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What changed in Arena Group Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Arena Group Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+316 added−356 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-31)

Top changes in Arena Group Holdings, Inc.'s 2023 10-K

316 paragraphs added · 356 removed · 220 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

62 edited+17 added−20 removed22 unchanged
Biggest changeSpecifically, our 2023 growth initiatives include: (i) increasing syndication of the content on our Platform through the re-publishing the content on third-party websites, (ii) offering of podcasts and e-commerce through our Platform, (iii) growing Sports Illustrated sportsbook (“SI Sportsbook”), (iv) acquiring or developing new verticals for our users, and (v) continuing to identify and partner with new Publisher Partners. 8 Sports Illustrated In 2019, we entered into a licensing agreement, as amended (the “Sports Illustrated Licensing Agreement”) with ABG-SI LLC (“ABG”), pursuant to which we have the exclusive right and license in the United States, Canada, Mexico, United Kingdom, Republic of Ireland, Australia, and New Zealand to operate the Sports Illustrated media business (in the English and Spanish languages), including to (i) operate the digital and print editions of Sports Illustrated (including all special interest issues and the swimsuit issue) and Sports Illustrated for Kids, (ii) develop new digital media channels under the Sports Illustrated brands, and (iii) operate certain related businesses, including without limitation, special interest publications, video channels, bookazines, and the licensing and/or syndication of certain products and content under the Sports Illustrated brand.
Biggest changeSpecifically, our growth initiatives include: (i) increasing syndication of the content on our Platform through the re-publishing the content on third party websites, (ii) offering of podcasts and e-commerce through our Platform, (iii) acquiring or developing new verticals for our users, and (iv) continuing to identify and partner with new Publisher Partners.
We have also developed proprietary advertising technology, techniques and relationships that allow us, our Publisher Partners and Expert Contributors to monetize online, editorially focused content through various display and video advertisements and tools and services for driving a subscription or membership based business and other monetization services (the “Monetization Solutions” and, together with the Platform, the “Platform Services”).
We have also developed proprietary advertising technology, techniques and relationships that allow us, our Publisher Partners, and our Expert Contributors to monetize editorially focused online content through various display and video advertisements and tools and services for driving a subscription or membership based business and other monetization services (the “Monetization Solutions” and, together with the Platform, the “Platform Services”).
(“Maven Network”) entered into a share exchange agreement (the “Share Exchange Agreement”), whereby the stockholders of Maven Network agreed to exchange all of the then-issued and outstanding shares of common stock for shares of common stock of Integrated.
(“Maven Network”) entered into a share exchange agreement (the “Share Exchange Agreement”), whereby the stockholders of Maven Network agreed to exchange all of the then-issued and outstanding shares of common stock of Maven Network for shares of common stock of Integrated.
Subject to the terms and conditions of each Partner Agreement and in exchange for the Platform Services, our Publisher Partners grant us, for so long as our Publisher Partner’s assets are hosted on the Platform, (i) the right to use, host, store, cache, reproduce, publish, publicly display, distribute, transmit, modify, adapt and create derivative works of the content provided by the Publisher Partner to provide, maintain and improve the Platform Services; (ii) use, publicly display, distribute and transmit the name, logo, and trademarks of the Publisher Partner to identify them as users of the Platform Services; (iii) exclusive control of ads.txt with respect to our Publisher Partner’s domains and (iv) the exclusive right to include our Publisher Partner’s website domains and related URLs in our coalition in a consolidated listing assembled by third party measurement companies such as comScore, Nielsen or other similar measuring services selected by us.
Subject to the terms and conditions of each Partner Agreement and in exchange for the Platform Services, our Publisher Partners grant us, for so long as our Publisher Partner’s assets are hosted on the Platform, (i) the right to use, host, store, cache, reproduce, publish, publicly display, distribute, transmit, modify, adapt and create derivative works of the content provided by the Publisher Partner to provide, maintain and improve the Platform Services; (ii) use, publicly display, distribute and transmit the name, logo, and trademarks of the Publisher Partner to identify them as users of the Platform Services; (iii) exclusive control of ads.txt with respect to our Publisher Partner’s domains; and (iv) the exclusive right to include our Publisher Partner’s website domains and related URLs in a consolidated listing assembled by third party measurement companies such as comScore, Nielsen or other similar measuring services selected by us.
These channels, such as PetHelpful, dengarden and Fashionista, act as an open community for writers, explorers, knowledge seekers, and conversation starters to connect in an interactive and informative online space. Corporate History We were originally incorporated in Delaware as Integrated Surgical Systems, Inc. (“Integrated”) in 1990. On October 11, 2016, Integrated and TheMaven Network, Inc.
