UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30,~~March 31, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 1-12471

~~THEMAVEN,~~THE ARENA GROUP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		68-0232575
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
200 Vesey Street,, 24^thFloor New York, New York		10281
(Address of principal executive offices)		(Zip Code)

(~~212~~)(212) 321-5002

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
~~N/A~~Common Stock, par value $0.01		~~N/A~~AREN		~~N/A~~NYSE American

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicated 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 ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ or No ☒

As of ~~November 1, 2021,~~May 2, 2022, the Registrant had ~~264,202,421~~ 17,808,434shares of common stock outstanding.

TABLE OF CONTENTS

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report”) of ~~theMaven,~~The Arena Group Holdings, Inc. (the “Company,” “we,” “our,” and “us”) contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements relate to future events or future performance and include, without limitation, statements concerning our business strategy, future revenues, market growth, capital requirements, product introductions, and expansion plans and the adequacy of our funding. Other statements contained in this Quarterly Report that are not historical facts are also forward-looking statements. We have tried, wherever possible, to identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and other comparable terminology.

We caution investors that any forward-looking statements presented in this Quarterly Report, or that we may make orally or in writing from time to time, are based on the beliefs of, assumptions made by, and information currently available to, us. Such statements are based on assumptions, and the actual outcome will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution in relying on forward-looking statements, which are based only on known results and trends at the time they are made, to anticipate future results or trends. Other risks are detailed by us in our public filings with the Securities and Exchange Commission (the “SEC”), including in Item 1A., Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021, filed with the SEC on April 1, 2022 (the “Form 10-K”). The discussion in this Quarterly Report should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report and our Annual ~~Report on Form 10-K for the year ended December 31, 2020.~~Report.

This Quarterly Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Quarterly Report.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL INFORMATION

~~THEMAVEN,~~THE ARENA GROUP HOLDINGS, INC. AND SUBSIDIARIES

Index to Condensed Consolidated Financial Statements

		PAGE
Condensed Consolidated Balance Sheets - ~~September 30, 2021~~March 31, 2022 (Unaudited) and December 31, ~~2020~~2021		5
Condensed Consolidated Statements of Operations (Unaudited) - Three Months Ended March 31, 2022 and ~~Nine Months Ended September 30,~~ 2021 ~~and 2020~~		6
Condensed Consolidated Statements of Stockholders’ Deficiency (Unaudited) ~~– Nine~~- Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~		7
Condensed Consolidated Statements of Cash Flows (Unaudited) - ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~		9
Notes to Condensed Consolidated Financial Statements (Unaudited)		10

~~THEMAVEN,~~THE ARENA GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2021
(unaudited)
December 31, 2020
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 (Note 14) - -
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
~~See accompanying notes to condensed consolidated financial statements~~
5
~~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

March 31, 2022
(unaudited)

December 31,
2021

($ in thousands, except share data)
Assets
Current assets:
Cash and cash equivalents $ 22,480 $ 9,349
Restricted cash 502 502
Accounts receivable, net 19,998 21,660
Subscription acquisition costs, current portion 24,940 30,162
Royalty fees 7,500 11,250
Prepayments and other current assets 4,972 4,748
Total current assets 80,392 77,671
Property and equipment, net 593 636
Operating lease right-of-use assets 493 528
Platform development, net 10,013 9,299
Subscription acquisition costs, net of current portion 7,307 8,235
Acquired and other intangible assets, net 52,255 57,356
Other long-term assets 587 639
Goodwill 19,619 19,619
Total assets $ 171,259 $ 173,983
Liabilities, mezzanine equity and stockholders’ deficiency
Current liabilities:
Accounts payable $ 7,070 $ 11,982
Accrued expenses and other 17,425 24,011
Line of credit 9,291 11,988
Unearned revenue 48,519 54,030
Subscription refund liability 2,534 3,087
Operating lease liability 387 374
Liquidated damages payable 5,369 5,197
Current portion of long-term debt 5,847 5,744
Total current liabilities 96,442 116,413
Unearned revenue, net of current portion 12,362 15,277
Operating lease liability, net of current portion 683 785
Liquidating damages payable, net of current portion - 7,008
Other long-term liabilities 7,527 7,556
Deferred tax liabilities 376 362
Long-term debt 64,929 64,373
Total liabilities 182,319 211,774
Commitments and contingencies (Note 15) - -
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; Series G shares issued and outstanding: 168; common shares issuable upon conversion: 8,582 at March 31, 2022 and December 31, 2021 168 168
Series H convertible preferred stock, $0.01 par value, $1,000 per share liquidation value and 23,000 shares designated; aggregate liquidation value: $14,556 and $15,066; Series H shares issued and outstanding: 14,556 and 15,066; common shares issuable upon conversion: 2,004,971 and 2,075,200 at March 31, 2022 and December 31, 2021, respectively 13,207 13,718
Total mezzanine equity 13,375 13,886
Stockholders’ deficiency:
Common stock, $0.01 par value, authorized 1,000,000,000 shares; issued and outstanding: 17,502,102 and 12,632,947 shares at March 31, 2022 and December 31, 2021, respectively 175 126
Common stock to be issued - -
Additional paid-in capital 246,052 200,410
Accumulated deficit (270,662 ) (252,213 )
Total stockholders’ deficiency (24,435 ) (51,677 )
Total liabilities, mezzanine equity and stockholders’ deficiency $ 171,259 $ 173,983

See accompanying notes to condensed consolidated financial statements.

5
THE ARENA GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
2022 2021
Three Months Ended March 31,
2022 2021
($ in thousands, except per share data)
Revenue $ 48,243 $ 33,615
Cost of revenue (includes amortization of developed technology and platform development for 2022 and 2021 of $2,311 and $2,167, respectively) 28,497 28,208
Gross profit 19,746 5,407
Operating expenses
Selling and marketing 17,216 17,529
General and administrative 13,514 5,638
Depreciation and amortization 4,202 3,963
Loss on impairment of assets 257 -
Total operating expenses 35,189 27,130
Loss from operations (15,443 ) (21,723 )
Other expenses
Change in valuation of warrant derivative liabilities - (665 )
Interest expense (2,820 ) (2,820 )
Liquidated damages (172 ) (255 )
Total other expenses (2,992 ) (3,740 )
Loss before income taxes (18,435 ) (25,463 )
Income taxes (14 ) -
Net loss $ (18,449 ) $ (25,463 )
Basic and diluted net loss per common share $ (1.20 ) $ (2.44 )
Weighted average number of common shares outstanding – basic and diluted 15,381,306 10,456,052
See accompanying notes to condensed consolidated financial statements.
6
~~THEMAVEN, INC. AND SUBSIDIARIES~~
~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY~~
~~(unaudited)~~
~~Nine Months Ended September 30, 2021~~

Common Stock Common Stock to be Issued Additional Total
                                                         Shares Par Value Shares Par Value
Paid-in
Capital
Accumulated Deficit Stockholders’
Deficiency

Balance at January 1, 2021 229,085,167 $ 2,290,851 1,080,930 $ 10,809 $ 139,658,166 $ (162,273,286 ) $ (20,313,460 )
Issuance of restricted stock awards to the board of directors 805,165 8,052 - - (8,052 ) - -
Repurchase restricted stock classified as liabilities (133,068 ) (1,331 ) - - 1,331 - -
Issuance of restricted stock in connection with the acquisition of The Spun -
Issuance of restricted stock in connection with the acquisition of The Spun, shares
Cashless exercise of common stock options
Cashless exercise of common stock options, shares
Common stock withheld for taxes
Common stock withheld for taxes, shares
Proceeds from common stock private placement
Proceeds from common stock private placement, shares
Issuance of common stock for restricted stock units in connection with the acquisition of LiftIgniter 256,661 2,567 - - (2,567 ) - -
Issuance of common stock in connection with professional services 312,500 3,125 - - 121,875 - 125,000
Issuance of common stock upon conversion of Series H convertible preferred stock
Issuance of common stock upon conversion of Series H convertible preferred stock, shares
Issuance of common stock in connection with vesting of restricted stock units
Issuance of common stock in connection with vesting of restricted stock units, shares
Forfeiture of unvested restricted stock awards
Forfeiture of unvested restricted stock awards, shares
Issuance of common stock in connection with the acquisition of Say Media
Issuance of common stock in connection with the acquisition of Say Media, shares
Beneficial conversion feature on Series H convertible preferred stock
Deemed dividend on Series H convertible preferred stock
Stock-based compensation - - - - 5,408,207 - 5,408,207
Net loss - - - - - (25,463,305 ) (25,463,305 )
Balance at March 31, 2021 230,326,425 2,303,264 1,080,930 10,809 145,178,960 (187,736,591 ) (40,243,558 )
Issuance of restricted stock in connection with the acquisition of The Spun 4,285,714 42,857 - - (42,857 ) - -
Issuance of restricted stock awards to the board of directors 82,158 822 - - (822 ) - -
Cashless exercise of common stock options 84,891 849 - - (849 ) - -
Common stock withheld for taxes (49,952 ) (490 ) - - (40,630 ) - (41,120 )
Repurchase of restricted stock classified as liabilities (133,068 ) (1,331 ) - - 1,331 - -
Proceeds from common stock private placement 28,578,575 285,786 - - 19,551,971 - 19,837,757
Stock-based compensation - - - - 8,665,939 - 8,665,939
Net loss - - - - - (20,656,558 ) (20,656,558 )
Balance at June 30, 2021 263,175,743 2,631,757 1,080,930 10,809 173,313,043 (208,393,149 ) (32,437,540 )
Issuance of common stock upon conversion of Series H convertible preferred stock 151,515 1,515 - - 48,485 - 50,000
Issuance of restricted stock in connection with the acquisition of Fulltime Fantasy 750,000 7,500 - - 495,000 - 502,500
Issuance of common stock upon vesting of restricted stock units 500,000 5,000 - - (5,000 ) - -
Forfeiture of unvested restricted stock awards (150,557 ) (1,505 ) - - 1,505 - -
Repurchase of restricted stock classified as liabilities (133,068 ) (1,331 ) - - 1,331 - -
Common stock withheld for taxes (46,856 ) (469 ) - - (28,649 ) - (29,118 )
Stock-based compensation - - - - 8,961,704 - 8,961,704
Net loss - - - - - (24,706,654 ) (24,706,654 )
Balance at September 30, 2021 264,246,777 $ 2,642,467 1,080,930 $ 10,809 $ 182,787,419 $ (233,099,803 ) $ (47,659,108 )
7
~~THEMAVEN,~~THE ARENA GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY
(unaudited)
~~Nine~~Three Months Ended ~~September 30, 2020~~March 31, 2022

Common Stock
Common Stock
to be Issued
Additional Total
Shares Par Value Shares Par Value
Paid-in
Capital

Accumulated
Deficit

Stockholders’
Deficiency

($ in thousands, except number of shares)
Balance at January 1, 2022 12,632,947 $ 126        49,134 $    - $ 200,410 $ (252,213 ) $ (51,677 )
Issuance of restricted stock awards to the board of directors - - - - - - -
Issuance of restricted stock awards to the board of directors, shares - - - - - - -
Issuance of common stock upon conversion of series H preferred stock 70,380 1 - - 510 - 511
Issuance of common stock for restricted stock units in connection with an acquisition 16,760 - - - - - -
Issuance of common stock in connection with professional services 14,617 - - - 184 - 184
Issuance of common stock in connection with settlement of liquidated damages 505,671 5 - - 6,680 - 6,685
Gain upon issuance of common stock in connection with settlement of liquidated damages - - - - 323 - 323
Issuance of common stock for restricted stock units 155,211 2 - - (2 )
-
-
Common stock withheld for taxes upon issuance of underlying shares for restricted stock units (67,023 ) (1 ) - - (555 ) - (556 )
Repurchase restricted stock classified as liabilities (8,064 ) - - - - - -
Issuance of common stock in connection with public offering 4,181,603 42 - - 30,448 - 30,490
Stock-based compensation - -
-
- 8,054
-
8,054
Net loss - - - - - (18,449 ) (18,449 )
Balance at March 31, 2022 17,502,102 $ 175 49,134 $ - $ 246,052 $ (270,662 ) $ (24,435 )
7
THE ARENA GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY
Shares Par Value Shares Par Value
Paid-in
Capital
Accumulated Deficit Stockholders’
Deficiency
Common Stock Common Stock to be Issued Additional Total
Shares Par Value Shares Par Value
Paid-in
Capital
Accumulated Deficit Stockholders’
Deficiency
Balance at January 1, 2020 37,119,117 $ 371,190 3,938,287 $ 39,383 $ 35,562,766 $ (73,041,323 ) $ (37,067,984 )
Issuance of restricted stock units in connection with the acquisition of LiftIgniter - - - - 500,000 - 500,000
Issuance of restricted stock awards to the board of directors 562,500 5,625 - - (5,625 ) - -
Common stock withheld for taxes (206,881 ) (2,069 ) - - (167,412 ) - (169,481 )
Stock-based compensation - - - - 3,930,172 - 3,930,172
Net loss - - - - - (22,776,624 ) (22,776,624 )
Balance at March 31, 2020 37,474,736 374,746 3,938,287 39,383 39,819,901 (95,817,947 ) (55,583,917 )
Issuance of common stock in connection with the acquisition of Say Media 1,350,394 13,504 (1,350,394 ) (13,504 ) - - -
Common stock withheld for taxes (234,767 ) (2,348 ) - - (109,992 ) - (112,340 )
Stock-based compensation - - - - 4,283,066 - 4,283,066
Net loss - - - - - (23,161,329 ) (23,161,329 )
Balance at June 30, 2020 38,590,363 385,902 2,587,893 25,879 43,992,975 (118,979,276 ) (74,574,520 )
Beginning balance, value 38,590,363 $ 385,902 2,587,893 25,879 $ 43,992,975 $ (118,979,276 ) $ (74,574,520 )
Issuance of common stock in connection with the acquisition of Say Media 1,107,378 11,074 (1,107,378 ) (11,074 ) - - -
Issuance of common stock upon conversion of Series H convertible preferred stock 909,090 9,091 - - 290,909 - 300,000
Common stock withheld for taxes (58,628 ) (586 ) - - (40,371 ) - (40,957 )
Beneficial conversion feature on Series H convertible preferred stock - - - - 132,663 - 132,663
Deemed dividend on Series H convertible preferred stock - - - - (132,663 ) - (132,663 )
Stock-based compensation - - - - 4,231,878 - 4,231,878
Net loss - - - - - (21,264,431 ) (21,264,431)
Balance September 30, 2020 40,548,203 $ 405,481 1,480,515 $ 14,805 $ 48,475,391 $ (140,243,707 ) $ (91,348,030 )
(unaudited)
Three Months Ended March 31, 2021
Common Stock
Common Stock
to be Issued
Additional Total
Shares Par Value Shares Par Value
Paid-in
Capital

Accumulated
Deficit

Stockholders’
Deficiency

($ in thousands, except number of shares)
Balance at January 1, 2021 10,412,963 $ 104 49,134 $ - $ 141,856 $ (162,273 ) $ (20,313 )
Balance 10,412,963 $ 104 49,134 $ - $ 141,856 $ (162,273 ) $ (20,313 )
Issuance of restricted stock awards to the board of directors 36,599 - - - - - -
Repurchase restricted stock classified as liabilities (6,049 ) - - - - - -
Issuance of common stock for restricted stock units in connection with an acquisition 11,667 - - - - - -
Issuance of common stock in connection with professional services 14,205 - - 125 - 125
Stock-based compensation - - - - 5,408 - 5,408
Net loss - - - - - (25,463 ) (25,463 )
Balance at March 31, 2021 10,469,385 $ 104 49,134 $ - $ 147,389 $ (187,736 ) $ (40,243 )
Balance 10,469,385 $ 104 49,134 $ - $ 147,389 $ (187,736 ) $ (40,243 )
See accompanying notes to condensed consolidated financial statements.
~~Ending~~ ~~balance, value~~ ~~40,548,203~~ $ ~~405,481~~ ~~1,480,515~~ ~~14,805~~ $ ~~48,475,391~~ $ ~~(140,243,707~~ ) $ ~~(91,348,030~~ )8
THE ARENA GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
2022 2021
Three Months Ended March 31,
2022 2021
($ in thousands)
Cash flows from operating activities
Net loss $ (18,449 ) $ (25,463 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment 114 110
Amortization of platform development and intangible assets 6,399 6,020
Amortization of debt discounts 660 694
Loss on impairment of assets 257 -
Change in valuation of warrant derivative liabilities - 665
Accrued interest - 1,866
Liquidated damages 172 255
Stock-based compensation 7,367 5,099
Deferred income taxes 14 -
Other 183 (509 )
Change in operating assets and liabilities:
Accounts receivable 1,594 2,917
Subscription acquisition costs 6,150 (8,349 )
Royalty fees 3,750 3,750
Prepayments and other current assets (224 ) (1,630 )
Other long-term assets 52 (238 )
Accounts payable (4,912 ) 1,920
Accrued expenses and other (7,444 ) 1,821
Unearned revenue (8,358 ) 9,039
Subscription refund liability (553 ) 737
Operating lease liabilities (54 ) (215 )
Other long-term liabilities (29 ) -
Net cash used in operating activities (13,311 ) (1,511 )
Cash flows from investing activities
Purchases of property and equipment (71 ) (98 )
Capitalized platform development (1,582 ) (868 )
Net cash used in investing activities (1,653 ) (966 )
Cash flows from financing activities
Repayments under line of credit, net of borrowings (2,697 ) (1,752 )
Proceeds from public offering of common stock, net of offering costs 32,058 -
Payment of tax withholdings of common stock withheld (556 ) -
Payment of restricted stock liabilities (710 ) (280 )
Net cash provided by (used for) financing activities 28,095 (2,032 )
Net increase (decrease) in cash, cash equivalents, and restricted cash 13,131 (4,509 )
Cash, cash equivalents, and restricted cash – beginning of period 9,851 9,535
Cash, cash equivalents, and restricted cash – end of period $ 22,982 $ 5,026
Cash, cash equivalents, and restricted cash
Cash and cash equivalents $ 22,480 $ 4,525
Restricted cash 502 501
Total cash, cash equivalents, and restricted cash $ 22,982 $ 5,026
Supplemental disclosure of cash flow information
Cash paid for interest $ 2,160 $ 260
Cash paid for income taxes - -
Noncash investing and financing activities
Reclassification of stock-based compensation to platform development $ 687 $ 309
Offering costs included in accrued expenses and other 1,568 -
Issuance of common stock in connection with settlement of liquidated damages 7,008 -
Issuance of common stock upon conversion of series H preferred stock 511 -

See accompanying notes to condensed consolidated financial statements.

89
~~THEMAVEN,~~THE ARENA GROUP HOLDINGS, INC. AND SUBSIDIARIES
~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~
~~(unaudited)~~
2021 2020
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
Proceeds from issuance of convertible preferred stock - -
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
Deemed dividend on convertible preferred stock - -
~~See accompanying notes to condensed consolidated financial statements.~~
9
~~THEMAVEN, INC. AND SUBSIDIARIES~~
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. ~~Summary of Significant Accounting Policies~~($ in thousands, unless otherwise stated)
1. Summary of Significant Accounting Policies
Basis of Presentation

The condensed consolidated financial statements include the accounts of The Arena Group Holdings, Inc. (formerly known as TheMaven, Inc.) and its wholly owned subsidiaries (“~~Maven”~~The Arena Group” or the “Company”), after eliminating all significant intercompany balances and transactions. The Company does not have any off-balance sheet arrangements. The Company changed its corporate name to The Arena Group Holdings, Inc. from TheMaven, Inc. on February 8, 2022.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the ~~SEC.~~Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“~~U.S.~~ GAAP”) for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements, which are included in ~~Maven’s~~The Arena Group’s Annual Report on Form 10-K ~~(the “Form 10-K”)~~ for the year ended December 31, ~~2020,~~2021, filed with the SEC on ~~August 16, 2021.~~April 1, 2022.

The condensed consolidated financial statements as of ~~September 30, 2021,~~March 31, 2022, and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ are unaudited but, in management’s opinion, include all adjustments necessary for a fair presentation of the results of interim periods. All such adjustments are of a normal recurring nature. The year-end condensed consolidated balance sheet as of December 31, ~~2020,~~2021, was derived from audited financial statements, but does not include all disclosures required by ~~U.S.~~ GAAP. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire fiscal year. The Company’s impact during the first ~~three quarters~~quarter of ~~2021 of~~2022 by the novel coronavirus (“COVID-19”) pandemic has been to a lesser extent than in 2021. With the initial onset of COVID-19, the Company faced significant change in its advertisers’ buying behavior. Since May 2020, there has been a steady recovery in the advertising market in both pricing and volume, which coupled with the return of professional and college sports yielded steady growth in revenues. Given that the Sports Illustrated media business relies on sporting events to generate content and comprises a material portion of the Company’s revenues, the cash flows and results of operations are susceptible to a widespread cancellation of sporting events or a general limitation of societal activity akin to what is widely known to have occurred in the Unites States and elsewhere during the 2020 calendar year and, to a lesser extent, during the 2021 calendar year. Future widespread shutdowns of in-person economic activity could have a material impact on the Company’s business. As a result of the Company’s advertising revenue declining in early 2021 caused by the widespread cancellations of sporting events, the Company ~~has been less than~~is vulnerable to a risk of loss in the near term and it is at least reasonably possible that events or circumstances may occur that could cause an impact in the ~~comparable period~~near term, that depend on the actions taken to prevent the further spread of the prior year. In 2021, restrictions on non-essential work activity have been largely lifted and sporting and other events are being held, with attendance closer to pre-pandemic levels, which has resulted in an increase in traffic and advertising revenue. COVID-19.
The Company ~~expects a continued modest growth~~operates in advertising revenue back toward pre-pandemic levels, however, such growth depends on future developments, including the duration and spread of the COVID-19 pandemic, whether related group gatherings and sports event advisories and restrictions will be put in place again, and the extent and effectiveness of containment and other actions taken, including the percentage of the population that receives COVID-19 vaccinations.one reportable segment.

