UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported):
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(Commission File Number) |
(IRS Employer Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
225 Liberty Street, 27th Floor, New York, New York 10281
(Former Name, or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name on exchange on which registered | ||
| N/A | N/A | N/A |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Act of 1934 (§240.12b-2 of this chapter)
Emerging
growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On November 15, 2021, theMaven, Inc. issued a press release announcing the results for the third quarter ended September 30, 2021. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description | |
| 99.1 | Press Release of theMaven, Inc., dated November 15, 2021 for the third quarter ended September 30, 2021 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THEMAVEN, INC. | ||
| Dated: November 15, 2021 | By: | /s/ Douglas B. Smith |
| Name: | Douglas B. Smith | |
| Title: | Chief Financial Officer | |
Exhibit 99.1
The Arena Group Reports Record Revenues and Audience Growth for Third Quarter of 2021
Third Quarter Revenues up 86% and Sports Audience Grows 166% Year-Over-Year;
Growth and Contribution Margin Demonstrates Business Model Effectiveness
NEW YORK – November 15, 2021 – TheMaven, Inc. operating under the brand name “The Arena Group” (OTCQX: MVEN), a tech-powered media company, today announced financial results for the three and nine-month period ended September 30, 2021.
2021 Financial and Operational Highlights
| ● | Total revenue increased 86% to $59.6 million in the third quarter of 2021 compared to $32.1 million in the third quarter of 2020. | |
| ● | Revenue for the first nine months of 2021 increased 50% to $127.9 million compared to $85.6 million, effectively matching the full-year 2020 revenue. | |
| ● | Advertising revenue increased 130% to $21.7 million in the third quarter of 2021 compared to $9.4 million in the third quarter of 2020, reflecting the improved monetization and efficiency of the Company’s unified technology platform. | |
| ● | The company ended the third quarter with recurring subscription revenue accounting for more than 50% of all revenues. | |
| ● | Magazine circulation revenue increased 102% to $26.0 million in the third quarter of 2021 compared to $12.9 million in the third quarter of 2020, reflecting higher subscriber levels and the diminishing effect of acquisition accounting adjustments from the commencement of Sports Illustrated media group operations in 2019. | |
| ● | Quarterly gross profit percentage doubled to 46% compared to 23% in the third quarter of 2020. | |
| ● | Net Loss, inclusive of a $7.3 million non-cash charge for exiting the Company’s New York City office lease, was $24.7 million, or $(0.10) per basic and diluted share for the quarter, compared to a net loss of $21.4 million, or $(0.55) per basic and diluted share, in the third quarter of 2020, a 68% improvement year-over-year. |
Recent Business Highlights
| ● | The successful launch of the Sports Illustrated Sportsbook in September has provided robust content offerings for sports bettors and fantasy players nationwide, and the opportunity for fans to place bets in Colorado. | |
| ● | A strategic partnership in podcasting and audio with iHeartmedia, the leading audio and media company in America, kicked off during the third quarter of 2021 |
| ● | Since acquiring The Spun in June, monthly revenue has tripled to more than $2 million with expenses remaining relatively flat; its monthly audience has increased by 50% to more than 30 million users; and monthly page views have doubled to more than 110 million. The Company paid a net $7.4 million in cash as part of the purchase price for The Spun, and expects to recover this cash outlay from The Spun’s operations before the end of this year. | |
| ● | SI Swim executed a rebranding and pivot towards becoming a female lifestyle brand. As a result, revenues doubled over the same period in 2020 and impressions grew by more than 15 billion year-over-year. | |
| ● | The Arena Group’s social presence has expanded with video views across social platforms increasing to over 170 million, highlighted by two original series on Snap; a large presence on TikTok and the growth of its brands across Instagram. |
Management Commentary
“Since I was asked to lead this business last September, the executive team and I have already achieved our initial goals to transform this company and make it a highly efficient, data driven, technology powered media company that could scale operations, grow audiences, expand margins and drive profitable growth,” said Ross Levinsohn, Chairman and Chief Executive Office of The Arena Group. “With a proven model, and tremendous momentum heading into 2022, we believe we will expand our footprint and business operations into new verticals, and new areas of growth including the launch of a commerce initiative and plans to enter both the NFT and Metaverse in the year ahead. With premium brands, award winning content and broad distribution reaching more than 120 million people every month, we are well positioned to grow in the fourth quarter of 2021, fiscal 2022 and beyond.”
