satisfaction in full. In September 2019, Manatt obtained a related sister-state judgement in the Superior Court of California, County of Los Angeles against the Company for the same amount. In December 2019, Manatt obtained a judgement lien with the Secretary of State of California related to such California sister-state judgment. On April 10, 2018, Joseph Schnaier, Danco Enterprises, LLC (an entity solely owned by Mr. Schnaier, "Danco"), Wantmcs Holdings, LLC (Mr. Schnaier is the managing member) and Wantickets (Mr. Schnaier is the 90% beneficial owner) filed a complaint in the Supreme Court of the State of New York, County of New York against each of the Company, LXL Tickets, Robert S. Ellin, Alec Ellin, Blake Indursky and Computershare Trust Company, N.A. ("Computershare"). Plaintiffs subsequently voluntarily dismissed all claims against Alec Ellin and Blake Indursky. The complaint alleged multiple causes of action arising out of Schnaier's investment (through Danco) of $1.25 million into the Company in 2016, the Company's purchase of certain operating assets of Wantickets pursuant to the Asset Purchase Agreement, dated as of May 5, 2017, and Mr. Schnaier's employment with LXL Tickets, including claims for fraudulent inducement, breach of contract, conversion, and defamation. Plaintiffs seek monetary damages and injunctive relief. Plaintiffs have also sued Computershare for negligence and for injunctive relief relating to the refusal to transfer certain restricted shares of the Company's common stock owned by the plaintiffs. Plaintiffs are seeking injunctive relief, damages of approximately $26.7 million, plus interest, attorneys' fees and costs and other such relief as the court may award. The Company has denied plaintiffs' claims. The Company believes that the complaint is an intentional act by the plaintiffs to publicly tarnish the Company's and its senior management's reputations through the public domain in an effort to obtain by threat of litigation certain results for Mr. Schnaier's self-serving and improper purposes. The Company is vigorously defending this lawsuit, and the Company believes that the allegations are without merit and that it has strong defenses. On June 26, 2018, the Company and LXL Tickets, filed counterclaims against the plaintiffs for breach of contract (including under the Asset Purchase Agreement), fraudulent inducement, and other causes of action, seeking injunctive relief, damages, attorneys' fees and expenses and such other relief as the court may award. The parties are currently engaged in pre-trial proceedings, including continuing discovery efforts with the trial not expected to commence, if any, until the second half of the Company's fiscal year ending March 31, 2021 (unless further delayed as a result of the COVID-19 pandemic). In October 2018, pursuant to the terms of the APA, the Company submitted a formal demand to Wantickets, Mr. Schnaier and Danco to indemnify the Company, among other things, for its costs and expenses incurred in connection with this matter. As of June 30, 2020, all of plaintiffs' claims other than fraudulent inducement have been dismissed or addressed by the parties or the court, subject to plaintiffs currently appealing the dismissal of the breach of the implied covenant of good faith and fair dealing claims related to Mr. Schnaier's employment agreement with LXL Tickets. The Company intends to continue to vigorously defend all defendants against any liability to the plaintiffs with respect to such claims. As of June 30, 2020, while the Company has assessed the likelihood of a loss, if any, is not probable, the outcome of this lawsuit is inherently uncertain and the potential range of loss could have a material adverse effect on the Company's business, financial condition and results of operations. As part of the Company's ordinary course of business, from time to time, the Company is involved in various disputes, claims and/or legal actions arising with certain licensors of music content which own and license rights to Slacker to certain sound recordings. On April 20, 2020, a certain licensor filed a complaint in the Superior Court of the State of California, Los Angeles County, against Slacker for non-payment of approximately $7.7 million in license payments. The Company has been and are continuing to negotiate with this licensor, as well as other licensors, on a payment plan and/or repayment of such amounts. Such amounts have been accrued on the Company's consolidated balance sheet. In August 2020, as a result of its payment in shares of its common stock in July 2020 to satisfy the Company's obligation in the amount of $10.0 million owed to such licensor, the licensor withdrew the complaint without prejudice. During each of the three months ended June 30, 2020 and 2019, the Company recorded aggregate legal settlement expenses relating to potential claims arising in connection with litigation brought against the Company by certain third-parties of $0 million. While the resolution of the above matters cannot be predicted with certainty, other than as set forth above the Company does not believe, based on current knowledge, that the outcome of the currently pending claims or legal proceedings in which the Company is currently involved will have a material adverse effect on the Company's financial statements. From time to time, the Company is involved in legal proceedings and other matters arising in connection with the conduct of its business activities. Many of these proceedings may be at preliminary stages and/or seek an indeterminate amount of damages. The Company regularly evaluates the status of its commitments and contingencies in which it is involved to (i) assess whether a material loss is probable or there is at least a reasonable possibility that a material loss or an additional material loss in excess of a recorded accrual may have been incurred and (ii) determine if financial accruals are required when appropriate. The Company records an expense accrual for any commitments and loss contingency when it determines that a loss is probable and the amount of the loss can be reasonably estimated. If an expense accrual is not appropriate, the Company further evaluates each matter to assess whether an estimate of possible loss or range of loss can be made and whether or not any such matter requires additional disclosure. There can be no assurance that any proceeding against the Company will be resolved in amounts that will not differ from the amounts of estimated exposures. Legal fees and other costs of defending litigation are expensed as incurred. Non-Income Related Taxes In general, the Company has not historically collected state or local sales, use or other similar taxes in any jurisdictions in which the Company does not have a tax nexus, in reliance on court decisions or applicable exemptions that restrict or preclude the imposition of obligations to collect such taxes with respect to online sales of its music subscription services. In addition, the Company has not historically collected state or local sales, use or other similar taxes in certain jurisdictions in which it has a physical presence, in reliance on applicable exemptions. On June 21, 2018, the U.S. Supreme Court decided, in South Dakota v. Wayfair, Inc., that state and local jurisdictions may, at least in certain circumstances, enforce a sales and use tax collection obligation on remote vendors that have no physical presence in such jurisdiction. A number of states have already begun, or have positioned themselves to begin, requiring sales and use tax collection by remote vendors and/or by online marketplaces. The details and effective dates of these collection requirements vary from state to state. The Company evaluated the new requirements, and based upon its assessment determined that its sales tax exposure was not material to the financial results as of June 30, 2020. The Company is in the process of determining how and when its collection practices will need to change in the relevant jurisdictions, including obtaining resale certificates from third party resellers of the Company's music services, as necessary. |
Employee Benefit Plan
Employee Benefit Plan | 3 Months Ended |
Jun. 30, 2020 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Note 13 — Employee Benefit Plan Effective March 2019, the Company sponsors a 401(k) plan (the "401(k) Plan") covering all employees. Prior to March 31, 2019, only Slacker employees were eligible to participate in the 401(k) Plan. Employees are eligible to participate in the 401(k) Plan the first day of the calendar month following their date of hire. The Company may make discretionary matching contributions to the 401(k) Plan on behalf of its employees up to a maximum of 100% of the participant's elective deferral up to a maximum of 5% of the employees' annual compensation. The Company made matching contributions of less than $0.1 million to the 401(k) Plan for the three month periods ended June 30, 2020 and 2019. |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Deficit | Note 14 — Stockholders' Deficit Issuance of Common Stock in the Public Offering On July 25, 2019, in a registered direct public offering, the Company entered into securities purchase agreements with certain institutional investors pursuant to which the Company sold a total of 5,000,000 shares of its common stock at a price per share of $2.10. The gross proceeds to the Company were $10.5 million. The net proceeds of the offering to the Company were $9.5 million, after deducting placement agent fees and other offering expenses totaling $1.0 million paid by the Company. Issuance of Restricted Shares of Common Stock for Services to Consultants and Vendors During During the three months ended June 30, 2019, the Company issued 102,897 shares of its common stock valued at $0.8 million to certain Company consultants. During the three and nine months ended June 30, 2019, the Company recorded $0.2 million of expense related to stock issuances to consultants. Warrants The table below summarizes the Company's warrant activities during the three month's ended June 30, 2020: Number of Weighted Weighted- Balance outstanding, March 31, 2020 167,363 $ 4.01 0.94 Granted - - - Exercised - - - Forfeited/expired - - - Balance outstanding, June 30, 2020 167,363 $ 4.01 0.69 Exercisable, June 30, 2020 167,363 $ 4.01 0.69 At June 30, 2020, the intrinsic value of warrants outstanding and exercisable was $0. Issuance of Common Stock to Certain Music Partner In June 2020, the Company entered into a new two-year license agreement with a certain music partner which owns and license rights to Slacker to certain sound recordings. Pursuant to this agreement, the Company agreed to certain minimum yearly guarantee payments and issued 264,000 shares of its common stock to such music partner in consideration of all payments due to the music partner prior the date of the agreement. |
Business Segment and Geographic