~~Reclassifications~~Reverse Stock Split

~~Certain prior year amounts have been reclassified~~The accompanying condensed consolidated financial statements and notes to ~~conform~~the condensed consolidated financial statements give effect to ~~current period presentation.~~the reverse stock split for all periods presented that was effective on February 9, 2022. The shares of common stock retained a par value of $0.01 per share. Accordingly, stockholders’ deficiency reflects the reverse stock split by reclassifying from “common stock” to “additional paid-in capital” in an amount equal to the par value of the decreased shares resulting from the reverse stock split. Any fractional shares that would otherwise be issued as a result of the reverse stock split were rounded up to the nearest whole share.
10
Use of Estimates

Preparation of condensed consolidated financial statements in conformity with ~~U.S.~~ GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the allowance for credit losses, fair values of financial instruments, capitalization of platform development, intangible assets and goodwill, useful lives of intangible assets and property and equipment, income taxes, fair value of assets acquired and liabilities assumed in the business acquisitions, determination of the fair value of stock-based compensation and valuation of derivatives liabilities and contingent liabilities, among others. The Company bases its estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
10
~~Contract Modifications~~
~~The Company occasionally enters into amendments to previously executed contracts that constitute contract modifications. The Company assesses each of these contract modifications to determine:~~
● ~~if the additional services and goods are distinct from the services and goods in the original arrangement; and~~
● ~~if the amount of consideration expected for the added services or goods reflects the stand-alone selling price of those services and goods.~~
A contract modification meeting both criteria is accounted for as a separate contract. A contract modification not meeting both criteria is considered a change to the original contract and is accounted for on either a prospective basis as a termination of the existing contract and the creation of a new contract, or a cumulative catch-up basis (see Note 3 and Note 12).
Recently Adopted Accounting Standards

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~, which removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. Certain amendments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. On January 1, 2021, the Company adopted ASU 2019-12 with no material impact to its condensed consolidated financial position, results of operations or cash flows.
In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which updates various codification topics to simplify the accounting guidance for certain financial instruments with characteristics of liabilities and equity, with a specific focus on convertible instruments and the derivative scope exception for contracts in an entity’s own equity and amends the diluted EPS computation for these instruments. On January 1, ~~2021,~~2022, the Company adopted ASU 2020-06 with no material impact to its condensed consolidated financial ~~statements.~~position, results of operations or cash flows.
In ~~October 2020,~~May 2021, the FASB issued ASU ~~2020-08,~~2021-04, ~~Codification Improvements~~ Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, a consensus of the Emerging Issues Task Force (EITF), to ~~Subtopic 310-20 – Receivables – Nonrefundable Fees and Other Costs, which clarifies~~provide explicit guidance on accounting by issuers for modifications or exchanges of freestanding equity-classified written call options that ~~a reporting entity should assess whether a callable debt security purchased at a premium is within~~remain equity classified after the ~~scope of ASC 310-20-35-33 each reporting period, which impacts the amortization period for nonrefundable fees and other costs.~~modification or exchange. On January 1, ~~2021,~~2022, the Company adopted ASU ~~2020-08~~2021-04 with no material impact to its condensed consolidated financial ~~statements.~~position, results of operations, cash flows or disclosures.
~~In October 2020, the FASB issued ASU 2020-10,~~ ~~Codification Improvements~~, which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations. On January 1, 2021, the Company adopted ASU 2020-10 with no material impact to its condensed consolidated financial statements.
~~Recently Issued Accounting Standards~~
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer to account for revenue contracts acquired in a business combination in accordance with Topic 606 as if it had originated the contracts. The acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired contracts. This update should lead to recognition and measurement consistent with what’s reported in the acquiree’s financial statements, provided that the acquiree prepared financial statements in accordance with ~~U.S.~~ GAAP. The new standard marks a change from current ~~U.S.~~ GAAP, under which assets and liabilities acquired in a business combination, including contract assets and contract liabilities arising from revenue contracts, are generally recognized at fair value at the acquisition date. On January 1, 2022, the Company adopted ASU 2021-08 ~~is effective for the Company in the fiscal year beginning after December 15, 2022, including interim periods within the fiscal year, and should~~with no material impact to its condensed financial position, results of operations or cash flows. This new accounting standard will be applied prospectively to business ~~combinations on or after the effective date of the amendment. Early adoption is permitted, including adoption in an interim period. The Company is~~ ~~currently evaluating the impact that adopting this new accounting standard would have on its condensed consolidated financial statements.~~combinations.
11

Loss per Common Share

Basic loss per share is computed using the weighted average number of common shares outstanding during the period and excludes any dilutive effects of common stock equivalent shares, such as stock options, restricted stock, and warrants. All restricted stock awards are considered outstanding but are included in the computation of basic loss per common share only when the underlying restrictions expire, the shares are no longer forfeitable, and are thus vested. All restricted stock units are included in the computation of basic loss per common share only when the underlying restrictions expire, the shares are no longer forfeitable, and are thus vested. Contingently issuable shares are included in basic loss per common share only when there are no circumstances under which those shares would not be issued. Diluted loss per common share is computed using the weighted average number of common shares outstanding and common stock equivalent shares outstanding during the period using the treasury stock method. ~~Common stock equivalent shares are excluded from the computation if their effect is anti-dilutive.~~

11
The Company excluded the outstanding securities summarized below (capitalized terms are ~~defined~~described herein), which entitle the holders thereof to acquire shares of the Company’s common stock, from its calculation of net ~~income~~ loss per common share, as their effect would have been anti-dilutive. Common stock equivalent shares are excluded from the diluted calculations when a net loss is incurred as they would be anti-dilutive.
Schedule of Net Income (Loss) Per Common Share
2022 2021
As of September 30, As of March 31,
2021 2020 2022 2021
Series G convertible preferred stock 188,791 188,791 8,582 8,582
Series H Preferred Stock 59,243,926 58,206,061 2,004,971 2,699,312
Series I Preferred Stock - 46,200,000
Series J Preferred Stock - 43,584,500
Indemnity shares of common stock - 412,500
Restricted Stock Awards 4,147,936 3,674,996 194,806 14,394
Financing Warrants 2,882,055 2,882,055 116,118 131,003
ABG Warrants 21,989,844 21,989,844 999,540 999,540
AllHipHop warrants 125,000 - 5,681 5,681
Publisher Partner Warrants 789,541 789,541 26,893 35,889
Common Stock Awards 6,861,973 8,033,936
Common Equity Awards 161,367,349 82,400,952
2016 Plan 286,151 321,761
2019 Plan
6,326,538
7,179,349
Outside Options 3,050,000 2,982,111 138,637 138,637
Total 260,646,415 271,345,287 10,107,917 11,534,148

2. ~~Acquisitions~~
~~Fulltime Fantasy Sports, LLC~~ – On July 15, 2021, the Company entered into an asset purchase agreement with Fulltime Fantasy Sports, LLC, a Delaware limited liability company (“Fulltime Fantasy”), where it purchased certain intellectual property (including databases, documents and certain rights related to the intellectual property) and subscriber and customer records (collectively the “Purchased Assets”) and assumed certain liabilities related to the Purchased Assets. The purchase price consisted of: (1) a cash payment of $~~335,000~~ ~~(paid in advance) including transaction related costs of $35,000, (2) the issuance of~~ ~~750,000~~ ~~shares the Company’s common stock (subject to certain vesting earn-out provisions and certain buy-back rights), with~~ ~~250,000~~ shares of the Company’s common stock that vested at closing; and the remaining consideration subject to certain terms and conditions for material breach of certain agreements and acceleration provisions under certain conditions consisting of: (3) a cash earn-out payment of $~~225,000~~ ~~and the vesting of~~ ~~250,000~~ ~~shares of the Company’s common stock on December 31, 2021, and (4) a cash earn-out payment of $225,000~~ ~~and the vesting of~~ ~~250,000~~ ~~shares of the Company’s common stock on June 30, 2022.~~
~~The composition of the purchase price is as follows:~~
~~Schedule of Preliminary Purchase Price~~

Total purchase consideration $ 1,256,887
Cash (including $35,000 of transaction related costs) $ 335,000
Restricted stock 167,500
Deferred cash payments 419,387
Deferred restricted stock 335,000
Total purchase consideration $ 1,256,887

~~The purchase price resulted in $1,256,887~~ ~~(including $35,000~~ ~~of transaction related costs)~~ ~~being assigned to a database acquired at the closing date of the acquisition. The useful life for the database is three years (~~3~~.0 years).~~
122. Balance Sheet Components
~~College Spun Media Incorporated~~ ~~– On June 4, 2021, the Company acquired all of the issued and outstanding shares of capital stock of College Spun Media Incorporated, a New Jersey corporation (“The Spun”), for an aggregate of $11,829,893~~ ~~in cash and the issuance of an aggregate of~~ ~~4,285,714~~ restricted shares of the Company’s common stock, with one-half of the shares vesting on the first anniversary of the closing date and the remaining one-half of the shares vesting on the second anniversary of the closing date, subject to a customary working capital adjustment based on cash and accounts receivable as of the closing date. The cash payment consists of: (i) $~~10,829,893~~ ~~paid at closing (of the cash paid at closing, $829,893~~ ~~represents adjusted cash pursuant to the working capital adjustments), and (ii) $500,000~~ ~~to be paid on the first anniversary of the closing and $500,000~~ to be paid on the second anniversary date of the closing. The vesting of shares of the Company’s common stock is subject to the continued employment of certain selling employees. The Spun operates in the United States.
~~The composition of the preliminary purchase price is as follows:~~
~~Schedule of Preliminary Purchase Price~~

Cash $ 10,829,893
Deferred cash payments 905,109
Total purchase consideration $ 11,735,002
~~The Company incurred $128,076~~ in transaction costs related to the acquisition, which primarily consisted of legal and accounting. The acquisition related expenses were recorded in general and administrative expense on the condensed consolidated statements of operations.
The preliminary purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed at the closing date of the acquisition based upon their respective fair values as summarized below:
~~Summary of Price Allocation for Acquisition~~

Cash $ 3,772,944
Accounts receivable 1,833,323
Other current assets 4,567
Goodwill 6,722,495
Accrued expenses (1,500 )
Deferred tax liabilities (596,827 )
Net assets acquired $ 11,735,002
The excess of purchase price over the fair value amounts assigned to the assets acquired and liabilities assumed represents goodwill from the acquisition. Goodwill is recorded as a non-current asset that is not amortized but is subject to an annual review for impairment. No portion of the goodwill will be deductible for tax purposes.
~~Petametrics Inc.~~ – On March 9, 2020, the Company entered into an asset purchase agreement with Petametrics Inc., doing business as LiftIgniter, a Delaware corporation (“LiftIgniter”), where it purchased substantially all the assets, including the intellectual property and excluding certain accounts receivable, and assumed certain liabilities. The purchase price consisted of: (1) a cash payment of $~~184,087~~ ~~on February 19, 2020, in connection with the repayment of all outstanding indebtedness, (2) at closing, a cash payment of $131,202, (3) collections of certain accounts receivable, (4) on the first anniversary date of the closing, the issuance of restricted stock for an aggregate of up to~~ ~~312,500~~ ~~shares of the Company’s common stock (of which~~ ~~256,661~~ ~~shares of the Company’s common stock were issued during the three months ended June 30, 2021 with~~ ~~55,839~~ ~~shares~~ ~~to be issued), and (5) on the second anniversary date of the closing, the issuance of restricted stock for an aggregate of up to~~ ~~312,500~~ ~~shares (subject to certain indemnifications) of the Company’s common stock.~~
~~The composition of the purchase price is as follows:~~
~~Schedule of Preliminary Purchase Price~~

Cash $ 315,289
Indemnity restricted stock units for shares of common stock 500,000
Total purchase consideration $ 815,289
13
The purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed at the closing date of the acquisition based upon their respective fair values as summarized below:
~~Summary of Price Allocation for Acquisition~~

Accounts receivable $ 37,908
Developed technology 917,762
Accounts payable (53,494 )
Unearned revenue (86,887 )
Net assets acquired $ 815,289
~~The useful life for the developed technology is three years (~~3~~.0 years).~~
3. ~~Balance Sheet Components~~

The components of certain balance sheet amounts are as follows:
Accounts Receivable – Accounts receivable are presented net of allowance for doubtful accounts. The allowance for doubtful accounts as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was $~~675,806~~1,578 ~~and $892,352, respectively.~~.

Subscription Acquisition Costs – ~~Subscription~~As of March 31, 2022 and December 31, 2021, subscription acquisition costs ~~include the incremental costs~~were $32,247 (short-term of ~~obtaining a contract with a customer, paid to external parties, if it expects to recover those costs. The current portion~~$24,940 and long-term of ~~the subscription~~$7,307) and $38,397 (short-term of $30,162 and long-term of $8,235), respectively. Subscription acquisition costs as of ~~September 30, 2021 and December~~March 31, ~~2020 was~~2022 presented as current assets of $~~31,257,268~~24,940 are expected to be amortized over a one year period, or through March 31, 2023and $~~28,146,895~~7,307~~, respectively, on~~ presented as long-term assets are expected to be amortized after the ~~condensed consolidated balance sheets. The noncurrent portion of the subscription acquisition costs as of September 30, 2021 and December~~one year period ending March 31, ~~2020 was $18,682,545~~ 2023~~and $13,358,585, respectively, on the condensed consolidated balance sheets.~~
Certain contract amendments resulted in a modification to the subscription acquisition costs that will be recognized on a prospective basis in the same proportion as the revenue that has not yet been recognized (further details are provided under the heading ~~Contract Balances~~ ~~in Note 12)~~.

Property and Equipment – Property and equipment are summarized as follows:
Schedule of Property and Equipment
March 31, 2022 December 31, 2021
As of As of
September 30, 2021 December 31, 2020 March 31, 2022 December 31, 2021
Office equipment and computers $ 1,267,898 $ 1,341,292 $ 1,407 $ 1,341
Furniture and fixtures 1,005 19,997 1 1
Leasehold improvements - 345,516
1,268,903 1,706,805
Gross property and equipment 1,408 1,342
Less accumulated depreciation and amortization (600,240 ) (577,367 ) (815 ) (706 )
Net property and equipment $ 668,663 $ 1,129,438 $ 593 $ 636

Depreciation and amortization expense for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was $~~114,165~~114 and $~~102,067~~110, respectively. ~~Depreciation and amortization expense for the nine months ended September 30, 2021 and 2020 was $333,891~~ ~~and $536,729~~, respectively. Depreciation and amortization expense is included in selling and marketing expenses and general and administrative expenses, as appropriate, on the condensed consolidated statements of operations.

1412

Platform Development – Platform development costs are summarized as follows:
Summary of Platform Development Costs
September 30, 2021 December 31, 2020 March 31, 2022 December 31, 2021
As of As of
September 30, 2021 December 31, 2020 March 31, 2022 December 31, 2021
Platform development $ 19,497,520 $ 16,027,428 $ 16,699 $ 21,997
Less accumulated amortization (11,485,813 ) (8,671,820 ) (6,686 ) (12,698 )
Net platform development $ 8,011,707 $ 7,355,608 $ 10,013 $ 9,299
A summary of platform development activity for the ~~nine~~three months ended ~~September 30, 2021 and year ended December~~March 31, ~~2020~~2022 is as follows:
Summary of Platform Development Cost Activity
September 30, 2021 December 31, 2020
As of
September 30, 2021 December 31, 2020
Platform development beginning of period $ 16,027,428 $ 10,678,692 $ 21,997
Payroll-based costs capitalized during the period 3,016,924 3,750,541
Payroll-based costs capitalized 1,582
Less dispositions
(7,356
)
Total capitalized costs 19,044,352 14,429,233 16,223
Stock-based compensation 1,347,624 1,608,995 687
Dispositions (894,456 ) (10,800 )
Impairments (211 )
Platform development end of period $ 19,497,520 $ 16,027,428 $ 16,699
Amortization expense for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ was $~~1,143,673~~1,344 and $~~909,631~~1,069, respectively. Amortization expense for platform development is included in cost of revenues on the ~~nine~~condensed consolidated statements of operations. For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, was~~impairment charges of $~~3,272,890~~211 and $~~2,868,289~~0, ~~respectively.~~respectively, have been record for platform development.

Intangible Assets – Intangible assets subject to amortization consisted of the following:
Schedule of Intangible Assets Subjects to Amortization
As of September 30, 2021 As of December 31, 2020 As of March 31, 2022 As of December 31, 2021
Carrying Amount Accumulated Amortization Net Carrying Amount

Carrying Amount
Accumulated Amortization Net Carrying Amount Carrying Amount Accumulated Amortization Net Carrying Amount Carrying Amount Accumulated Amortization Net Carrying Amount
Developed technology $ 19,070,857 $ (11,576,450 ) $ 7,494,407 $ 19,070,857 $ (8,283,740 ) $ 10,787,117 $ 17,333 $ (12,214 ) $ 5,119 $ 17,579 $ (11,465 ) $ 6,114
Noncompete agreement 480,000 (480,000 ) - 480,000 (480,000 ) -
Trade name 3,328,000 (712,292 ) 2,615,708 3,328,000 (503,342 ) 2,824,658 3,328 (851 ) 2,477 3,328 (782 ) 2,546
Brand name 5,175 (427 ) 4,748 5,175 (298 ) 4,877
Subscriber relationships 73,458,799 (28,992,944 ) 44,465,855 73,458,799 (18,105,041 ) 55,353,758 73,459 (36,252 ) 37,207 73,459 (32,623 ) 40,836
Advertiser relationships 2,240,000 (510,922 ) 1,729,078 2,240,000 (332,515 ) 1,907,485 2,240 (629 ) 1,611 2,240 (570 ) 1,670
Database 2,396,887 (904,030 ) 1,492,857 1,140,000 (531,183 ) 608,817 2,397 (1,304 ) 1,093 2,397 (1,104 ) 1,293
Subtotal amortizable intangible assets 100,974,543 (43,176,638 ) 57,797,905 99,717,656 (28,235,821 ) 71,481,835 103,932 (51,677 ) 52,255 104,178 (46,842 ) 57,336
Website domain name 20,000 - 20,000 20,000 - 20,000 - - - 20 - 20
Total intangible assets $ 100,994,543 $ (43,176,638 ) $ 57,817,905 $ 99,737,656 $ (28,235,821 ) $ 71,501,835 $ 103,932 $ (51,677 ) $ 52,255 $ 104,198 $ (46,842 ) $ 57,356

Amortization expense for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was $~~5,038,837~~5,055 and $~~5,093,076~~4,951, ~~respectively. Amortization~~respectively, of which amortization expense for ~~the nine months ended September 30, 2021 and 2020 was~~developed technology of $~~14,940,817~~967 and $~~15,220,591~~1,098, ~~respectively.~~ ~~NaN~~respectively, is included in cost of revenues on the condensed consolidated statements of operations. For the three months ended March 31, 2022 and 2021, impairment charges of $46 and $0, respectively, have been recorded ~~during~~for the ~~nine months September 30, 2021 and 2020.~~intangible assets.

~~Other Long-term Liabilities~~ ~~– Other long-term liabilities consisted of the following:~~
~~Schedule of Other Long-term Liabilities~~
September 30, 2021 December 31, 2020
As of
September 30, 2021 December 31, 2020
Lease termination payments $ 7,269,469 $ 541,381
Deferred cash payments 666,677 -
Other 136,296 211,984
Other long-term liabilities $ 8,072,442 $ 753,365
153. Leases
4. ~~Leases~~

The Company’s ~~leases are primarily comprised of~~ real estate ~~leases~~lease for the use of office space ~~with certain~~was subleased during the year ended December 31, 2021 (as further described below). The Company’s current lease ~~arrangements that contain equipment. The Company determines whether an arrangement that provides control over the use of an asset~~ is a lease at inception. Lease assets and liabilities are recognized upon commencement of the lease based on the present value of the future minimum lease payments over the lease term. The lease term includes options to extend the lease when it is reasonably certain that the Company will exercise that option. Substantially, all of the leases are long-term operating ~~leases for facilities~~lease with a remaining fixed payment ~~terms between~~term of ~~1.5~~ 2.51~~and~~ ~~7.9~~ years.
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The table below presents supplemental information related to operating leases:
Schedule of Supplemental Information Related to Operating Leases
Nine Months Ended September 30, 2021
Operating cash flows for operating leases $ 2,901,529
Noncash lease liabilities arising from obtaining operating leased assets during the period $ -
Weighted-average remaining lease term 6.00
Weighted-average discount rate 9.90 %
Three Months Ended March 31,
2022 2021
Operating lease costs during the period (1) $ 179 $ 2,718
Cash payments included in the measurement of operating lease liabilities during the period $ 117 $ 2,787
Weighted-average remaining lease term (in years) as of period-end 2.51 11.02
Weighted-average discount rate during the period 9.9 % 13.6 %
(1) Operating lease costs is presented net of sublease income that is not material.

The Company generally utilizes its incremental borrowing rate based on information available at the commencement of the lease in determining the present value of future payments since the implicit rate for ~~most of~~ the Company’s leases is not readily determinable.

Variable lease expense includes rental increases that are not fixed, such as those based on amounts paid to the lessor based on cost or consumption, such as maintenance and utilities.

~~Operating~~The components of operating lease costs ~~recognized for the three months ended September 30, 2021 and 2020~~ were $as follows:
~~642,926~~ ~~and $982,414, respectively.~~Schedule of Operating ~~lease costs recognized for the nine months ended September 30, 2021 and 2020 were $2,458,229~~Lease Costs ~~and $3,082,499, respectively.~~
2022 2021
Three Months Ended March 31,
2022 2021
Operating lease costs:
Cost of revenue $ - $ 1,797
Selling and marketing - 516
General and administrative 234 423
Total operating lease costs (1) 234 2,736
Sublease income (55 ) (18 )
Operating cost $ 179 $ 2,718
(1) Includes certain costs associated with a business membership agreement that permits access to certain office space of $170, see below.