“Over the past year, we have successfully expanded our sports vertical, anchored by Sports Illustrated, the most trusted brand in sports,” added Levinsohn. “Premium content delivered to multiple platforms and diversified revenue has helped us grow exponentially this year. Our sports vertical is the fastest growing media property in the United States, according to Comscore, growing unique visitors by 166% year-over-year. Importantly, our sports media vertical reached nearly 53 million monthly users according to Comscore in September. This impressive improvement in content, traffic, and monetization serves as the formula for additional verticals that we plan to pursue.”
“Our financial vertical, anchored by The Street.com, and featuring a robust, highly profitable subscription business, will follow this clear and proven roadmap,” continued Levinsohn. “We anticipate announcing several important developments about the future of this flagship product over the course of the coming weeks and months. In addition, we expect to expand into additional verticals in the same fashion, with the goal of launching new verticals over the next 16 months, all benefiting from our innovative and expert approach and our scalable technology platform.”
“In the first nine months of 2021, we have generated approximately $128 million in revenue, essentially matching our full-year revenue last year, demonstrating rapid growth,” added Levinsohn. “With accelerating momentum and continued optimization and growth of our traffic, we anticipate a meaningful improvement in profitability going forward. We have begun the process of uplisting to a national exchange, and while we do not control the timing or outcome of this process, we plan to move as quickly as possible.”
| 2 |
Financial Results for the Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020
Revenue was $59.6 million for the quarter, up 86% compared to $32.1 million. The increase was due to a 130% increase in advertising revenue to $21.7 million. The increase in advertising revenue was primarily due to additional revenue of approximately $6.8 million generated as a result of a doubling of advertising sponsorships of the Sports Illustrated Swim business and other growth in the Sports Illustrated media business, and approximately $5.5 million from the addition of The Spun, which was acquired during the second quarter of 2021. In addition, magazine circulation revenue increased by 102% to $26.0 million for the third quarter of 2021 reflecting a drive to increase subscribers in the fourth quarter of 2020 and the diminishing effect of acquisition accounting adjustments on the subscribers that existed when the Company began operating the Sports Illustrated Media Group in October of 2019. Other revenue (primarily licensing and e-commerce revenue) increased by 216% to $4.2 million during the third quarter of 2021 driven in part by an increase in advertising and sponsorships related to the SI Swim and other Sports Illustrated media businesses. These increases were partially offset by a 9% decrease in digital subscription revenue to $7.7 million for the third quarter of 2021, compared to approximately $8.5 million for the third quarter of 2020. Digital subscription revenue represented approximately 12.9% of total revenue in the third quarter of 2021 compared to 26.4% during the same period last year.
Gross profit was $27.4 million, representing a 46% gross profit percentage for the third quarter of 2021, which was double the gross profit percentage of 23% on gross profit of $7.4 million for the third quarter of 2020. For the three months ended September 30, 2021 and 2020, the Company recognized cost of revenue of approximately $32.2 million and approximately $24.7 million, respectively. The increase in cost of revenue of approximately $7.5 million is primarily related to:
| ● | printing, distribution, and fulfillment costs of approximately $3.4 million, reflecting increase production costs related the SI Swim issue and sponsorships; | |
| ● | payroll, stock-based compensation, and related expenses for customer support, technology maintenance, and occupancy costs of related personnel of approximately $2.6 million; | |
| ● | other costs of revenue related to SI Swim events of approximately $1.3 million; and | |
| ● | amortization of our platform of approximately $0.2 million. |
Total operating expenses were approximately $49.8 million in the third quarter of 2021 compared to $21.2 million in the third quarter of 2020. The increase was due to a $7.3 million non-cash charge related to exiting the Company’s lease in its New York City office, a $4.2 million non-cash increase in stock-based compensation expense and a $9.4 million increase in circulation expenses tied to the increase of $13.1 million in magazine circulation revenue.
Net loss was $24.7 million, or $(0.10) per basic and diluted share for the third quarter of 2021, compared to a net loss of $21.4 million, or $(0.55) per basic and diluted share for the third quarter of 2020, a 82% improvement year over year.