Business Segment and Geographic Reporting | 3 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Business Segment and Geographic Reporting | Note 15 — Business Segment and Geographic Reporting Management has determined that the Company has one operating segment. The Company's reporting segment reflects the manner in which its chief operating decision maker reviews results and allocates resources. The Company's reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments. Customers The Company has one external customer that accounts for more than 10% of its revenue. Such original equipment manufacturer (the "OEM") provides premium Slacker service in all of their new vehicles. In the three months ended June 30, 2020 and 2019, total revenue from the OEM was $6.1 million and $5.0 million, respectively. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 16 — Fair Value Measurements The following table presents the fair value of the Company's financial liabilities that are measured at fair value on a recurring basis (in thousands): June 30, 2020 Fair Hierarchy Level Value Level 1 Level 2 Level 3 Liabilities: Bifurcated embedded derivative on senior secured convertible debentures $ 220 $ - $ - $ 220 Bifurcated embedded derivative on unsecured convertible note payable $ 74 $ - $ - $ 74 March 31, 2020 Fair Hierarchy Level Value Level 1 Level 2 Level 3 Liabilities: Bifurcated embedded derivative on senior secured convertible debentures $ 524 $ - $ - $ 524 Bifurcated embedded derivative on unsecured convertible note payable 141 $ - $ - $ 141 The following table presents a reconciliation of the Company's derivative instruments for the three month period ended June 30, 2020 (in thousands) : Amount Balance as of March 31, 2020 $ 665 Total fair value adjustments reported in earnings (371 ) Balance as of June 30, 2020 $ 294 The following table presents a reconciliation of the Company's derivative instruments for the three months ended June 30, 2019 (in thousands): Amount Balance as of March 31, 2019 $ 586 Total fair value adjustments reported in earnings (162 ) Balance as of June 30, 2019 $ 424 Bifurcated embedded derivative on senior secured convertible debentures and unsecured convertible notes payable The fair value of the bifurcated embedded derivative on senior secured convertible debentures and unsecured convertible notes was determined using the following significant unobservable inputs: June 30, March 31, 2020 2020 Bifurcated embedded derivative on senior secured convertible debentures Market yield 21.9 % 27.4 % Bifurcated embedded derivative on unsecured convertible note payable pricing model): Market yield 34.9 % 43.9 % Significant increases or decreases in the inputs noted above in isolation would result in a significantly lower or higher fair value measurement. The Company determined that as of the assessment date, the fair value of the bifurcated embedded derivatives is $0.3 million. The change in fair value of $0.4 million is recorded in other income (expense) on the Company's consolidated statements of operations for the three-month period ended June 30, 2020. The Company did not elect the fair value measurement option for the following financial assets or liabilities. The fair values of certain financial instruments measured at amortized cost and the hierarchy level the Company used to estimate the fair values are shown below (in thousands): June 30, 2020 Carrying Hierarchy Level Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 10,391 $ 10,391 $ - $ - Restricted cash 6,735 6,735 - - Liabilities: Notes payable 2,484 - - 2,484 Senior secured convertible debentures, net 7,749 - - 9,131 Unsecured convertible notes payable related party, net 5,206 - - 7,454 Unsecured convertible notes payable, net 1,645 - - 1,915 March 31, 2020 Carrying Hierarchy Level Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 5,702 $ 5,702 $ - $ - Restricted cash 6,735 6,735 - - Liabilities: Note payable 331 - - 331 Senior secured convertible debentures, net 8,701 - - 9,254 Unsecured convertible notes payable related party, net 5,114 4,451 Unsecured convertible note payable 1,539 - - 1,338 The fair values of financial instruments not included in these tables are estimated to be equal to their carrying values as of June 30, 2020 and March 31, 2020. The Company's estimates of the fair values were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values. The fair value of the financial assets and liabilities, where the Company did not elect the fair value measurement option, were determined using the following significant unobservable inputs: June 30, March 31, 2020 2020 Senior secured convertible debentures, net (binomial lattice model): Market yield 21.9 % 27.4 % Unsecured convertible notes payable related party, net (yield model with a Black-Scholes-Merton option pricing model): Market yield 32.4 % 41.6 % Unsecured convertible note payable (yield model with a Black-Scholes-Merton option pricing model): Market yield 34.9 % 43.9 % Significant increases or decreases in the inputs noted above in isolation would result in a significantly lower or higher fair value measurement. Cash equivalents and restricted cash equivalents primarily consisted of short-term interest-bearing money market funds with maturities of less than 90 days and time deposits. The estimated fair values were based on available market pricing information of similar financial instruments. Due to their short maturity, the carrying amounts of the Company's accounts receivable, accounts payable, accrued expenses and other long-term liabilities approximated their fair values as of June 30, 2020 and March 31, 2020. The Company's outstanding debt is carried at cost, adjusted for discounts. The Company's note payable is not publicly traded and fair value is estimated to equal carrying value. The Company's debentures and unsecured convertible notes payable with fixed rates are not publicly traded and the Company has estimated fair values using a variety of valuation models and market rate assumptions detailed below. The debentures and unsecured convertible notes are valued using a binomial lattice model and a yield model with a Black-Scholes-Merton option pricing model, respectively. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 17 — Subsequent Events In July 2020, the Company completed the previously announced acquisition of 100% of the issued and outstanding equity interests of PodcastOne pursuant to the Stock Purchase Agreement, dated as of May 7, 2020. The Company acquired 100% of the issued and outstanding equity interests of PodcastOne and issued to the sellers 5,363,636 shares of its common stock. 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 such acquisition. As of the filing of this Quarterly Report In July 2020, the Company entered into a Securities Purchase Agreement, as amended on July 30, 2020, with a certain existing institutional investor pursuant to which, subject to the satisfaction of certain closing conditions on the Closing Date, the Company agreed to sell, in a private placement transaction, for a cash purchase price of $15.0 million, the Company's 8.5% Subordinated Secured Convertible Note in the principal amount of $15.0 million. In addition, on the closing date of the transaction (the "Closing Date"), the Company agreed to issue to the Purchaser 800,000 shares, as amended, of its common stock (the "Shares"). Subject to satisfaction of closing conditions, the Note and the Shares will be issued in a private placement transaction exempt from the registration requirements of the Securities Act of 1933, as amended. If the transaction is consummated, the note shall mature on the second anniversary of the Closing Date, accrue interest at 8.5% per year, payable quarterly in cash in arrears, and shall be convertible into shares of common stock at a conversion price of $4.50 per share at the Purchaser's option, subject to certain customary adjustments such as stock splits, stock dividends and stock combinations. The closing of the private placement transaction is subject to various customary closing conditions and other conditions, including, among others the Company repaying in full the outstanding obligations to its senior secured lender and the agreements with the senior lender being terminated. In connection with the execution of the Securities Purchase Agreement, the Company provided a prepayment notice to its senior secured lender on July 31, 2020 of its intention to prepay in full, by August 31, 2020, all of its senior secured convertible debentures disclosed in Note 8 — Senior Secured Convertible Debentures In July 2020, the Company issued to a certain music licensor 2,415,459 shares (the "Shares") of its common stock at a price of $4.14 per share, to satisfy the Company's payment obligation in the amount of $10.0 million owed to such music licensor (the "Threshold Amount"). In the event that the value of the Shares as of September 30, 2020 is less than the Threshold Amount, the Company agreed to make an additional cash payment to such music licensor in an amount equal to the difference between (i) the Threshold Amount and (ii) the sum of (x) the net proceeds of any sales of the Shares by the music licensor plus (y) the aggregate value of the Shares not sold by the music licensor as of such date. The shares were issued pursuant to the Company's effective shelf Registration Statement on Form S-3, as amended (File No. 333-228909), which was filed with the SEC on December 19, 2018 and went effective on February 7, 2019 (the "Registration Statement"), and a prospectus supplement related to the offering of these shares filed with the SEC on July 22, 2020. The Company did not receive any cash proceeds from the offering of these In July 2020, the Company issued directly to a certain institutional investor and another investor a total of 1,820,000 shares of the Company's common stock for cash consideration of approximately $7.5 million at a price per share of $4.14. The Company intends to use the net proceeds for repayment of debt of up to $5.0 million, working capital and general corporate purposes. The offering of the shares was made pursuant to the Registration Statement, and a prospectus supplement related to the offering filed with the SEC on July 23, 2020. In August 2020, the Company and Mani Brothers 9200 Sunset (DE), LLC, the landlord of its principal executive offices in West Hollywood, entered into the Occupancy Agreement. Pursuant to the agreement, the Company agreed to issue MBRG Investors, LLC as the designee of the landlord 95,436 shares of its freely-tradable common stock (the "Shares"), at a price per share of $4.14, in full satisfaction of the Company's payment obligation of approximately $395,000 to the landlord. The offering of these shares were made pursuant to the Registration Statement and prospectus supplement related to the offering, which was filed with the SEC on August 11, 2020, and the final settlement and issuance of these shares was on August 11, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
COVID-19 | COVID-19 In March 2020, the World Health Organization declared the outbreak of the novel coronavirus disease ("COVID-19") as a pandemic. The global impact of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets creating increasing volatility and overall uncertainty. The Company began to experience modest adverse impacts of the COVID-19 pandemic in the fourth quarter of fiscal year ended March 31, 2020 and this impact is expected to become more adverse and to continue throughout at least the first half of the fiscal year ending March 31, 2021, and possibly longer. The Company's event and programmatic advertising revenues were directly impacted in the first quarter of 2021 with all on-premise in-person live music festivals and events postponed and mixed demand from historical programmatic advertising partners. Further, one of the Company's larger customers also experienced a temporary halt to its production as a result of COVID-19, which in turn could adversely impact the Company's near-term subscriber growth in 2021. During the quarter ended June 30, 2020, the Company enacted several initiatives to counteract these near-term challenges, including salary reductions, obtaining a Paycheck Protection Program loan (see Note 7 - Notes Payable) and pivoting its live music production to 100% digital. The Company began producing, curating, and broadcasting digital music festivals and events across its platform which has resulted in the growth in the number of live events streamed, related sponsorship revenue and overall viewership. However, there is uncertainty as to the duration and overall impact of the COVID-19 pandemic, which could result in an adverse material change in a future period to the Company's results of operations, financial position and liquidity |
Use of Estimates | Use of Estimates The preparation of the Company's condensed consolidated financial statements in conformity with the United States of America ("US") generally accepted accounting principles ("GAAP") requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue, allowance for doubtful accounts, the assigned value of acquired assets and assumed and contingent liabilities associated with business combinations and the related purchase price allocation, useful lives and impairment of property and equipment, intangible assets, goodwill and other assets, the fair value of the Company's equity-based compensation awards and convertible debt and debenture instruments, fair values of derivatives, and contingencies. Actual results could differ materially from those estimates. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. Given the overall uncertainty surrounding the COVID-19 pandemic, there is a reasonable possibility that actual results could differ from those estimates and such differences could be material to the financial position and results of operations, specifically in assessing when the collectability of revenue related consideration is probable, and the impairment assessment of goodwill, indefinite lived assets or long-lived assets that are depreciated or amortized. |