Maturities of the operating lease ~~liabilities~~liability as of ~~September 30, 2021~~March 31, 2022 are summarized as follows:
Summary of Maturity of Lease Liabilities
Years Ending December 31,
2021 (remaining three months of the year) $ 140,134
2022 472,084
2023 486,247
2024 500,834
2025 512,019
Thereafter 896,034
Minimum lease payments 3,007,352
Less imputed interest (753,176 )
Present value of operating lease liabilities $ 2,254,176
Current portion of operating lease liabilities $ 282,011
Long-term portion of operating lease liabilities 1,972,165
Total operating lease liabilities $ 2,254,176
Years Ending December 31,
2022 (remaining nine months of the year) $ 355
2023 486
2024 373
Minimum lease payments 1,214
Less imputed interest (144 )
Present value of operating lease liability $ 1,070
Current portion of operating lease liability $ 387
Long-term portion of operating lease liability 683
Total operating lease liability $ 1,070

~~Effective September 30,~~Sublease Agreement – In November 2021, the Company ~~terminated~~entered into an agreement to sublease its leased office space for the duration of its operating lease through September 2024. As of March 31, 2022, the Company is entitled to receive sublease income of $582.
Business Membership – Effective October 1, 2021, the Company entered into a business membership agreement with York Factory LLC, doing business as SaksWorks, that permits access to certain office space with furnishings, referred to as SaksWorks Memberships (each membership provides a certain ~~lease arrangement for office space and as a result, relinquished~~number of accounts that equate to the use of the space ~~and derecognized a right-of-use asset of $15,673,474, a lease liability of $17,934,940~~ ~~and recorded a penalty~~ ~~upon termination of $9,606,121~~ ~~(as discounted since the amount~~granted). The term of the ~~liability and timing of the Cash Payments, as defined below, are fixed), resulting in a net loss upon termination of~~agreement was for 27 months, with 21 months remaining at $~~7,344,655~~57 , which has been reflected in general and administrative expenses on the condensed consolidated statements of operations. In connection with the termination, the Company agreed to pay the landlord cash of $~~10,000,000~~ ~~(the “Cash Payments”) and $1,475,000~~ ~~in market rate advertising. The Cash Payments are due as follows: $1,000,000~~ ~~on December 1, 2021; $1,000,000~~ on ~~October 1, 2022; $4,000,000~~ ~~on October 1, 2023;~~ ~~and $4,000,000~~ ~~on October 1, 2024.~~per month for 110 accounts.

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4. Line of Credit

5. ~~Line of Credit~~
~~FastPay Credit Facility~~ – On ~~February 27, 2020,~~December 6, 2021, the Company entered into aan amendment to its financing and security agreement for its line of credit with FPP Finance LLC (“FastPay”), that was originally entered into on February 27, 2020, pursuant to which ~~FastPay~~(i) the maximum amount of advances available was increased to $25,000 from $15,000, (ii) the interest rate on the facility applicable margin was decreased to 6.0% per annum from 8.5% per annum (the facility bears interest at the LIBOR rate plus the applicable margin), and (iii) the maturity date was extended ~~a $~~to ~~15,000,000~~February 28, 2024. The line of credit is for working capital purposes and is secured by a first lien on all of the Company’s cash and accounts receivable and a second lien on all other assets. ~~Borrowings under the facility bear interest at the LIBOR Rate plus~~ ~~8.50%~~ ~~and have a final maturity~~As of ~~February 6,~~March 31, 2022~~. The balance outstanding as of September 30, 2021~~ and December 31, ~~2020~~2021, the balance outstanding under the FastPay line of credit was $~~6,705,391~~9,291 and $~~7,178,791~~11,988, respectively. ~~As of the date these condensed consolidated financial statements were issued or were available to be issued the balance outstanding was approximately $9,400,000~~.

6. ~~Restricted Stock Liabilities~~
5. Restricted Stock Liabilities

On December 15, 2020, the Company entered into an amendment for certain restricted stock awards and units that were previously issued to certain employees in connection with a previous ~~merger.~~merger (the “HubPages merger”). Pursuant to the amendment, the Company committed to repurchase ~~1,064,549~~48,389 vested restricted stock awards as of December 31, 2020 at a price of $~~4.00~~88.00 per share in 24 equal monthly installments on the second business day of each calendar month beginning January 4, 2021, subject to certain conditions.

The following table presents the components of the restricted stock liabilities:
Schedule of Components of Restricted Stock Liabilities
As of
September 30, 2021 December 31, 2020
Restricted stock liabilities recorded upon modification of the restricted stock awards and units (1,064,549 restricted stock to be purchased at $4.00 per share) $ 4,258,196 $ 4,258,196
Less imputed interest (457,462 ) (457,462 )
Present value of restricted stock liabilities 3,800,734 3,800,734
Less payments (excluding imputed interest) (1,342,379 ) (177,425 )
Restricted stock liabilities $ 2,458,355 $ 3,623,309
Current portion of restricted stock liabilities (included in accrued expenses and other) $ 1,936,734 $ 1,627,499
Long-term portion of restricted stock liabilities 521,621 1,995,810
Total restricted stock liabilities $ 2,458,355 $ 3,623,309
March 31, 2022 December 31, 2021
As of
March 31, 2022 December 31, 2021
Restricted stock liabilities (before imputed interest) $ 2,307 $ 3,801
Less imputed interest (78 ) (177 )
Present value of restricted stock liabilities 2,229 3,624
Less payments during the period (710 ) (1,472 )
Restricted stock liabilities at end of period (reflected in accrued expenses and other) $ 1,519 $ 2,152

7.The Company recorded the repurchase of ~~Fair Value Measurements~~8,064 and 6,049 shares of the Company’s restricted common stock during the three months ended March 31, 2022 and 2021, respectively, on the condensed consolidated statements of stockholders’ deficiency. On April 4, 2022, the Company paid $1,597 for the remaining 18,134 shares of the Company’s restricted common stock that were outstanding as of March 31, 2022 that were subject to repurchase.
6. Liquidated Damages Payable
Liquidated damages were recorded as a result of the following: (i) certain registration rights agreements provide for damages if the Company does not register certain shares of the Company’s common stock within the requisite time frame (the “Registration Rights Damages”); and (ii) certain securities purchase agreements provide for damages if the Company does not maintain its periodic filings with the SEC within the requisite time frame (the “Public Information Failure Damages”).
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Obligations with respect to the liquidated damages payable are summarized as follows:
Summary of Liquidated Damages
As of March 31, 2022

Registration
Rights
Damages

Public
Information
Failure
Damages

Accrued
Interest
Balance
MDB common stock to be issued (1) $ 15 $ - $ - $ 15
Series H convertible preferred stock 618 625 457 1,700
Convertible debentures - 704 216 920
Series J convertible preferred stock 932 932 356 2,220
Series K convertible preferred stock 95 379 40 514
Total $ 1,660 $ 2,640 $ 1,069 $ 5,369
As of December 31, 2021

Registration
Rights
Damages

Public
Information
Failure
Damages

Accrued
Interest
Balance
MDB common stock to be issued (1) $ 15 $ - $ - $ 15
Series H convertible preferred stock 1,164 1,172 792 3,128
Convertible debentures - 873 242 1,115
Series I convertible preferred stock 1,386 1,386 613 3,385
Series J convertible preferred stock 1,560 1,560 490 3,610
Series K convertible preferred stock 180 722 50 952
Total $ 4,305 $ 5,713 $ 2,187 $ 12,205
(1) Consists of shares of common stock issuable to MDB Capital Group, LLC (“MDB”).
The Company will continue to accrue interest on the liquidated damages balance at 1.0% per month based on the balance outstanding as of March 31, 2022, or $5,369, until paid. There is no scheduled date when the unpaid liquidated damages become due.
As of December 31, 2021, the short-term and long-term liquidated damages payable were $5,197 and $7,008, respectively. The long-term portion was converted into shares of the Company’s common stock on January 24, 2022, as further described below.
On January 24, 2022, the Company entered into several stock purchase agreements with several investors the Company was liable to for liquidated damages, pursuant to which the Company issued an aggregate of 505,671 shares of its common stock at a price equal to $13.86 per share (determined based on the volume-weighted average price of the Company’s common stock at the close of trading on the sixty (60) previous trading days), to the investors in lieu of an aggregate of $7,008 owed in liquidated damages. The Company agreed that it would prepare and file as soon as reasonably practicable, a registration statement covering the resale of these shares of the Company’s common stock issued in lieu of payment of these liquidated damages in cash. The Company recorded $6,685 in connection with the issuance of shares of the Company’s common stock and recognized a gain of $323 on the settlement of the liquidated damages, which was recorded within additional paid-in capital on the condensed consolidated statement of stockholders’ deficiency.
7. Fair Value Measurements

The Company estimates the fair value of financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts the Company would realize upon disposition.

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The fair value hierarchy consists of three broad levels of inputs that may be used to measure fair value, which are described below:

● Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities;
● Level 22. Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
● Level 33. Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates.

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The Company ~~accounts~~accounted for certain warrants (as described under the heading Common Stock Warrants in Note 10) as derivative liabilities, which requires the Company to carry such amounts on its condensed consolidated balance sheets as a liability at fair value, as adjusted at each reporting period-end. The Company accounted for the embedded conversion features of the 12% senior convertible debentures (the “12% Convertible Debentures”) as derivative liabilities, which required the Company to carry such amounts on its condensed consolidated balance sheets as a liability at fair value, as adjusted at each reporting period-end. As of December 31, ~~2020, there was no longer any principal or accrued but unpaid interest outstanding under~~2021, the ~~12% Convertible Debentures since certain holders converted the debt into shares of the Company’s common stock~~Strome Warrants and ~~certain holders~~B. Riley Warrants (as described in Note 10) were ~~paid in cash.~~classified within equity.

These warrants are and the embedded conversion features were classified as Level 3 within the fair-value hierarchy. Inputs to the valuation model include the Company’s publicly quoted stock price, the stock volatility, the risk-free interest rate, the remaining life of the warrants and debentures, the exercise price or conversion price, and the dividend rate. The Company uses the closing stock price of its common stock over an appropriate period of time to compute stock volatility.
~~Warrant Derivative Liabilities~~
~~The following table presents the assumptions used for the warrant derivative liabilities under the Black-Scholes option-pricing model:~~
~~Schedule of Warrant Derivative Liabilities~~
As of September 30, 2021 As of December 31, 2020
Strome Warrants B. Riley Warrants Strome Warrants B. Riley Warrants
Expected life 1.70 4.50 2.45 4.79
Risk-free interest rate 0.28 % 0.76 % 0.13 % 0.36 %
Volatility factor 153.59 % 142.59 % 150.55 % 140.95 %
Dividend rate 0 % 0 % 0 % 0 %
Transaction date closing market price $ 0.38 $ 0.38 $ 0.60 $ 0.60
Exercise price $ 0.50 $ 0.33 $ 0.50 $ 0.33
The following table represents the carrying amounts and change in valuation for the Company’s warrants accounted for as a derivative liability and classified within Level 3 of the fair-value hierarchy:
~~Schedule of Valuation Activity for Warrants Accounted for Derivative Liability~~
As of and for the Nine Months Ended September 30, 2021 As of and for the Nine Months Ended September 30, 2020
Carry Amount at Beginning of Period Change in Valuation Carrying Amount at End of Period Carry Amount at Beginning of Period Change in Valuation Carrying Amount at End of Period
Strome Warrants $ 704,707 $ (339,924 ) $ 364,783 $ 1,036,687 $ 63,160 $ 1,099,847
B. Riley Warrants 443,188 (156,888 ) 286,300 607,513 71,750 679,263
Total $ 1,147,895 $ (496,812 ) $ 651,083 $ 1,644,200 $ 134,910 $ 1,779,110
For the three months ended ~~September 30,~~March 31, 2021, ~~and 2020,~~ the change in valuation of warrant derivative liabilities of $665 was recognized as other ~~(expense) income~~expense on the condensed consolidated statement of ~~operations, was~~ operations.
~~$801,755~~ ~~and ($517,405~~), respectively. For the nine months ended September 30, 2021 and 2020, the change in valuation of warrant derivative liabilities recognized as other (expense) income on the condensed consolidated statement of operations, as described in the above table, was ~~$496,812~~ ~~and~~ ~~($134,910), respectively.~~
8. Long-term Debt

~~Embedded Derivative Liabilities~~
~~For the three months ended September 30, 2020, the change in valuation of embedded derivative liabilities recognized as other (expense) on the condensed consolidated statements of operations was ($2,370,000~~). ~~For the nine months ended September 30, 2020, the change in valuation of embedded derivative liabilities recognized as other income on the condensed consolidated statements of operations was $2,173,000~~.
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8. ~~Long-term Debt~~
~~12% Second Amended~~ Senior Secured ~~Notes~~Note

~~Below is a summary~~As of March 31, 2022 and December 31, 2021, the ~~various amended and restated notes, as well as various amendments thereto, to the~~ 12%Company’s outstanding obligation under its senior secured note ~~that was originally issued on June 10, 2019,~~with BRF Finance Co., LLC, an affiliated entity of B. Riley Financial, Inc. (“B. Riley”), in its capacity as agent for ~~gross proceeds of $20,000,000. The transactions leading up to~~ the ~~12% second amended~~purchasers and ~~restated note that~~as purchaser, is ~~outstanding~~summarized as ~~of September 30, 2021 consisted of:~~follows:

● ~~Amended~~On March 24, 2020, the Company entered into a second amended and restated note when the principal balance outstanding under its note issued on June ~~14,~~19, 2019 ~~where the Company received gross proceeds of~~was $~~48,000,000, together with the $20,000,000~~51,336 ~~gross proceeds received on June 10, 2019 for total gross proceeds of $68,000,000~~(including accrued interest), due on June 14, 2022;
● ~~First amendment to~~ (as further amended). The terms of the ~~amended and restated~~ note ~~issued on August 27, 2019, where~~also permitted the Company ~~received gross proceeds of $3,000,000~~;
● ~~Second amendment to the amended and restated note issued on February 27, 2020, where the Company issued a $3,000,000~~ ~~letter of credit to the Company’s landlord for leased premises; and~~
● ~~Second amended and restated note issued on March 24, 2020, where the Company was permitted~~ to enter into a ~~15.0%~~ ~~delayed draw term note,~~Delayed Draw Term Note (as described below), in the aggregate principal amount of $~~12,000,000~~12,000.;
● ~~First~~On October 23, 2020, the Company entered into a first amendment to second amended and restated note issued on March 24, ~~2020 was entered into on October 23,~~ 2020 (“Amendment 1”), where the maturity date was changed to December 31, 2022 (as further amended) from June 14, 2022, subject to certain acceleration conditions and interest payable on the ~~notes~~note on September 30, 2020, December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021, and December 31, 2021 will be payable in-kind in arrears on the last day of such fiscal quarter. Alternatively, at the option of the holder, such interest amounts originally could have been paid in shares of previously designated Series K convertible preferred stock (the “Series K Preferred Stock”); however, after December 18, 2020, the date the Series K Preferred Stock converted into shares of the Company’s common stock, such interest amounts can be converted into shares of the Company’s common stock based upon the conversion rate specified in the Certificate of Designation for the Series K Preferred Stock, subject to certain ~~adjustments. During the three months ended September 30, 2021, the Company filed a Certificate of Elimination, which eliminated designation of the Series K Preferred Stock.~~adjustments;

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● ~~Second~~On May 19, 2021, the Company entered into a second amendment to the second amended and restated note issued March 24, 2020 ~~was entered into on May 19, 2021~~ (“Amendment 2”), ~~with BRF Finance Co., LLC, an affiliated entity of B. Riley Financial, Inc. (“B. Riley”), in its capacity as agent for the purchasers and as purchaser,~~ pursuant to which: (i) the interest rate on the ~~12%~~ ~~Second Amended~~ Senior Secured ~~Notes,~~Note, as defined below, decreased from a rate of ~~12%~~12.0% per annum to a rate of ~~10%~~ 10.0%per annum; and (ii) the Company agreed that within one (1) business day after receipt of cash proceeds from any issuance of equity interests, it will prepay the certain obligations in an amount equal to such cash proceeds, net of underwriting discounts and commissions; provided, that, this mandatory prepayment obligation does not apply to any proceeds that the Company received from shares of the Company’s common stock issued pursuant to ~~the~~a certain securities purchase agreement ~~(as further described below under the heading~~ ~~Common Stock Private Placement~~ ~~in Note 10)~~ during the 90-day period commencing on May 20, ~~2021.~~2021;
● On December 6, 2021, the Company entered into a third amendment to the second amended and restated note issued March 24, 2020 (“Amendment 3”), where the Company was permitted to increase the FastPay line of credit in an aggregate principal amount not to exceed $25,000; and
● On January 23, 2022, the Company entered into a fourth amendment to the second amended and restated note issued March 24, 2020 (“Amendment 4”), where the maturity date on the note was extended to (i) December 31, 2023 from December 31, 2022 upon the consummation of the equity financing on February 15, 2022 (further details are provided below), or (ii) the date accelerated pursuant to certain terms of Amendment 4.

Collectively, the ~~amended and restated notes and amendments thereto and the~~ second amended and restated ~~notes~~note and Amendment 1, Amendment 2, Amendment 3 and Amendment 24 thereto are referred to as the ~~“12% Second Amended Senior~~“Senior Secured ~~Notes,~~Note,” with all borrowings collateralized by substantially all assets of the Company.
After the date of Amendment 4, interest on the note will be payable, at the agent’s sole discretion, either (a) in cash quarterly in arrears on the last day of each fiscal quarter or (b) by continuing to add such interest due on such payment dates to the principal amount of the note. Interest on the Senior Secured Note will accrue for each calendar quarter on the outstanding principal amount of the note at an aggregate rate of 10.0% per annum, subject to adjustment in the event of default. Further, interest that was payable during fiscal years 2020 and 2021 and added to the principal amount under the note remains subject to the conversion election under Amendment 1.

Delayed Draw Term Note

OnAs of March ~~24, 2020,~~31, 2022 and December 31, 2021, the ~~Company entered into a~~ ~~15%~~Company’s outstanding obligation under its delayed draw term note ~~(the “Delayed Draw Term Note”) pursuant to the second amended and restated note purchase agreement, in the aggregate principal amount of $12,000,000~~.with B. Riley is summarized as follows:
● On March 24, 2020, the Company entered into a delayed draw term note (the “Delayed Draw Term Note”) with an interest rate of 15.0% per annum, pursuant to the second amended and restated note purchase agreement, in the aggregate principal amount of $12,000. The terms of the note provided that up to $8,000 in principal amount was due on March 31, 2021;
● On March 24, 2020, the Company drew down $6,914 under the Delayed Draw Term Note, with interest payable in-kind in arrears on the last day of each fiscal quarter;
● On October 23, 2020, pursuant to the terms of Amendment 1, the maturity date of the Delayed Draw Term Note was changed to March 31, 2022 (as further amended) from March 31, 2021. Amendment 1 also provided that the holder, could originally elect, in lieu of receipt of cash for payment of all or any portion of the interest due or cash payments up to a certain conversion portion of the Delayed Draw Term Note, to receive shares of Series K Preferred Stock; however, after December 18, 2020, the date the Series K Preferred Stock converted into shares of the Company’s common stock, the holder may elect, in lieu of receipt of cash for such amounts, shares of the Company’s common stock at the price the Company last sold shares of the Company’s common stock;
● On October 23, 2020, $3,367, including principal and accrued interest of the Delayed Draw Term Note, converted into shares of the Company’s Series K Preferred Stock, which shares were further converted into shares of the Company’s common stock;

1918
● On May 19, 2021, pursuant to Amendment 2, the interest rate on the Delayed Draw Term Note decreased to a rate of 10.0% per annum from a rate of 15.0% per annum;
● On December 28, 2021, the Company drew down $5,086 under the Delayed Draw Term Note, and after payment of commitment and funding fees paid of $509, the Company received net proceeds of $4,578; and
● On February 15, 2023, pursuant to Amendment 4, the maturity date on the Delayed Draw Term Note was extended to (i) December 31, 2022 from March 31, 2022 for $5,925 of principal due and (ii) December 31, 2023 from March 31, 2022 for $4,000 of principal due, subject to certain acceleration terms.

~~On March 24, 2020, the Company drew down $6,913,865~~ ~~under the Delayed Draw Term Note, and after payment of commitment and funding fees paid of $793,109, and other of its legal fees and expenses~~Amendment 4 also provided that ~~were incurred, the Company received net proceeds of $6,000,000. The net proceeds were used for working capital and general corporate purposes. Additional borrowings under the Delayed Draw Term Note requested by the Company may~~interest will be ~~made~~payable, at the ~~option of the purchasers, subject to certain conditions. Up to $8,000,000~~agent’s sole discretion, either (a) in ~~principal amount under the note was originally due on~~ ~~March 31, 2021. Interest on amounts outstanding under the note was payable in-kind~~cash quarterly in arrears on the last day of each fiscal ~~quarter.~~
On October 23, 2020, pursuant to the terms of Amendment 1, the maturity date of the Delayed Draw Term Note was changed from March 31, 2021 to March 31, 2022. Amendment 1 also provided that the holder, could originally elect,quarter or (b) in lieu of receipt of cash for payment of all or any portion of the interest due or cash payments up to a certain conversion portion of the Delayed Draw Term Note, to receive shares of Series K Preferred Stock; however, after December 18, 2020, the date the Series K Preferred Stock converted into shares of the Company’s common stock, the holder may elect,kind quarterly in ~~lieu of receipt of cash for such amounts, shares of the Company’s common stock at the price the Company last sold shares of the Company’s common stock.~~
~~On May 19, 2021, pursuant to Amendment 2, the interest rate~~arrears on the ~~Delayed Draw Term Note decreased from a~~last day of each fiscal quarter, and will accrue for each fiscal quarter on the principal amount outstanding under the note at an aggregate rate of ~~15%~~10.0% per annum, subject to ~~a rate~~adjustment in the event of ~~10%~~ ~~per annum.~~default.