Financial Results for the Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020
Revenue was $127.9 million year-to-date, up 50% compared to $85.6 million. The increase reflects a diversification of revenue including a 61% increase in advertising revenue, a 57% increase in magazine circulation revenue, a 12% increase in digital subscription revenue and a 119% increase in other revenue.
| 3 |
Gross profit for the nine months ended September 2021, was $44.0 million compared to $9.3 million during the same period last year. Total operating expenses were $111.3 million during this period, compared to approximately $64.8 million for the same period last year. However, of the $46.5 million increase in costs, $16.4 million were non-cash items including stock based compensation and a charge related to the exiting of our New York City lease, and $22.4 million was an increase in circulation expense, which was correlated to a $19.3 million increase in magazine circulation revenue.
Net loss was $70.8 million, or $(0.29) per basic and diluted share for the nine months ended September 30, 2021, compared to a net loss of $67.2 million, or $(1.72) per basic and diluted share for the prior year period.
Balance Sheet and Liquidity as of September 30, 2021
Cash and cash equivalents were $8.2 million as of September 30, 2021, compared to $6.7 million as of June 30, 2021 and $9.0 million as of December 31, 2020.
For the nine months ended September 30, 2021, net cash used in operating activities was approximately $8.3 million, as compared to $20.3 million in the prior year period, a $12.0 million improvement. The improvement was a result of a $42.9 million increase in cash received from customers (including payments received in advance of performance obligations) to $125.1 million in the nine months ended September 30, 2021 from $82.1 million in the prior year period, offset by a $30.5 million increase in cash paid (a) to employees, publisher partners, expert contributors, suppliers, and vendors, and (b) for revenue share arrangements and professional services and (c) cash paid for interest to $132.5 million in the nine months ended September 30, 2021 as compared $102.0 million for the nine months ended September 30, 2020.
For the nine months ended September 30, 2021, net cash used in investing activities was approximately $10.7 million, consisting primarily of: (a) approximately $7.4 million used to acquire The Spun; (b) approximately $0.3 million for property and equipment; and (c) approximately $3.0 million for capitalized costs for the Company’s platform; as compared to the nine months ended September 30, 2020, where net cash used in investing activities was approximately $4.3 million consisting primarily of: (x) approximately $0.3 million used for the acquisition of a business; (y) approximately $1.1 million for property and equipment; and (z) approximately $2.9 million for capitalized costs for the Company’s platform.
Conference Call
Management will host a conference call to discuss these results today at 5 p.m. ET. To access the call, please dial 888-506-0062 (toll free) or 973-528-0011 and if requested, reference conference ID 306741. The conference call will also be webcast live on the Investor Relations section of The Arena Group’s website at https://investors.thearenagroup.net/news-and-events/events.
Following the conclusion of the live call, a replay of the webcast will be available on the Investor Relations section of the Company’s website for at least 90 days. A telephonic replay of the conference call will also be available from 7 p.m. ET on November 15, 2021 until 11:59 p.m. ET on November 29, 2021 by dialing 877-481-4010 (United States) or 919-882-2331 (international) and using the passcode 43643.
| 4 |
About The Arena Group
The Arena Group, creates dynamic, digital destinations that delight consumers with stories and news about the things they love – their favorite sports teams, the inside scoop on personal finance, and the latest on lifestyle essentials. The Company’s robust media ecosystem brings together consumers, publishers and advertisers while harnessing the authority of trusted brands and the editorial prowess of leading writers and editors. For more on best-in-class capabilities in direct sales and programmatic advertising, data, SEO, social, and operations, visit www.thearenagroup.net.
