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Unsecured Convertible Notes

9 Months Ended

Dec. 31, 2020

Long-term Debt, Unclassified [Abstract]

Unsecured Convertible Notes

Note 10 — Unsecured Convertible Notes

The Company's unsecured convertible notes payable at December 31, 2020 and March 31, 2020 were as follows (in thousands):

		December 31,				March 31,
		2020				2020
Unsecured Convertible Notes - Related Party
(A) 7.5% Unsecured Convertible Note - Due May 31, 2021		$	4,322			$	4,120
(B) 7.5% Unsecured Convertible Notes - Due May 31, 2021			1,086				1,035
Less: Discount			(15	)			(41	)
Net			5,393				5,114

Unsecured Convertible Promissory Note		$	2,000			$	2,000
Accrued Interest			144				24
Less: Discount			(287	)			(485	)
Fair Value of Embedded Derivatives			30				141
Net			1,887				1,680
Unsecured Convertible Notes, Net			7,280				6,794
Less: Unsecured Convertible Notes, Current			-				-
Unsecured Convertible Notes, Net, Long-term		$	7,280			$	6,794

Total principal maturities of the Company's long-term borrowings, including the senior secured convertible notes, unsecured convertible notes, and notes payable are $0.9 million for the year ending March 31, 2021 (remaining three months), $3.7 million for the year ending March 31, 2022 and $19.6 million for the year ending March 31, 2023. 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 December 31, 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 December 31, 2020, the balance due of $4.3 million, which included $0.8 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 nine months ended December 31, 2020, the Company amortized less than $0.1million of discount to interest expense, and the unamortized discount as of December 31, 2020 was less than $0.1 million. As of December 31, 2020, $0.3 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 pursuant to 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 as it had been determined that there was substantial doubt about the Company's ability to continue as a going concern and Trinad Capital granted the Company a concession, as the effective interest rate of the amended Note is less than that of the original Trinad Notes.

On January 11, 2021, the Company entered into an additional Amendment of Notes Agreement (the "Third Amendment Agreement") with Trinad Capital pursuant to which the maturity dates of all of the Trinad Notes were extended to May 31, 2022, and in consideration of such extension, the interest rate payable under such notes increased to 8.5%, and the Company agreed to issue to Trinad Capital 280,000 shares of its common stock. Accordingly, these notes have been classified as long-term as of December 31, 2020 on the Company's balance sheet. The Company may not redeem any of the Trinad Notes prior to May 31, 2022 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 "Unsecured Note"), bearing annual interest at 8%. The purpose of the Unsecured Note was to fund the acquisition of React Presents. All unpaid and outstanding principal and any unpaid and accrued interest is due on February 5, 2022. The Unsecured 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 Unsecured 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 Unsecured Note and has determined that it includes two derivative instruments which are bifurcated from the underlying unsecured convertible notes relating to provisions around an event of default and change of control. The Company 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 derivative instruments were $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 accompanying condensed consolidated balance sheet.

At December 31, 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: 1.1 years, Volatility: 102.7%, Market Rate: 31.2% and Probability of Default: 36.45%. The Company determined that as of the assessment date, the fair value is less than $0.1 million. The change in fair value of $0.1 million is recorded in other income (expense) on the accompanying condensed consolidated statements of operations for the nine months ended December 31, 2020.