~~Paycheck Protection Program Loan~~
On April 6, 2020, the Company entered into a note agreement with JPMorgan Chase Bank, N.A. (“JPMorgan Chase”) under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (“SBA”) (the “Paycheck Protection Program Loan”). The Company received total proceeds of $~~5,702,725~~ under the Paycheck Protection Program Loan. In accordance with the requirements of the CARES Act, the Company used proceeds from the Paycheck Protection Program Loan primarily for payroll costs. The Paycheck Protection Program Loan was scheduled to mature on ~~April 6, 2022, with a~~ ~~0.98%~~ ~~interest rate and was subject to the terms and conditions applicable to loans administered by the SBA under the CARES Act.~~
~~On June 22, 2021, the SBA authorized full forgiveness of $5,702,725~~ under the Paycheck Protection Program Loan; thus, the Company will not need to make any payments on the Paycheck Protection Program Loan that JPMorgan Chase facilitates as an SBA lender. JPMorgan Chase will apply the forgiveness amount the SBA authorized, plus all accrued interest, to the Company’s Paycheck Protection Program Loan. The requirements under this program are established by the SBA. All requests for Paycheck Protection Program Loan forgiveness are subject to SBA eligibility. The Company recorded a gain upon debt extinguishment for the nine months ended September 30, 2021 of $~~5,716,697~~ ~~(including accrued interest) pursuant to the forgiveness in other (expense) income on the condensed consolidated statements of operations.~~
~~Further details as of the date these condensed consolidated financial statements were issued or were available to be issued are provided under the heading~~ ~~Long-term Debt~~ ~~in Note 15.~~
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The following table summarizes the long-term debt:
Schedule of Long Term Debt
As of September 30, 2021 As of December 31, 2020
Principal Balance (including accrued interest) Unamortized Discount and Debt Issuance Costs Carrying Value Principal Balance (including accrued interest) Unamortized Discount and Debt Issuance Costs Carrying Value
12% Second Amended Senior Secured Note, as amended, due on December 31, 2022 $ 61,131,882 $ (2,413,593 ) $ 58,718,289 $ 56,296,091 $ (3,739,690 ) $ 52,556,401
Delayed Draw Term Note, as amended, due on March 31, 2022 4,717,714 (151,732 ) 4,565,982 4,294,318 (359,172 ) 3,935,146
Paycheck Protection Program Loan, scheduled to mature April 6, 2022, however, fully forgiven on June 22, 2021 - - - 5,702,725 - 5,702,725
Total $ 65,849,596 $ (2,565,325 ) $ 63,284,271 $ 66,293,134 $ (4,098,862 ) $ 62,194,272
As of March 31, 2022 As of December 31, 2021
Principal Balance (including accrued interest) Unamortized Discount and Debt Issuance Costs Carrying Value Principal Balance (including accrued interest) Unamortized Discount and Debt Issuance Costs Carrying Value
Senior Secured Note, as amended, matures December 31, 2023 $ 62,691 $ (1,584 ) $ 61,107 $ 62,691 $ (1,935 ) $ 60,756
Delayed Draw Term Note, as amended, matures December 31, 2023 9,928 (259 ) 9,669 9,928 (567 ) 9,361
Total $ 72,619 $ (1,843 ) $ 70,776 $ 72,619 $ (2,502 ) $ 70,117
Current portion $ 5,847 $ 5,744
Long-term portion 64,929 64,373
Total $
70,776
$
70,117

As of March 31, 2022 and December 31, 2021, the Company’s Delayed Draw Term Note, as amended, carrying value of $9,669 and $9,361, respectively, was as follows: (1) $5,847 and $5,744 for the first draw (including accrued interest and less unamortized discount and debt issuance costs of $78 and $180), respectively; and (2) $3,822 and $3,617 for the second draw (including accrued interest and less unamortized discount and debt issuance costs of $181 and $387), respectively. As of March 31, 2022, the effective interest rate of the Senior Secured Note, Delayed Draw Term Note first draw and second draw were 11.4%, 11.7% and 12.5%, respectively.

The ~~current portion~~following table summarizes principal maturities of long-term ~~debt~~debt:
Schedule of Principal Maturities of Long-term Debt
Years Ending December 31,
2022 $ 5,924
2023 66,695
Total $ 72,619
19
9. Preferred Stock
The Company has the authority to issue 1,000,000 shares of preferred stock, $0.01 par value per share, consisting of authorized and/or outstanding shares as of ~~September 30, 2021 and December~~March 31, ~~2020 was $4,565,982~~ ~~and none, respectively, on the condensed consolidated balance sheets. The noncurrent portion of long-term debt~~2022 as ~~of September 30, 2021 and December 31, 2020 was $58,718,289~~ ~~and $62,194,272, respectively, on the condensed consolidated balance sheets.~~follows:

● 1,800 authorized shares designated as “Series G Convertible Preferred Stock”, of which 168 shares are outstanding.
● 23,000 authorized shares designated as “Series H Convertible Preferred Stock” (as further described below), of which 14,556 shares are outstanding.
9. ~~Preferred Stock~~
Series H Preferred Stock

~~On August 17, 2021,~~ 50The Company recorded the issuance of 70,380 shares of ~~Series~~the Company’s common stock upon conversion of 510 shares of the Company’s series H convertible preferred stock (the “Series H Preferred Stock”) ~~were converted into~~ ~~151,515~~ ~~shares~~during the three months ended March 31, 2022, as reflected on the condensed consolidated statements of ~~the Company’s common stock.~~stockholders’ deficiency.

21
Series L Preferred Stock

On May 4, 2021, a special committee of the Board declared a dividend of one preferred stock purchase right to be paid to the stockholders of record at the close of business on May 14, 2021 for (i) each outstanding share of the Company’s common stock and (ii) each share of the Company’s common stock issuable upon conversion of each share of the Company’s Series H Preferred Stock. Each preferred stock purchase right entitles the registered holder to purchase, subject to a rights agreement, from the Company one one-thousandth of a share of the Company’s newly created Series L Junior Participating Preferred Stock, par value $0.01per share (the “Series L Preferred Stock”), at a price of $~~4.00~~,$4.00, subject to certain adjustments. The Series L Preferred Stock will be entitled, when, as and if declared, to a preferential per share quarterly dividend payment equal to the greater of (i) $1.00 per share or (ii) 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all ~~noncash~~non-cash dividends or other distributions paid to the holders of the Company’s common stock. The Series L Preferred Stock will be entitled to 1,000 votes on all matters submitted to a vote of the stockholders of the Company. In the event of any merger, consolidation or other transaction in which shares of the Company’s common stock are converted or exchanged, the Series L Preferred Stock will be entitled to receive 1,000 times the amount received per one share of the Company’s common ~~stock.~~stock.

~~10.~~ ~~Stockholders’ Equity~~The rights agreement pursuant to the Series L Preferred Stock was set to expire on May 3, 2022; however, the board of directors elected to extend the expiration date, which extension is evidenced by an amended and restated rights agreement, dated May 2, 2022, by and between the Company and the rights agent, and which extension is subject to ratification by the Company’s stockholders.
10. Stockholders’ Equity
Common Stock
The Company has the authority to issue 1,000,000,000 shares of common stock, $0.01 par value per share.
~~Common Stock Private Placement~~

On ~~May 20, 2021~~February 15, 2022 and ~~May 25, 2021,~~March 11, 2022, the Company ~~entered into securities purchase agreements with several accredited investors, pursuant to which the Company sold an aggregate of~~ ~~21,435,718~~ ~~shares of its common stock, at a per share price of $0.70~~ ~~for aggregate~~raised gross proceeds of $~~15,005,000~~34,498 ~~in a private placement. On June 2, 2021, the Company entered into a securities purchase agreement with an accredited investor,~~ pursuant to ~~which the Company sold an aggregate~~a firm commitment underwritten public offering of ~~7,142,857~~ 4,181,603shares of ~~its~~the Company’s common stock (on February 15, 2022 the Company issued 3,636,364 shares and on March 11, 2022 the Company issued 545,239 shares pursuant to the underwriter’s overallotment that was exercised on March 10, 2022), at a ~~per share~~public offering price of $~~0.70~~8.25 ~~for gross proceeds of $5,000,000~~ ~~in a private placement that was in addition to the closings that occurred on May 20, 2021 and May 25, 2021. After payment of legal fees and expenses the investors of $167,244, of which $100,000~~ ~~was paid in cash to B. Riley, the~~per share. The Company received net proceeds of $~~19,837,757~~32,058, after deducting underwriting discounts and commissions and other offering costs payable by the Company. In additions, the Company directly incurred offering costs of $1,568 and recorded $~~. The proceeds will be used for general corporate purposes.~~30,490 upon the issuance of its common stock, as reflected on the condensed consolidated statement of stockholders’ deficiency.

Pursuant to the registration rights agreements entered into in connection with the securities purchase agreements, the Company agreed to register the shares of the Company’s common stock issued in the private placements. The Company committed to file the registration statement on the earlier of: (i) in the event the Company does not obtain a waiver from the holders of the shares of the Company’s common stock that were issued upon the conversion of the Series K Preferred Stock (the “Waiver”), within ten (10) calendar days following the date the Company’s registration statement(s) on Form S-1, registering for resale shares of the Company’s common stock that were issued in connection with offerings prior to the date of the registration rights agreement (the “Prior Registration Statements”), is declared effective by the SEC; and (ii) in the event the Company does obtain the Waiver, the earliest practicable date on which the Company is permitted by the SEC guidance to file the initial registration statement following the filing of the Prior Registration Statements (the “Filing Date”). The Company also committed to cause the registration statement to become effective by no later than 90 days after the Filing Date (or, in the event of a full review by the staff of the SEC, 120 days following the Filing Date). The registration rights agreement provides for Registration Rights Damages upon the occurrence of certain events up to a maximum amount of 6% of the aggregate amount invested pursuant to the securities purchase agreements.
22
The securities purchase agreements included a provision that requires the Company to maintain its periodic filings with the SEC in order to satisfy the public information requirements under Rule 144(c) of the Securities Act. At any time during the period commencing from the twelve (12) month anniversary of the date the Company becomes current in its filing obligations and ending at such time that all of the common stock may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company (i) fails for any reason to satisfy the current public information requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer in the future, and the Company fails to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information Failure”) then, in addition to such purchaser’s other available remedies, the Company must pay to a purchaser, in cash, as partial liquidated damages and not as a penalty (“Public Information Failure Damages”), an amount in cash equal to one percent (1.0%) of the aggregate subscription amount of the purchaser’s shares then held by the purchaser on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured up to a maximum of five (5) 30-day periods and (b) such time that such public information is no longer required for the purchasers to transfer the shares pursuant to Rule 144. Public Information Failure Damages will be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Damages are incurred and (ii) the third (3rd) business day after the event or failure giving rise to the Public Information Failure Damages is cured. In the event the Company fails to make Public Information Failure Damages in a timely manner, such Public Information Failure Damages will bear interest at the rate of 1.0% per month (prorated for partial months) until paid in full.
Common Stock Warrants

The Company issued warrants to purchase shares of the Company’s common stock to MDB Capital Group, LLC (the “MDB Warrants”), Strome Mezzanine Fund LP (the “Strome Warrants”), and B. Riley ~~Financial, Inc.~~ (the “B. Riley Warrants”) in connection with various financing transactions (collectively, the “Financing Warrants”).

The Financing Warrants outstanding and exercisable as of ~~September 30, 2021~~March 31, 2022 are summarized as follows:
~~Summary~~Schedule of ~~Warrant Activity~~Common Stock Financing Warrants Outstanding and Exercisable
Outstanding Exercise Price Expiration Date Total Outstanding and Exercisable (Shares
Exercise Price Expiration Date Classified as Derivative Liabilities (Shares) Classified within Stockholders’ Equity (Shares) Total Exercisable (Shares)
MDB Warrants $ 0.20 November 4,2021 - 327,490 327,490
Strome Warrants 0.50 June 15, 2023 1,500,000 - 1,500,000 $ 11.00 June 15, 2023 68,182
B. Riley Warrants 0.33 October 18, 2025 875,000 - 875,000 7.26 October 18, 2025 39,773
MDB Warrants 1.15 October 19, 2022 - 119,565 119,565 25.30 October 19, 2022 5,435
MDB Warrants 2.50 October 19, 2022 - 60,000 60,000 55.00 October 19, 2022 2,728
Total outstanding and exercisable 2,375,000 507,055 2,882,055
Total 116,118

The intrinsic value of exercisable but unexercised in-the-money stock warrants as of ~~September 30, 2021~~March 31, 2022 was $~~102,698~~142, based on a fair market value of the Company’s common stock of $~~0.38~~10.83 per share on ~~September 30, 2021.~~March 31, 2022.

2320

~~11.~~ ~~Compensation Plans~~
11. Compensation Plans

The Company provides stock-based compensation in the form of (a) restricted stock awards to certain employees ~~and directors, comprised of restricted stock awards and restricted stock units (collectively referred~~(referred to as the “Restricted Stock Awards”), (b) stock option grants to employees, directors and consultants ~~(referred to as~~under the ~~“Common Stock Awards”)~~2016 Plan (as described below), (c) stock option awards, restricted stock awards, unrestricted stock awards, and stock appreciation rights to employees, directors and consultants ~~(collectively~~under the ~~“Common Equity Awards”)~~2019 Plan (as described below), (d) stock option awards outside of the 2016 ~~Stock Incentive~~ Plan and 2019 ~~Equity Incentive~~ Plan to certain officers, directors and employees (referred to as the “Outside Options”), (e) common stock warrants to the Company’s publisher partners (referred to as the “Publisher Partner Warrants”), and (f) common stock warrants to ABG-SI, LLC (referred to as the “ABG Warrants”).

Stock-based compensation and equity-based expense charged to operations or capitalized during the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ are summarized as follows:
Summary of Stock-based Compensation
Restricted Common Common Publisher
Stock Stock Equity Outside Partner ABG
Awards Awards Awards Options Warrants Warrants Totals
During the Three Months Ended September 30, 2021
Cost of revenue $ 11,808 $ 23,217 $ 1,696,147 $ 967 $ - $ - $ 1,732,139
Selling and marketing - 3,970 1,341,948 75,193 - - 1,421,111
General and administrative 414,163 78,017 4,081,766 - - 745,636 5,319,582
Total costs charged to operations 425,971 105,204 7,119,861 76,160 - 745,636 8,472,832
Capitalized platform development 2,328 - 483,854 2,690 - - 488,872
Total stock-based compensation $ 428,299 $ 105,204 $ 7,603,715 $ 78,850 $ - $ 745,636 $ 8,961,704

During the Three Months Ended September 30, 2020
Cost of revenue $ 35,610 $ 53,149 $ 1,178,276 $ 2,471 $ 992 $ - $ 1,270,498
Selling and marketing 323,164 42,695 734,391 43,900 - - 1,144,150
General and administrative 80,306 127,786 855,390 - - 364,248 1,427,730
Total costs charged to operations 439,080 223,630 2,768,057 46,371 992 364,248 3,842,378
Capitalized platform development 88,619 32,680 267,013 1,188 - - 389,500
Total stock-based compensation $ 527,699 256,310 $ 3,035,070 $ 47,559 $ 992 $ 364,248 $ 4,231,878
24
~~Stock-based compensation and equity-based expense charged to operations or capitalized during the nine months ended September 30, 2021 and 2020 are summarized as follows:~~
Restricted Common Common Publisher
Restricted
Stock
Awards

2016
Plan

2019
Plan

Outside
Options

ABG
Warrants
Totals
Stock Stock Equity Outside Partner ABG
Awards Awards Awards Options Warrants Warrants Totals
During the Nine Months Ended September 30, 2021
During the Three Months Ended March 31, 2022
Cost of revenue $ 60,838 $ 169,482 $ 4,694,925 $ 4,463 $ - $ - $ 4,929,708 $ 430 $ 14 $ 1,714 $ - $ - $ 2,158
Selling and marketing - 13,899 3,820,996 224,371 - - 4,059,266 - 9 591 - - 600
General and administrative 559,505 297,283 10,344,247 - - 1,498,217 12,699,252 - 48 3,941 105 515 4,609
Total costs charged to operations 620,343 480,664 18,860,168 228,834 - 1,498,217 21,688,226 430 71 6,246 105 515 7,367
Capitalized platform development 11,276 5,071 1,324,805 6,472 - - 1,347,624 - 5 682 - - 687
Total stock-based compensation $ 631,619 $ 485,735 $ 20,184,973 $ 235,306 $ - $ 1,498,217 $ 23,035,850 $ 430 $ 76 $ 6,928 $ 105 $ 515 $ 8,054

During the Nine Months Ended September 30, 2020
During the Three Months Ended March 31, 2021
Cost of revenue $ 108,936 $ 150,915 $ 3,261,542 $ 5,644 $ 36,654 $ - $ 3,563,691 $ 24 $ 127 $ 1,290 $ 2 $ - $ 1,443
Selling and marketing 920,566 102,206 2,114,595 142,767 - - 3,280,134 - 5 972 75 - 1,052
General and administrative 238,558 437,614 2,430,553 150,577 - 1,084,826 4,342,128 3 117 2,128 - 356 2,604
Total costs charged to operations 1,268,060 690,735 7,806,690 298,988 36,654 1,084,826 11,185,953 27 249 4,390 77 356 5,099
Capitalized platform development 234,611 154,445 864,656 5,451 - - 1,259,163 5 3 299 2 - 309
Total stock-based compensation $ 1,502,671 845,180 $ 8,671,346 $ 304,439 $ 36,654 $ 1,084,826 $ 12,445,116 $ 32 $ 252 $ 4,689 $ 79 $ 356 $ 5,408

Unrecognized compensation expense and expected weighted-average period to be recognized related to the stock-based compensation awards and equity-based awards as of ~~September 30, 2021~~March 31, 2022 was as follows:
Schedule of Unrecognized Compensation Expense
Restricted Common Common Publisher Restricted
Stock Stock Equity Outside Partner ABG Stock 2016 2019 Outside ABG
Awards Awards Awards Options Warrants Warrants Totals Awards Plan Plan Options Warrants Totals
Unrecognized compensation expense $ 2,750,000 $ - $ 54,255,910 $ 135,741 $ - $ 3,788,429 $ 60,930,080
Unrecognized compensation cost $ 1,925 $ - $ 44,563 $ - $ 1,988 $ 48,476
Expected weighted-average period expected to be recognized (in years) 1.68 - 2.14 0.44 - 1.63 2.08 1.18 - 1.84 - 1.57 1.81
Stock Option Repricing
~~Pursuant~~
On March 18, 2022, the Company approved a repricing of certain outstanding stock options (the “Stock Option Repricing”) granted under the Company’s 2016 Stock Incentive Plan (the “2016 Plan”) and the 2019 Equity Incentive Plan (the “2019 Plan”) that had an exercise price above $8.82 per share, including certain outstanding stock options held by senior management of the Company. The Stock Option Repricing also included certain outstanding stock options granted outside of the 2016 Plan and 2019 Plan, which repricing is still subject to ~~an amendment with ABG-SI, LLC on June 4, 2021,~~stockholder approval. As a result of the Stock Option Repricing, the exercise ~~price related~~prices were set to $8.82 per share, which was the ~~ABG Warrants exercisable for up to~~ ~~10,994,922~~ ~~shares~~closing sale price of the Company’s common stock ~~was changed to $0.42~~ ~~per share from $0.84~~ ~~per share in~~as listed on the NYSE American exchange on March 18, 2022. Except for ~~additional benefits~~the repricing of the stock options under the ~~Sports Illustrated licensing agreement.~~
~~Further details as~~2019 Plan, all terms and conditions of each stock option remains in full force and effect. For the repricing of the ~~date these condensed consolidated financial statements were issued or were available to be issued are provided~~stock options under the ~~heading~~ ~~Compensation Plans~~ 2019 Plan, the Company (i) modified the exercise price; (ii) will allow cashless exercise as a method of paying the exercise price, and (iii) will waive a lock-up provision in ~~Note 15.~~the stock option agreements. All other term and conditions of each of the stock options under the 2019 Plan remains in full force and effect.

2521
The Stock Option Repricing of approximately 4,343,017 stock option grants (for 340 employees) that were issued to employees of the Company, including senior management, resulted in incremental cost of $6,061, of which $143 was recognized at the time of the Stock Option Repricing for the fully vested awards and included in our condensed consolidated statement of operations, and $5,918 will recognized over the remaining vesting term of the original award at the repricing date.

~~12.~~ ~~Revenue Recognition~~
12. Revenue Recognition

Disaggregation of Revenue

The following table provides information about disaggregated revenue by ~~product line,~~category, geographical market and timing of revenue recognition:
Schedule of Disaggregation of Revenue

Three Months Ended
September 30,

Nine Months Ended
September 30,
2022 2021
2021 2020 2021 2020 Three Months Ended March 31,
Revenue by product line:
Advertising $ 21,678,480 $ 9,409,031 $ 46,300,974 $ 28,788,631
2022 2021
Revenue by category:
Digital revenue
Digital advertising $ 21,646 $ 9,540
Digital subscriptions 7,698,359 8,469,943 22,472,951 20,096,640 6,461 7,085
Magazine circulation 25,973,853 12,874,574 53,325,894 34,041,272
Other 4,222,816 1,336,445 5,835,682 2,667,243
Other revenue 3,465 746
Total digital revenue 31,572 17,371
Print revenue
Print advertising 1,368 1,533
Print subscriptions 15,303 14,711
Total print revenue 16,671 16,244
Total $ 59,573,508 $ 32,089,993 $ 127,935,501 $ 85,593,786 $ 48,243 $ 33,615
Revenue by geographical market:
United States $ 57,762,726 $ 29,964,150 $ 123,697,063 $ 81,295,916 $ 47,321 $ 32,528
Other 1,810,782 2,125,843 4,238,438 4,297,870 922 1,087
Total $ 59,573,508 $ 32,089,993 $ 127,935,501 $ 85,593,786 $ 48,243 $ 33,615
Revenue by timing of recognition:
At point in time $ 51,875,149 $ 23,620,050 $ 105,462,550 $ 65,497,146 $ 41,782 $ 26,530
Over time 7,698,359 8,469,943 22,472,951 20,096,640 6,461 7,085
Total $ 59,573,508 $ 32,089,993 $ 127,935,501 $ 85,593,786 $ 48,243 $ 33,615
Contract Balances

The timing of the Company’s performance under its various contracts often differs from the timing of the customer’s payment, which results in the recognition of a contract asset or a contract liability. A contract asset is recognized when a good or service is transferred to a customer and the Company does not have the contractual right to bill for the related performance obligations. A contract liability is recognized when consideration is received from the customer prior to the transfer of goods or services.