Forward Looking Statements
This press release includes statements that constitute forward-looking statements. Forward-looking statements may be identified by the use of words such as “forecast,” “guidance,” “plan,” “estimate,” “will,” “would,” “project,” “maintain,” “intend,” “expect,” “anticipate,” “prospect,” “strategy,” “future,” “likely,” “may,” “should,” “believe,” “continue,” “opportunity,” “potential,” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters, and include, for example, statements related to the expected effects on the Company’s business from the COVID-19 pandemic. These forward-looking statements are based on information available at the time the statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or suggested by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the duration and scope of the COVID-19 pandemic and impact on the demand for the Company products; the ability of the Company to expand its verticals; the Company’s ability to grow its subscribers; the Company’s ability to grow its advertising revenue; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the effects of steps that the Company could take to reduce operating costs; the inability of the Company to sustain profitable sales growth; circumstances or developments that may make the Company unable to implement or realize the anticipated benefits, or that may increase the costs, of its current and planned business initiatives; and those factors detailed by theMaven, Inc. in its public filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on 10-Q. Should one or more of these risks, uncertainties, or facts materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by the forward-looking statements contained herein. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
Contact
Rob Fink
FNK IR
Arena@fnkir.com
646.809.4048
| 5 |
THEMAVEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2021 | December 31, 2020 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 8,227,840 | $ | 9,033,872 | ||||
| Restricted cash | 500,809 | 500,809 | ||||||
| Accounts receivable, net | 19,519,147 | 16,497,626 | ||||||
| Subscription acquisition costs, current portion | 31,257,268 | 28,146,895 | ||||||
| Royalty fees, current portion | 15,000,000 | 15,000,000 | ||||||
| Prepayments and other current assets | 4,875,177 | 4,667,263 | ||||||
| Total current assets | 79,380,241 | 73,846,465 | ||||||
| Property and equipment, net | 668,663 | 1,129,438 | ||||||
| Operating lease right-of-use assets | 2,048,900 | 18,292,196 | ||||||
| Platform development, net | 8,011,707 | 7,355,608 | ||||||
| Royalty fees, net of current portion | - | 11,250,000 | ||||||
| Subscription acquisition costs, net of current portion | 18,682,545 | 13,358,585 | ||||||
| Acquired and other intangible assets, net | 57,817,905 | 71,501,835 | ||||||
| Other long-term assets | 692,021 | 1,330,812 | ||||||
| Goodwill | 22,861,872 | 16,139,377 | ||||||
| Total assets | $ | 190,163,854 | $ | 214,204,316 | ||||
| Liabilities, mezzanine equity and stockholders’ deficiency | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 9,443,576 | $ | 8,228,977 | ||||
| Accrued expenses and other | 21,287,989 | 14,718,193 | ||||||
| Line of credit | 6,705,391 | 7,178,791 | ||||||
| Unearned revenue | 71,305,655 | 61,625,676 | ||||||
| Subscription refund liability | 4,379,364 | 4,035,531 | ||||||
| Operating lease liabilities | 282,011 | 1,059,671 | ||||||
| Liquidated damages payable | 11,765,706 | 9,568,091 | ||||||
| Current portion of long-term debt | 4,565,982 | - | ||||||
| Warrant derivative liabilities | 651,083 | 1,147,895 | ||||||
| Total current liabilities | 130,386,757 | 107,562,825 | ||||||
| Unearned revenue, net of current portion | 19,207,736 | 23,498,597 | ||||||
| Restricted stock liabilities, net of current portion | 521,621 | 1,995,810 | ||||||
| Operating lease liabilities, net of current portion | 1,972,165 | 19,886,083 | ||||||
| Other long-term liabilities | 8,072,442 | 753,365 | ||||||
| Deferred tax liabilities | 577,960 | 210,832 | ||||||
| Long-term debt, net of current portion | 58,718,289 | 62,194,272 | ||||||
| Total liabilities | 219,456,970 | 216,101,784 | ||||||
| Commitments and contingencies (1) | - | - | ||||||