Revenue Recognition Policy | Revenue Recognition Policy The Company accounts for a contract with a customer when an approved contract exists, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of substantially all of the consideration is probable. Revenue is recognized when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company uses the expected value method to estimate the value of variable consideration on advertising and with original equipment manufacturer contracts to include in the transaction price and reflect changes to such estimates in periods in which they occur. Variable consideration for these services is allocated to and recognized over the related time period such advertising and subscription services are rendered as the amounts reflect the consideration the Company is entitled to and relate specifically to the Company's efforts to satisfy its performance obligation. The amount of variable consideration included in revenue is limited to the extent that it is probable that the amount will not be subject to significant reversal when the uncertainty associated with the variable consideration is subsequently resolved. Practical Expedients The Company elected the practical expedient and did not restate contracts that began and were completed within the same annual reporting period. The Company elected the practical expedient and recognized the incremental costs of obtaining a contract, if any, as an expense when incurred if the amortization period of the asset that would have been recognized is one year or less. Gross Versus Net Revenue Recognition The Company reports revenue on a gross or net basis based on management's assessment of whether the Company acts as a principal or agent in the transaction. To the extent the Company acts as the principal, revenue is reported on a gross basis net of any sales tax from customers, when applicable. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service prior to transfer to the customer. Where applicable, the Company has determined that it acts as the principal in all of its subscription service streams and may act as principal or agent for its ticketing/live events, advertising and licensing revenue streams. The Company's revenue is principally derived from the following services: Subscription Services Subscription services revenue substantially consist of monthly to annual recurring subscription fees, which are primarily paid in advance by credit card or through direct billings arrangements. The Company defers the portions of monthly to annual recurring subscription fees collected in advance and recognizes them in the period earned. Subscription revenue is recognized in the period of services rendered. The Company's subscription revenue consists of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. As a result, the Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligation over time is a time-based measure. The Company recognizes subscription revenue straight-line through the subscription period. Subscription Services consist of: Direct subscriber, mobile service provider and mobile app services The Company generates revenue for subscription services on both a direct basis and through subscriptions sold through certain third-party mobile service providers and mobile app services (collectively the "Mobile Providers"). For subscriptions sold through the Mobile Providers, the subscriber executes an on-line agreement with Slacker outlining the terms and conditions between Slacker and the subscriber upon purchase of the subscription. The Mobile Providers promote the Slacker app through their e-store, process payments for subscriptions, and retain a percentage of revenue as a fee. The Company reports this revenue gross of the fee retained by the Mobile Providers, as the subscriber is Slacker's customer in the contract and Slacker controls the service prior to the transfer to the subscriber. Subscription revenues from monthly subscriptions sold directly through Mobile Providers are subject to such Mobile Providers' refund or cancellation terms. Revenues from Mobile Providers are recognized net of any such adjustments for variable consideration, including refunds and other fees. The Company's payment terms vary based on whether the subscription is sold on a direct basis or through Mobile Providers. Subscriptions sold on a direct basis require payment before the services are delivered to the customer. The payment terms for subscriptions sold through Mobile Providers vary, but are generally payable within 30 days. Third-Party Original Equipment Manufacturers The Company generates revenue for subscription services through subscriptions sold through a third-party Original Equipment Manufacturer (the "OEM"). For subscriptions sold through the OEM, the OEM executes an agreement with Slacker outlining the terms and conditions between Slacker and the OEM upon purchase of the subscription. The OEM installs the Slacker app in their equipment and provides the Slacker service to the OEM's customers. The monthly fee charged to the OEM is based upon a fixed rate per vehicle, multiplied by the variable number of total vehicles which have the Slacker application installed. The number of customers, or the variable consideration, is reported by OEMs and resolved on a monthly basis. The Company's payment terms with OEM are up to 30 days. Advertising Revenue Advertising revenue primarily consist of revenues generated from the sale of audio, video, and display advertising space to third-party advertising exchanges. Revenues are recognized based on delivery of impressions over the contract period to the third-party exchanges, either when an ad is placed for listening or viewing by a visitor or when the visitor "clicks through" on the advertisement. The advertising exchange companies report the variable advertising revenue performed on a monthly basis which represents the Company's efforts to satisfy the performance obligation. Licensing Revenue Licensing revenue primarily consists of sales of licensing rights to digitally stream its live music services in certain geographies (e.g. China). Licensing revenue is recognized when the Company satisfies its performance obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, which is typically when the live event has aired. Any license fees collected in advance of an event are deferred until the event airs. The Company reports licensing revenue on a gross basis as the Company acts as the principal in the underlying transactions. Sponsorship Revenue Sponsorship revenue primarily consists of sales of sponsorship programs that provide sponsors with opportunities to reach our customers. Sponsorship revenue is recognized when the Company satisfies its performance obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, over the term of the agreement, which is typically as the event airs. Any sponsorship fees collected in advance of the contract term (typically an event) are deferred until the event airs. The Company reports sponsorship revenue on a gross basis as the Company acts as the principal in the underlying transactions. Ticket/Event Revenue Ticket/Event revenue is primarily from the sale of tickets and promoter fees earned from venues or other co-promoters under one of several formulas, including a fixed guaranteed amount and/or a percentage of ticket sales or event profits. Revenue from the promotion or production of an event is recognized at a point in time when the show occurs. Revenue collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue collected from sponsorship agreements, which is not related to a single event, is classified as deferred revenue and recognized over the term of the agreement or operating season as the benefits are provided to the sponsor. Revenue from the Company's ticketing operations primarily consists of service fees charged at the time a ticket for an event is sold in either the primary or secondary markets, including both online pay-per-view ("PPV") ticket sales as well as tickets physically purchased through a ticket sale vendor. For primary tickets sold to the Company's PPV and festival events the revenue for the associated ticket charges collected in advance of the event is recorded as deferred revenue until the event occurs. |
Cost of Sales | Cost of Sales Cost of Sales principally consist of royalties paid for the right to stream video, music and non-music content to the Company's customers and the cost of securing the rights to produce and stream live events from venues and promoters. Royalties are calculated using negotiated and regulatory rates documented in content license agreements and are based on usage measures or revenue earned. Music royalties to record labels, professional rights organizations and music publishers relate to the consumption of music listened to on Slacker's radio services. As of June 30, 2020 and 2019, the Company accrued $12.6 million and $10.2 million of royalties, respectively, due to artists from use of Slacker's radio services. |
Sales and Marketing | Sales and Marketing Sales and Marketing include the direct and indirect costs related to the Company's product and event advertising and marketing. |
Product Development | Product Development Product development costs primarily are expenses for research and development, product and content development activities, including internal software development and improvement costs which have not been capitalized by the Company. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period, on an accelerated basis. The Company accounts for awards with graded vesting as if each vesting tranche is valued as a separate award. The Company uses the Black-Scholes-Merton option pricing model to determine the grant date fair value of stock options. This model requires the Company to estimate the expected volatility and the expected term of the stock options which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected employee stock option exercise behavior. The Company uses a predicted volatility of its stock price during the expected life of the options that is based on the historical performance of the Company's stock price as well as including an estimate using guideline companies. The expected term is computed using the simplified method as the Company's best estimate given its lack of actual exercise history. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the stock. Stock-based awards are comprised principally of stock options, restricted stock, restricted stock units ("RSUs"), restricted stock awards ("RSAs") and warrant grants. Forfeitures are recognized as incurred. Stock option awards issued to non-employees are accounted for at grant date fair value determined using the Black-Scholes-Merton option pricing model. Management believes that the fair value of the stock options is more reliably measured than the fair value of the services received. The Company records the fair value of these equity-based awards and expense at their cost ratably over related vesting periods. |
Income Taxes | Income Taxes The Company accounts for income taxes using 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 financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Company's Statements of Operations in the period that includes the enactment date. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted-average number of common shares and the dilutive effect of contingent shares outstanding during the period. Potentially dilutive contingent shares, which primarily consist of stock options issued to employees, directors and consultants, restricted stock units, warrants issued to third parties and accounted for as equity instruments and convertible notes would be excluded from the diluted earnings per share calculation because their effect is anti-dilutive. At June 30, 2020 and 2019, the Company had 167,363 warrants outstanding, 4,383,334 and 5,031,668 options outstanding, respectively, 5,685,697 and 1,613,814 restricted stock units outstanding, respectively, 0 restricted stock awards outstanding and 3,995,241 and 2,949,425 shares of common stock issuable, respectively, underlying the Company's convertible notes and convertible debentures. |
