Stockholders' Equity

12 Months Ended

Mar. 31, 2023

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

4. STOCKHOLDERS’ EQUITY

COMMON STOCK

Authorized Common Stock

On June 7, 2023, the Company amended its Certificate of Incorporation to effect a 1:20 reverse stock split, which became effective on June 9, 2023 (the "Reverse Stock Split"). Proportionate adjustments were made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, as well as to the number of shares issuable under the Company’s equity incentive plans. The Reverse Stock Split did not affect the number of authorized shares of Common Stock or the par value of the Common Stock nor did it change the authorized shares of preferred stock or the relative voting power of such holders of our outstanding Common Stock and preferred stock. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would have otherwise been entitled to receive fractional shares as a result of the Reverse Stock Split were entitled to a cash payment in lieu thereof after the sale on the open market of the aggregated fractional shares by the exchange agent for the Reverse Stock Split. All shares and per share amounts discussed in these consolidated financial statements have been retrospectively adjusted for the Reverse Stock Split. The effects of the Reverse Stock Split have been retrospectively effected throughout this document, including but not limited to earnings per share.

On October 11, 2021, the Company filed an Amended and Restated Certificate of Incorporation which authorized an increase in the number of shares of Common Stock for issuance to 275 million shares.

During the year ended March 31, 2023, the Company issued 582 thousand shares of Common Stock in payment of preferred stock dividends, Board fees, payment of performance shares, pursuant to a business combinations, and the acquisition of intangible assets, after taking into account the June 2023 Reverse Stock Split.

During the year ended March 31, 2022, the Company issued 455 thousand shares of Common Stock which consist of the sale of shares of our Common Stock, issuance of Common Stock for business combinations, the issuances of Common Stock in payment of preferred stock dividends and in payment of board retainer fees, and as payment pursuant to a Stock Purchase Agreement, after taking into account the Reverse Stock Split.

ATM Sales Agreement

In July 2020, we entered into an At-the-Market sales agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) and B. Riley FBR, Inc. (“B. Riley” and, together with A.G.P., the “Sales Agents”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of Common Stock at the market prices prevailing on Nasdaq at the time of the sale of such shares. The Company is not obligated to sell any shares under the ATM Sales Agreement. Any sales of shares made under the ATM Sales Agreement will be made pursuant to the 2020 Shelf Registration Statement, for an aggregate offering price of up to $30 million.

During the year ended March 31, 2021, we sold 1.4 million shares of Common Stock under the ATM Sales Agreement, taking into account the Reverse Stock Split. Net proceeds from such sales totaled $18.6 million. No sales under the ATM Sales Agreement were made during the year ended March 31, 2023 or 2022. Subsequent to March 31, 2023, the Company sold 177 thousand shares of Common Stock under the ATM Sales Agreement for net proceeds of $1.1 million.

Common Stock Offering

On June 14, 2023, the Company agreed to sell its shares in a public offering, as further described in Note 9 - Subsequent Events.

Common Stock Purchase Agreement

In October 2021, we entered into a Common Stock Purchase Agreement (the “Equity Line Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”) with B. Riley Principal Capital, LLC (“B. Riley”). Pursuant to the Equity Line Purchase Agreement, the Company has the right to sell to B. Riley up to the lesser of (i) $50 million of newly issued shares of Common Stock and (ii) the Exchange Cap (as defined in the Equity Line Purchase Agreement), from time to time during the 24-month period from and after the October 21, 2021. Sales of Common Stock pursuant to the Equity Line Purchase Agreement, and the timing of any sales, are solely at the option of the Company, and the Company is under no obligation to sell any securities to B. Riley under the Equity Line Purchase Agreement. As consideration for B. Riley’s commitment to purchase shares of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the Equity Line Purchase Agreement, upon execution of the Equity Line Purchase Agreement, the Company issued 10.5 thousand shares of Common Stock to B. Riley (the “Commitment Shares”), taking into account the Reverse Stock Split. The purchase price of the shares of Common Stock that we elect to sell to B. Riley pursuant to the Equity Line Purchase Agreement will be determined by reference to the volume weighted average price of the Common Stock (“VWAP”) during the applicable purchase date, less a fixed 5% discount to such VWAP. Pursuant to the Registration Rights Agreement, the Company filed a Registration Statement on Form S-1 that was declared effective by the Securities and Exchange Commission on October 21, 2021 (File No. 333-260210) for the resale by B. Riley of up to 1.3 million shares of Common Stock (including the Commitment Shares) acquired pursuant to the Equity Line Purchase Agreement, taking into account the Reverse Stock Split. There were no sales under these agreements for the year ended March 31, 2023. As of March 31, 2023, there is still approximately $38.0 million available under the 2020 Shelf Registration Statement, and $37.6 million available under the Equity Line Purchase Agreement, to raise additional capital.

PREFERRED STOCK

Cumulative dividends in arrears on preferred stock were $0.1 million as of March 31, 2023 and 2022. For the years ended March 31, 2023 and 2022, we paid preferred stock dividends in the form of 37 thousand and 12 thousand shares of Common Stock, respectively.

TREASURY STOCK

We have treasury stock, at cost, consisting of 66 thousand shares of Common Stock as of March 31, 2023 and 2022.