The following table provides information about contract balances:
Schedule of Contract with Customer, Asset and Liability
As of
September 30, 2021 December 31, 2020
Unearned revenue (short-term contract liabilities):
Digital subscriptions $ 15,708,139 $ 14,870,712
Magazine circulation 49,244,783 46,586,345
Advertising and other 6,352,733 168,619
$ 71,305,655 $ 61,625,676
Unearned revenue (long-term contract liabilities):
Digital subscriptions $ 1,593,724 $ 593,136
Magazine circulation 17,444,012 22,712,961
Other 170,000 192,500
$ 19,207,736 $ 23,498,597
March 31, 2022 December 31, 2021
As of
March 31, 2022 December 31, 2021
Unearned revenue (short-term contract liabilities):
Digital revenue $ 12,815 $ 14,693
Print revenue 35,704 39,337
Total unearned revenue (short-term contract liabilities) $ 48,519 $ 54,030
Unearned revenue (long-term contract liabilities):
Digital revenue $ 1,321 $ 1,446
Print revenue 11,041 13,831
Total unearned revenue (long-term contract liabilities) $ 12,362 $ 15,277

Unearned Revenue – Unearned revenue, also referred to as contract liabilities, include payments received in advance of performance under the contracts and are recognized as revenue over time. The Company records contract liabilities as unearned revenue on the condensed consolidated balance sheets. ~~Digital subscription and magazine circulation revenue of $42,893,297~~ ~~was recognized during the nine months ended September 30, 2021 from unearned revenue at the beginning of the year.~~
During January and February 2020, the Company modified certain digital and magazine subscription contracts that prospectively changed the frequency of the related issues required to be delivered on a yearly basis. The Company determined that the remaining digital content and magazines to be delivered are distinct from the digital content or magazines already provided under the original contract. As a result, the Company in effect established a new contract that included only the remaining digital content or magazines. Accordingly, the Company allocated the remaining performance obligations in the contracts as consideration from the original contract that has not yet been recognized as revenue.

2622

~~13.~~ ~~Income Taxes~~
13. Income Taxes

The provision for income taxes in interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of its annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period. The quarterly provision for income taxes, and estimate of the Company’s annual effective tax rate, are subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in how the Company conducts business, and tax law developments.

The provision effective tax rate ~~benefit~~ for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was ~~0.29%~~0.1% and ~~0.00%~~0.0%, respectively. The ~~tax benefit~~deferred income taxes for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was primarily due to discrete items.

The realization of deferred tax assets is dependent upon a variety of factors, including the generation of future taxable income, the reversal of deferred tax liabilities, and tax planning strategies. Based upon the Company’s historical operating losses and the uncertainty of future taxable income, the Company has provided a valuation allowance against most of the deferred tax assets as of ~~September 30,~~March 31, 2022 and 2021.
14. Related Party
For the three months ended March 31, 2022, the Company had certain transactions with B. Riley, a principal stockholder, where it paid fees associated with the common stock public offering totaling $2,440.
For the three months ended March 31, 2022 and 2021, the Company paid in cash or accrued interest that was added to the principal on the Senior Secured Note and ~~December 31, 2020.~~Delayed Draw Term Note due to B. Riley, a principal stockholder, of $1,815 (paid in cash) and $1,852 (accrued interest that was added to the principal), respectively.

~~14.~~ ~~Commitments~~Service and ~~Contingencies~~Consulting Contracts
For the three months ended March 31, 2022 and 2021, the Company paid James C. Heckman, its former Chief Executive Officer, consulting fees of $165 and $52, respectively, in connection with a consulting agreement, as amended from time to time. For the three months ended March 31, 2022, the Company paid an entity affiliated with Mr. Heckman, Roundtable Media, L.L.C., a net revenue share amount of $82 in connection with a partner agreement.
~~Revenue Guarantees~~Repurchases of Restricted Stock

On ~~a select basis,~~December 15, 2020, the Company ~~has provided revenue share guarantees~~entered into an amendment for certain restricted stock awards and units that were previously issued to certain ~~independent publishers that transition their publishing operations~~employees in connection with the HubPages merger, pursuant to which the Company agreed to repurchase from ~~another platform to theMaven.net or maven.io.~~certain key personnel of HubPages, Inc., including Paul Edmondson, one of the Company’s officers, and his spouse, an aggregate of ~~These arrangements generally guarantee~~16,802 shares of the ~~publisher~~Company’s common stock at a ~~monthly amount~~price of ~~income~~$88.00 per share each month for a period of ~~12 to~~ 24 months, ~~from inception of the publisher contract that is the greater of (a) a fixed monthly minimum, or (b) the calculated earned revenue share.For the three months ended September 30, 2021~~for aggregate proceeds to Mr. Edmondson and ~~2020, the Company recognized publisher partner guarantees~~his spouse of $~~214,286~~67 ~~and $2,539,055, respectively. For the nine months ended September 30, 2021 and 2020, the Company recognized publisher partner guarantees of $3,781,240~~ ~~and $7,541,619,~~ ~~respectively.~~per month (see Note 5).

23
15. Commitments and Contingencies
Contingent Liability
In connection with the Company’s underwritten public offering in February 2022, the Company may have a contingent liability arising out of possible violations of the Securities Act of 1933, as amended (the “Securities Act”) in connection with an investor presentation, which the Company publicly filed. Specifically, the furnishing of the investor presentation publicly may have constituted an “offer to sell” as described in Section 5(b)(1) of the Securities Act and the investor presentation may be deemed to be a prospectus that did not meet the requirements of Section 10 of the Securities Act, resulting in a potential violation of Section 5(b)(1) of the Securities Act. Any liability would depend upon the number of shares purchased by investors who reviewed and relied upon the investor presentation. If a claim were brought by any such investor and a court were to conclude that the public disclosure of such investor presentation constituted a violation of the Securities Act, the Company could be required to repurchase the shares sold to the investors at the original purchase price, plus statutory interest. The Company could also incur considerable expense in contesting any such claims. As of the issuance date of these consolidated financial statements, no legal proceedings or claims have been made or threatened by any investors. The likelihood and magnitude of this contingent liability, if any, is not determinable at this time.
Claims and Litigation

From time to time, the Company may be subject to claims and litigation arising in the ordinary course of business. The Company is not currently a party to any pending or threatened legal proceedings that it believes would reasonably be expected to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

2716. Subsequent Events
~~15.~~ ~~Subsequent Events~~

The Company performed an evaluation of subsequent events through the date of filing of these condensed consolidated financial statements with the SEC. Other than the below described subsequent events, there were no material subsequent events which affected, or could affect, the amounts or disclosures on the condensed consolidated financial statements.

Compensation Plans

From ~~October~~April 1, ~~2021~~2022 through the date these condensed consolidated financial statements were issued, ~~or were available to be issued,~~ the Company granted ~~approximately~~ ~~90,000~~common stock options, restricted stock units and restricted stock awards ~~to employees and~~totaling ~~910,000~~252,525 ~~common stock options exercisable for shares~~, all of ~~its common stock to employees.~~which remain outstanding.

~~Long-term Debt~~Acquisition of Athlon Holdings, Inc.

~~12% Second Amended Senior Secured Notes~~ ~~– The balance~~On April 1, 2022, the Company acquired 100% of the issued and outstanding ~~under~~capital stock of Athlon Holdings, Inc. (“Athlon”) for a purchase price of $18,100, comprised of (i) a cash portion of $15,100, with $11,800 paid at closing (including cash acquired of $1,800) and $3,200 to be paid post-closing (as further described below) and (ii) the ~~12% Second Amended Senior Secured Notes~~issuance of 314,103 shares of the Company’s common stock with a fair market value of $3,000 (the fair market value of the common stock issuance was determined based on the average closing price of the Company’s common stock for the 10 trading days preceding the April 1, 2022 closing date), subject to a customary working capital adjustment based on current assets less current liabilities as of the ~~date these condensed consolidated financial statements were issued~~closing date. Certain of Athlon’s key employees entered into either advisory agreements or ~~were available to be issued was approximately $61.7~~ ~~million, which included outstanding principal of approximately $48.8~~ ~~million, payment of in-kind interest of approximately $12.3~~ ~~million that~~employment agreements with the ~~Company was permitted to add to the aggregate outstanding principal balance, and unpaid accrued interest of approximately $0.5~~ ~~million.~~Company.

~~Delayed Draw Term Note~~– The ~~balance outstanding under~~amount to be paid post-closing of $3,200 will be paid as follows: (i) $3,000 will be paid on the ~~Delayed Draw Term Note~~nine-month anniversary of the closing date, or January 1, 2023, and (ii) $245 will be paid within two business days from the date the Company receives proceeds from the sale of all or a portion of the equity interest in Just Like Falling Off a Bike, LLC that was held by Athlon as of the closing date ~~these condensed consolidated financial statements were issued or were available to be issued~~(this amount was ~~approximately $4.7~~ ~~million, which included outstanding principal of approximately $3.6~~ ~~million, and payment of in-kind interest of approximately $1.1~~ ~~million that the Company was permitted to add to the aggregate outstanding principal balance.~~
~~Business Membership Agreement~~
Effective October 1, 2021, the Company entered into a business membership agreement with York Factory LLC, doing business as SaksWorks, that permits access to certain office space with furnishings, referred to as SaksWorks Memberships (each membership provides a certain number of accounts that equate to the use of the space granted). The term of the agreement is for ~~twenty-seven~~ ~~months, with an initial period of three months at $25,000~~ ~~per month for 30 accounts and secondary period for the remaining~~ ~~twenty-four~~ ~~months at $56,617~~ per month for 110 accounts. The agreement also provides for: (1) additional accounts at predetermined pricing; (2) early termination date of June 30, 2023 providing the Company gives notice by December 31, 2022; and (3) renewal of agreement at the endpaid on ~~the term for a twelve-month period at the then-current market price and pricing structure on such renewal date~~April 4, 2022).

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, ~~2020~~2021 included in the ~~Company’s Annual Report on~~ Form 10-K filed with the SEC on ~~August 16, 2021.~~April 1, 2022. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those set forth above. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Forward-Looking Statements.”

Overview
We operate a best-in-class ~~digital media~~technology platform ~~(the “Platform”)~~ empowering premium publishers who impact, inform, educate and entertain. Our focus is on leveraging the Platform and iconic brands in targeted verticals to maximize the audience, improve engagement and optimize monetization of digital publishing assets for the benefit of our users, our advertiser clients, and our owned and operated properties as well as properties we run on behalf of independent publisher partners. We operate the ~~media businesses~~print and digital business at SI.com for Sports Illustrated (“Sports Illustrated”), own and operate TheStreet, Inc. ~~(“TheStreet”) and The Spun (collectively, Sports Illustrated, TheStreet and The Spun are hereinafter referred to as our “Owned and Operated Businesses”~~(the “TheStreet”), own and operate more than 40 brands with our HubPages, Inc. (“HubPages”) business; own and operate Athlon Holdings, Inc. (“Parade”), which includes titles such as Parade, Spry, and Relish, and the brands Athlon Sports and Athlon Outdoors with more than 25 special interest titles including Harris’ Farmer’s Almanac and Mopar Action, and we power more than 200 independent brands. Our proprietary technology platform (the “Platform”) provides digital publishing, distribution, data, marketing and monetization capabilities for the Sports Illustrated and TheStreet businesses as well as a subset of independent, professionally managed, online media publishers (each a “Publisher Partner”). ~~Our strategy is to focus on key verticals where audiences are passionate about~~
Of the more than 200 Publisher Partners, a ~~topic category (e.g., sports, finance) and where we can leverage the strength~~large majority of them publish content within one of our ~~core brands to grow audience~~three verticals of sports, finance or lifestyle, and oversee an online community for their respective sites, leveraging our Platform, monetization ~~both~~operation, distribution channels and data and analytics offerings and engages the collective audiences within ~~our core brands as well as our Publisher Partners. Each Publisher Partner joins the Platform by invitation-only and is drawn from premium media brands and independent publishing businesses~~a single network. Our lifestyle vertical will also see significant benefits with the ~~objective~~acquisition of ~~augmenting~~Parade and as we apply our ~~position in key verticals~~existing technology to this new acquisition. Generally, Publisher Partners are independently owned, strategic partners who receive a share of revenue from the interaction with their content. Audiences expand and ~~optimizing~~advertising revenue may improve due to the ~~performance of the Partner. Because of the state-of-the-art technology~~scale we have achieved by combining all Publisher Partners onto a single platform and a large ~~scale of the Platform~~ and experienced sales organization. They may also benefit from our ~~expertise in search engine optimization (SEO), social media, subscription~~membership marketing and ~~ad monetization, Publisher Partners benefit from improved traffic and increased monetization.~~management systems, which we believe will enhance their revenue. Additionally, we believe the lead brand within each vertical creates a halo benefit for all Publisher Partners in the vertical while each of them adds to the breadth and quality of content. While they benefit from these critical performance improvements they also may save substantially in costs of technology, infrastructure, advertising sales, and member marketing and management.
Our growth strategy is to continue to expand ~~the coalition~~ by adding new ~~Publisher Partners in key verticals that management believes will expand the scale of unique users interacting on the Platform. In each vertical, we seek to build around a leading brand, such~~premium publishers with high quality brands and content either as Sports Illustrated (for sports) and TheStreet (for finance), surround it with subcategory specialists, and further enhance coverage with individual expert contributors. The primary means of expansion is adding independent Publisher Partners ~~and/~~or by acquiring publishers ~~that have premium branded content~~as owned and ~~can broaden the reach and impact of the Platform.~~
~~On September 20, 2021, we re-branded to “The Arena Group.”~~operated entities.

Liquidity and Capital Resources
Cash and Working Capital Facility
As of ~~September 30, 2021,~~March 31, 2022, our principal sources of liquidity consisted of cash of ~~approximately $8.2 million.~~$22,480. In addition, as of March 31, 2022, we had the use of additional proceeds from our working capital facility with ~~FastPay~~FPP Finance LLC (“FastPay”) in the amount of ~~approximately $8.3 million.  During~~$15,709, subject to eligible accounts receivable. As of March 31, 2022, the ~~three months ended September 30, 2021, we generated positive cash flows from operations in~~outstanding balance of the ~~amount of approximately $1.7 million.~~FastPay working capital facility was $9,291. We ~~experience seasonality with respect to our revenues, with the fourth quarter typically generating a significant portion~~also had accounts receivable, net of our ~~revenues; thus, we expect the fourth quarter to continue to build upon our generation~~advances from FastPay of ~~positive cash flows from operations. The FastPay line~~$10,707 as of ~~credit expires in the first quarter of 2022 and there is approximately a $4.6 million principal payment due on the Term Note on~~ March 31, 2022. ~~We are in negotiations with FastPay to increase, extend and improve the terms~~Our cash balance as of the facility, of which there can be no assurances that these negotiations will result in any increase, extension, or improvement in the terms of the facility. Historically, we have relied on equity and debt offerings, to the extent available and, to a lesser extent, cash from operations to satisfy our liquidity needs. If we are unable to continue to generate positive cash flows, or otherwise extend the maturityissuance date of our line of credit and the Term Note, we may need to seek additional capital. Should capital not be available to us at reasonable terms, other actions may become necessary in addition to cost control measures and continued efforts to increase revenue.accompanying condensed consolidated financial statements is $13,179.
In addition, we continue to be focused on growing our existing operations and seeking accretive and complementary strategic acquisitions as part of our growth strategy. We believe, that with additional sources of liquidity and the ability to raise additional capital or incur additional indebtedness to supplement our internal projections, we will be able to execute our growth plan and finance our working capital requirements.

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Material Contractual Obligations

We have material contractual obligations that arise in the normal course of business primarily consisting of employment contracts, consulting agreements, leases, liquidated damages, debt and related interest payments. Purchase obligations consist of contracts primarily related to merchandise, equipment, and third-party services, the majority of which are due in the next 12 months. See Notes 3, 6 and 8 in our accompanying condensed consolidated financial statements for amounts outstanding as of March 31, 2022, related to leases, liquidated damages and long-term debt. There have been no material changes from the disclosures in our Form 10-K.
Contingent Liability
Finally, we may have a contingent liability arising out of possible violations of the Securities Act in connection with an investor presentation, which we furnished as Exhibit 99.2 to our Current Report on Form 8-K and Current Report on Form 8-K/A filed on January 31, 2022 and February 1, 2022, respectively. Specifically, the furnishing of the investor presentation publicly may have constituted an “offer to sell” as described in Section 5(b)(1) of the Securities Act and the investor presentation may be deemed to be a prospectus that does not meet the requirements of Section 10 of the Securities Act, resulting in a potential violation of Section 5(b)(1) of the Securities Act. Any liability would depend upon the number of shares purchased by investors who reviewed and relied upon such investor presentation that may have constituted a potential violation of Section 5 of the Securities Act. If a claim were brought by any such ‘recipients’ of such investor presentation and a court were to conclude that the public disclosure of such investor presentation constituted a violation of Section 5 of the Securities Act, we could be required to repurchase the shares sold to the investors who reviewed such investor presentation at the original purchase price, plus statutory interest. We could also incur considerable expense in contesting any such claims. As of the date of the filing of this Quarterly Report, no legal proceedings or claims have been made or threatened by any investors in our offering. Such payments and expenses, if required, could significantly reduce the amount of working capital we have available for our operations and business plan, delay or prevent us from completing our plan of operations, or force us to raise additional funding, which funding may not be available on favorable terms, if at all.
Working Capital Deficit
We have financed our working capital requirements since inception through issuances of equity securities and various debt financings. Our working capital deficit as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was as follows:

As of As of
September 30, 2021 December 31, 2020 March 31, 2022 December 31, 2021
Current assets $ 79,380,241 $ 73,846,465 $ 80,392 $ 77,671
Current liabilities (130,386,757 ) (107,562,825 ) (96,442 ) (116,413 )
Working capital deficit (51,006,516 ) (33,716,360 ) (16,050 ) (38,742 )

As of ~~September 30, 2021,~~March 31, 2022, we had a working capital deficit of ~~approximately $51.0 million,~~$16,050, as compared to ~~approximately $33.7 million~~$38,742 as of December 31, ~~2020,~~2021, consisting of ~~approximately $79.4 million~~$80,392 total current assets and $96,442 total current liabilities. As of December 31, 2021, our working capital deficit consisted of $77,671 in total current assets and ~~approximately $130.4 million~~$116,413 in total current liabilities. Included in current assets as of September 30, 2021 was approximately $0.5 million of restricted cash. Also included in our working capital deficit are noncash current liabilities, consisting of approximately $0.7 million of warrant derivative liabilities, leaving a working capital deficit that requires cash payments of approximately $50.9 million.

Our cash flows during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ consisted of the following:

Nine Months Ended September 30, Three Months Ended March 31,
2021 2020 2022 2021
Net cash used in operating activities $ (8,261,324 ) $ (20,273,407 ) $ (13,311 ) $ (1,511 )
Net cash used in investing activities (10,673,872 ) (4,286,469 ) (1,653 ) (966 )
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 )
Net cash provided by (used in) financing activities 28,095 (2,032 )
Net increase (decrease) in cash, cash equivalents, and restricted cash $ 13,131 $ (4,509 )
Cash, cash equivalents, and restricted cash, end of period $ 8,728,649 $ 5,734,592 $ 22,982 $ 5,026
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For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, net cash used in operating activities was ~~approximately $8.3 million,~~$13,311, consisting primarily ~~of: approximately $125.1 million~~of $58,227 of cash paid (i) to employees, Publisher Partners, expert contributors, suppliers, and vendors, and (ii) for revenue share arrangements, advance of royalty fees and professional services; and (iii) $2,160 of cash paid for interest, offset by $47,076 of cash received from customers (including payments received in advance of performance obligations); less (i) approximately $132.5 million of cash paid (a) to employees, Publisher Partners, expert contributors, suppliers, and vendors, and (b) for revenue share arrangements and professional services; and (ii) approximately $0.9 million of cash paid for interest; as compared to. For the ~~nine~~three months ended ~~September 30, 2020, where~~March 31, 2021, net cash used in operating activities was ~~approximately $20.3 million,~~$1,511, consisting primarily ~~of: approximately $82.1 million~~of $39,210 cash paid (i) to employees, Publisher Partners, suppliers, and vendors, (ii) for revenue share arrangements, advance of royalty fees and professional services; and (iii) $260 of cash paid for interest offset by $37,959 of cash received from customers (including payments received in advance of performance obligations); less (y) approximately $102.0 million of cash paid (a) to employees, Publisher Partners, suppliers, and vendors, and (b) for revenue share arrangements, advance of royalty fees and professional services; and (z) approximately $0.4 million of cash paid for interest..

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022, net cash used in investing activities was $1,653, consisting primarily of $1,582 for capitalized costs for our Platform and $71 for property and equipment. For the three months ended March 31, 2021, net cash used in investing activities was ~~approximately $10.7 million,~~$966 consisting primarily ~~of: (i) approximately $7.4 million used to acquire a business; (ii) approximately $0.3 million for property and equipment; and (iii) approximately $3.0 million~~of $868 for capitalized costs for our 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 millionPlatform and $98 for property and ~~equipment; and (z) approximately $2.9 million for capitalized costs for our Platform.~~equipment.

For the nine months ended September 30, 2021, net cash used by financing activities was approximately $18.1 million, consisting primarily of: (i) approximately $19.8 million in net proceeds from the private placement issuance of common stock; less (ii) approximately $0.5 million from repayment under our line of credit; and (iii) approximately $1.2 million in payments of restricted stock liabilities; as compared to the three months ended ~~September 30, 2020, where~~March 31, 2022, net cash provided by financing activities was ~~approximately $20.8 million,~~$28,095, consisting primarily ~~of: (i) approximately $6.1 million~~of $32,058 (excludes accrued offering costs of $1,568) in net proceeds from the ~~issuance~~public offering of ~~Series H Preferred Stock and Series J convertible preferred~~common stock ~~(the “Series J Preferred Stock”); (ii) approximately $11.7 million in net proceeds~~less (i) $2,697 from ~~the Delayed Draw Term Note and the Payroll Protection Program Loan; and (iii) approximately $3.3 million in borrowings~~repayments of our FastPay line of credit; ~~less (iv) approximately $0.3 million~~(ii) $710 related to payments of restricted stock liabilities; and (iii) $556 for tax payments relating to the withholding of shares of common stock for certain employees. For the three months ended March 31, 2021, net cash used in financing activities was $2,032 consisting primarily of $1,752 from repayments of our FastPay line of credit and $280 in payments ~~for taxes relating to repurchase~~ of restricted ~~shares.~~stock liabilities.
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Results of Operations

Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~
Three Months Ended September 30, 2021 versus 2020
2021 2020 $ Change % Change
Revenue $ 59,573,508 $ 32,089,993 $ 27,483,515 85.6 %
Cost of revenue 32,173,859 24,708,941 7,464,918 30.2 %
Gross profit 27,399,649 7,381,052 20,018,597 271.2 %
Operating expenses
Selling and marketing 22,712,193 9,928,901 12,783,292 128.7 %
General and administrative 23,023,883 7,172,175 15,851,708 221.0 %
Depreciation and amortization 4,055,432 4,053,184 2,248 0.1 %
Total operating expenses 49,791,508 21,154,260 28,637,248 135.4 %
Loss from operations (22,391,859 ) (13,773,208 ) (8,618,651 ) 62.6 %
Total other (expense) (2,544,494 ) (7,491,223 ) 4,946,729 -66.0 %
Loss before income taxes (24,936,353 ) (21,264,431 ) (3,617,922 ) 17.3 %
Income taxes 229,699 - 229,699 100.0 %
Net loss (24,706,654 ) (21,397,094 ) (3,442,223 ) 16.2 %
Deemed dividend on Series H convertible preferred stock - (132,663 ) 132,663 -100.0 %
Net loss attributable to common stockholders $ (24,706,654 ) $ (21,397,094 ) $ (3,309,560 ) 15.5 %
Basic and diluted net loss per common stock $ (0.10 ) $ (0.55 ) $ 0.45 -81.8 %
Weighted average number of common stock outstanding – basic and diluted 252,811,058 39,186,432 213,624,626 545.1 %

Three Months Ended March 31,
2022 versus 2021
2022 2021 $ Change % Change
Revenue $ 48,243 $ 33,615 $ 14,628 43.5 %
Cost of revenue 28,497 28,208 289 1.0 %
Gross profit 19,746 5,407 14,339 265.2 %
Operating expenses
Selling and marketing 17,216 17,529 (313 ) -1.8 %
General and administrative 13,514 5,638 7,876 139.7 %
Depreciation and amortization 4,202 3,963 239 6.0 %
Loss of impairment of assets 257 - 257 100.0 %
Total operating expenses 35,189 27,130 8,059 29.7 %
Loss from operations (15,443 ) (21,723 ) 6,280 -28.9 %
Total other expenses (2,992 ) (3,740 ) 748 -20.0 %
Loss before income taxes (18,435 ) (25,463 ) 7,028 -27.6 %
Income taxes (14 ) - (14 ) 100.0 %
Net loss $ (18,449 ) $ (25,463 ) $ 7,014 -27.5 %
Basic and diluted net loss per common share $ (1.20 ) $ (2.44 ) $ 1.24 -50.8 %
Weighted average number of common shares outstanding – basic and diluted 15,381,306 10,456,052 4,925,254 47.1 %
For the three months ended ~~September 30, 2021,~~March 31, 2022, the ~~total~~ net loss was ~~approximately $24.7 million. The total net loss increased by approximately $3.3 million~~$18,449, as compared to $25,463 for the three months ended ~~September 30, 2020,~~March 31, 2021, which ~~had a net loss~~represents an improvement of ~~approximately $21.4 million.~~$7,014. The primary ~~reasons~~driver for the ~~increase~~improvement in ~~the total~~ net loss is ~~a lease termination charge of approximately $7.3 million and~~due to an $14,628 increase in revenue, which was partially offset by an increase in ~~stock-based compensation~~operating expenses of ~~approximately $4.6 million~~$8,059 during the three months ended March 31, 2022. The increase in revenues was attributable to management’s decision to make a strategic shift to focus on premium content providers and reduced reliance on Partner Publisher guarantees in September ~~30, 2021. The basic and diluted net loss per common share for~~2020 as well as the ~~three months ended September 30, 2021 of $0.10 decreased from $0.55 for the three months ended September 30, 2020, primarily because of our net loss per common share decreased along with the increase~~addition of the ~~daily weighted average shares outstanding to 252,811,058 shares from 39,186,432 shares.~~results of The Spun, which was acquired in June 2021.
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Revenue

The following table sets forth revenue, cost of revenue, and gross profit:

Three Months Ended September 30, 2021 versus 2020
2021 2020 Change % Change Three Months Ended March 31, 2022 versus 2021
(percentages reflect cost of revenue as a percentage of total revenue) 2022 2021 $ Change % Change
Revenue $ 59,573,508 100.0 % $ 32,089,993 100.0 % $ 27,483,515 85.6 % $ 48,243 $ 33,615 $ 14,628 43.5 %
Cost of revenue 32,173,859 54.0 % 24,708,941 77.0 % 7,464,918 30.2 % 28,497 28,208 289 1.0 %
Gross profit $ 27,399,649 46.0 % $ 7,381,052 23.0 % $ 20,018,597 271.2 % $ 19,746 $ 5,407 $ 14,339 265.2 %

For the three months ended ~~September 30, 2021,~~March 31, 2022 we had ~~revenue~~gross profit of ~~approximately $59.6 million,~~$19,746, as compared to ~~revenue of approximately $32.1 million~~$5,407 for the three months ended ~~September 30, 2020.~~March 31, 2021, an improvement of $14,339. Gross profit percentage for the three months ended March 31, 2022 was 40.9%, as compared to 16.1% for the three months ended March 31, 2021.

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The improvement in gross profit percentage was driven by our strategic shift to eliminate most Publisher Partner guarantees near the end of fiscal 2020. As a result, Publisher Partner revenue share as a percentage of digital advertising revenue was 23.3% for the three months ended March 31, 2022, as compared to 55.0% for the three months ended March 31, 2021. In addition, we continue to experience high contributions from our digital advertising.
The following table sets forth revenue by ~~product line and the corresponding percent of total revenue:~~category:

Three Months Ended September 30, 2021 versus 2020
2021 2020 Change % Change
(percentages reflect product line as a percentage of total revenue)
Advertising $ 21,678,480 36.4 % $ 9,409,031 29.3 % $ 12,269,449 38.2 %
Digital subscriptions 7,698,359 12.9 % 8,469,943 26.4 % (771,584 ) -2.4 %
Magazine circulation 25,973,853 43.6 % 12,874,574 40.1 % 13,099,279 40.8 %
Other 4,222,816 7.1 % 1,336,445 4.2 % 2,886,371 9.0 %
Total revenue $ 59,573,508 100.0 % $ 32,089,993 100.0 % $ 27,483,515 85.6 %
Three Months Ended March 31, 2022 versus 2021
2022 2021 $ Change % Change
Digital revenue
Digital advertising $ 21,646 $ 9,540 $ 12,106 126.9 %
Digital subscriptions 6,461 7,085 (624 ) -8.8 %
Other revenue 3,465 746 2,719 364.5 %
Total digital revenue 31,572 17,371 14,201 81.8 %
Print revenue
Print advertising 1,368 1,533 (165 ) -10.8 %
Print subscriptions 15,303 14,711 592 4.0 %
Total print revenue 16,671 16,244 427 2.6 %
Total revenue $ 48,243 $ 33,615 $ 14,628 43.5 %

For the three months ended ~~September 30, 2021,~~March 31, 2022, total revenue increased $14,628 to $48,243 from $33,615 for the three months ended March 31, 2021. The primary sources of revenue for the three months ended March 31, 2022 were as follows: (i) digital advertising of ~~approximately $21.7 million;~~$21,646, (ii) digital subscriptions of ~~approximately $7.7 million;~~$6,461, (iii) ~~magazine circulation~~other digital revenue of ~~approximately $26.0 million;~~$3,465, (iv) print advertising of $1,368 and (iv) ~~approximately $4.2 million~~print subscriptions of $15,303.
The primary driver of the increase in our total revenue is derived from ~~other revenue. Our~~our digital advertising revenue which increased by ~~approximately $12.3 million, due to additional revenue of approximately $6.8 million generated as a result of a doubling of advertising sponsorships~~$12,106. The main drivers of the ~~Sports Illustrated Swim (“SI Swim”) business and other growth~~increase in ~~the Sports Illustrated media business, and approximately $5.5 million~~digital advertising revenue include an additional $6,018 of revenue generated as a result of The Spun business, which was acquired during the second quarter of 2021. Our digital subscriptions decreased by approximately $0.8 million. Our magazine circulation increased by approximately $13.1 million 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 we began operating the2021, $4,073 from Sports Illustrated ~~media~~due to an increase in advertising sponsorships, $759 generated from TheStreet; and $1,256 generated from other business. Our other digital revenue, primarily consisting of licensing and e-commerce revenue, increased by ~~approximately $2.9 million~~$2,719 due to additional revenue ~~primarily~~ for certain licensing agreements related to, SI Swim and other Sports Illustrated media businesses.

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Cost of Revenue
The following table sets forth cost of revenue by category:

Three Months Ended March 31, 2022 versus 2021
2022 2021 $ Change % Change
Publisher Partner revenue share payments $ 5,042 $ 5,250 $ (208 ) -4.0 %
Hosting, bandwidth, and software licensing fees 481 601 (120 ) -20.0 %
Fees paid for data analytics and to other outside services providers 1,380 667 713 106.9 %
Royalty fees 3,750 3,750 - 0.0 %
Content and editorial expenses 9,744 9,636 108 1.1 %
Printing, distribution and fulfillment costs 2,747 3,498 (751 ) -21.5 %
Amortization of developed technology and platform development 2,311 2,167 144 6.6 %
Stock-based compensation 2,157 1,444 713 49.4 %
Other cost of revenue 885 1,195 (310 ) -25.9 %
Total cost of revenue $ 28,497 $ 28,208 $ 289 1.0 %
For the three months ended ~~September 30, 2021,~~March 31, 2022, we recognized cost of revenue of ~~approximately $32.2 million, which represented a 46% gross profit percentage,~~$28,497, as compared to ~~approximately $24.7 million in~~$28,208 for the three months ended ~~September 30, 2020, representing a 23% gross profit percentage. The~~March 31, 2021, which represents an increase ~~in the cost~~of $289. Cost of revenue for the first quarter of ~~approximately $7.5 million during the three months ended September 30, 2021 is primarily from~~2022, was impacted by increases ~~in:~~in (i) stock-based compensation of $713, and (ii) fees paid for data analytics and outside service providers of $713, partially offset by decreases in (iii) printing, distribution, and fulfillment costs of ~~approximately $3.4 million; (ii) payroll, stock-based compensation,~~$751, and ~~related expenses for customer support, technology maintenance, and occupancy costs of related personnel of approximately $2.6 million; (iii)~~(iv) other costs of revenue related to SI Swim of approximately $1.3 million; and (iv) amortization of our platform of approximately $0.2 million. The improvement in gross profit percentage was due to a decrease in partner revenue shares from 61% of digital advertising revenue in the third quarter of 2020 to 27% in the third quarter of 2021 as a result of the elimination of most partner guarantees near the end of last year.$310.

For the three months ended September 30, 2021, we capitalized costs related to our Platform of approximately $1.5 million, as compared to approximately $1.2 million for the three months ended September 30, 2020. For the three months ended September 30, 2021, the capitalization of our Platform consisted of: (i) approximately $1.0 million in payroll and related expenses, including taxes and benefits; and (ii) approximately $0.5 million in stock-based compensation for related personnel.
Operating Expenses

The following table sets forth operating ~~expenses and the corresponding percentage of total revenue:~~expenses:

Three Months Ended September 30, 2021 versus 2020
2021 2020 Change % Change
(percentages reflect expense as a percentage of total revenue)
Selling and marketing $ 22,712,193 38.1 % $ 9,928,901 30.9 % $ 12,783,292 60.4 %
General and administrative 23,023,883 38.6 % 7,172,175 22.4 % 15,851,708 74.9 %
Depreciation and amortization 4,055,432 6.8 % 4,053,184 12.6 % 2,248 0.0 %
Total operating expenses $ 49,791,508 $ 21,154,260 $ 28,637,248 135.4 %
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Three Months Ended March 31, 2022 versus 2021
2022 2021 $ Change % Change
Selling and marketing $ 17,216 $ 17,529 $ (313 ) -1.8 %
General and administrative 13,514 5,638 7,876 139.7 %
Depreciation and amortization 4,202 3,963 239 6.0 %
Loss on impairment of assets 257 - 257 100.0 %
Total operating expenses $ 35,189 $ 27,130 $ 8,059 29.7 %

Operating expenses for the three months ended March 31, 2022 increased by $8,059 to $35,189 from $27,130 for the three months ended March 31, 2021.
Selling and Marketing. For the three months ended ~~September 30, 2021,~~March 31, 2022, we incurred selling and marketing costs of ~~approximately $22.7 million,~~$17,216, as compared to ~~approximately $9.9 million~~$17,529 for the three months ended ~~September 30, 2020.~~March 31, 2021. The ~~increase~~decrease in selling and marketing costs of ~~approximately $12.8 million~~$313 is primarily ~~from increases~~related to a $2,205 decrease in ~~circulation costs of approximately $9.4 million; advertising costs of approximately $1.4 million; professional and marketing service costs of approximately $0.7 million;~~ payroll of selling and marketing account management support teams ~~along with the related benefits~~due to a reclass to general and ~~stock-based compensation of approximately $1.3 million; office and occupancy~~administrative expense offset by an increase in circulation costs of ~~approximately $0.1 million; less a decrease~~$1,893. The increase in ~~other selling~~circulation costs reflects the effects of acquisition accounting where agency fees were excluded from subscribers that existed upon acquisition, and ~~marketing related costs~~benefited the first quarter of ~~approximately $0.1 million.~~fiscal 2021 as compared to the first quarter of fiscal 2022.

General and Administrative. For the three months ended ~~September 30, 2021,~~March 31, 2022, we incurred general and administrative costs of approximately $23.0 million from payroll and related expenses, professional services, occupancy costs, stock-based compensation of related personnel, depreciation and amortization, and other corporate expense,$13,514 as compared to ~~approximately $7.2 million~~$5,638 for the three months ended ~~September 30, 2020.~~March 31, 2021. The $7,876 increase in general and administrative expenses ~~of approximately $15.9 million~~ is primarily ~~from~~due to an increase in ~~our~~ payroll, along with the related benefits and ~~stock-compensation~~stock-based compensation, of ~~approximately $5.5 million; an increase in professional services, including accounting, legal~~$7,382 and ~~insurance of approximately $2.2 million; an increase in facilities costs related to the lease termination of approximately $7.3 million and an increase in~~ other general corporate expenses of ~~approximately $0.9 million.~~$390.

29
Other ~~(Expenses) Income~~Expenses

The following table sets forth other ~~(expense) income:~~expenses:

Three Months Ended September 30, 2021 versus 2020
2021 2020 Change % Change
(percentages reflect other (expense) income as a percentage of the total)
Change in valuation of warrant derivative liabilities $ 801,755 -31.5 % $ (517,405 ) 6.9 % $ 1,319,160 -17.6 %
Change in valuation of embedded derivative liabilities - 0.0 % (2,370,000 ) 31.6 % 2,370,000 -31.6 %
Interest expense (2,512,637 ) 98.7 % (4,253,180 ) 56.8 % 1,746,556 -23.3 %
Interest income - 0.0 % 1,116 0.0 % (7,129 ) 0.0 %
Liquidated damages (833,612 ) 32.8 % (319,903 ) 4.3 % (513,709 ) 6.9 %
Other income - 0.0 % (31,851 ) 0.4 % 31,851 -0.4 %
Total other (expense) $ (2,544,494 ) 100.0 % $ (7,491,223 ) 100.0 % $ 4,946,729 -66.0 %
Three Months Ended March 31, 2022 versus 2021
2022 2021 $ Change % Change
Change in valuation of warrant derivative liabilities $ - $ (665 ) $ 665 -100.0 %
Interest expense (2,820 ) (2,820 ) - 0.0 %
Liquidated damages (172 ) (255 ) 83 -32.5 %
Total other expenses $ (2,992 ) $ (3,740 ) $ 748 -20.0 %

Change in Valuation of Warrant Derivative Liabilities. ~~There was approximately $1.3 million increase in noncash income related the~~The change in ~~the~~ valuation of ~~the~~ warrant derivative liabilities for the three months ended ~~September 30, 2021,~~March 31, 2022 was the result of the decrease in the fair value of the warrant derivative liabilities as of March 31, 2022, as compared to ~~the prior year period.~~
~~Change in Valuation of Embedded Derivative Liabilities. There was approximately $2.4 million increase in noncash income related~~ the change in the valuation ~~of the embedded derivative liabilities~~ for the three months ended ~~September 30, 2021, as compared~~March 31, 2021. The change in the valuation is not impacted by our actual business operations but is instead strongly tied to the ~~prior year period.~~change in the market value of our common stock.

Interest Expense. We incurred interest expense of ~~approximately $2.5 million~~$2,820 for the three months ended September 30, 2021, as compared to approximately $4.3 million for the three months ended September 30, 2020. The decrease in interest expense of approximately $1.8 million is primarily from an increase of approximately $0.2 million of other interest; less a decrease of accrued interest of approximately $0.8 millionMarch 31, 2022 and ~~a decrease from the amortization of debt discount on notes payable of approximately $1.2 million.~~2021.

33
Liquidated Damages. We recorded $172 accrued interest as liquidated damages, ~~of approximately $0.8 million for~~during the three months ended ~~September 30, 2021, an increase of approximately $0.5 million as compared to the three months ended September 30, 2020,~~March 31, 2022 primarily from the issuance of our ~~12% Convertible Debentures,~~convertible debentures, Series H ~~Preferred~~convertible preferred Stock, Series I convertible preferred stock, ~~(the “Series I Preferred Stock”),~~ Series J ~~Preferred Stock,~~convertible preferred stock and Series K ~~Preferred Stock. The liquidated damages were recognized because~~convertible preferred stock since we determined that: (i) the registration statements ~~covering~~registering for resale the shares of our common stock issuable upon conversion ~~under the aforementioned instruments~~of such securities would not be declared effective within the requisite time frame; and (ii) that we would not be able to ~~file~~become current in our periodic ~~reports in the requisite time frame~~filing obligations with the SEC in order to satisfy the public information requirements under the applicable securities purchase agreements. We recorded liquidated damages, including the accrued interest thereon, of $255 in for the three months ended March 31, 2021 primarily from issuance of the same securities as outlined above based upon the reasons set forth above.

~~Nine Months Ended September 30, 2021 and 2020~~Use of Non-GAAP Financial Measures
Nine Months Ended September 30, 2021 versus 2020
2021 2020 $ Change % Change
Revenue $ 127,935,501 $ 85,593,786 $ 42,341,715 49.5 %
Cost of revenue 83,978,050 76,321,953 7,656,097 10.0 %
Gross profit 43,957,451 9,271,833 34,685,618 374.1 %
Operating expenses
Selling and marketing 55,122,357 27,698,182 27,424,175 99.0 %
General and administrative 44,230,360 24,852,891 19,377,469 78.0 %
Depreciation and amortization 11,981,998 12,276,990 (294,992 ) -2.4 %
Total operating expenses 111,334,715 64,828,063 46,506,652 71.7 %
Loss from operations (67,377,264 ) (55,556,230 ) (11,821,034 ) 21.3 %
Total other (expense) (3,678,952 ) (11,646,154 ) 7,967,202 -68.4 %
Loss before income taxes (71,056,216 ) (67,202,384 ) (3,853,832 ) 5.7 %
Income taxes 229,699 - 229,699 100.0 %
Net loss $ (70,826,517 ) $ (67,202,384 ) $ (3,624,133 ) 5.4 %
Deemed dividend on Series H convertible preferred stock - (132,663 ) 132,663 -100.0 %
Net loss attributable to common stockholders (70,826,517 ) (67,335,047 ) (3,491,470 ) 5.2 %
Basic and diluted net loss per common share $ (0.29 ) $ (1.72 ) $ 1.43 -83.1 %
Weighted average number of shares outstanding – basic and diluted 244,209,151 39,177,864 205,031,287 523.3 %
~~For~~We report our financial results in accordance with generally accepted accounting principles in the ~~nine months ended September 30, 2021,~~United States of America (“GAAP”); however, management believes that certain non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods. We believe Adjusted EBITDA provides visibility to the ~~total~~underlying continuing operating performance by excluding the impact of certain items that are noncash in nature or not related to our core business operations. We calculate Adjusted EBITDA as net loss, ~~was approximately $70.8 million. The total net~~adjusted for (i) interest expense, (ii) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, (v) change in derivative valuations, (vi) liquidated damages, (vii) loss ~~increased~~on impairment of assets, (viii) professional and vendor fees, and (ix) employee restructuring payments.
Our non-GAAP Adjusted EBITDA may not be comparable to a similarly titled measure used by ~~approximately $3.5 million~~other companies, has limitations as ~~compared~~an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Additionally, we do not consider our non-GAAP Adjusted EBITDA as superior to, ~~the nine months ended September 30, 2020, which had~~or a ~~net loss of approximately $67.3 million. The primary reasons~~substitute for, the ~~increase~~equivalent measures calculated and presented in the total net loss is a lease termination charge of approximately $7.3 million and an increase in stock-based compensation of approximately $10.5 million during the nine months ended September 30, 2021. The basic and diluted net loss per common share for the nine months ended September 30, 2021 of $0.29 decreased from $1.72 for the nine months ended September 30, 2020, primarily because our net loss per common share decreased alongaccordance with ~~the increase~~GAAP. Some of the ~~daily weighted average shares outstanding to 244,209,151 shares from 39,177,864 shares.~~limitations is that Adjusted EBITDA:
● does not reflect stock-based compensation and, therefore, does not include all of our compensation costs;
● does not reflect depreciation and amortization expense and, although this is a noncash expense, the assets being depreciated may have to be replaced in the future, increasing our cash requirements;
● does not reflect interest expense, or the cash required to service our debt, which reduces cash available to us;
● does not reflect deferred income taxes, which is a noncash expense;

3430

~~Revenue~~
~~The following table sets forth revenue, cost of revenue, and gross profit:~~
Nine Months Ended September 30, 2021 versus 2020
2021 2020 Change % Change
(percentages reflect cost of revenue as a percentage of total revenue)
Revenue $ 127,935,501 100.0 % $ 85,593,786 100.0 % $ 42,341,715 49.5 %
Cost of revenue 83,978,050 65.6 % 76,321,953 89.2 % 7,656,097 10.0 %
Gross profit $ 43,957,451 34.4 % $ 9,271,833 10.8 % $ 34,685,618 374.1 %
~~For the nine months ended September 30, 2021, we had revenue of approximately $127.9 million, as compared to revenue of approximately $85.6 million for the nine months ended September 30, 2020.~~
● does not reflect the change in derivative valuations and, although this is a noncash expense, the change in the valuations each reporting period are not impacted by our actual business operations but is instead strongly tied to the change in the market value of our common stock;
● does not reflect liquidated damages and, therefore, does not include future cash requirements if we repay the liquidated damages in cash instead of shares of our common stock (which the investor would need to agree to);
● does not reflect any losses from the impairment of assets, which is a noncash operating expense;
● does not reflect the professional and vendor fees incurred by us for services provided by consultants, accountants, lawyers, and other vendors, which services were related to certain types of events that are not reflective of our business operations; and
● does not reflect payments related to employee restructuring changes for our former Chief Executive Officer.

The following table ~~sets forth revenue by product line and~~presents a reconciliation of Adjusted EBITDA to net loss, which is the ~~corresponding percent of total revenue:~~most directly comparable GAAP measure, for the periods indicated:

Nine Months Ended September 30, 2021 versus 2020
2021 2020 Change % Change
(percentages reflect product line as a percentage of total revenue)
Advertising $ 46,300,974 36.2 % $ 28,788,631 33.6 % $ 17,512,343 20.5 %
Digital subscriptions 22,472,951 17.6 % 20,096,640 23.5 % 2,376,311 2.8 %
Magazine circulation 53,325,894 41.7 % 34,041,272 39.8 % 19,284,622 22.5 %
Other 5,835,682 4.6 % 2,667,243 3.1 % 3,168,439 3.7 %
Total revenue $ 127,935,501 100.0 % $ 85,593,786 100.0 % $ 42,341,715 49.5 %
Three Months Ended March 31,
2022 2021
Net loss $ (18,449 ) $ (25,463 )
Add:
Interest expense (1) 2,820 2,820
Deferred income taxes 14 -
Depreciation and amortization (2) 6,513 6,130
Stock-based compensation (3) 7,367 5,099
Change in derivative valuations - 665
Liquidated damages (4) 172 255
Loss on impairment of assets (5) 257 -
Professional and vendor fees (6) - 1,719
Employee restructuring payments (7) 174 61
Adjusted EBITDA $ (1,132 ) $ (8,714 )

For the nine months ended September 30, 2021, the primary sources of revenue were as follows: (i) advertising of approximately $46.3 million; (ii) digital subscriptions of approximately $22.5 million; (iii) magazine circulation of approximately $53.3 million; and (iv) approximately $5.8 million from other revenue. Our advertising revenue increased by approximately $17.5 million due to additional revenue of approximately $10.0 million generated as a result of the Sports Illustrated media business, approximately $6.5 million generated as a result of The Spun, which was acquired during the second quarter 2021, and approximately $1.0 million in revenue generated from our other business. Our digital subscriptions increased by approximately $2.4 million due to additional revenue generated by TheStreet. Our magazine circulation increased by approximately $19.3 million as a result of the Sports Illustrated media business. Our other revenue, primarily consisting of licensing and e-commerce revenue, increased by approximately $3.2 million, due to additional revenue of approximately $3.6 generated as a result of the Sports Illustrated media business, offset by an approximately $0.4 million decrease in revenue from our other business.
~~Cost of Revenue~~
For the nine months ended September 30, 2021, we recognized cost of revenue of approximately $84.0 million, a 34% gross profit percentage, compared to approximately $76.3 million in the nine months ended September 30, 2020, representing a 11% gross profit percentage. The increase of approximately $7.7 million in cost of revenue during the nine months ended September 30, 2021 is primarily from increases in: (i) our Publisher Partner guarantees and revenue share payments of approximately $1.7 million; (ii) payroll, stock-based compensation, and related expenses for customer support, technology maintenance, and occupancy costs of related personnel of approximately $4.2 million; (iii) printing, distribution, and fulfillment costs of approximately $0.4 million; (iv) other costs of revenue of approximately $1.1 million; and (v) amortization of our Platform of approximately $0.2 million.
For the nine months ended September 30, 2021, we capitalized costs related to our Platform of approximately $4.4 million, as compared to approximately $4.1 million for the nine months ended September 30, 2020. For the nine months ended September 30, 2021, the capitalization of our Platform consisted of: (i) approximately $3.0 million in payroll and related expenses, including taxes and benefits; and (ii) approximately $1.3 million in stock-based compensation for related personnel.
(1) Represents interest expense of $2,820 and $2,820, for the three months ended March 31, 2022 and 2021, respectively. Interest expense is related to our capital structure. Interest expense varies over time due to a variety of financing transactions. Interest expense includes $660 and $694 for amortization of debt discounts for the three months ended March 31, 2022 and 2021, respectively, which are a noncash item and presented in our condensed consolidated statements of cash flows. Investors should note that interest expense will recur in future periods.
(2) Represents depreciation and amortization related to our developed technology and Platform included within cost of revenues of $2,311 and $2,167 and depreciation and amortization included within operating expenses of $4,202 and $3,963 for the three months ended March 31, 2022 and 2021, respectively. We believe (i) the amount of depreciation and amortization expense in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Investors should note that the use of tangible and intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods.
(3) Represents noncash costs arising from the grant of stock-based awards to employees, consultants and directors. We believe that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in our operating performance because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations, and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Additionally, we believe that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between our operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.

3531

~~Operating Expenses~~
~~The following table sets forth operating expenses and the corresponding percentage of total revenue:~~
Nine Months Ended September 30, 2021 versus 2020
2021 2020 Change % Change
(percentages reflect expense as a percentage of total revenue)
Selling and marketing $ 55,122,357 43.1 % $ 27,698,182 32.4 % $ 27,424,175 42.3 %
General and administrative 44,230,360 34.6 % 24,852,891 29.0 % 19,377,469 29.9 %
Depreciation and amortization 11,981,998 9.4 % 12,276,990 14.3 % (294,992 ) -0.5 %
Total operating expenses $ 111,334,715 $ 64,828,063 $ 46,506,652 71.7 %
~~Selling and Marketing~~. For the nine months ended September 30, 2021, we incurred selling and marketing costs of approximately $55.1 million, as compared to approximately $27.7 million for the nine months ended September 30, 2020. The increase in selling and marketing costs of approximately $27.4 million is primarily from an increase in circulation costs of approximately $22.4 million; payroll of selling and marketing account management support teams, along with the related benefits and stock-based compensation of approximately $3.3 million; an increase in advertising costs of approximately $1.8 million; an increase in professional and marketing service costs of approximately $1.2 million; an increase in office, travel, conferences and occupancy costs of approximately $0.3 million; less a decrease in other selling and marketing related costs of approximately $1.0 million.
~~General and Administrative~~. For the nine months ended September 30, 2021, we incurred general and administrative costs of approximately $44.2 million from payroll and related expenses, professional services, occupancy costs, stock-based compensation of related personnel, depreciation and amortization, and other corporate expense, as compared to approximately $24.9 million for the nine months ended September 30, 2020. The increase in general and administrative expenses of approximately $19.4 million is primarily from an increase in our payroll, along with the related benefits and stock-compensation of approximately $8.4 million; an increase in professional services, including accounting, legal and insurance of approximately $3.1 million; an increase in facilities costs related to the lease termination of approximately $7.1 million; and an increase in other general corporate expenses of approximately $0.8 million.
~~Other (Expenses) Income~~
~~The following table sets forth other (expense) income:~~
Nine Months Ended September 30, 2021 versus 2020
2021 2020 Change % Change
(percentages reflect other (expense) income as a percentage of the total)
Change in valuation of warrant derivative liabilities $ 496,812 -13.5 % $ (134,910 ) 1.2 % $ 631,722 -5.4 %
Change in valuation of embedded derivative liabilities - 0.0 % 2,173,000 -18.7 % (2,173,000 ) 18.7 %
Interest expense (7,695,317 ) 209.2 % (12,169,315 ) 104.4 % 4,480,011 -38.4 %
Interest income 471 0.0 % 4,499 0.0 % (10,041 ) 0.0 %
Liquidated damages (2,197,615 ) 59.7 % (1,487,577 ) 12.8 % (710,038 ) 6.1 %
Other expense - 0.0 % (31,851 ) 0.3 % 31,851 -0.3 %
Gain upon debt extinguishment 5,716,697 -155.4 % - 0.0 % 5,716,697 -49.1 %
Total other (expense) $ (3,678,952 ) 100.0 % $ (11,646,154 ) 100.0 % $ 7,967,202 -68.4 %
~~Change in Valuation of Warrant Derivative Liabilities~~. There was approximately $0.6 million increase in noncash income related the change in the valuation of the warrant derivative liabilities for the nine months ended September 30, 2021, as compared to the prior year period.
36 (4) Represents damages (or interest expense related to accrued liquidated damages) we owe to certain of our investors in private placements offerings conducted in fiscal years 2018 through 2020, pursuant to which we agreed to certain covenants in the respective securities purchase agreements and registration rights agreements, including the filing of resale registration statements and becoming current in our reporting obligations, which we were not able to timely meet.
(5) Represents our impairment of certain assets that no longer are useful.
(6) Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers, and other vendors related to the preparation of periodic reports in order for us to become current in our reporting obligations (“Delinquent Reporting Obligations Services”). With respect to the Delinquent Reporting Obligations Services, we incurred professional and vendor fees in the first quarter of 2021 related to the preparation of our annual reports for fiscal years 2018 and 2019 (which contained the financial information for the quarterly periods during fiscal 2019), and our quarterly reports fiscal 2020. The amount of fees incurred in connection with the Delinquent Reporting Obligations Services is adjusted based on our best estimate of the amount we expect we would ordinarily incur to meet our reporting obligations pursuant to the Exchange Act.
(7) Represents severance payments to our former Chief Executive Officer for the three months ended March 31, 2022 and 2021.
~~Change in Valuation of Embedded Derivative Liabilities~~. There was approximately $2.2 million decrease in noncash income related the change in the valuation of the embedded derivative liabilities for the nine months ended September 30, 2021, as compared to the prior year period.
~~Interest Expense~~. We incurred interest expense of approximately $7.7 million for the nine months ended September 30, 2021, as compared to approximately $12.2 million for the nine months ended September 30, 2020. The decrease in interest expense of approximately $4.5 million is primarily from an increase of approximately $0.5 million of other interest; less a decrease of approximately $1.6 million of accrued interest and a decrease of the amortization of debt discount on notes payable of approximately $3.4 million.
~~Liquidated Damages~~. We recorded liquidated damages of approximately $2.2 million for the nine months ended September 30, 2021, primarily from issuance of our 12% Convertible Debentures, Series H Preferred Stock, Series I Preferred Stock, and Series J Preferred Stock issued during 2020. The liquidated damages were recognized because we determined that: (i) registration statements covering the shares of common stock issuable upon conversion under the aforementioned instruments would not be declared effective within the requisite time frame; and (ii) that we would not be able to file our periodic reports in the requisite time frame with the SEC in order to satisfy the public information requirements under the securities purchase agreements.
~~Gain Upon Debt Extinguishment~~. We recorded a gain upon debt extinguishment of $5,716,697 (including accrued interest) pursuant to the forgiveness of the Paycheck Protection Program Loan for the nine months ended September 30, 2021.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer(s) and principal financial officer(s), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were ~~not~~ effective as of such date in providing reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, continues to implement procedures intended to remediate the material weaknesses identified as of September 30, 2021. During fiscal 2020, we engaged external certified public accountants to assist our accounting department and Chief Financial Officer in preparing the necessary periodic reports. In TheStreet merger, we also acquired some additional employees with accounting experience that has assisted us with preparing our periodic reports. Finally, we recently hired a Chief Accounting Officer to assist with the preparation of our periodic reports. We believe our accounting department is now capable of ensuring that we remain current with our periodic filing obligations. In addition, our Audit Committee is now assisting our Board in fulfilling its responsibility to oversee (i) the integrity of our financial statements, our accounting and financial reporting processes, and financial statement audits, (ii) our compliance with legal and regulatory requirements, (iii) our systems of internal control over financial reporting and disclosure controls and procedures, (iv) the engagement of our independent registered public accounting firm, and its qualifications, performance, compensation, and independence, (v) review and approval of related party transactions, and (vi) the communication among our independent registered public accounting firm, our financial and senior management, and our Board.
~~In addition, we intend to undertake the following additional remediation measures to address the material weaknesses described in this Quarterly Report:~~
~~(i)~~ ~~we intend to update the documentation of our internal control processes, including formal risk assessment of our financial reporting processes; and~~
~~(ii)~~ ~~we intend to implement procedures pursuant to which we can ensure segregation of duties and hire additional resources to ensure appropriate review and oversight.~~
We will continue to evaluate and implement procedures as deemed appropriate to remediate these material weaknesses; however, we expect that the remediation of those matters that were deemed material weaknesses will be fully complete no later than December 31, 2021.
37
Changes in Internal Control over Financial Reporting

In connection with our continued monitoring and maintenance of our controls procedures as part of the implementation of Section 404 of the Sarbanes, we continue to review, test, and improve the effectiveness of our internal controls. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended ~~September 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

32
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be subject to claims and litigation arising in the ordinary course of business. We are not currently subject to any pending or threatened legal proceedings that we believe would reasonably be expected to have a material adverse effect on our business, financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS
There are numerous factors that affect our business and operating results, many of which are beyond our control. The risk factors described in Part I, “Item IA. Risk Factors” in our Annual Report on Form 10-K, for the year ended December 31, ~~2020,~~2021, should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with SEC in connection with evaluating us, our business and the forward-looking statements contained in this Quarterly Report on Form 10-Q. Additional risks and uncertainties not known to us at present, or that we currently deem immaterial, may affect us. The occurrence of any of these known or unknown risks could have a material adverse impact on our business, financial condition and results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~The following sets forth certain unregistered sales of our equity securities during the three months ended March 31, 2021 through the date of filing this Quarterly Report that have not been previously disclosed:
On March 7, 2022, we issued 88,188 shares of common stock to Mr. Ross Levinsohn in connection with the vesting of outstanding restricted stock units. The per share fair value on the issuance date was $8.36. In connection with the issuance, we withheld an additional 67,023 shares of common stock for taxes due which were withhold at a per share fair value of $8.28. The issuance was exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.
On March 22, 2022, we issued 34,500 shares of our common stock upon the conversion of 250 shares of Series H Convertible Preferred Stock. The issuances were exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof and Regulation D promulgated thereunder as transactions not involving a public offering.
On March 23, 2022, we issued 16,760 shares of our common stock pursuant to the asset purchase agreement, dated March 9, 2020, by and between us and Petametrics Inc., doing business as LiftIgniter. The per share fair value on the issuance date was $9.51. The issuance was exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.
On March 22, 2022, we issued 34,500 shares of our common stock upon the conversion of 250 shares of Series H Convertible Preferred Stock. The issuances were exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof and Regulation D promulgated thereunder as transactions not involving a public offering.
On March 25, 2022, we issued 1,380 shares of our common stock upon the conversion of 10 shares of Series H Convertible Preferred Stock. The issuances were exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof and Regulation D promulgated thereunder as transactions not involving a public offering.
On April 1, 2022, we issued 314,103 shares of our common stock pursuant to the stock purchase agreement, dated April 1, 2022, by and between us and Athlon Holdings, Inc. The number of shares issued was based on the average closing price of our common stock on the 10 trading days preceding April 1, 2022, the closing date. The per share fair value on the issuance date was $10.00. The issuance was exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.
33

ITEM 6. EXHIBITS

The following documents are filed as part of this Quarterly Report:

38
Exhibit
Number
Description of Document

3.1 Certificate of ~~Elimination~~Amendment of the Amended and Restated Certificate of ~~Designation~~Incorporation, filed with the Secretary of ~~Series F Convertible Preferred Stock,~~State of the State of Delaware on January 20, 2022, and which was filed as Exhibit 3.1 to our Current Report on Form 8-K filed on ~~September 13, 2021.~~January 26, 2022.

3.2 Certificate of ~~Elimination~~Correction of the Certificate of ~~Designation~~Amendment of ~~Series I Convertible Preferred Stock,~~the Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on January 26, 2022, and which was filed as Exhibit 3.2 to our Current Report on Form 8-K filed on ~~September 13, 2021~~January 26, 2022..

3.3 Certificate of ~~Elimination~~Correction of the Certificate of ~~Designation~~Amendment of ~~Series J Convertible Preferred Stock,~~the Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on February 3, 2022, and which was filed as Exhibit ~~3.3~~3.9 to Pre-Effective Amendment No. 3 to our ~~Current Report~~Registration Statement on Form ~~8-K~~S-1 (File No. 333-262111) filed on ~~September 13, 2021.~~
~~3.4~~ ~~Certificate of Elimination of the Certificate of Designation of Series K Convertible Preferred Stock, which was filed as Exhibit 3.4 to our Current Report on Form 8-K filed on September 13, 2021.~~February 9, 2022.

10.1 ~~Amended Consulting Agreement,~~Bonus Letter, dated ~~June 3,~~October 6, 2021, by and between the Company ~~Maven Coalition, Inc.,~~ and ~~James C. Heckman Jr.,~~Ross Levinsohn, which was filed as Exhibit ~~10.103~~10.1 to our ~~Registration Statement~~Current Report on Form ~~S-1~~8-K filed on ~~October 29, 2021.~~January 10, 2022.

10.2 ~~General Release~~Amendment No. 1 to Second Amended and ~~Continuing Obligations~~Restated executive Employment Agreement, dated ~~June 3,~~December 22, 2021, by and between the Company ~~Maven Coalition, Inc.,~~ and ~~James C. Heckman Jr.,~~Ross Levinsohn, which was filed as Exhibit ~~10.104~~10.2 to our ~~Registration Statement~~Current Report on Form ~~S-1~~8-K filed on ~~October 29, 2021.~~January 10, 2022.

10.3 ~~Amendment to 2016~~Form of Stock ~~Incentive Plan Option~~Purchase Agreement, dated ~~June 3, 2021,~~January 24, 2022, by and between the Company and ~~James C. Heckman Jr.,~~several stockholders, which was filed as Exhibit ~~10.105~~10.1 to our ~~Registration Statement~~Current Report on Form ~~S-1~~8-K filed on ~~October 29, 2021.~~January 28, 2022.

10.4 Amendment No. 4 to ~~2019 Stock Incentive Plan Option~~Second Amended and Restated Note Purchase Agreement, dated ~~June 3, 2021,~~as of January 23, 2022, by and ~~between~~among the Company, Maven Coalition, Inc., TheStreet, Inc., Maven Media Brands, LLC, College Spun Media Incorporated, and ~~James C. Heckman Jr.~~BRF Finance Co., LLC as Agent and Purchaser, which was filed as Exhibit ~~10.105~~10.2 to our ~~Registration Statement~~Current Report on Form ~~S-1~~8-K filed on ~~October 29, 2021.~~January 28, 2022.

10.5*10.5 ~~Asset Purchase Agreement~~Form of Amendment to Options Agreements by and between the Company and ~~Fulltime Fantasy Sports,~~Douglas Smith, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed on March 24, 2022.
10.5 Underwriting Agreement, dated February 10, 2022, by and between the Company and B. Riley Securities, Inc., as representative of the several underwriters, which was filed as Exhibit 1.1 to our Current Report on Form 8-K filed on February 11, 2022.
10.6 Amended and Restated Rights Agreement, dated May 2, 2022, by and between the Company and American Stock Transfer & Trust Company, LLC, ~~dated July 15, 2021.~~which was filed as Exhibit 4.1 to our Current Report on Form 8-K filed on May 3, 2022.

31.1* Chief Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Chief Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1* Chief Executive Officer’s Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2* Chief Financial Officer’s Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS** Inline XBRL Instance Document

101.SCH** Inline XBRL Taxonomy Extension Schema Document

101.CAL** Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB** Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE** Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF** Inline XBRL Taxonomy Extension Definition Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

** In accordance with Regulation S-T, the XBRL related information on Exhibit No. 101 to this Quarterly Report on Form 10-Q shall be deemed “furnished” herewith but not “filed”.
3934
SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~TheMaven,~~The Arena Group Holdings, Inc.

