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Unsecured Convertible Notes
 9 Months Ended
Dec. 31, 2022
Debt Disclosure [Abstract]  
Unsecured Convertible Notes

Note 10 — Unsecured Convertible Notes

 

Unsecured Convertible Notes – Related Party 

 

The Company’s unsecured convertible notes payable at December 31, 2022 and March 31, 2022 were as follows (in thousands): 

 

   December 31,
2022		   March 31,
2022		 
Unsecured Convertible Notes - Related Party        
8.5% Unsecured Convertible Note - Due July 1, 2024  $4,931   $4,702 
8.5% Unsecured Convertible Notes - Due July 1, 2024   1,234    1,177 
Less: Discount   (585)   
-
 
Net   5,580    5,879 
Less: Unsecured Convertible Notes, Current   
-
    
-
 
Unsecured Convertible Notes, Net, Long-term  $5,580   $5,879 

 

The Company incurred interest expense of $0.2 million and $0.2 million attributed to its unsecured convertible notes for the three months ended December 31, 2022 and 2021, respectively. The Company incurred interest expense of $0.7 million and $0.6 million attributed to its unsecured convertible notes for the nine months ended December 31, 2022 and 2021, respectively. Total principal maturities of the Company’s unsecured convertible notes are $6.1 million for the year ending March 31, 2024.

 

As of December 31, 2022 and March 31, 2022, the Company had outstanding 8.5% 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 discussed below. The Trinad Notes are convertible into shares of the Company’s common stock at a fixed conversion price of $3.00 per share.

 

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, 2023, and in July 2022 the Trinad Notes were extended until July 1, 2024. At December 31, 2022, the balance due of $6.0 million, which included $1.5 million of accrued interest, was outstanding under the first Trinad Note. At March 31, 2022, the balance due of $5.9 million, which included $1.4 million of accrued interest, was outstanding under the first Trinad Note.

 

Between October 27, 2017 and December 18, 2017, the Company issued nine unsecured convertible notes payable to Trinad Capital for aggregate total principal amount of $1.1 million and were charged an 8.5% interest rate. The notes were due on various dates through December 31, 2018 and were extended to May 31, 2023. As of December 31, 2022 and March 31, 2022, $0.3 million and $0.3 million of accrued interest was included in the principal balance, respectively. 

 

On August 11, 2021, 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 Trinad Notes was extended to May 31, 2023, and in consideration of such extension, the Company issued to Trinad Capital 33,654 shares of its restricted common stock. The Company evaluated the Amendment Agreement and the amendment was required to be accounted for as an extinguishment under ASC 470-50, Debt – Modifications and Extinguishment. The resulting loss on extinguishment recorded of $4.3 million is included in loss on extinguishment of debt in the Company’s condensed consolidated statement of operations for the year ended March 31, 2022. In addition, the Company recorded a $4.2 million benefit to additional paid in capital as a result of the excess of the deemed fair value of the Trinad Notes over the principal and accrued interest outstanding at the time of extinguishment.

 

In July 2022, the Company entered into an amendment with Trinad Capital pursuant to which the maturity date of all of the Trinad Notes was extended to July 1, 2024, and in consideration of such extension, the Company issued to Trinad Capital 500,000 shares of the Company’s restricted common stock. The Company evaluated the Amendment Agreement and the amendment was not required to be accounted for as a TDR under ASC 470-60 as no concession was granted to the Company. The Company then evaluated the Amendment Agreement and the amendment was not required to be accounted for as an extinguishment under ASC 470-50, Debt – Modifications and Extinguishment. The Company recorded the debt as a modification and recorded the derivative associated with the conversion feature as a debt discount. The Company determined the value of the derivative to be $0.2 million using the Black-Scholes option pricing model based on the following assumptions: common share price of $0.71 per share; expected exercise price of $3.00 per share; volatility of 84.8%; expected dividend yield of zero; and annual risk-free interest rate of 4.09%. The derivative has been recorded within other long-term liabilities on the consolidated balance sheet.

 

The Company may not redeem any of the Trinad Notes prior to maturity without Trinad Capital’s consent.

 

In February 2023, the Trinad Notes along with accrued interest thereunder were exchanged for the Company’s Series A Preferred Stock (as defined below) in addition to 200,000 shares of the Company’s common stock issued by the Company to Trinad Capital (See Note 21 – Subsequent Events).

 

Unsecured Convertible Promissory Note

 

On February 5, 2020, React Presents issued a two-year $2 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 was due on February 5, 2022. At issuance, the Note was 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.

  

 Effective December 31, 2021, the Note holder converted the Note in whole pursuant to an exchange agreement entered into during the year ended March 31, 2022, which provided for an exchange of the Note into shares of the Company’s common stock at a price of $2.10 per share, resulting in 1,155,143 shares issued upon the exchange. As a result of the effective exchange incentives offered to the Note holder, the Company recorded a $0.8 million expense to Other Income (expense) in the condensed consolidated statement of operations for the year ended March 31, 2022.