EQUITY INCENTIVE PLANS

Stock Based Compensation Awards

Awards issued under our 2000 Equity Incentive Plan (the “2000 Plan”) were in any of the following forms (or a combination thereof) (i) stock option awards; (ii) stock appreciation rights; (iii) stock or restricted stock or restricted stock units; or (iv) performance awards. The 2000 Plan provides for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market value of our Common Stock on the date of grant. ISOs granted to shareholders having more than 10% of the total combined voting power of the Company must have exercise prices of at least 110% of the fair market value of our Common Stock on the date of grant. ISOs and non-statutory stock options granted under the 2000 Plan are subject to vesting provisions, and exercise is subject to the continuous service of the participant. The exercise prices and vesting periods (if any) for non-statutory options were set at the discretion of our Compensation Committee.

Options outstanding and exercisable under the 2000 Plan are as follows:

As of March 31, 2023
Range of Exercise Prices	Options Outstanding (In thousands)		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
$148		0.3		2.25	$	148	$	—
$280 - $488		10.0		0.50	$	290		—
		10.2		0.54	$	287	$	—

As of March 31, 2022
Range of Exercise Prices	Options Outstanding (In thousands)		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
$148		0.3		3.25	$	148	$	—
$280 - $488		10.6		1.50		290		—
		10.9		1.54	$	287	$	—

A total of 0.4 thousand options were forfeited during the year ended March 31, 2023. The Company does not estimate forfeitures, but recognizes forfeitures in the period in which they occur.

In August 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan). The 2017 Plan replaced the 2000 Plan, and applies to employees and directors of, and consultants to, the Company. The 2017 Plan provides for the issuance of up to 905 thousand shares of Common Stock, in the form of various awards, including stock options, stock appreciation rights, stock, restricted stock, restricted stock units, performance awards and cash awards.

During the year ended March 31, 2023, the Company granted 155 thousand stock appreciation rights (“SARs”), which were granted under the 2017 Plan. All SARs issued have an exercise price equal to the market price of the Company’s Common Stock on the date of grant and a maturity date of 10 years after grant date.

The following weighted average assumptions were used to estimate the fair value of SARs granted, as follows:

	For the Year Ended March 31,
	2023			2022
Expected dividend yield		—			—
Expected equity volatility		112	%	95% - 114%
Expected term (years)		6.50		6.0 - 6.5
Risk-free interest rate		4.49	%	0.96% - 1.63%
Exercise price	$	9.82		$25.80-$51.20
Market price per share	$	9.82		$25.80-$51.20

The weighted average fair value of outstanding the grants made during the year ended March 31, 2023, was $8.52 per award. The weighted average fair value of outstanding the grants made during the year ended March 31, 2022, was $32.67 per award.

SARs outstanding under the 2017 Plan are as follows:

As of March 31, 2023
Range of Prices	SARs Outstanding (In thousands)		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
$7.80 - $14.80		430		8.37	$	11.15	$	3
$23.20 - $29.40		105		6.25		27.62		—
$34.20 - $42.00		100		8.78		40.18		—
$44.60 - $51.20		21		8.57		45.46		—
		657		8.10	$	19.33	$	3

As of March 31, 2022
Range of Prices	SARs Outstanding (In thousands)		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
$10.80 - $14.80		278		8.74	$	12.40	$	1,208
$23.20 - $29.40		114		7.90		27.40		—
$34.20 - $42.00		123		8.91		39.40		—
$44.60 - $51.20		30		9.60		46.40		—
		545		8.65	$	23.52	$	1,208

Exercisable SARs under the 2017 Plan as of March 31, 2023 are as follows:

SARs Exercisable (In thousands)		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
	424		7.6	$	20.46	$	—

As of March 31, 2023, the compensation cost not yet recognized related nonvested SARS awards totaled $441 thousand, to be recognized over the weighted average remaining vesting period of 0.64 years.

Total SARs outstanding are as follows (in thousands):

	Year Ended March 31, 2023
March 31, 2022		545
Issued		155
Forfeited		(43	)
March 31, 2023		657

In addition, the Company grants performance stock unit ("PSU") awards under the 2017 Plan to employees of the Company that vest upon certain performance goals being achieved over a two year period. Upon vesting, the award may be settled in shares or cash at the Company's discretion.

In fiscal year 2023, 31 thousand PSU shares were issued. No PSU shares were issued during the year ended March 31, 2022.

During the year ended March 31, 2023, there were 6 thousand additional PSU awards granted, and the Company issued 24 thousand shares of Common Stock (net of 10 thousand shares withheld to pay taxes). Based on performance for the year ended March 31, 2023, the Company has accrued for 16 thousand unvested PSU awards.

A total of $4.5 million and $5.5 million of stock based compensation was included within Selling, General and Administrative expenses for the years ended March 31, 2023 and 2022, respectively.

There was $0.4 million of stock-based compensation expense for the year ended March 31, 2023 and 2022, respectively, related to Board of Director fees. During the years ended March 31, 2023 and 2022, the Company issued 34 thousand and 14 thousand restricted shares to non-employee directors, respectively.

OPTIONS GRANTED OUTSIDE CINEVERSE’S EQUITY INCENTIVE PLAN

In October 2013, we issued options outside of the 2000 Plan to 10 individuals who became employees as a result of a business combination. The employees received options to purchase an aggregate of 3 thousand shares of our Common Stock at an exercise price of $350 per share. The options were fully vested as of October 2017 and expire 10 years from the date of grant, if unexercised. As of March 31, 2023, 0.6 thousand of such options remained outstanding.