Business Combinations | Business Combinations The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the underlying net tangible and intangible assets acquired, based on their respective fair values. The excess of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management's judgment and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses and cash flows, weighted average cost of capital, discount rates, estimates of customer turnover rates and estimates of terminal values. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with original maturities, when purchased, of three months or less. The following table provides amounts included in cash, cash equivalents and restricted cash presented in the Company's condensed consolidated statements of cash flows for the three months ended June 30, 2020 and 2019 (in thousands): 2020 2019 Cash and cash equivalents $ 10,391 $ 10,015 Restricted cash 6,735 235 Total cash and cash equivalents and restricted cash $ 17,126 $ 10,250 |
Restricted Cash and Cash Equivalents | Restricted Cash and Cash Equivalents The Company maintains certain letters of credit agreements with its banking provider, which are secured by cash for periods of less than one year, as well as an account control agreement associated with the Company's senior secured convertible debentures whereby the Company is required to have a minimum cash on hand of $6.5 million. As of each of June 30, 2020 and March 31, 2020, the Company had restricted cash of $6.7 million. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company evaluates the collectability of its accounts receivable based on a combination of factors. Generally, it records specific reserves to reduce the amounts recorded to what it believes will be collected when a customer's account ages beyond typical collection patterns, or the Company becomes aware of a customer's inability to meet its financial obligations. There were no impairment losses recorded on receivables for the three months ended June 30, 2020 and 2019. The Company believes that the credit risk with respect to trade receivables is limited due to the large and established nature of its largest customers and the nature of its subscription receivables. At June 30, 2020, the Company had two customers that made up 22% and 61% of the total gross accounts receivable balance. At March 31, 2020, the Company had two customers that made up 22% and 57% of the total gross accounts receivable balance. The Company's accounts receivable at June 30, 2020 and March 31, 2020 is as follows (in thousands): June 30, March 31, 2020 2020 Accounts receivable, gross $ 3,755 $ 4,109 Less: Allowance for doubtful accounts (10 ) (220 ) Accounts receivable, net $ 3,745 $ 3,889 |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve service potential are also capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal repairs and maintenance are expensed as incurred. Depreciation is recorded using the straight-line method over the assets' estimated useful lives, which are generally as follows: buildings and improvements (5 years), furniture and equipment (3 to 5 years) and computer equipment and software (3 to 5 years). Leasehold improvements are depreciated over the shorter of the estimated useful life, based on the estimates above, or the lease term. The Company evaluates the carrying value of its property and equipment if there are indicators of potential impairment. The Company performs an analysis to determine the recoverability of the asset group carrying value by comparing the expected undiscounted future cash flows to the net book value of the asset group. If it is determined that the expected undiscounted future cash flows are less than the net book value of the asset group, the excess of the net book value over the estimated fair value is recorded in the Company's consolidated statements of operations. Fair value is generally estimated using valuation techniques that consider the discounted cash flows of the asset group using discount and capitalization rates deemed reasonable for the type of assets, as well as prevailing market conditions, appraisals, recent similar transactions in the market and, if appropriate and available, current estimated net sales proceeds from pending offers. |
Capitalized Internal-Use Software | Capitalized Internal-Use Software The Company capitalizes certain costs incurred to develop software for internal use. Costs incurred in the preliminary stages of development are expensed as incurred. Once software has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized costs are recorded as part of property and equipment. Costs related to minor enhancements, maintenance and training are expensed as incurred. Capitalized internal-use software costs are amortized on a straight-line basis over their two- to five-year estimated useful lives. The Company evaluates the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. During the three months ended June 30, 2020 and 2019, the Company capitalized $0.8 million and $0.7 million of internal use software, respectively. |
Goodwill | Goodwill Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company evaluates goodwill for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. The Company conducts its annual impairment analysis in the fourth quarter of each fiscal year. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit's carrying amount, including goodwill, to the fair value of the reporting unit. Estimations and assumptions regarding the number of reporting units, future performances, results of the Company's operations and comparability of its market capitalization and net book value will be used. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is measured by the resulting amount. Because the Company has one reporting unit, as part of the Company's qualitative assessment an entity-wide approach to assess goodwill for impairment is utilized. In the Company's assessment for potential impairment the Company identified triggering events due to the events resulting from the global COVID-19 pandemic. No impairment losses have been recorded in the three months ended June 30, 2020 and 2019. The Company's reporting unit is the same as its operating segment and reporting segment as described in Note 15 - Business Segment and Geographic Reporting. |
Intangible Assets with Indefinite Useful Lives | Intangible Assets with Indefinite Useful Lives The Company's indefinite-lived intangible assets consist of trademarks and trade names. The Company evaluates indefinite-lived intangible assets for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. The Company conducts its annual impairment analysis in the fourth quarter of each fiscal year. In our assessment for potential impairment as of June 30, 2020, we identified triggering events due to the events resulting from the global COVID-19 pandemic which caused the temporary halting of car production of our OEM partner as well as overall advertising spend decrease from our advertising partners. No impairment losses have been recorded in the three months ended June 30, 2020 and 2019. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown, which may impair the Company's asset values, including intangible assets. |
Intangible Assets with Finite Useful Lives | Intangible Assets with Finite Useful Lives The Company has certain finite lived intangible assets that were initially recorded at their fair value at the time of acquisition. These intangible assets consist of Non-Compete, Fan Database, Brands, Intellectual Property, Customer Relationships, and Capitalized Software Development Costs resulting from business combinations. Intangible assets with finite useful lives are amortized using the straight-line method over their respective estimated useful lives, which are generally as follows: Non-Compete (3 years), Fan Database (3 years), Brands (15-16 years), Intellectual Property (15 years), Customer Relationships (1.5-5 years), Domain Names (5 years), and Software (5 years). The Company reviews all finite-lived intangible assets for impairment when circumstances indicate that their carrying values may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess carrying value over the fair value in its consolidated statements of operations. No impairment losses have been recorded in the three months ended June 30, 2020 and 2019. |
Deferred Revenue and Costs | Deferred Revenue and Costs Deferred revenue consists substantially of amounts received from customers in advance of the Company's performance service period. Deferred revenue is recognized as revenue on a systematic basis that is proportionate to the period that the underlying services are rendered, which in certain arrangements is straight line over the remaining contractual term or estimated customer life of an agreement. In the event the Company receives cash in advance of providing its music services, the Company will also defer an amount of such future royalty and costs to 3rd party music labels, publishers and other providers on its balance sheets. Deferred costs are amortized to expense concurrent with the recognition of the related revenue and the expense is included in cost of sales. |
Fair Value Measurements - Valuation Hierarchy | Fair Value Measurements - Valuation Hierarchy Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (i.e., an exit price). The Company uses the three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company's own assumptions about the data market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized below: Level 1 Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. Level 3 Valuation is based upon other unobservable inputs that are significant to the fair value measurement. The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. Proper classification of fair value measurements within the valuation hierarchy is considered each reporting period. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains cash balances at commercial banks. Cash balances commonly exceed the $250,000 amount insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts, and management believes that the Company is not exposed to any significant credit risk with respect to such cash and cash equivalents. |
Adoption of New Accounting pronouncements | Adoption of New Accounting pronouncements In August 2018, the FASB issued ASU No. 2018-15. Intangibles - Goodwill and Other – Internal-Use Software, In November 2018, the FASB issued ASU 2018-18 which clarified the interaction between Topic 808 and Topic 606, which makes targeted improvements for collaborative arrangements as follows: a) clarifies that certain transactions between collaborative arrangement participants are within the scope of ASC 606 when the collaborative arrangement participant is a customer in the context of a unit of account. b) adds unit-of-account (i.e., distinct good or service) guidance to ASC 808 to align with the guidance in ASC 606 to determine whether the collaborative arrangement, or a part of the arrangement, is within the scope of ASC 606. And c) specifies that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, if the collaborative arrangement participant is not a customer, an entity is precluded from presenting the transaction together with revenue recognized under ASC 606. The ASU was effective for public business entities for fiscal years ending after December 15, 2019. For all other entities, the ASU was effective for annual reporting periods ending after December 15, 2020. The Company adopted this guidance in the first quarter of 2021. The adoption of this standard did not have, and is not expected to have, a material impact to the condensed consolidated financial statements. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The amendments in this ASU clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20; instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842: Leases. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 Financial Instruments. The amendments in this ASU further clarify certain aspects of ASU No. 2016-13. For entities that have not yet adopted ASU No. 2016-13, this ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief. The amendments in this ASU provide transition relief for ASU No. 2016-13 by providing an option to irrevocably elect the fair value option for certain financial assets measured at an amortized cost basis. For smaller reporting companies that have not yet adopted ASU No. 2016-13, this ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact this ASU will have on its financial statements and related disclosures, as well as the timing of adoption and the application method. In December 2019, the FASB issued ASU No. 2019-12. Simplifying the Accounting for Income Taxes. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the U.S. Securities and Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statement presentation or disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of cash, cash equivalents and restricted cash | 2020 2019 Cash and cash equivalents $ 10,391 $ 10,015 Restricted cash 6,735 235 Total cash and cash equivalents and restricted cash $ 17,126 $ 10,250 |