| Mezzanine equity: | ||||||||
| Series G redeemable and convertible preferred stock, $0.01 par value, $1,000 per share liquidation value and 1,800 shares designated; aggregate liquidation value: $168,496; Series G shares issued and outstanding: 168,496; common shares issuable upon conversion: 188,791 at September 30, 2021 and December 31, 2020 | 168,496 | 168,496 | ||||||
| Series H convertible preferred stock, $0.01 par value, $1,000 per share liquidation value; aggregate liquidation value $19,546,000 and $19,596,000; Series H shares designated: 23,000; Series H shares issued and outstanding: 19,546 and 19,596; common shares issuable upon conversion: 59,243,926 and 59,395,476 shares at September 30, 2021 and December 31, 2020, respectively | 18,197,496 | 18,247,496 | ||||||
| Total mezzanine equity | 18,365,992 | 18,415,992 | ||||||
| Stockholders’ deficiency: | ||||||||
| Common stock, $0.01 par value, authorized 1,000,000,000 shares; issued and outstanding: 264,246,777 and 229,085,167 shares at September 30, 2021 and December 31, 2020, respectively | 2,642,467 | 2,290,851 | ||||||
| Common stock to be issued | 10,809 | 10,809 | ||||||
| Additional paid-in capital | 182,787,419 | 139,658,166 | ||||||
| Accumulated deficit | (233,099,803 | ) | (162,273,286 | ) | ||||
| Total stockholders’ deficiency | (47,659,108 | ) | (20,313,460 | ) | ||||
| Total liabilities, mezzanine equity and stockholders’ deficiency | $ | 190,163,854 | $ | 214,204,316 | ||||
| (1) | Refer to Note 14 in the Company’s Quarterly Report on Form 10-Q for further information. |
| 6 |
THEMAVEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | 59,573,508 | $ | 32,089,993 | $ | 127,935,501 | $ | 85,593,786 | ||||||||
| Cost of revenue (includes amortization of developed technology and platform development for three months ended 2021 and 2020 of $2,241,243 and $2,089,286, respectively, and for nine months ended 2021 and 2020 of $6,565,600 and $6,348,619, respectively) | 32,173,859 | 24,708,941 | 83,978,050 | 76,321,953 | ||||||||||||
| Gross profit | 27,399,649 | 7,381,052 | 43,957,451 | 9,271,833 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling and marketing | 22,712,193 | 9,928,901 | 55,122,357 | 27,698,182 | ||||||||||||
| General and administrative | 23,023,883 | 7,172,175 | 44,230,360 | 24,852,891 | ||||||||||||
| Depreciation and amortization | 4,055,432 | 4,053,184 | 11,981,998 | 12,276,990 | ||||||||||||
| Total operating expenses | 49,791,508 | 21,154,260 | 111,334,715 | 64,828,063 | ||||||||||||
| Loss from operations | (22,391,859 | ) | (13,773,208 | ) | (67,377,264 | ) | (55,556,230 | ) | ||||||||
| Other (expense) income | ||||||||||||||||
| Change in valuation of warrant derivative liabilities | 801,755 | (517,405 | ) | 496,812 | (134,910 | ) | ||||||||||
| Change in valuation of embedded derivative liabilities | - | (2,370,000 | ) | - | 2,173,000 | |||||||||||
| Interest expense | (2,512,637 | ) | (4,253,180 | ) | (7,695,317 | ) | (12,169,315 | ) | ||||||||
| Interest income | - | 1,116 | 471 | 4,499 | ||||||||||||
| Liquidated damages | (833,612 | ) | (319,903 | ) | (2,197,615 | ) | (1,487,577 | ) | ||||||||
| Other expenses | - | (31,851 | ) | - | (31,851 | ) | ||||||||||
| Gain upon debt extinguishment | - | - | 5,716,697 | - | ||||||||||||
| Total other expense | (2,544,494 | ) | (7,491,223 | ) | (3,678,952 | ) | (11,646,154 | ) | ||||||||
| Loss before income taxes | (24,936,353 | ) | (21,264,431 | ) | (71,056,216 | ) | (67,202,384 | ) | ||||||||
| Income taxes | 229,699 | - | 229,699 | - | ||||||||||||
| Net loss | (24,706,654 | ) | (21,264,431 | ) | (70,826,517 | ) | (67,202,384 | ) | ||||||||
| Deemed dividend on Series H convertible preferred stock | - | (132,663 | ) | - | (132,663 | ) | ||||||||||
| Net loss attributable to common stockholders | $ | (24,706,654 | ) | $ | (21,397,094 | ) | $ | (70,826,517 | ) | $ | (67,335,047 | ) | ||||
| Basic and diluted net loss per common stock | $ | (0.10 | ) | $ | (0.55 | ) | $ | (0.29 | ) | $ | (1.72 | ) | ||||
| Weighted average number of common stock outstanding – basic and diluted | 252,811,058 | 39,186,432 | 244,209,151 | 39,177,864 | ||||||||||||
| 7 |
THEMAVEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (70,826,517 | ) | $ | (67,202,384 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation of property and equipment | 333,891 | 536,729 | ||||||
| Amortization of platform development and intangible assets | 18,213,707 | 18,088,880 | ||||||
| Loss on disposition of assets | 862,442 | 105,123 | ||||||
| Loss upon lease termination | 7,344,655 | - | ||||||
| Gain upon debt extinguishment | (5,716,697 | ) | - | |||||
| Amortization of debt discounts | 1,533,537 | 4,899,625 | ||||||
| Change in valuation of warrant derivative liabilities | (496,812 | ) | 134,910 | |||||
| Change in valuation of embedded derivative liabilities | - | (2,173,000 | ) | |||||
| Accrued interest | 5,273,159 | 6,832,376 | ||||||
| Liquidated damages | 2,197,615 | 1,487,577 | ||||||
| Stock-based compensation | 21,688,226 | 11,185,953 | ||||||
| Deferred income taxes | (229,699 | ) | - | |||||
| Other | (1,014,932 | ) | (296,019 | ) | ||||
| Change in operating assets and liabilities net of effect of acquisitions: | ||||||||
| Accounts receivable | (173,266 | ) | 4,893,512 | |||||
| Subscription acquisition costs | (8,434,333 | ) | (11,053,054 | ) | ||||
| Royalty fees | 11,250,000 | 11,250,000 | ||||||
| Prepayments and other current assets | (78,347 | ) | 327,088 | |||||
| Other long-term assets | 638,791 | (376,142 | ) | |||||
| Accounts payable | 1,214,599 | (968,581 | ) | |||||
| Accrued expenses and other | 5,566,243 | (2,484,525 | ) | |||||
| Unearned revenue | 5,389,118 | 2,871,080 | ||||||
| Subscription refund liability | 343,833 | (169,693 | ) | |||||
| Operating lease liabilities | (2,448,282 | ) | 1,837,138 | |||||
| Other long-term liabilities | (692,255 | ) | - | |||||
| Net cash used in operating activities | (8,261,324 | ) | (20,273,407 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (299,999 | ) | (1,085,392 | ) | ||||
| Capitalized platform development | (3,016,924 | ) | (2,885,788 | ) | ||||
| Payments for acquisition of businesses, net of cash acquired | (7,356,949 | ) | (315,289 | ) | ||||
| Net cash used in investing activities | (10,673,872 | ) | (4,286,469 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from long-term debt | - | 11,702,725 | ||||||
| Borrowings (repayments) under line of credit | (473,400 | ) | 3,328,431 | |||||
| Proceeds from common stock private placement | 20,005,000 | - | ||||||
| Proceeds from issuance of Series H convertible preferred stock | - | 113,000 | ||||||
| Proceeds from issuance of Series J convertible preferred stock | - | 6,000,000 | ||||||
| Payments of issuance costs from common stock private placement | (167,243 | ) | - | |||||
| Payment for taxes related to repurchase of restricted common stock | (70,238 | ) | (322,778 | ) | ||||
| Payment of restricted stock liabilities | (1,164,955 | ) | - | |||||
| Net cash provided by financing activities | 18,129,164 | 20,821,378 | ||||||
| Net decrease in cash, cash equivalents, and restricted cash | (806,032 | ) | (3,738,498 | ) | ||||
| Cash, cash equivalents, and restricted cash – beginning of period | 9,534,681 | 9,473,090 | ||||||
| Cash, cash equivalents, and restricted cash – end of period | $ | 8,728,649 | $ | 5,734,592 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | 896,580 | $ | 437,314 | ||||
| Cash paid for income taxes | - | - | ||||||
| Noncash investing and financing activities | ||||||||
| Reclassification of stock-based compensation to platform development | $ | 1,347,624 | $ | 1,259,163 | ||||
| Issuance of common stock in connection with professional services | 125,000 | - | ||||||
| Deferred cash payments in connection with acquisition of The Spun | 905,109 | - | ||||||
| Assumption of liabilities in connection with acquisition of The Spun | 1,500 | - | ||||||
| Debt discount on delayed draw term note | - | 913,865 | ||||||
| Restricted stock units issued in connection with acquisition of LiftIgniter | - | 500,000 | ||||||
| Assumption of liabilities in connection with acquisition of LiftIgniter | - | 140,381 | ||||||
| Restricted stock issued in connection with acquisition of Fulltime Fantasy | 502,500 | - | ||||||
| Deferred cash payments in connection with acquisition of Fulltime Fantasy | 419,367 | |||||||
| Deemed dividend on Series H convertible preferred stock | - | 132,663 | ||||||
| 8 |