These channels, such as PetHelpful, dengarden and Fashionista, act as an open community for writers, explorers, knowledge seekers, and conversation starters to connect in an interactive and informative online space. 6 Corporate History We were originally incorporated in Delaware as Integrated Surgical Systems, Inc. (“Integrated”) in 1990. On October 11, 2016, Integrated and TheMaven Network, Inc.
The Platform Services include: ● Content management, machine learning driven content recommendations, traffic redistribution, hosting and bandwidth; ● Video publishing, hosting, and player solution via an integrated set of third-party providers; ● Dashboards for our Publisher Partners as well as integration with leading analytics services like Google Analytics; 7 ● User account management; ● User account migration to platform, including emails and membership data; ● Technical support team to support our Publisher Partners and staff (if applicable) on the Platform; ● Advertising serving, trafficking/insertion orders, yield management, and reporting and collection; ● Various integrations to enable the syndication of content (e.g., Apple News, Facebook Instant Articles, Google AMP, Google news and RSS feeds); and ● Other features, as they may be added to the Platform from time to time.
The Platform Services include: ● Content management, machine learning driven content recommendations, traffic redistribution, hosting and bandwidth; ● Video publishing, hosting, and player solution via an integrated set of third party providers; ● Dashboards for our Publisher Partners as well as integration with leading analytics services like Google Analytics; ● User account management; ● User account migration to our Platform, including emails and membership data; ● Technical support team to support our Publisher Partners and staff (if applicable) on the Platform; ● Advertising serving, trafficking/insertion orders, yield management, reporting and collection; 4 ● Various integrations to enable the syndication of content (e.g., Apple News, Facebook Instant Articles, Google AMP, Google news and RSS feeds); and ● Other features, as they may be added to the Platform from time to time.
Our Brands and Growth Strategy Our business model is to grow our Platform audience while striving to diversify revenue and drive gross margin through traditional media brands as well as new digital-first brands. We believe our vertical model allows us and our partners to leverage audience growth, technological efficiencies and cost savings across all of our brands.
Our Brands and Growth Strategy Our business model is to grow our Platform audience while striving to diversify revenue and drive gross margin through traditional media brands as well as new digital-first brands. We believe our vertical model allows us and our Publisher Partners to leverage audience growth, technological efficiencies and cost savings across all of our brands.
Competition Currently, we believe that there are many competitors delivering media content in the verticals that we serve on the web and on mobile devices and an even broader array of general media companies and major media brands that compete for the attention of users and the advertisers who desire to reach them.
Competition Currently, we believe that there are many competitors delivering media content in the verticals that we serve on the web and on mobile devices and an even broader array of general media companies and major media brands that compete for the attention of users overall and the advertisers who desire to reach them.
The playbook is a set of processes, procedures and tactics that help improve the consumer experience, develop a greater organic audience reach, apply data management and artificial intelligence tools, optimize monetization and leverage content through syndication and improved distribution.
The playbook is a set of processes, procedures and tactics that help improve the consumer experience, develop a greater organic audience reach, apply data management and artificial intelligence tools, optimize monetization and leverage content through syndication and improve distribution.
Because of the state-of-the-art technology and large scale of the Platform and our expertise in search engine optimization, social media, ad monetization and subscription marketing, Publisher Partners continually benefit from our ongoing technological advances and bespoke audience development expertise.
Because of the state-of-the-art technology and large scale of the Platform and our expertise in search engine optimization, social media, ad monetization and subscription marketing, Publisher Partners continually benefit from our ongoing technological advances and audience development expertise.
As such, we encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels. The contents of the websites referred to above are not incorporated into this filing. 14
As such, we encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels. The contents of the websites referred to above are not incorporated into this filing.
Our vertical model consists of (i) acquiring or partnering with powerful brands that can offer our audience bespoke content and domain authority, (ii) forming key strategic partnerships with like-minded partners of high-quality content, (iii) partnering with entrepreneurial publishers to drive local content at variable cost tied to performance, and (iv) growing our Publisher Partners on our network to expand our content offerings and add scale to the ecosystem.
Our vertical model consists of (i) acquiring or partnering with powerful brands that can offer our audience custom content and domain authority, (ii) forming key strategic partnerships with like-minded partners of high-quality content, (iii) partnering with entrepreneurial publishers to drive local content at variable cost tied to performance, and (iv) growing our Publisher Partners on our network to expand our content offerings and add scale to the ecosystem.
Our Publisher Partners use the Platform Services to produce, manage, host and monetize their content in accordance with the terms and conditions of partner agreements between each of our Publisher Partners and us (the “Partner Agreements”). Our Publisher Partners incur the costs with respect to creating their content; thus, not requiring capital expenditures by us.
Our Publisher Partners use the Platform Services to produce, manage, host and monetize their content in accordance with the terms and conditions of partner agreements between each of our Publisher Partners and us (the “Partner Agreements”). Our Publisher Partners incur the costs with respect to creating their content; thus, not requiring capital investment by us.