Schedule of accounts receivable | June 30, March 31, 2020 2020 Accounts receivable, gross $ 3,755 $ 4,109 Less: Allowance for doubtful accounts (10 ) (220 ) Accounts receivable, net $ 3,745 $ 3,889 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue | Three Months Ended 2020 2019 Revenue Subscription services $ 8,870 $ 8,565 Advertising, licensing and sponsorship 1,426 933 Ticket/Event 211 - Total Revenue $ 10,507 $ 9,498 |
Schedule of contract liabilities balances | Contract Liabilities Balance as of March 31, 2020 $ 949 Revenue recognized that was included in the contract liability at beginning of period (689 ) Increase due to cash received, excluding amounts recognized as revenue during the period 851 Balance as of June 30, 2020 $ 1,111 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | June 30, March 31, 2020 2020 Property and equipment, net Production equipment $ 54 $ 54 Computer, machinery, and software equipment 670 707 Furniture and fixtures 41 41 Leasehold improvements 41 41 Capitalized internally developed software 6,415 5,617 Total property and equipment 7,221 6,460 Less accumulated depreciation and amortization (3,785 ) (3,063 ) Total property and equipment, net $ 3,436 $ 3,397 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in carrying amount of goodwill | Goodwill Balance as of March 31, 2020 $ 9,672 Acquisitions - Impairment losses - Balance as of June 30, 2020 $ 9,672 |
Schedule of changes in carrying amount of indefinite-lived intangible assets | Tradenames Balance as of March 31, 2020 $ 4,637 Acquisitions - Impairment losses - Balance as of June 30, 2020 $ 4,637 |
Schedule of finite-lived intangible assets | Gross Accumulated Net Software $ 19,280 $ 9,638 $ 9,642 Intellectual property (patents) 5,366 894 4,472 Customer relationships 6,570 5,259 1,311 Domain names 29 14 15 Brand names 1,500 43 1,457 Non-compete agreement 250 35 215 Fan database 230 32 198 Total $ 33,225 $ 15,915 $ 17,310 The Company's finite-lived intangible assets were as follows as of March 31, 2020 (in thousands): Gross Accumulated Net Software $ 19,280 $ 8,674 $ 10,606 Intellectual property (patents) 5,366 805 4,561 Customer relationships 6,570 5,128 1,442 Domain names 29 13 16 Brand names 1,500 17 1,483 Non-compete agreement 250 14 236 Fan database 230 13 217 Total $ 33,225 $ 14,664 $ 18,561 |
Schedule of estimated future amortization expense | For Years Ending March 31, 2021 (remaining nine months) $ 3,756 2022 5,008 2023 3,885 2024 461 2025 461 Thereafter 3,739 $ 17,310 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued liabilities | June 30, March 31, 2020 2020 Accounts payable $ 31,980 $ 26,703 Accrued liabilities 4,911 3,938 Lease liabilities, current 84 82 $ 36,975 $ 30,723 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Notes Payable Tables Abstract | |
Schedule of notes payable | June 30, March 31, 2020 2020 Senior promissory note $ 336 $ 331 PPP loan 1,998 - SBA loan 150 - 2,484 331 Less: Current portion of Notes payable (1,227 ) (331 ) Notes payable $ 1,257 $ - |
Senior Secured Convertible De_2
Senior Secured Convertible Debentures (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Senior Secured Convertible Debentures [Abstract] | |
Schedule of senior secured convertible debentures | June 30, March 31, 2020 2020 Senior Secured Convertible Debentures Senior Secured Convertible Debentures $ 8,956 $ 10,118 Accrued interest - 101 Fair Value of Embedded Derivatives 220 524 Less: Discount (1,207 ) (1,518 ) Net 7,969 9,225 Less: Senior Secured Convertible Debentures, current (7,969 ) (2,720 ) Senior Secured Convertible Debentures, long-term $ - $ 6,505 |
Unsecured Convertible Notes (Ta
Unsecured Convertible Notes (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
Schedule of unsecured convertible notes payable | June 30, March 31, 2020 2020 Unsecured Convertible Notes - Related Party (A) 7.5% Unsecured Convertible Note - Due May 31, 2021 $ 4,187 $ 4,120 (B) 7.5% Unsecured Convertible Notes - Due May 31, 2021 1,052 1,035 Less: Discount (33 ) (41 ) Net 5,206 5,114 Unsecured Convertible Promissory Note $ 2,000 $ 2,000 Accrued Interest 64 24 Less: Discount (419 ) (485 ) Fair Value of Embedded Derivatives 74 141 Net 1,719 1,680 Unsecured Convertible Notes, Net 6,925 6,794 Less: Unsecured Convertible Notes, Current (5,206 ) - Unsecured Convertible Notes, Net, Long-term $ 1,719 $ 6,794 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of operating lease costs | June 30, 2020 Fixed rent cost 23 Short term lease cost 88 Total operating lease cost $ 111 |
Schedule of supplemental balance sheet information related to leases | Operating leases June 30, Operating lease right-of-use assets $ 107 Total operating lease right-of-use assets 107 Operating lease liability, current $ 84 Operating lease liability, noncurrent 23 Total operating lease liabilities $ 107 |
Schedule of maturities of operating lease liabilities | For Years Ending March 31, 2021 (remaining nine months) $ 70 2022 47 Total lease payments 117 Less: imputed interest (10 ) Present value of operating lease liabilities $ 107 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Schedule of warrant activities | Number of Weighted Weighted- Balance outstanding, March 31, 2020 167,363 $ 4.01 0.94 Granted - - - Exercised - - - Forfeited/expired - - - Balance outstanding, June 30, 2020 167,363 $ 4.01 0.69 Exercisable, June 30, 2020 167,363 $ 4.01 0.69 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of financial liabilities are measured at fair value on a recurring basis | June 30, 2020 Fair Hierarchy Level Value Level 1 Level 2 Level 3 Liabilities: Bifurcated embedded derivative on senior secured convertible debentures $ 220 $ - $ - $ 220 Bifurcated embedded derivative on unsecured convertible note payable $ 74 $ - $ - $ 74 March 31, 2020 Fair Hierarchy Level Value Level 1 Level 2 Level 3 Liabilities: Bifurcated embedded derivative on senior secured convertible debentures $ 524 $ - $ - $ 524 Bifurcated embedded derivative on unsecured convertible note payable 141 $ - $ - $ 141 |
Schedule of derivative instruments | Amount Balance as of March 31, 2020 $ 665 Total fair value adjustments reported in earnings (371 ) Balance as of June 30, 2020 $ 294 Amount Balance as of March 31, 2019 $ 586 Total fair value adjustments reported in earnings (162 ) Balance as of June 30, 2019 $ 424 |
Schedule of derivative on senior secured convertible debentures | June 30, March 31, 2020 2020 Bifurcated embedded derivative on senior secured convertible debentures Market yield 21.9 % 27.4 % Bifurcated embedded derivative on unsecured convertible note payable pricing model): Market yield 34.9 % 43.9 % |
Schedule of fair value measurement option for financial assets or liabilities | June 30, 2020 Carrying Hierarchy Level Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 10,391 $ 10,391 $ - $ - Restricted cash 6,735 6,735 - - Liabilities: Notes payable 2,484 - - 2,484 Senior secured convertible debentures, net 7,749 - - 9,131 Unsecured convertible notes payable related party, net 5,206 - - 7,454 Unsecured convertible notes payable, net 1,645 - - 1,915 March 31, 2020 Carrying Hierarchy Level Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 5,702 $ 5,702 $ - $ - Restricted cash 6,735 6,735 - - Liabilities: Note payable 331 - - 331 Senior secured convertible debentures, net 8,701 - - 9,254 Unsecured convertible notes payable related party, net 5,114 4,451 Unsecured convertible note payable 1,539 - - 1,338 |
Schedule of fair value of each of the debentures and unsecured convertible | June 30, March 31, 2020 2020 Senior secured convertible debentures, net (binomial lattice model): Market yield 21.9 % 27.4 % Unsecured convertible notes payable related party, net (yield model with a Black-Scholes-Merton option pricing model): Market yield 32.4 % 41.6 % Unsecured convertible note payable (yield model with a Black-Scholes-Merton option pricing model): Market yield 34.9 % 43.9 % |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Jun. 30, 2020 | Jun. 30, 2019 | Jul. 31, 2020 | Jul. 03, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | |
Organization and Basis of Presentation (Textual) | ||||||
Description of financial information | The presented financial information includes the financial information and activities of React Presents for the three month ended June 30, 2020 (91 days) and June 30, 2019 (0 days). | |||||
Cash, cash equivalents and restricted cash | $ 17,126 | $ 10,250 | $ 12,437 | $ 13,939 | ||
Net loss | (7,532) | (10,966) | ||||
Utilized cash in operating activities | 4,412 | $ (2,527) | ||||
Working capital deficiency | $ 43,400 | |||||
Liquidity, description | The Company is currently seeking additional funds, primarily through the issuance of equity and/or debt securities for cash to operate its business. In July 2020, the Company (i) sold 1,820,000 shares of its common stock to a current institutional investor and another investor for gross proceeds of $7.5 million, (ii) issued 2,415,459 shares of its common stock to satisfy a $10.0 million vendor payment obligation and (iii) provided notice to its senior secured debenture creditors of its intent to repay its loan in full by August 31, 2020. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain terms that result in undue restrictions on its operations, in the case of debt financing or cause substantial dilution for its stockholders, in case of equity and/or convertible debt financing. The Company may also have to consider reducing certain overhead costs through the reduction of salaries and other means and settle liabilities through negotiation. There can be no assurance that the Company's attempts at any or all of these endeavors will be successful. | |||||
Subsequent Event [Member] | ||||||
Organization and Basis of Presentation (Textual) | ||||||
Issuance of shares | 5,363,636 | |||||
Outstanding equity interest, percentage | 100.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 |
Cash and cash equivalents | $ 10,391 | $ 5,702 | ||
Restricted cash | 6,735 | 6,735 | ||
Total cash and cash equivalents and restricted cash | 17,126 | $ 12,437 | $ 10,250 | $ 13,939 |
Cash and Cash Equivalents [Member] | ||||
Cash and cash equivalents | 10,391 | 10,015 | ||
Restricted cash | 6,735 | 235 | ||
Total cash and cash equivalents and restricted cash | $ 17,126 | $ 10,250 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
Accounting Policies [Abstract] | ||
Accounts receivable, gross | $ 3,755 | $ 4,109 |
Less: Allowance for doubtful accounts | (10) | (220) |
Accounts receivable, net | $ 3,745 | $ 3,889 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Textual) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2020USD ($)shares | Mar. 31, 2020shares | Jun. 30, 2019USD ($)shares | |
Summary of Significant Accounting Policies (Textual) | |||
Royalties due to artists | $ | $ 12,600 | $ 10,200 | |
Warrants outstanding | shares | 167,363 | ||
Stock options outstanding | shares | 4,383,334 | 5,031,668 | |
Convertible notes and convertible debentures | shares | 5,685,697 | 1,613,814 | |
Restricted cash | $ | $ 6,700 | ||
Amount insured by federal deposit insurance corporation | $ | $ 250 | ||
Number of customer | 2 | ||
Capitalized internal use software, description | Straight-line basis over their two- to five-year estimated useful lives. | ||
Capitalized internal use software | $ | $ 800 | $ 700 | |
Senior Secured Convertible Debentures [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Minimum cash | $ | $ 6,500 | ||
Accounts Receivable [Member] | Customer One [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Stock options outstanding | shares | 3,995,241 | 2,949,425 | |
Concentration risk, percentage | 22.00% | 22.00% | |
Accounts Receivable [Member] | Customer Two [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Stock options outstanding | shares | 0 | ||
Concentration risk, percentage | 61.00% | 57.00% | |
Software [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Intangible assets finite useful lives | 5 years | ||
Domain Names [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Intangible assets finite useful lives | 5 years | ||
Intellectual Property [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Intangible assets finite useful lives | 15 years | ||
Non Compete [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Intangible assets finite useful lives | 3 years | ||
Fan Database [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Intangible assets finite useful lives | 3 years | ||
Maximum [Member] | Customer Relationships [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Intangible assets finite useful lives | 5 years | ||
Maximum [Member] | Brand Names [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Intangible assets finite useful lives | 16 years | ||
Minimum [Member] | Customer Relationships [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Intangible assets finite useful lives | 1 year 6 months | ||
Minimum [Member] | Brand Names [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Intangible assets finite useful lives | 15 years | ||
Buildings and Improvement [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Property and equipment estimated useful lives | 5 years | ||
Furniture and Equipment [Member] | Maximum [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Property and equipment estimated useful lives | 5 years | ||
Furniture and Equipment [Member] | Minimum [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Property and equipment estimated useful lives | 3 years | ||
Computer Equipment and Software [Member] | Maximum [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Property and equipment estimated useful lives | 5 years | ||
Computer Equipment and Software [Member] | Minimum [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Property and equipment estimated useful lives | 3 years |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | ||
Subscription services | $ 8,870 | $ 8,565 |
Advertising, licensing and sponsorship | 1,426 | 933 |
Ticket/Event | 211 | |
Total Revenue | $ 10,507 | $ 9,498 |
Revenue (Details 1)
Revenue (Details 1) $ in Thousands | 3 Months Ended |
Jun. 30, 2020USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Balance as of March 31, 2020 | $ 949 |
Revenue recognized that was included in the contract liability at beginning of period | (689) |
Increase due to cash received, excluding amounts recognized as revenue during the period | 851 |
Balance as of June 30, 2020 | $ 1,111 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 7,221 | $ 6,460 |
Less accumulated depreciation and amortization | (3,785) | (3,063) |
Total property and equipment, net | 3,436 | 3,397 |
Production equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 54 | 54 |
Computer, machinery, and software equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 670 | 707 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 41 | 41 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 41 | 41 |
Capitalized internally developed software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 6,415 | $ 5,617 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Property and Equipment (Textual) | ||
Depreciation and amortization expense | $ 700 | $ 400 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2020USD ($) | |
Beginning Balance | $ 9,672 |
Ending Balance | 9,672 |
Goodwill [Member] | |
Beginning Balance | 9,672 |
Acquisitions | |
Impairment losses | |
Ending Balance | $ 9,672 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) - Trade Names [Member] $ in Thousands | 3 Months Ended |
Jun. 30, 2020USD ($) | |
Indefinite-lived Intangible Assets [Line Items] | |
Balance | $ 4,637 |
Acquisitions | |
Impairment losses | |
Balance | $ 4,637 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 33,225 | $ 33,225 |
Accumulated Amortization | 15,915 | 14,664 |
Net Carrying Value | 17,310 | 18,561 |
Software [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 19,280 | 19,280 |
Accumulated Amortization | 9,638 | 8,674 |
Net Carrying Value | 9,642 | 10,606 |
Intellectual property (patents) [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 5,366 | 5,366 |
Accumulated Amortization | 894 | 805 |
Net Carrying Value | 4,472 | 4,561 |
Customer relationships [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 6,570 | 6,570 |
Accumulated Amortization | 5,259 | 5,128 |
Net Carrying Value | 1,311 | 1,442 |
Domain names [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 29 | 29 |
Accumulated Amortization | 14 | 13 |
Net Carrying Value | 15 | 16 |
Brand names [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 1,500 | 1,500 |
Accumulated Amortization | 43 | 17 |
Net Carrying Value | 1,457 | 1,483 |
Non-compete agreement [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 250 | 250 |
Accumulated Amortization | 35 | 14 |
Net Carrying Value | 215 | 236 |
Fan Database [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 230 | 230 |
Accumulated Amortization | 32 | 13 |
Net Carrying Value | $ 198 | $ 217 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets (Details 3) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
For Years Ended March 31, | ||
2021 (remaining nine months) | $ 3,756 | |
2022 | 5,008 | |
2023 | 3,885 | |
2024 | 461 | |
2025 | 461 | |
Thereafter | 3,739 | |
Total | $ 17,310 | $ 18,561 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Goodwill and Intangible Assets (Textual) | ||
Amortization expense on its finite-lived intangible assets | $ 1,300 | $ 1,800 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 31,980 | $ 26,703 |
Accrued liabilities | 4,911 | 3,938 |
Lease liabilities, current | 84 | 82 |
Accounts payable and accrued liabilities, Total | $ 36,975 | $ 30,723 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
Notes payable, Total | $ 2,484 | $ 331 |
Less: Current portion of Notes payable | (1,227) | (331) |
NotesPayable | 1,257 | |
Senior promissory note [Member] | ||
Notes payable, Total | 336 | 331 |
PPP loan [Member] | ||
Notes payable, Total | 1,998 | |
SBA loan [Member] | ||
Notes payable, Total | $ 150 |
Note Payable (Details Textual)
Note Payable (Details Textual) - Convertible Notes Payable [Member] - USD ($) $ in Thousands | Apr. 13, 2020 | Jun. 17, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Mar. 31, 2015 | Dec. 31, 2014 |
Note Payable (Textual) | ||||||
Aggregate principal amount | $ 300 | $ 300 | $ 200 | |||
Bears interest | 6.00% | |||||
Accrued interest | $ 100 | $ 100 | ||||
Debt, description | The payables arose in connection with professional services rendered by attorneys for the Company prior to and through December 31, 2014, and the Note had an original maturity date of December 31, 2015, which was extended to September 30, 2016 or such later date as the lender may agree to in writing. | |||||
Proceeds from a loan | $ 2,000 | $ 200 | ||||
Interest at a rate | 1.00% | 3.75% |
Senior Secured Convertible De_3
Senior Secured Convertible Debentures (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
Senior Secured Convertible Debentures [Abstract] | ||
Senior Secured Convertible Debentures | $ 8,956 | $ 10,118 |
Accrued interest | 101 | |
Fair Value of Embedded Derivatives | 220 | 524 |
Less: Discount | (1,207) | (1,518) |
Net | 7,969 | 9,225 |
Less: Senior Secured Convertible Debentures, current | (7,969) | (2,720) |
Senior Secured Convertible Debentures, long-term | $ 6,505 |
Senior Secured Convertible De_4
Senior Secured Convertible Debentures (Details Textual) - USD ($) $ in Thousands | Feb. 11, 2019 | Jul. 25, 2019 | Jun. 29, 2018 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Dec. 31, 2019 |
Senior Secured Convertible Debentures (Textual) | |||||||
Debt conversion, description | Received (i) 400,000 free trading shares of the Company’s common stock via a Section 3(a)(9) exchange of $10,000 worth of JGB’s debentures originally issued on June 28, 2018, (ii) a reduction in the convertible price from $10.00 per share to $5.00 per share, (iii) an incremental $1.0 million in aggregate principle Debenture payments equally over six months beginning in February 2020 and (d) $6.5 million of cash deposited into a locked bank account (to be released when and if debt is fully paid down). | ||||||
Outstanding principal balance of the debentures | $ 9,000 | $ 10,200 | |||||
Accrued interest | 0 | $ 100 | |||||
Additional debt discount | 200 | $ 600 | |||||
Change in conversion price | $ 100 | ||||||
Repayment of principal amount in January, 2019 | 300 | ||||||
Repayment of principal amount in February, 2019 | 200 | ||||||
Repayment of principal amount in February 2020 | $ 400 | ||||||
Aggregate cash purchase price, description | (a) if the Debentures are prepaid on or after the original issuance date, but on or prior to December 31, 2019, all remaining regularly scheduled interest to be paid on the Debentures from the date of such payment of the Debentures to, but excluding, December 31, 2019, plus 10% of the entire outstanding principal balance of the Debentures, (b) if the Debentures are prepaid after December 31, 2019, but on or prior to June 30, 2020, 10% of the entire outstanding principal balance of the Debentures; (c) if the Debentures are prepaid after June 30, 2020, but on or prior to December 31, 2020, 8% of the entire outstanding principal balance of the Debentures; and (d) if the Debentures are prepaid on or after December 31, 2020, but prior to the maturity date, 6% of the entire outstanding principal balance of the Debentures. The terms of the February 2019 Debentures were otherwise the same as the June 2019 Debentures. | ||||||
Covenant breach | Jan. 31, 2020 | ||||||
Provided for cash payment | $ 150 | ||||||
Selling shares of common stock | 5,000,000 | ||||||
Gross proceeds | $ 10,500 | ||||||
Secured Debt [Member] | |||||||
Senior Secured Convertible Debentures (Textual) | |||||||
Coupon rate | 12.75% | 12.75% | |||||
Expected term | 1 year | 1 year 2 months 30 days | |||||
Volatility rate | 114.60% | 101.40% | |||||
Market rate | 21.90% | 2.74% | |||||
Probability of divesture | 41.23% | ||||||
Probability of default | 51.31% | ||||||
Fair value issuance | $ 200 | $ 500 | |||||
Change in fair value of less than in fair value other income (expense) | $ 300 | $ 100 | |||||
Securities Purchase Agreement [Member] | |||||||
Senior Secured Convertible Debentures (Textual) | |||||||
Debt conversion, description | (i) recorded issuance costs of $1.1 million against the liability and (ii) used $3.5 million of the proceeds to pay off 100% of the Company's revolving line of credit. Issuance costs are being amortized to interest expense over the term of the June 2018 Debentures. | ||||||
Accrued interest percentage | 12.75% | ||||||
Debenture mature date | Jun. 29, 2021 | ||||||
Debt, description | (a) a 10% discount to the average of the three lowest daily volume weighted average prices of the Company's common stock over the prior 20 trading days, or (b) the Conversion Price, subject to a certain minimum price per share and if certain conditions are met. | ||||||
Convertible debenture, description | In conjunction with the additional financing, the Company (i) recorded issuance costs of $0.1 million against the liability, (ii) modified certain financial liquidity covenants in the Debentures, (iii) modified the definition of “Monthly Allowance” by increasing it from $170,000 to $221,000, and (iv) amended the definition of “Prepayment Amount” to mean, with respect to any payment of the Debentures prior to the maturity date, the entire outstanding principal balance (including any original issue discount) of the Debenture, all accrued and unpaid interest thereon, together with a prepayment premium (the “Prepayment Premium”) equal to the following: | ||||||
Monthly allowance, description | The Company amended the SPA with the Purchasers to obtain additional financing, increasing the cash purchase price of the Debentures by $3.0 million, $3.2 million in aggregate principal amount, of its 12.75% Original Issue Discount Senior Secured Convertible Debentures due June 29, 2021 (the "February 2019 Debentures" and together with the June 2018 Debentures, the "Debentures"). | An aggregate cash purchase price of $10.0 million, $10.64 million in aggregate principal amount, of its 12.75% Original Issue Discount Senior Secured Convertible Debentures due June 29, 2021 (the "June 2018 Debentures"). |
Unsecured Convertible Notes (De
Unsecured Convertible Notes (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | |
Debt Instrument [Line Items] | |||
Unsecured Convertible Notes - Related Party | $ 1,227 | $ 331 | |
Fair Value of Embedded Derivatives | 220 | 524 | |
7.5% Unsecured Convertible Note [Member] | |||
Debt Instrument [Line Items] | |||
Unsecured Convertible Notes - Related Party | [1] | 4,187 | 4,120 |
7.5% Unsecured Convertible Notes [Member] | |||
Debt Instrument [Line Items] | |||
Unsecured Convertible Notes - Related Party | [2] | 1,052 | 1,035 |
Unsecured Convertible Notes - Related Party [Member] | |||
Debt Instrument [Line Items] | |||
Less: Discount | (33) | (41) | |
Net | 5,206 | 5,114 | |
Unsecured Convertible Promissory Note [Member] | |||
Debt Instrument [Line Items] | |||
Unsecured Convertible Promissory Note | 2,000 | 2,000 | |
Accrued Interest | 64 | 24 | |
Less: Discount | (419) | (485) | |
Fair Value of Embedded Derivatives | 74 | 141 | |
Net | 1,719 | 1,680 | |
Unsecured Convertible Notes, Net | 6,925 | 6,794 | |
Less: Unsecured Convertible Notes, Current | (5,206) | ||
Unsecured Convertible Notes, Net, Long-term | $ 1,719 | $ 6,794 | |
[1] | The first Trinad Note was issued on February 21, 2017, to convert aggregate principal and interest of $3.6 million under the first senior promissory note and second senior promissory note with Trinad Capital previously issued on December 31, 2014 and April 8, 2015, respectively. The first Trinad Note was due on March 31, 2018 and was extended to May 31, 2019 and further extended to May 31, 2021 (as discussed below). At June 30, 2020, the balance due of $4.2 million, which included $0.6 million of accrued interest, was outstanding under the first Trinad Note. At March 31, 2020, the balance due of $4.1 million, which included $0.5 million of accrued interest, was outstanding under the first Trinad Note. | ||
[2] | Between October 27, 2017 and December 18, 2017, the Company issued six unsecured convertible notes payable to Trinad Capital for aggregate total principal amount of $0.9 million. The notes were due on various dates through December 31, 2018 and were extended to May 31, 2019 and further extended to May 31, 2021 (as discussed below). For the three months ended June 30, 2020, the Company amortized less than $0.1 million of discount to interest expense, and the unamortized discount as of June 30, 2020 was less than $0.1 million. As of June 30, 2020, $0.1 million of accrued interest was added to the principal balance. |
Unsecured Convertible Notes (_2
Unsecured Convertible Notes (Details Textual) - USD ($) $ in Thousands | Feb. 05, 2020 | Mar. 30, 2018 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 18, 2017 | Feb. 21, 2017 |
Unsecured Convertible Notes (Textual) | ||||||
Unsecured convertible notes payable outstanding, description | As of June 30, 2020 and March 31, 2020, the Company had outstanding 7.5% (effective as of April 1, 2018, previously 6%) unsecured convertible notes payable (the "Trinad Notes") issued to Trinad Capital Master Fund Ltd. ("Trinad Capital"), a fund controlled by Mr. Ellin, the Company's Chief Executive Officer, Chairman, director and principal stockholder, as follows: (A) The first Trinad Note was issued on February 21, 2017, to convert aggregate principal and interest of $3.6 million under the first senior promissory note and second senior promissory note with Trinad Capital previously issued on December 31, 2014 and April 8, 2015, respectively. The first Trinad Note was due on March 31, 2018 and was extended to May 31, 2019 and further extended to May 31, 2021 (as discussed below). At June 30, 2020, the balance due of $4.2 million, which included $0.6 million of accrued interest, was outstanding under the first Trinad Note. At March 31, 2020, the balance due of $4.1 million, which included $0.5 million of accrued interest, was outstanding under the first Trinad Note. F-22 (B) Between October 27, 2017 and December 18, 2017, the Company issued six unsecured convertible notes payable to Trinad Capital for aggregate total principal amount of $0.9 million. The notes were due on various dates through December 31, 2018 and were extended to May 31, 2019 and further extended to May 31, 2021 (as discussed below). For the three months ended June 30, 2020, the Company amortized less than $0.1 million of discount to interest expense, and the unamortized discount as of June 30, 2020 was less than $0.1 million. As of June 30, 2020, $0.1 million of accrued interest was added to the principal balance. | As of June 30, 2020 and March 31, 2020, the Company had outstanding 7.5% (effective as of April 1, 2018, previously 6%) unsecured convertible notes payable (the "Trinad Notes") issued to Trinad Capital Master Fund Ltd. ("Trinad Capital"), a fund controlled by Mr. Ellin, the Company's Chief Executive Officer, Chairman, director and principal stockholder, as follows: (A) The first Trinad Note was issued on February 21, 2017, to convert aggregate principal and interest of $3.6 million under the first senior promissory note and second senior promissory note with Trinad Capital previously issued on December 31, 2014 and April 8, 2015, respectively. The first Trinad Note was due on March 31, 2018 and was extended to May 31, 2019 and further extended to May 31, 2021 (as discussed below). At June 30, 2020, the balance due of $4.2 million, which included $0.6 million of accrued interest, was outstanding under the first Trinad Note. At March 31, 2020, the balance due of $4.1 million, which included $0.5 million of accrued interest, was outstanding under the first Trinad Note. F-22 (B) Between October 27, 2017 and December 18, 2017, the Company issued six unsecured convertible notes payable to Trinad Capital for aggregate total principal amount of $0.9 million. The notes were due on various dates through December 31, 2018 and were extended to May 31, 2019 and further extended to May 31, 2021 (as discussed below). For the three months ended June 30, 2020, the Company amortized less than $0.1 million of discount to interest expense, and the unamortized discount as of June 30, 2020 was less than $0.1 million. As of June 30, 2020, $0.1 million of accrued interest was added to the principal balance. | ||||
Interest expense discount, description | The Company amortized less than $0.1 million of discount to interest expense, and the unamortized discount as of June 30, 2020 was less than $0.1 million. | |||||
Unsecured Debt [Member] | ||||||
Unsecured Convertible Notes (Textual) | ||||||
Total principal maturities of long-term borrowings for the year ended March 31, 2021 | $ 900 | |||||
Total principal maturities of long-term borrowings for the year ended March 31, 2022 | 16,900 | |||||
Total principal maturities of long-term borrowings for the year ended March 31, 2023 | 100 | |||||
Convertible Notes Payable B [Member] | ||||||
Unsecured Convertible Notes (Textual) | ||||||
Principal amount | $ 900 | |||||
Accrued interest | 100 | |||||
Interest rate payable, description | The Company entered into an Amendment of Notes Agreement (the "Amendment Agreement") with Trinad Capital pursuant to which the maturity date of all of the Company's 6% unsecured convertible notes was extended to May 31, 2019. In consideration of the maturity date extension, the interest rate payable under the notes was increased from 6.0% to 7.5% beginning on April 1, 2018, and the aggregate amount of accrued interest due under all of the Trinad Notes as of March 31, 2018 of $0.3 million was paid. | |||||
Convertible Notes Payable A [Member] | ||||||
Unsecured Convertible Notes (Textual) | ||||||
Principal amount | $ 3,600 | |||||
First Trinad Note [Member] | ||||||
Unsecured Convertible Notes (Textual) | ||||||
Principal amount | 4,100 | |||||
Accrued interest | $ 500 | |||||
Unsecured Convertible Promissory Note [Member] | ||||||
Unsecured Convertible Notes (Textual) | ||||||
Interest rate payable, description | The Company has performed a fair value analysis using a binomial lattice calculation on the event of default derivative instrument using the following assumptions. Coupon Rate: 8.0%, Term: 2.0 years, Volatility: 100.0%, Market Rate: 27.7% and Probability of Default: 33.1%. The Company determined that at issuance, the fair value of the instruments was $0.1 million. The Company has recorded the fair value of the derivatives and corresponding debt discount within the unsecured convertible notes payable on the Company’s consolidated balance sheet. | The Company performed a fair value analysis using a binomial lattice calculation on the derivative instruments using the following assumptions: Coupon Rate: 8.0%, Term: 1.60 years, Volatility: 99.7%, Market Rate: 34.9% and Probability of Default: 41.23%. The Company determined that as of the assessment date, the fair value is $0.1 million. The change in fair value of less than $0.1 million is recorded in other income (expense) on the Company's consolidated statements of operations for the three months ended June 30, 2020. | ||||
Unsecured Convertible Promissory Note, description | React Presents issued a two-year $2.0 million Convertible Promissory Note (the “Note”), bearing annual interest at 8%. The purpose of the Note was to fund the acquisition of React Presents. All unpaid and outstanding principal and any unpaid and accrued interest are due on February 5, 2022. The Note is convertible by the holder at any time prior to maturity in part or in whole with the unpaid interest and principal convertible at a conversion price equal to $4.50 per share of the Company’s common stock, subject to certain protective adjustments. |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
Chief Executive Officer [Member] | ||
Related Party Transactions (Textual) | ||
Due to related parties | $ 0 | $ 0 |
Leases (Detail)
Leases (Detail) $ in Thousands | 3 Months Ended |
Jun. 30, 2020USD ($) | |
Leases [Abstract] | |
Fixed rent cost | $ 23 |
Short term lease cost | 88 |
Total operating lease cost | $ 111 |
Leases (Details 1)
Leases (Details 1) - Leases [Member] $ in Thousands | Jun. 30, 2020USD ($) |
Operating lease right-of-use assets | $ 107 |
Total operating lease right-of-use assets | 107 |
Operating lease liability, current | 84 |
Operating lease liability, noncurrent | 23 |
Total operating lease liabilities | $ 107 |
Leases (Detail 2)
Leases (Detail 2) $ in Thousands | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
2021 (remaining nine months) | $ 70 |
2022 | 47 |
Total lease payments | 117 |
Less: imputed interest | (10) |
Present value of operating lease liabilities | $ 107 |
Leases (Details Textual)
Leases (Details Textual) $ in Thousands | May 01, 2019USD ($) | Jun. 30, 2020USD ($)ft² | Jun. 30, 2019USD ($) |
Leases (Textual) | |||
Lease agreement expires date | Mar. 31, 2022 | ||
Operating lease right-of-use assets | $ 200 | ||
Borrowing rate | 12.75% | ||
Operating lease rental expenses, description | The Company compensates the landlord in cash at the rate of approximately $40 thousand per month for months that the Company occupies the space, provided, that the Company and the temporary trustee of landlord’s assets agreed that such payments shall be $22.4 thousand per month for the months of December 2019 and January 2020. The Company or the third party has the right to terminate the arrangement at any time without prior notice. Rent expense for the month to month arrangements totaled less than $0.1 million for the three month period ended June 30, 2020 and $0.1 million for the three month period ended June 30, 2019. | ||
Office space | ft² | 5,200 | ||
Monthly rent | $ 20 | $ 38 | |
Operating lease expiring term | 1 year 6 months | ||
Remaining lease commitments | $ 200 | ||
Slacker Inc [Member] | |||
Leases (Textual) | |||
Lease agreement expires date | Dec. 31, 2020 | ||
Rental expense for operating leases | $ 100 | $ 100 | |
React Presents [Member] | |||
Leases (Textual) | |||
Lease agreement expires date | Oct. 9, 2020 | ||
Rental expense for operating leases | $ 100 | ||
October 1, 2019 [Member] | |||
Leases (Textual) | |||
Monthly rent | $ 14 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Aug. 31, 2020 | Apr. 20, 2020 | Feb. 22, 2018 | Feb. 08, 2018 | Jun. 30, 2020 | Dec. 31, 2016 | Apr. 10, 2018 | |
Commitments and Contingencies (Textual) | |||||||
Plaintiffs seeking damages | $ 200 | ||||||
Contractual obligation for the fiscal year ended March 31, 2021 | $ 10,200 | ||||||
Contractual obligation for the fiscal year March 31, 2022 | 900 | ||||||
Contractual obligation for the fiscal year March 31, 2023 | $ 100 | ||||||
Description of settlement agreement | Pursuant to the terms of the settlement agreement, as a result of the note due to Manatt described above having not been paid as of June 30, 2019 and is currently being past due, in August 2019, Manatt obtained a judgement in the Court of Chancery of the State of Delaware against the Company for the amount of $0.3 million, which represents principal and all accrued and unpaid interest on the note through July 5, 2019. The judgement amount will continue to accrue interest at the 6% applicable rate from July 6, 2019 through the date of the judgment’s satisfaction in full. | ||||||
License payments | $ 7,700 | ||||||
Subsequent Event [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
License payments | $ 10,000 | ||||||
Joseph Schnaier [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Plaintiffs seeking damages | $ 26,700 | ||||||
Ownership percentage | 90.00% | ||||||
Third Parties [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Legal settlement expenses | $ 0 | ||||||
Acquisition Agreements [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Business acquisition, description | The Company has licenses, production and/or distribution agreements to make guaranteed payments as follows: $2.2 million for the fiscal year ending March 31, 2021, $2.0 million for the fiscal year ending March 31, 2022 and $0.9 million for the fiscal year ending March 31, 2023. These agreements also provide for a revenue share that ranges between 35% and 50% of net revenues. In addition, there are other licenses, production and/or distribution agreements that provide for a revenue share of 50% on net revenues; however, without a requirement to make future minimum guaranteed payments irrespective to the execution and results of the planned events. | ||||||
Employment Agreements [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Total damages claim amount | $ 600 | ||||||
Prepaid minimum guarantees | $ 1,250 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) | 3 Months Ended |
Jun. 30, 2020 | |
Employee Benefit Plan (Textual) | |
Defined contribution plan, description | The Company may make discretionary matching contributions to the 401(k) Plan on behalf of its employees up to a maximum of 100% of the participant's elective deferral up to a maximum of 5% of the employees' annual compensation. The Company made matching contributions of less than $0.1 million to the 401(k) Plan for the three month periods ended June 30, 2020 and 2019. |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) - Warrant [Member] | 3 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Option Indexed to Issuer's Equity [Line Items] | |
Number of Warrants, Granted | shares | |
Number of Warrants, Exercised | shares | |
Number of Warrants, Forfeited or expired | shares | |
Number of Warrants, Balance outstanding | shares | 167,363 |
Number of Warrants, Exercisable | shares | 167,363 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited or expired | $ / shares | |
Weighted Average Exercise Price, Balance outstanding | $ / shares | 4.01 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 4.01 |
Weighted Average Remaining Contractual Life (in Years), Balance outstanding | 11 months 8 days |
Weighted Average Remaining Contractual Life (in Years), Balance outstanding | 8 months 9 days |
Weighted Average Remaining Contractual Life (in Years), Exercisable | 8 months 9 days |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jul. 25, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2020 | |
Stockholders' Deficit (Textual) | ||||
Preferred stock, authorized | 10,000,000 | 10,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Sale of common stock shares | 5,000,000 | |||
Common stock price per share | $ 2.10 | |||
Common stock gross proceeds | $ 10,500 | |||
Common stock offering costs | $ 2,000 | |||
Consultants [Member] | ||||
Stockholders' Deficit (Textual) | ||||
Common restricted stock issued for services, value | $ 1,100 | $ 800 | ||
Common restricted stock issued for services, shares | 559,857 | 102,897 | ||
Expense related to restricted stock issuances | $ 1,500 | $ 200 | ||
Unrecognized compensation cost | 200 | |||
Intrinsic value of warrants outstanding and exercisable | 100 | |||
Accounts payable and accrued liabilities | $ 500 | |||
Guarantee payments and issued shares of common stock | 264,000 |
Business Segment and Geograph_2
Business Segment and Geographic Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Business Segment and Geographic Reporting (Textual) | ||
Total revenues | $ 10,507 | $ 9,498 |
One External Customer [Member] | Sales Revenue, Net [Member] | ||
Business Segment and Geographic Reporting (Textual) | ||
Concentration risk, percentage | 10.00% | |
OEM [Member] | ||
Business Segment and Geographic Reporting (Textual) | ||
Total revenues | $ 6,100 | $ 5,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
Level 1 [Member] | ||
Liabilities: | ||
Bifurcated embedded derivative on senior secured convertible debentures | ||
Bifurcated embedded derivative on unsecured convertible note payable | ||
Level 2 [Member] | ||
Liabilities: | ||
Bifurcated embedded derivative on senior secured convertible debentures | ||
Bifurcated embedded derivative on unsecured convertible note payable | ||
Level 3 [Member] | ||
Liabilities: | ||
Bifurcated embedded derivative on senior secured convertible debentures | 220 | 524 |
Bifurcated embedded derivative on unsecured convertible note payable | 74 | 141 |
Fair Value [Member] | ||
Liabilities: | ||
Bifurcated embedded derivative on senior secured convertible debentures | 220 | 524 |
Bifurcated embedded derivative on unsecured convertible note payable | $ 74 | $ 141 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 1) - Fair Value [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Balance as of March 31, 2020 | $ 665 | $ 586 |
Total fair value adjustments reported in earnings | (371) | (162) |
Balance as of June 30, 2020 | $ 294 | $ 424 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 2) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2020 | |
Bifurcated embedded derivative on senior secured convertible debentures | |||
Market yield | 21.90% | 27.40% | |
Bifurcated embedded derivative on unsecured convertible note payable pricing model): | |||
Market yield | 34.90% | 43.90% |
Fair Value Measurements (Deta_4
Fair Value Measurements (Details 3) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 |
Assets: | ||
Cash and cash equivalents | $ 10,391 | $ 5,702 |
Restricted cash | 6,735 | 6,735 |
Level 1 [Member] | ||
Assets: | ||
Cash and cash equivalents | 10,391 | 5,702 |
Restricted cash | 6,735 | 6,735 |
Liabilities: | ||
Notes payable | ||
Senior secured convertible debentures, net | ||
Unsecured convertible notes payable related party, net | ||
Unsecured convertible notes payable, net | ||
Level 2 [Member] | ||
Assets: | ||
Cash and cash equivalents | ||
Restricted cash | ||
Liabilities: | ||
Notes payable | ||
Senior secured convertible debentures, net | ||
Unsecured convertible notes payable related party, net | ||
Unsecured convertible notes payable, net | ||
Level 3 [Member] | ||
Assets: | ||
Cash and cash equivalents | ||
Restricted cash | ||
Liabilities: | ||
Notes payable | 2,484 | 331 |
Senior secured convertible debentures, net | 9,131 | 9,254 |
Unsecured convertible notes payable related party, net | 7,454 | 4,451 |
Unsecured convertible notes payable, net | 1,915 | 1,338 |
Carrying Value [Member] | ||
Assets: | ||
Cash and cash equivalents | 10,391 | 5,702 |
Restricted cash | 6,735 | 6,735 |
Liabilities: | ||
Notes payable | 2,484 | 331 |
Senior secured convertible debentures, net | 7,749 | 8,701 |
Unsecured convertible notes payable related party, net | 5,206 | 5,114 |
Unsecured convertible notes payable, net | $ 1,645 | $ 1,539 |
Fair Value Measurements (Deta_5
Fair Value Measurements (Details 4) | 3 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Mar. 31, 2020 | |
Unsecured Convertible Notes Related Party [Member] | ||
Market yield | 21.90% | 27.40% |
Unsecured convertible notes payable related party, net (yield model with a Black-Scholes-Merton option pricing model): | ||
Market yield | 32.40% | 41.60% |
Unsecured convertible note payable (yield model with a Black-Scholes-Merton option pricing model): | ||
Market yield | 34.90% | 43.90% |
Fair Value Measurements (Deta_6
Fair Value Measurements (Details Textual) $ in Thousands | 3 Months Ended |
Jun. 30, 2020USD ($) | |
Fair Value Measurements (Textual) | |
Fair value of other income (expense) | $ 400 |
Fair value of derivative instrument on convertible debentures | $ 300 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - shares | 1 Months Ended | |||
Aug. 31, 2020 | Jul. 31, 2020 | Jul. 31, 2020 | Jul. 03, 2020 | |
Percentage of acquired | 100.00% | 100.00% | ||
Issuance of shares | 5,363,636 | 5,363,636 | ||
Outstanding equity interest, percentage | 100.00% | 100.00% | ||
Convertible note, description | The Company agreed to sell, in a private placement transaction, for a cash purchase price of $15.0 million, the Company's 8.5% Subordinated Secured Convertible Note in the principal amount of $15.0 million. In addition, on the closing date of the transaction (the "Closing Date"), the Company agreed to issue to the Purchaser 800,000 shares, as amended, of its common stock (the "Shares"). Subject to satisfaction of closing conditions, the Note and the Shares will be issued in a private placement transaction exempt from the registration requirements of the Securities Act of 1933, as amended. If the transaction is consummated, the note shall mature on the second anniversary of the Closing Date, accrue interest at 8.5% per year, payable quarterly in cash in arrears, and shall be convertible into shares of common stock at a conversion price of $4.50 per share at the Purchaser's option, subject to certain customary adjustments such as stock splits, stock dividends and stock combinations. | |||
Subsequent events, description | The Company agreed to issue MBRG Investors, LLC as the designee of the landlord 95,436 shares of its freely-tradable common stock (the "Shares"), at a price per share of $4.14, in full satisfaction of the Company's payment obligation of approximately $395,000 to the landlord. | The Company issued directly to a certain institutional investor and another investor a total of 1,820,000 shares of the Company's common stock for cash consideration of approximately $7.5 million at a price per share of $4.14. The Company intends to use the net proceeds for repayment of debt of up to $5.0 million, working capital and general corporate purposes. | ||
Music licensor [Member] | ||||
Subsequent events, description | The Company issued to a certain music licensor 2,415,459 shares (the "Shares") of its common stock at a price of $4.14 per share, to satisfy the Company's payment obligation in the amount of $10.0 million owed to such music licensor |