View:
United States securities and exchange commission logo
August 19, 2022
Ross Levinsohn
Chief Executive Officer
Arena Group Holdings, Inc.
200 Vesey Street
24th Floor
New York, New York 10281
Re: Arena Group
Holdings, Inc.
Form 10-K for the
fiscal year ended December 31, 2021
Filed April 1, 2022
File No. 001-12471
Dear Mr. Levinsohn:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the fiscal year ended December 31, 2021
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations, page 31
1. We note from your
December 2021 and June 2022 Investor Presentations on your website
that you discuss
certain key performance indicators including monthly average page
views, revenue per page
view (RPM), overall CPM, sports partner impressions and video
views as well as
certain subscriber information. Please tell us all of the key variables and
other factors that
management uses to manage business. As an example, explain whether
management uses digital
and print subscription renewal rates to manage the business. We
refer you to Item
303(a) of Regulation S-K and SEC Interpretive Release No. 33-10751.
2. We note that the
quantity of your digital advertisements, the impression bid prices, and
revenue are reported on
a real-time basis. Please tell us your consideration of disclosing
Ross Levinsohn
FirstName LastNameRoss
Arena Group Holdings, Inc.Levinsohn
Comapany
August 19, NameArena
2022 Group Holdings, Inc.
August
Page 2 19, 2022 Page 2
FirstName LastName
the number of clicks or impressions and the cost-per click or
cost-per-impression for each
period presented. Price and volume disclosures such as the number of
clicks or
impressions and revenue per-click or per impression including an
analysis of any trends or
uncertainties appears to be important information necessary to
understanding your results
of operations. We refer you to Item 303(a) of Regulation S-K and
Section III.B of SEC
Release 33-8350.
Use of Non-GAAP Financial Measures, page 35
3. We note your adjustment representing professional and vendor fees
recorded in
connection with services provided by consultants, accountants,
lawyers, and other vendors
related to (i) the preparation of periodic reports in order for you to
become current in your
reporting obligations ( Delinquent Reporting Obligations Services
), (ii) up-list to a
national securities exchange, (iii) contemplated and completed
acquisitions, (iv) public
and private offerings of your securities and other financings, and (v)
stockholder disputes
and the implementation of your Rights Agreement. Please explain
whether these
professional and vendor fees represent normal, recurring, cash
operating expenses
necessary to operate your business. We refer you to Rule 100(b) of
Regulation G and
Question 100.01 of the C&DI on Non-GAAP Financial Measures.
Item 15. Exhibits, Financial Statement Schedules, page 43
4. We note that in 2019, you entered into a licensing agreement, as
amended by Amendment
No. 1 dated September 1, 2019, Amendment No. 2 dated April 1, 2020,
Amendment No. 3
dated July 28, 2020, Amendment No. 4 dated June 4, 2021, and side
letter dated June 4,
2021 (collectively, the Sports Illustrated Licensing Agreement )
with ABG-SI LLC
( ABG ). Please clarify whether the collective Sports Illustrated
Licensing Agreement is
filed as an exhibit and if not, please explain why it is not filed as
an exhibit.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Revenue Recognition, page F-13
5. You disclose that you account for revenue on a gross basis, as
compared to a net basis, in
the statement of operations and cost of revenues is presented as a
separate line item in the
statement of operations. Please explain how you determined that you
have the credit risk
in the revenue-generating transactions and are also the primary
obligor responsible for
providing the services to the customer. Explain why you control each
specified good or
service before that good or service is transferred to the customer. In
this respect, please
provide us with your analysis of the principal versus agent
considerations for your digital
advertising and subscription revenues attributable to the media
business for Sports
Illustrated and properties you operate on behalf of independent
Publisher Partners. We
refer you to ASC 606-10-55-36 through 55-40.
Ross Levinsohn
FirstName LastNameRoss
Arena Group Holdings, Inc.Levinsohn
Comapany
August 19, NameArena
2022 Group Holdings, Inc.
August
Page 3 19, 2022 Page 3
FirstName LastName
6. We note that you have developed proprietary advertising technology,
techniques and
relationships that allows Expert Contributors to monetize online,
editorially focused
content through various display and video advertisements and tools and
services for
driving a subscription or membership based business and other
monetization services.
Please help us better understand your revenue share arrangements with
Expert
Contributors contributing content to your operated sites. Explain
whether your
Independent Publisher Partners, Expert Contributors and you split the
revenue generated
from the Platform Services.
7. Please clarify your disclosures that indicate pursuant to the Partner
Agreements, you and
your Publisher Partners split revenue generated from the Platform
Services used in
connection with the Publisher Partner s content based on certain
metrics such as whether
the revenue was from direct sales, was generated by your Publisher
Partner or you, was
generated in connection with a subscription or a membership, was based
on standalone or
bundled subscriptions or whether the revenue was derived from
affiliate links. In this
respect, explain in greater detail how you and your Independent
Publisher Partners split
revenue for each of the aforementioned metrics.
Segments, page F-13
8. Please clarify whether the owned and operated properties as well as
properties you run on
behalf of Independent Publisher Partners represent one reportable
segment. That is,
explain whether you are aggregating operating segments since they have
similar economic
characteristic. If so, please provide your analysis of how you
considered the aggregation
criteria outlined in ASC 280-10-50-11. Further, clarify your
disclosures that indicate the
chief operating decision maker ("CODM") of the Company reviews
specific financial and
operational specific data and other key metrics to make resource
allocation decisions and
assesses performance by review of profit and loss information on a
consolidated basis.
That is, confirm that the CODM does not also review similar data based
on a
disaggregated basis (e.g., owned and operated properties versus
Independent Publisher
Partners or Digital versus Print businesses). Please advise. In
addition, the factors used to
aggregate operating segments into one reportable segment should be
disclosed, if
applicable. We refer you to ASC 280-10-50-21(a).
Subscription Acquisition Costs, page F-20
9. We note that you have determined that sales commissions paid on all
third-party agent
sales of subscriptions are direct and incremental and, therefore, meet
the capitalization
criteria. Clarify whether a contract exists with the subscriber at the
time the commission
is earned. We refer you to ASC 606-10-25-1. That is, confirm that the
contract creates
enforceable rights and obligations at that time. Also, clarify whether
the subscription
agreements have substantive termination penalties. Further, tell us
whether you pay
additional commissions upon contract renewals and whether those
renewal commissions
are commensurate with the initial commission paid. We refer you to ASC
340-40. In
addition, please clarify the nature of direct mail cost and explain
why such cost is
Ross Levinsohn
Arena Group Holdings, Inc.
August 19, 2022
Page 4
considered a cost to obtain a contract.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Morgan Youngwood, Senior Staff Accountant at
202-551-3479 or
Stephen Krikorian, Accounting Branch Chief at 202-551-3488 with any questions.
FirstName LastNameRoss Levinsohn Sincerely,
Comapany NameArena Group Holdings, Inc.
Division of
Corporation Finance
August 19, 2022 Page 4 Office of Technology
FirstName LastName