Our strategy is to focus on key verticals where audiences are passionate about a topic category (e.g., sports and finance), and where we can leverage the strength of our core brands to grow our audience and increase monetization both within our core brands as well as our media publisher partners (each, a “Publisher Partner”).
Our strategy is to focus on key subject matter verticals where audiences are passionate about a topic category (e.g., sports and finance) where we can leverage the strength of our core brands to grow our audience and increase monetization both within our core brands as well as for our media publisher partners (each, a “Publisher Partner”).
Our focus is on leveraging our Platform and iconic brands in targeted verticals to maximize audience reach, improve engagement, and optimize monetization of digital publishing assets for the benefit of our users, our advertiser clients, and our greater than 40 owned and operated properties as well as properties we run on behalf of independent Publisher Partners.
Our focus is on leveraging our Platform and brands in targeted verticals to maximize audience reach, enhance engagement, and optimize monetization of digital publishing assets for the benefit of our users, our advertiser clients, and our greater than 40 owned and operated properties as well as properties we run on behalf of independent Publisher Partners.
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.
Our growth strategy is to continue adding new Publisher Partners in key verticals that management believes will expand the scale of unique users interacting on the Platform.
We have developed a playbook that leverages our state-of-the-art platform to optimize the performance of both our owned and operated and our Publisher Partners’ properties.
We have developed a playbook that leverages our Platform to optimize the performance of both our owned and operated and our Publisher Partners’ properties.
On November 4, 2016, the parties consummated a recapitalization pursuant to the Share Exchange Agreement and, as a result, Maven Network became a wholly owned subsidiary of Integrated. Integrated changed its name to theMaven, Inc. on December 2, 2016.
On November 4, 2016, the parties consummated a re-capitalization pursuant to the Share Exchange Agreement and, as a result, Maven Network became a wholly owned subsidiary of Integrated. Integrated changed its name to theMaven, Inc. on December 2, 2016.
Seasonality We do experience seasonality during the year, as a result of advertising seasonality and sports seasons and major sporting events. Advertising typically peaks in the fourth quarter of our fiscal year as advertisers concentrate their budgets during the holiday season.
Seasonality We experience seasonality as a result of advertising seasonality, sports seasons and major sporting events. Advertising typically peaks in the fourth quarter of our fiscal year as advertisers tend to concentrate their budgets during the holiday season.
TheStreet TheStreet is a leading financial news and information provider to investors and institutions worldwide and produces business news and market analysis for individual investors. TheStreet has a strong editorial tradition, robust subscription platform, and valuable membership base to us, and benefits from our mobile-friendly CMS, social, video, and monetization technology.
TheStreet TheStreet is a leading financial news and information provider to investors and institutions worldwide and produces business news and market analysis for individual investors. TheStreet has a strong editorial tradition, a subscription platform, and valuable membership base to us, and benefits from our mobile-friendly Content Management System, social, video, and monetization technology.
This year, we launched our first company-wide Diversity, Equity, and Inclusion (“DEI”) Council – comprised of 18 employees with a variety of identities and backgrounds that also represented as wide a selection as possible across brands, functions, and tenures at Arena, and most importantly, represented a clear commitment to diversity and inclusion at our company.
In December 2022, we launched our first company-wide Diversity, Equity, and Inclusion (“DEI”) Council – comprised of 18 employees with a variety of identities and backgrounds that also represented as wide a selection as possible across brands, functions, and tenures at Arena, and most importantly, represented a clear commitment to diversity and inclusion at our company.
This trend is magnified as it also includes the professional sports and college football seasons, which account for a significant portion of our advertising revenue during that period of the year. Other sporting events such as the Super Bowl, Winter and Summer Olympics, soccer’s World Cup, and major golf, tennis and cycling events create increased traffic surrounding the respective events.
This trend is magnified by professional sports and college football seasons, which account for a significant portion of our advertising revenue during that period of the year. Other sporting events such as the Super Bowl, the Winter and Summer Olympics, soccer’s World Cup, and major golf, tennis and cycling events create increased traffic at the time of these respective events.
Roughly 23% of our workforce, or 92 employees, is represented by a union named The NewsGuild of New York, CWA Local 31003 (the “Guild”) pursuant to a binding Memorandum of Agreement executed by and between the Guild and The Arena Media Brands, LLC (“Arena Media”) on December 31, 2021 (the “MOA”), which covers Sports Illustrated editorial staff.
As of December 31, 2023 approximately 18% of our workforce, or 82 employees, is represented by a union named The NewsGuild of New York, CWA Local 31003 (the “Guild”) pursuant to a binding Memorandum of Agreement executed by and between the Guild and The Arena Media Brands, LLC (“Arena Media”) on December 31, 2021 (the “MOA”), which covers Sports Illustrated editorial staff.
DEI Initiatives We believe that a workforce rich in diversity of thought, background, and experience helps us build a company and community where we can all succeed.
Diversity, Equity, and Inclusion We believe that a workforce rich in diversity of thought, background, and experience helps us build a company and community where we can all succeed.
From time to time we also expect to file additional patents and copyrights. 10 Our Publisher Partners and Licensing In connection with our Partner Agreements and any other applicable agreements between us and our Publisher Partners, (i) we and our affiliates own and retain (a) all right, title, and interest in and to the Platform, other Monetization Solutions and data collected by us, and (b) we and our licensors’ trademarks and branding and all software and technology we use to provide and operate the Platform and Monetization Solutions, and (ii) each Publisher Partner owns and retains (a) all right, title, and interest in and to the Publisher Partner’s assets, content, and data collected by Publisher Partner and (b) each Publisher Partner’s trademarks and branding.
Our Publisher Partners and Licensing In connection with our Partner Agreements and any other applicable agreements between us and our Publisher Partners, (i) we and our affiliates own and retain (a) all right, title, and interest in and to the Platform, other Monetization Solutions and data collected by us, and (b) we and our licensors’ trademarks and branding and all software and technology we use to provide and operate the Platform and Monetization Solutions, and (ii) each Publisher Partner owns and retains (a) all right, title, and interest in and to the Publisher Partner’s assets, content, and data collected by Publisher Partner and (b) each Publisher Partner’s trademarks and branding.
On September 20, 2021, we re-branded to “The Arena Group.” Effective on February 8, 2022, we changed our legal name to The Arena Group Holdings, Inc. in conjunction with filing a Certificate of Amendment and Certificate of Corrections with the State of Delaware and on February 9, 2022, our common stock began trading on the NYSE American.
On September 20, 2021, we re-branded to “The Arena Group.” Effective on February 8, 2022, we changed our legal name to The Arena Group Holdings, Inc. in conjunction with filing a Certificate of Amendment and Certificate of Corrections with the State of Delaware.
The Spun The Spun, founded in September 2012, and acquired by us in June 2021, is an online independent sports publication that brings readers the most interesting athletic stories of the day. The Spun focuses on the social media aspect of the industry.
Also driving the expansion in the sports vertical was the addition of The Spun and Athlon Sports. 5 The Spun founded in September 2012, and acquired by us in June 2021, is an online independent sports publication that brings readers the most interesting athletic stories of the day. The Spun focuses on the social media aspect of the industry.
Our registered trademarks are all subject to renewal at various times through 2033. We will continue to file updated trademark applications in the United States and abroad to reflect our branding evolution and to continue strengthening our trademark portfolio as financial resources permit.
Our registered trademarks are all subject to maintenance or renewal at various times through 2033. We will continue to file updated trademark applications in the United States and abroad to reflect our branding evolution and to continue strengthening our trademark portfolio as financial resources permit. From time to time, we also expect to file additional patents and copyrights.
Item 1. Business The Arena Group Holdings, Inc. (the “Company,” “Arena Group,” “we,” “our,” or “us”), is a tech-powered media company that focuses on building deep content verticals powered by a best-in-class digital media platform (the “Platform”) empowering premium publishers who impact, inform, educate, and entertain.
Item 1. Business The Arena Group Holdings, Inc. (the “Company,” “Arena Group,” “we,” “our,” or “us”), is a media company that leverages technology to build deep content verticals powered by anchor brands and a best-in-class digital media platform (the “Platform”) empowering publishers who impact, inform, educate, and entertain.
As of December 31, 2022, we also owned 165 U.S. trademark registrations, 15 pending U.S. trademark applications, and 88 issued foreign trademark registrations and 20 pending foreign trademark applications in over 30 countries, and a number of unregistered marks that we use in the United States and other countries to promote our brands.
As of December 31, 2023, we also owned approximately 160 U.S. trademark registrations, 29 pending U.S. trademark applications, and 89 issued foreign trademark registrations and 16 pending foreign trademark applications in over 30 countries, and a number of unregistered marks that we use in the United States and other countries to promote our brands.
In each vertical, we seek to build around a leading brand, such as Sports Illustrated (for sports), TheStreet (for finance) and Parade and Men’s Journal (for lifestyle), surround it with subcategory specialists, and further enhance coverage with individual Expert Contributors.
In each vertical, we seek to build around leading brands, such as FanNation, Athlon Sports or The Spun (for sports), TheStreet (for finance) and Parade and Men’s Journal (for lifestyle), surround them with subcategory specialists, and further enhance coverage with individual Expert Contributors.
The following is a list of possible competitors and their respective categories: ● Vice, Buzzfeed, Business Insider, et al. – niche content, leverages social, mobile, and video, and competes for ad dollars; ● Fortune, CNN, ESPN, Yahoo!, Google, et al. – general content, major media companies, and competes for ad dollars; ● WordPress, