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Temporary Equity (FaceBank Group, Inc. Pre-Merger)
 3 Months Ended 9 Months Ended 12 Months Ended
Mar. 31, 2020
Sep. 30, 2020
Dec. 31, 2019
Temporary Equity  
16. Temporary Equity

 

Series D Convertible Preferred Stock

 

On March 6, 2020, the Company (i) entered into a stock purchase agreement to issue 203,000 shares of its Series D Preferred Stock, for proceeds of $203,000 and (ii) during the nine months ended September 30, 2020 the Company redeemed 682,000 shares of Series D Preferred Stock in exchange for approximately $0.9 million.

  

The following table summarizes the Company’s Series D Preferred Stock activities for the three and nine months ended September 30, 2020 (dollars in thousands):

 

    Series D Preferred Stock  
    Shares     Amount  
Total temporary equity as of December 31, 2019     461,839     $ 462  
Issuance of Series D convertible preferred stock for cash     203,000       203  
Offering cost related to issuance of Series D convertible preferred stock     -       (3 )
Deemed dividends related to immediate accretion of offering cost     -       3  
Accrued Series D preferred stock dividends     17,198       17  
Bifurcated redemption feature of Series D convertible preferred stock     -       (171 )
Deemed dividends related to immediate accretion of bifurcated redemption feature of Series D convertible preferred stock     -       171  
Redemption of Series D preferred stock (including accrued dividends)     (682,037 )     (682 )
Total temporary equity as of September 30, 2020     -     $ -  

 

The redemption of the 659,000 shares of Series D Preferred Stock (amounts in thousands except share and per share values):

 

Series D preferred stock issued     659,000  
Per share value   $ 1.00  
Series D preferred stock value   $ 659  
Accrued dividends   $ 23  
Total Series D preferred stock   $ 682  
Redemption percentage   $ 1.29  
Total redemption   $ 880  

 

Holders of shares of the Series D Preferred Stock were entitled to receive, cumulative cash dividends at the rate of 8% on $1.00 per share of the Series D Preferred Stock per annum (equivalent to $0.08 per annum per share), subject to adjustment. The dividends were payable solely upon redemption, liquidation or conversion.

 

The Series D Preferred Stock was classified as temporary equity because it had redemption features that were outside of the Company’s control upon certain triggering events, such as a Market Event. A “Market Event” is defined as any trading day during the period which shares of the Series D Preferred Stock are issued and outstanding, where the trading price for such date is less than $0.35. In the event of a Market Event, the Series D Preferred Stock shall be subject to mandatory redemption and the stated value shall immediately be increased to $1.29 per share of Series D Preferred Stock. The Market Event was considered to be outside the control of the Company, resulting in classification of the Series D Preferred Stock as temporary equity.

 

The initial discounted carrying value resulted in recognition of a bifurcated redemption feature of $0.2 million, further reducing the initial carrying value of the shares of Series D Preferred Stock. The discount to the aggregate stated value of the shares of Series A Convertible Preferred Stock, resulting from recognition of the bifurcated redemption feature was immediately accreted as a reduction of additional paid-in capital and an increase in the carrying value of the Series D Shares. The accretion is presented in the condensed consolidated statement of operations as a deemed dividend, increasing net loss to arrive at net loss attributable to common stockholders.

 

As of September 30, 2020, all of the shares of Series D Preferred Stock have been redeemed by the Company and there will be no future issuances.

  
FaceBank Group, Inc Pre-Merger [Member]      
Temporary Equity

Note 12 – Temporary Equity

 

Series D Convertible Preferred Stock

 

On March 6, 2020, the Company (i) entered into a stock purchase agreement to issue 203,000 shares of its Series D Preferred Stock, for proceeds of $203,000 and (ii) redeemed the 203,000 shares of Series D Preferred Stock previously issued on September 6, 2019. As a result, the total number of shares of Series D Preferred Stock outstanding as of March 31, 2020 was 456,000 (see Note 17).

 

The following table summarizes the Company’s Series D Preferred Stock activities for the three months ended March 31, 2020 (dollars in thousands):

 

    Series D Preferred Stock  
    Shares     Amount  
Total temporary equity as of December 31, 2019     461,839     $ 462  
Issuance of Series D convertible preferred stock for cash     203,000       203  
Offering cost related to issuance of Series D convertible preferred stock     -       (3 )
Deemed dividends related to immediate accretion of offering cost     -       3  
Accrued Series D preferred stock dividends     8,868       9  
Bifurcated redemption feature of Series D convertible preferred stock     -       (171 )
Deemed dividends related to immediate accretion of bifurcated redemption feature of Series D convertible preferred stock     -       171  
Redemption of Series D preferred stock (including accrued dividends)     (210,831 )     (211 )
Total temporary equity as of March 31, 2020     462,876     $ 463  

 

The redemption of the 203,000 shares of Series D Preferred Stock (previously issued on September 6, 2019) on March 6, 2020 occurred as follows (amounts in thousands except share and per share values):

 

Series D preferred stock issued     203,000  
Per share value   $ 1.00  
    $ 203  
Accrued dividends   $ 8  
    $ 211  
Redemption percentage   $ 1.29  
Total   $ 272  

 

Holders of shares of the Series D Preferred Stock are entitled to receive, cumulative cash dividends at the rate of 8% on $1.00 per share of the Series D Preferred Stock per annum (equivalent to $0.08 per annum per share), subject to adjustment. The dividends are payable solely upon redemption, liquidation or conversion. The Company recorded approximately $9,000 accrued dividend as of March 31, 2020.

 

The Series D Preferred Stock is being classified as temporary equity because it has redemption features that are outside of the Company’s control upon certain triggering events, such as a Market Event. A “Market Event” is defined as any trading day during the period which shares of the Series D Preferred Stock are issued and outstanding, where the trading price for such date is less than $0.35. In the event of a Market Event, the Series D Preferred Stock shall be subject to mandatory redemption and the stated value shall immediately be increased to $1.29 per share of Series D Preferred Stock. The Market Event is considered to be outside the control of the Company, resulting in classification of the Series D Preferred Stock as temporary equity.

 

The initial discounted carrying value resulted in recognition of a bifurcated redemption feature of $171,000, further reducing the initial carrying value of the shares of Series D Preferred Stock. The discount to the aggregate stated value of the shares of Series A Convertible Preferred Stock, resulting from recognition of the bifurcated redemption feature was immediately accreted as a reduction of additional paid-in capital and an increase in the carrying value of the Series D Shares. The accretion is presented in the condensed consolidated statement of operations as a deemed dividend, increasing net loss to arrive at net loss attributable to common stockholders.

  

Note 13 – Temporary Equity

 

Series D Convertible Preferred Stock

 

The following table summarizes the Company’s Series D Convertible Preferred Stock activities for the year ended December 31, 2019 (dollars in thousands):

 

    Series D Preferred Stock  
    Shares     Amount  
Total temporary equity as of December 31, 2018     -     $ -  
Issuance of Series D convertible preferred stock for cash     709,000       709  
Offering cost related to issuance of Series D convertible preferred stock     -       (9 )
Deemed dividends related to immediate accretion of offering cost     -       9  
Accrued Series D preferred stock dividends     5,839       6  
Bifurcated redemption feature of Series D convertible preferred stock     -       (589 )
Deemed dividends related to immediate accretion of bifurcated redemption feature of Series D convertible preferred stock     -       589  
Redemption of Series D preferred stock     (253,000 )     (253 )
Total temporary equity as of December 31, 2019     461,839     $ 462  

 

During the year ended December 31, 2019, the Company entered into the following stock purchase agreements:

 

  ● On July 15, 2019, the Company issued 253,000 shares of its Series D Preferred Stock, for proceeds of $253,000;
  ● On September 6, 2019, the Company issued 203,000 shares of its Series D Preferred Stock, for proceeds of $203,000; and
  ● On December 19, 2019, the Company issued 253,000 shares of its Series D Preferred Stock, for proceeds of $253,000.

 

Holders of shares of the Series D Preferred Stock are entitled to receive, cumulative cash dividends at the rate of 8% on $1.00 per share of the Series D Preferred Stock per annum (equivalent to $0.08 per annum per share). The dividends are payable solely upon redemption, liquidation or conversion.

 

The Series D Preferred Stock is being classified as temporary equity because it has redemption features that are outside of the Company’s control upon certain triggering events, such as a Market Event. A “Market Event” is defined as any trading day during the period which shares of the Series D Preferred Stock are issued and outstanding, where the trading price for such date is less than $0.35. In the event of a Market Event, the Series D Preferred Stock shall be subject to mandatory redemption and the stated value shall immediately be increased to $1.29 per share of Series D Preferred Stock. The Market Event is considered to be outside the control of the Company, resulting in classification of the Series D Preferred Stock as temporary equity.

 

The initial discounted carrying value resulted in recognition of a bifurcated redemption feature of $589,000, further reducing the initial carrying value of the Series D Shares. The discount to the aggregate stated value of the Series A Shares, resulting from recognition of the bifurcated redemption feature was immediately accreted as a reduction of additional paid-in capital and an increase in the carrying value of the Series D Shares. The accretion is presented in the Consolidated Statement of Operations as a deemed dividend, increasing net loss to arrive at net loss attributable to common stockholders.

 

On December 19, 2019, the Company redeemed the 253,000 shares of its Series D preferred stock issued on July 15, 2019 as follows (amounts in thousands except share and per share values):

 

Series D preferred stock issued     253,000  
Per share value   $ 1.00  
    $ 253  
Accrued dividends   $ 9  
    $ 262  
Redemption percentage   $ 1.29  
Total   $ 337  

 

The Company recorded approximately $14,000 of accrued dividends as of December 31, 2019.