Date: ~~November 15, 2021~~May 4, 2022 By: /s/ ROSS LEVINSOHN
Ross Levinsohn
Chief Executive Officer
(Principal Executive Officer)
Date: ~~November 15, 2021~~May 4, 2022 By: /s/ SPIROS CHRISTOFORATOS
Spiros Christoforatos
Chief Accounting Officer
(Principal Accounting Officer)

4035

	Page Number

PART I - FINANCIAL INFORMATION	4

Item 1. Condensed Consolidated Financial Statements	4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2925

Item 3. Quantitative and Qualitative Disclosures About Market Risk	3732

Item 4. Controls and Procedures	3732

PART II - OTHER INFORMATION	3833

Item 1. Legal Proceedings	3833

Item 1A. Risk Factors	3833

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3833

Item 3. Defaults Upon Senior Securities	3833

Item 4. Mine Safety Disclosures	3833

Item 5. Other Information	3833

Item 6. Exhibits	3834

SIGNATURES	4035

	September 30, 2021 (unaudited)			December 31, 2020
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 (Note 14)		-			-
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


	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

	March 31, 2022 (unaudited)			December 31, 2021
	($ in thousands, except share data)
Assets
Current assets:
Cash and cash equivalents	$	22,480		$	9,349
Restricted cash		502			502
Accounts receivable, net		19,998			21,660
Subscription acquisition costs, current portion		24,940			30,162
Royalty fees		7,500			11,250
Prepayments and other current assets		4,972			4,748
Total current assets		80,392			77,671
Property and equipment, net		593			636
Operating lease right-of-use assets		493			528
Platform development, net		10,013			9,299
Subscription acquisition costs, net of current portion		7,307			8,235
Acquired and other intangible assets, net		52,255			57,356
Other long-term assets		587			639
Goodwill		19,619			19,619
Total assets	$	171,259		$	173,983
Liabilities, mezzanine equity and stockholders’ deficiency
Current liabilities:
Accounts payable	$	7,070		$	11,982
Accrued expenses and other		17,425			24,011
Line of credit		9,291			11,988
Unearned revenue		48,519			54,030
Subscription refund liability		2,534			3,087
Operating lease liability		387			374
Liquidated damages payable		5,369			5,197
Current portion of long-term debt		5,847			5,744
Total current liabilities		96,442			116,413
Unearned revenue, net of current portion		12,362			15,277
Operating lease liability, net of current portion		683			785
Liquidating damages payable, net of current portion		-			7,008
Other long-term liabilities		7,527			7,556
Deferred tax liabilities		376			362
Long-term debt		64,929			64,373
Total liabilities		182,319			211,774
Commitments and contingencies (Note 15)		-			-
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; Series G shares issued and outstanding: 168; common shares issuable upon conversion: 8,582 at March 31, 2022 and December 31, 2021		168			168
Series H convertible preferred stock, $0.01 par value, $1,000 per share liquidation value and 23,000 shares designated; aggregate liquidation value: $14,556 and $15,066; Series H shares issued and outstanding: 14,556 and 15,066; common shares issuable upon conversion: 2,004,971 and 2,075,200 at March 31, 2022 and December 31, 2021, respectively		13,207			13,718
Total mezzanine equity		13,375			13,886
Stockholders’ deficiency:
Common stock, $0.01 par value, authorized 1,000,000,000 shares; issued and outstanding: 17,502,102 and 12,632,947 shares at March 31, 2022 and December 31, 2021, respectively		175			126
Common stock to be issued		-			-
Additional paid-in capital		246,052			200,410
Accumulated deficit		(270,662	)		(252,213	)
Total stockholders’ deficiency		(24,435	)		(51,677	)
Total liabilities, mezzanine equity and stockholders’ deficiency	$	171,259		$	173,983

	2022			2021
	Three Months Ended March 31,
	2022			2021
	($ in thousands, except per share data)
Revenue	$	48,243		$	33,615
Cost of revenue (includes amortization of developed technology and platform development for 2022 and 2021 of $2,311 and $2,167, respectively)		28,497			28,208
Gross profit		19,746			5,407
Operating expenses
Selling and marketing		17,216			17,529
General and administrative		13,514			5,638
Depreciation and amortization		4,202			3,963
Loss on impairment of assets		257			-
Total operating expenses		35,189			27,130
Loss from operations		(15,443	)		(21,723	)
Other expenses
Change in valuation of warrant derivative liabilities		-			(665	)
Interest expense		(2,820	)		(2,820	)
Liquidated damages		(172	)		(255	)
Total other expenses		(2,992	)		(3,740	)
Loss before income taxes		(18,435	)		(25,463	)
Income taxes		(14	)		-
Net loss	$	(18,449	)	$	(25,463	)
Basic and diluted net loss per common share	$	(1.20	)	$	(2.44	)
Weighted average number of common shares outstanding – basic and diluted		15,381,306			10,456,052


	Common Stock						Common Stock to be Issued				Additional						Total
	Shares			Par Value			Shares		Par Value		Paid-in Capital			Accumulated Deficit			Stockholders’ Deficiency
Balance at January 1, 2021		229,085,167		$	2,290,851			1,080,930	$	10,809	$	139,658,166		$	(162,273,286	)	$	(20,313,460	)
Issuance of restricted stock awards to the board of directors		805,165			8,052			-		-		(8,052	)		-			-
Repurchase restricted stock classified as liabilities		(133,068	)		(1,331	)		-		-		1,331			-			-
Issuance of restricted stock in connection with the acquisition of The Spun		-
Issuance of restricted stock in connection with the acquisition of The Spun, shares
Cashless exercise of common stock options
Cashless exercise of common stock options, shares
Common stock withheld for taxes
Common stock withheld for taxes, shares
Proceeds from common stock private placement
Proceeds from common stock private placement, shares
Issuance of common stock for restricted stock units in connection with the acquisition of LiftIgniter		256,661			2,567			-		-		(2,567	)		-			-
Issuance of common stock in connection with professional services		312,500			3,125			-		-		121,875			-			125,000
Issuance of common stock upon conversion of Series H convertible preferred stock
Issuance of common stock upon conversion of Series H convertible preferred stock, shares
Issuance of common stock in connection with vesting of restricted stock units
Issuance of common stock in connection with vesting of restricted stock units, shares
Forfeiture of unvested restricted stock awards
Forfeiture of unvested restricted stock awards, shares
Issuance of common stock in connection with the acquisition of Say Media
Issuance of common stock in connection with the acquisition of Say Media, shares
Beneficial conversion feature on Series H convertible preferred stock
Deemed dividend on Series H convertible preferred stock
Stock-based compensation		-			-			-		-		5,408,207			-			5,408,207
Net loss		-			-			-		-		-			(25,463,305	)		(25,463,305	)
Balance at March 31, 2021		230,326,425			2,303,264			1,080,930		10,809		145,178,960			(187,736,591	)		(40,243,558	)
Issuance of restricted stock in connection with the acquisition of The Spun		4,285,714			42,857			-		-		(42,857	)		-			-
Issuance of restricted stock awards to the board of directors		82,158			822			-		-		(822	)		-			-
Cashless exercise of common stock options		84,891			849			-		-		(849	)		-			-
Common stock withheld for taxes		(49,952	)		(490	)		-		-		(40,630	)		-			(41,120	)
Repurchase of restricted stock classified as liabilities		(133,068	)		(1,331	)		-		-		1,331			-			-
Proceeds from common stock private placement		28,578,575			285,786			-		-		19,551,971			-			19,837,757
Stock-based compensation		-			-			-		-		8,665,939			-			8,665,939
Net loss		-			-			-		-		-			(20,656,558	)		(20,656,558	)
Balance at June 30, 2021		263,175,743			2,631,757			1,080,930		10,809		173,313,043			(208,393,149	)		(32,437,540	)
Issuance of common stock upon conversion of Series H convertible preferred stock		151,515			1,515			-		-		48,485			-			50,000
Issuance of restricted stock in connection with the acquisition of Fulltime Fantasy		750,000			7,500			-		-		495,000			-			502,500
Issuance of common stock upon vesting of restricted stock units		500,000			5,000			-		-		(5,000	)		-			-
Forfeiture of unvested restricted stock awards		(150,557	)		(1,505	)		-		-		1,505			-			-
Repurchase of restricted stock classified as liabilities		(133,068	)		(1,331	)		-		-		1,331			-			-
Common stock withheld for taxes		(46,856	)		(469	)		-		-		(28,649	)		-			(29,118	)
Stock-based compensation		-			-			-		-		8,961,704			-			8,961,704
Net loss		-			-			-		-		-			(24,706,654	)		(24,706,654	)
Balance at September 30, 2021		264,246,777		$	2,642,467			1,080,930	$	10,809	$	182,787,419		$	(233,099,803	)	$	(47,659,108	)


	Common Stock						Common Stock to be Issued				Additional						Total
	Shares			Par Value			Shares		Par Value		Paid-in Capital			Accumulated Deficit			Stockholders’ Deficiency
	($ in thousands, except number of shares)
Balance at January 1, 2022		12,632,947		$	126			49,134	$	-	$	200,410		$	(252,213	)	$	(51,677	)
Issuance of restricted stock awards to the board of directors		-			-			-		-		-			-			-
Issuance of restricted stock awards to the board of directors, shares		-			-			-		-		-			-			-
Issuance of common stock upon conversion of series H preferred stock		70,380			1			-		-		510			-			511
Issuance of common stock for restricted stock units in connection with an acquisition		16,760			-			-		-		-			-			-
Issuance of common stock in connection with professional services		14,617			-			-		-		184			-			184
Issuance of common stock in connection with settlement of liquidated damages		505,671			5			-		-		6,680			-			6,685
Gain upon issuance of common stock in connection with settlement of liquidated damages		-			-			-		-		323			-			323
Issuance of common stock for restricted stock units		155,211			2			-		-		(2	)		-			-
Common stock withheld for taxes upon issuance of underlying shares for restricted stock units		(67,023	)		(1	)		-		-		(555	)		-			(556	)
Repurchase restricted stock classified as liabilities		(8,064	)		-			-		-		-			-			-
Issuance of common stock in connection with public offering		4,181,603			42			-		-		30,448			-			30,490
Stock-based compensation		-			-			-		-		8,054			-			8,054
Net loss		-			-			-		-		-			(18,449	)		(18,449	)
Balance at March 31, 2022		17,502,102		$	175			49,134	$	-	$	246,052		$	(270,662	)	$	(24,435	)

	2021			2020
	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
Proceeds from issuance of convertible preferred stock		-			-
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
Deemed dividend on convertible preferred stock		-			-

					2022		2021
	As of September 30,				As of March 31,
	2021		2020		2022		2021
Series G convertible preferred stock		188,791		188,791		8,582		8,582
Series H Preferred Stock		59,243,926		58,206,061		2,004,971		2,699,312
Series I Preferred Stock		-		46,200,000
Series J Preferred Stock		-		43,584,500
Indemnity shares of common stock		-		412,500
Restricted Stock Awards		4,147,936		3,674,996		194,806		14,394
Financing Warrants		2,882,055		2,882,055		116,118		131,003
ABG Warrants		21,989,844		21,989,844		999,540		999,540
AllHipHop warrants		125,000		-		5,681		5,681
Publisher Partner Warrants		789,541		789,541		26,893		35,889
Common Stock Awards		6,861,973		8,033,936
Common Equity Awards		161,367,349		82,400,952
2016 Plan						286,151		321,761
2019 Plan						6,326,538		7,179,349
Outside Options		3,050,000		2,982,111		138,637		138,637
Total		260,646,415		271,345,287		10,107,917		11,534,148


Total purchase consideration	$	1,256,887
Cash (including $35,000 of transaction related costs)	$	335,000
Restricted stock		167,500
Deferred cash payments		419,387
Deferred restricted stock		335,000
Total purchase consideration	$	1,256,887


Cash	$	10,829,893
Deferred cash payments		905,109
Total purchase consideration	$	11,735,002


Cash	$	3,772,944
Accounts receivable		1,833,323
Other current assets		4,567
Goodwill		6,722,495
Accrued expenses		(1,500	)
Deferred tax liabilities		(596,827	)
Net assets acquired	$	11,735,002


Cash	$	315,289
Indemnity restricted stock units for shares of common stock		500,000
Total purchase consideration	$	815,289


Accounts receivable	$	37,908
Developed technology		917,762
Accounts payable		(53,494	)
Unearned revenue		(86,887	)
Net assets acquired	$	815,289

							March 31, 2022			December 31, 2021
	As of						As of
	September 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
Office equipment and computers	$	1,267,898		$	1,341,292		$	1,407		$	1,341
Furniture and fixtures		1,005			19,997			1			1
Leasehold improvements		-			345,516
		1,268,903			1,706,805
Gross property and equipment								1,408			1,342
Less accumulated depreciation and amortization		(600,240	)		(577,367	)		(815	)		(706	)
Net property and equipment	$	668,663		$	1,129,438		$	593		$	636

	As of September 30, 2021							As of December 31, 2020							As of March 31, 2022							As of December 31, 2021
	Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed technology	$	19,070,857	$	(11,576,450	)	$	7,494,407	$	19,070,857	$	(8,283,740	)	$	10,787,117	$	17,333	$	(12,214	)	$	5,119	$	17,579	$	(11,465	)	$	6,114
Noncompete agreement		480,000		(480,000	)		-		480,000		(480,000	)		-
Trade name		3,328,000		(712,292	)		2,615,708		3,328,000		(503,342	)		2,824,658		3,328		(851	)		2,477		3,328		(782	)		2,546
Brand name																5,175		(427	)		4,748		5,175		(298	)		4,877
Subscriber relationships		73,458,799		(28,992,944	)		44,465,855		73,458,799		(18,105,041	)		55,353,758		73,459		(36,252	)		37,207		73,459		(32,623	)		40,836
Advertiser relationships		2,240,000		(510,922	)		1,729,078		2,240,000		(332,515	)		1,907,485		2,240		(629	)		1,611		2,240		(570	)		1,670
Database		2,396,887		(904,030	)		1,492,857		1,140,000		(531,183	)		608,817		2,397		(1,304	)		1,093		2,397		(1,104	)		1,293
Subtotal amortizable intangible assets		100,974,543		(43,176,638	)		57,797,905		99,717,656		(28,235,821	)		71,481,835		103,932		(51,677	)		52,255		104,178		(46,842	)		57,336
Website domain name		20,000		-			20,000		20,000		-			20,000		-		-			-		20		-			20
Total intangible assets	$	100,994,543	$	(43,176,638	)	$	57,817,905	$	99,737,656	$	(28,235,821	)	$	71,501,835	$	103,932	$	(51,677	)	$	52,255	$	104,198	$	(46,842	)	$	57,356

Nine Months Ended September 30, 2021
Operating cash flows for operating leases	$	2,901,529
Noncash lease liabilities arising from obtaining operating leased assets during the period	$	-
Weighted-average remaining lease term		6.00
Weighted-average discount rate		9.90	%

Years Ending December 31,
2021 (remaining three months of the year)	$	140,134
2022		472,084
2023		486,247
2024		500,834
2025		512,019
Thereafter		896,034
Minimum lease payments		3,007,352
Less imputed interest		(753,176	)
Present value of operating lease liabilities	$	2,254,176
Current portion of operating lease liabilities	$	282,011
Long-term portion of operating lease liabilities		1,972,165
Total operating lease liabilities	$	2,254,176

Years Ending December 31,
2022 (remaining nine months of the year)	$	355
2023		486
2024		373
Minimum lease payments		1,214
Less imputed interest		(144	)
Present value of operating lease liability	$	1,070
Current portion of operating lease liability	$	387
Long-term portion of operating lease liability		683
Total operating lease liability	$	1,070

	As of March 31, 2022
	Registration Rights Damages		Public Information Failure Damages		Accrued Interest		Balance
MDB common stock to be issued (1)	$	15	$	-	$	-	$	15
Series H convertible preferred stock		618		625		457		1,700
Convertible debentures		-		704		216		920
Series J convertible preferred stock		932		932		356		2,220
Series K convertible preferred stock		95		379		40		514
Total	$	1,660	$	2,640	$	1,069	$	5,369

	●	Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities;
	●	Level 22. Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
	●	Level 33. Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates.

	As of September 30, 2021						As of December 31, 2020
	Strome Warrants			B. Riley Warrants			Strome Warrants			B. Riley Warrants
Expected life		1.70			4.50			2.45			4.79
Risk-free interest rate		0.28	%		0.76	%		0.13	%		0.36	%
Volatility factor		153.59	%		142.59	%		150.55	%		140.95	%
Dividend rate		0	%		0	%		0	%		0	%
Transaction date closing market price	$	0.38		$	0.38		$	0.60		$	0.60
Exercise price	$	0.50		$	0.33		$	0.50		$	0.33

	As of and for the Nine Months Ended September 30, 2021							As of and for the Nine Months Ended September 30, 2020
	Carry Amount at Beginning of Period		Change in Valuation			Carrying Amount at End of Period		Carry Amount at Beginning of Period		Change in Valuation		Carrying Amount at End of Period
Strome Warrants	$	704,707	$	(339,924	)	$	364,783	$	1,036,687	$	63,160	$	1,099,847
B. Riley Warrants		443,188		(156,888	)		286,300		607,513		71,750		679,263
Total	$	1,147,895	$	(496,812	)	$	651,083	$	1,644,200	$	134,910	$	1,779,110


	●	~~First~~On October 23, 2020, the Company entered into a first amendment to second amended and restated note issued on March 24, ~~2020 was entered into on October 23,~~ 2020 (“Amendment 1”), where the maturity date was changed to December 31, 2022 (as further amended) from June 14, 2022, subject to certain acceleration conditions and interest payable on the ~~notes~~note on September 30, 2020, December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021, and December 31, 2021 will be payable in-kind in arrears on the last day of such fiscal quarter. Alternatively, at the option of the holder, such interest amounts originally could have been paid in shares of previously designated Series K convertible preferred stock (the “Series K Preferred Stock”); however, after December 18, 2020, the date the Series K Preferred Stock converted into shares of the Company’s common stock, such interest amounts can be converted into shares of the Company’s common stock based upon the conversion rate specified in the Certificate of Designation for the Series K Preferred Stock, subject to certain ~~adjustments. During the three months ended September 30, 2021, the Company filed a Certificate of Elimination, which eliminated designation of the Series K Preferred Stock.~~adjustments;

	●	~~Second~~On May 19, 2021, the Company entered into a second amendment to the second amended and restated note issued March 24, 2020 ~~was entered into on May 19, 2021~~ (“Amendment 2”), ~~with BRF Finance Co., LLC, an affiliated entity of B. Riley Financial, Inc. (“B. Riley”), in its capacity as agent for the purchasers and as purchaser,~~ pursuant to which: (i) the interest rate on the ~~12%~~ ~~Second Amended~~ Senior Secured ~~Notes,~~Note, as defined below, decreased from a rate of ~~12%~~12.0% per annum to a rate of ~~10%~~ 10.0%per annum; and (ii) the Company agreed that within one (1) business day after receipt of cash proceeds from any issuance of equity interests, it will prepay the certain obligations in an amount equal to such cash proceeds, net of underwriting discounts and commissions; provided, that, this mandatory prepayment obligation does not apply to any proceeds that the Company received from shares of the Company’s common stock issued pursuant to ~~the~~a certain securities purchase agreement ~~(as further described below under the heading~~ ~~Common Stock Private Placement~~ ~~in Note 10)~~ during the 90-day period commencing on May 20, ~~2021.~~2021;

	●	On December 6, 2021, the Company entered into a third amendment to the second amended and restated note issued March 24, 2020 (“Amendment 3”), where the Company was permitted to increase the FastPay line of credit in an aggregate principal amount not to exceed $25,000; and

	●	On January 23, 2022, the Company entered into a fourth amendment to the second amended and restated note issued March 24, 2020 (“Amendment 4”), where the maturity date on the note was extended to (i) December 31, 2023 from December 31, 2022 upon the consummation of the equity financing on February 15, 2022 (further details are provided below), or (ii) the date accelerated pursuant to certain terms of Amendment 4.

	●	On March 24, 2020, the Company entered into a delayed draw term note (the “Delayed Draw Term Note”) with an interest rate of 15.0% per annum, pursuant to the second amended and restated note purchase agreement, in the aggregate principal amount of $12,000. The terms of the note provided that up to $8,000 in principal amount was due on March 31, 2021;

	●	On March 24, 2020, the Company drew down $6,914 under the Delayed Draw Term Note, with interest payable in-kind in arrears on the last day of each fiscal quarter;

	●	On October 23, 2020, pursuant to the terms of Amendment 1, the maturity date of the Delayed Draw Term Note was changed to March 31, 2022 (as further amended) from March 31, 2021. Amendment 1 also provided that the holder, could originally elect, in lieu of receipt of cash for payment of all or any portion of the interest due or cash payments up to a certain conversion portion of the Delayed Draw Term Note, to receive shares of Series K Preferred Stock; however, after December 18, 2020, the date the Series K Preferred Stock converted into shares of the Company’s common stock, the holder may elect, in lieu of receipt of cash for such amounts, shares of the Company’s common stock at the price the Company last sold shares of the Company’s common stock;

	●	On October 23, 2020, $3,367, including principal and accrued interest of the Delayed Draw Term Note, converted into shares of the Company’s Series K Preferred Stock, which shares were further converted into shares of the Company’s common stock;

	●	On May 19, 2021, pursuant to Amendment 2, the interest rate on the Delayed Draw Term Note decreased to a rate of 10.0% per annum from a rate of 15.0% per annum;

	●	On December 28, 2021, the Company drew down $5,086 under the Delayed Draw Term Note, and after payment of commitment and funding fees paid of $509, the Company received net proceeds of $4,578; and

	●	On February 15, 2023, pursuant to Amendment 4, the maturity date on the Delayed Draw Term Note was extended to (i) December 31, 2022 from March 31, 2022 for $5,925 of principal due and (ii) December 31, 2023 from March 31, 2022 for $4,000 of principal due, subject to certain acceleration terms.

	As of September 30, 2021							As of December 31, 2020
	Principal Balance (including accrued interest)		Unamortized Discount and Debt Issuance Costs			Carrying Value		Principal Balance (including accrued interest)		Unamortized Discount and Debt Issuance Costs			Carrying Value
12% Second Amended Senior Secured Note, as amended, due on December 31, 2022	$	61,131,882	$	(2,413,593	)	$	58,718,289	$	56,296,091	$	(3,739,690	)	$	52,556,401
Delayed Draw Term Note, as amended, due on March 31, 2022		4,717,714		(151,732	)		4,565,982		4,294,318		(359,172	)		3,935,146
Paycheck Protection Program Loan, scheduled to mature April 6, 2022, however, fully forgiven on June 22, 2021		-		-			-		5,702,725		-			5,702,725
Total	$	65,849,596	$	(2,565,325	)	$	63,284,271	$	66,293,134	$	(4,098,862	)	$	62,194,272

Years Ending December 31,
2022	$	5,924
2023		66,695
Total	$	72,619

	●	1,800 authorized shares designated as “Series G Convertible Preferred Stock”, of which 168 shares are outstanding.

	●	23,000 authorized shares designated as “Series H Convertible Preferred Stock” (as further described below), of which 14,556 shares are outstanding.

				Outstanding						Exercise Price		Expiration Date	Total Outstanding and Exercisable (Shares
	Exercise Price		Expiration Date	Classified as Derivative Liabilities (Shares)		Classified within Stockholders’ Equity (Shares)		Total Exercisable (Shares)
MDB Warrants	$	0.20	November 4,2021		-		327,490		327,490
Strome Warrants		0.50	June 15, 2023		1,500,000		-		1,500,000	$	11.00	June 15, 2023		68,182
B. Riley Warrants		0.33	October 18, 2025		875,000		-		875,000		7.26	October 18, 2025		39,773
MDB Warrants		1.15	October 19, 2022		-		119,565		119,565		25.30	October 19, 2022		5,435
MDB Warrants		2.50	October 19, 2022		-		60,000		60,000		55.00	October 19, 2022		2,728
Total outstanding and exercisable					2,375,000		507,055		2,882,055
Total														116,118