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Stockholders' Deficit

12 Months Ended

Mar. 31, 2020

Equity [Abstract]

Stockholders' Deficit

Note 15 — Stockholders' Deficit

The Company's board of directors and stockholders approved the Company's 2016 Equity Incentive Plan, as amended (the "2016 Plan") which reserves a total of 12,600,000 shares of the Company's common stock for issuance. Incentive awards authorized under the 2016 Plan include, but are not limited to, nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and stock appreciation rights. If an incentive award granted under the 2016 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to the Company in connection with the exercise of an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2016 Plan.

The maximum contractual term for awards is 10 years. As of March 31, 2020, there were 2,446,270 shares of common stock available for future issuance under the 2016 Plan.

Options Grants to Employees

The Company recognized share-based compensation expense to employees of $2.5 million and $7.2 million during the years ended March 31, 2020 and 2019, respectively. The total tax benefit recognized related to this share-based compensation expense to employees was $0 for the years ended March 31, 2020 and 2019. As of March 31, 2020, unrecognized compensation costs for unvested awards to employees was $1.1 million, which is expected to be recognized over a weighted-average period of 7.8 years on an accelerated basis.

The following table provides information about our option grants made to employees during the last two fiscal years:

		Year Ended March 31,
		2020				2019
Number of options granted			195,000				1,237,500
Weighted-average exercise price per share		$	2.39			$	4.63
Weighted-average grant date fair value per share		$	1.14			$	2.23

The grant date fair value of each of these option grants to employees was determined using the Black-Sholes-Merton option-pricing model with the following assumptions:

		Year Ended March 31,
		2020					2019
Expected volatility			47.79%-50.62	%				47.43%-52.30	%
Dividend yield			0.00	%				0.00	%
Risk-free rate			0.37%-1.88	%				2.52%-2.96	%
Expected term (in years)			5.50-7.00					5.10-7.00

The following table summarizes the activity of our options issued to employees during the years ended March 31, 2020 and 2019:

		Number of Shares				Weighted- Average Exercise Price per Share
Outstanding as of April 1, 2018			3,800,001			$	4.10
Granted			1,237,500				4.63
Exercised			-				-
Forfeited or expired			(157,500	)			5.49
Outstanding as of March 31, 2019			4,880,001				3.95
Granted			195,000				2.39
Exercised			-				-
Forfeited or expired			(671,667	)			4.87
Outstanding as of March 31, 2020			4,403,334				3.74
Exercisable as of March 31, 2020			3,217,091				3.79

The weighted-average remaining contractual term for options to employees outstanding and options to employees exercisable as of March 31, 2020 was 7.8 years and 7.8 years, respectively. The intrinsic value of options to employees outstanding and options to employees exercisable was $4.4 million and $3.2 million, respectively, at March 31, 2020.

Options Grants to Non-Employees

The Company recognized share-based compensation expense to non-employees of less than $0.1 million and $0.1 million during the years ended March 31, 2020 and 2019, respectively. The total tax benefit recognized related to this share-based compensation expense to non-employees was $0 for the years ended March 31, 2020 and 2019. As of March 31, 2020, there were no unrecognized compensation costs for unvested awards to non-employees. There were no option grants to non-employees for the last two fiscal years.

The following table summarizes the activity of our options issued to non-employees during the years ended March 31, 2020 and 2019:

		Number of Shares				Weighted- Average Exercise Price per Share
Outstanding as of April 1, 2018			101,667			$	4.00
Granted			-				-
Exercised			-				-
Forfeited or expired			-				-
Outstanding as of March 31, 2019			101,667				4.00
Granted			-				-
Exercised			-				-
Forfeited or expired			(76,667	)			4.00
Outstanding as of March 31, 2020			25,000				4.00
Exercisable as of March 31, 2020			25,000				4.00

The weighted average remaining contractual term for options to non-employees outstanding as of March 31, 2020 was 7.9 years. The intrinsic value of options to non-employees outstanding and options to non-employees exercisable was $0 at March 31, 2020.

Restricted Stock Units Grants

The Company recognized share-based compensation expense to employees of $5.4 million and $2.1 million during the years ended March 31, 2020 and 2019, respectively. Compensation expense resulting from restricted stock unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. The total tax benefit recognized related to this share-based compensation expense to employees was $0 for the years ended March 31, 2020 and 2019. As of March 31, 2020, unrecognized compensation costs for unvested awards to employees was $6.7 million, which is expected to be recognized over a weighted-average period of 1.8 years on an accelerated basis.

The following table provides information about our restricted stock units grants made to employees during the last two fiscal years:

		Year Ended March 31,
		2020				2019
Number of units granted			4,008,306				1,377,391
Weighted-average grant date fair value per share		$	2.12			$	4.64

The following table summarizes the activity of our restricted stock units issued to employees during the years ended March 31, 2020 and 2019:

		Number of Shares
Outstanding as of April 1, 2018			-
Granted			1,337,391
Vested			-
Cancelled			-
Outstanding as of March 31, 2019			1,337,391
Granted			4,008,306
Vested			(761,583	)
Cancelled			(93,409	)
Outstanding as of March 31, 2020			4,530,705

Restricted Stock Awards

The Company recognized share-based compensation expense to employees of less than $0.1 million and $0 million during the years ended March 31, 2020 and 2019, respectively. Compensation expense resulting from restricted stock award grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. The total tax benefit recognized related to this share-based compensation expense to employees was $0 for the years ended March 31, 2020 and 2019. As of March 31, 2020, unrecognized compensation costs for unvested awards to employees was $0.1 million, which is expected to be recognized over a weighted-average period of 0.9 years on an accelerated basis.

The following table summarizes the activity of our restricted stock awards made to employees during the years ended March 31, 2020 and 2019:

		Number of Shares
Outstanding as of March 31, 2019			-
Granted			24,675
Vested			-
Cancelled			-
Outstanding as of March 31, 2020			24,675

The weighted average grant date fair value per share of awards issued during the year ended March 31, 2019 was $4.05.

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 the 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 costs totaling $1.0 million paid by the Company.

Issuance of Restricted Shares of Common Stock to Consultants and Vendors

During the years ended March 31, 2020 and 2019, the Company issued 1,709,146 and 449,374 restricted shares of its common stock valued at $4.2 million and $2.2 million, respectively, to certain Company consultants and vendors. During the year ended March 31, 2020 and 2019, the Company recorded $3.3 million and $3.1 million, respectively, of expense related to the restricted stock issuances.

During the quarter ended September 30, 2019, Slacker entered into an amendment to an existing agreement with a certain licensor of music content (the "Music Partner") which owns and licenses rights to Slacker to certain sound recordings. Pursuant to this amendment the Company issued the Music Partner $0.4 million in restricted shares of the Company's common stock, at a price of approximately $4.51 per share, as full payment of certain amounts due under such agreement.

The Company evaluated this agreement and it was required to be accounted for as troubled debt restructuring under ASC 470-60, Troubled Debt Restructurings by Debtors. There were no material adjustments required as a result.

Issuance of Restricted Shares of Common Stock for Services to Employees

During each of the years ended March 31, 2020 and 2019, the Company issued 0 shares of its common stock to certain employees. During the year ended March 31, 2020 and 2019, the Company recorded less than $0.1 million and $0.5 million, respectively, of expense related to the previous stock issuances. As of March 31, 2020, there was no remaining unrecognized compensation cost.

Additional details of the Company's issuances of its restricted common stock to employees during the years ended March 31, 2020 and 2019 are as follows:

		Number of Shares				Weighted- Average Grant Date Fair Value per Share
Non-vested as of March 31, 2018			187,500			$	5.01
Granted			-				-
Vested			(172,222	)			5.01
Forfeited or expired			-
Non-vested as of March 31, 2019			15,278				5.01
Granted			-
Vested			(15,278	)			5.01
Forfeited or expired			-				-
Non-vested as of March 31, 2020			-				-

Warrants

The table below summarizes the Company's warrant activities:

		Number of Warrants				Weighted Average Exercise Price				Weighted- Average Remaining Contractual Term (in years)
Balance outstanding, April 1, 2018		167,363				$4.01				2.94
Granted			-				-				-
Exercised			-				-				-
Forfeited/expired			-				-				-
Balance outstanding, March 31, 2019			167,363				4.01				1.94
Granted			-				-				-
Exercised			-				-				-
Forfeited/expired			-				-				-
Balance outstanding, March 31, 2020			167,363				4.01				0.94
Exercisable, March 31, 2020			167,363				4.01				0.94

At March 31, 2020, the intrinsic value of warrants outstanding and exercisable was $0.2 million.

Authorized Common Stock and Creation of Preferred Stock

The Company has the authority to issue up to 501,000,000 shares, consisting of 500,000,000 shares of the Company's common stock and 1,000,000 shares of the Company's preferred stock, $0.001 par value per share (the "preferred stock").

The Company may issue shares of preferred stock from time to time in one or more series, each of which will have such distinctive designation or title as shall be determined by the Company's board of directors and will have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issue of such class or series of preferred stock as may be adopted from time to time by the Company's board of directors. The Company's board of directors will have the power to increase or decrease the number of shares of preferred stock of any series after the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased, the shares constituting such decrease will resume the status of authorized but unissued shares of preferred stock.

While the Company does not currently have any plans for the issuance of preferred stock, the issuance of such preferred stock could adversely affect the rights of the holders of common stock and, therefore, reduce the value of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the common stock until and unless the Company's board of directors determines the specific rights of the holders of the preferred stock; however, these effects may include: restricting dividends on the common stock, diluting the voting power of the common stock, impairing the liquidation rights of the common stock, or delaying or preventing a change in control of the Company without further action by the stockholders.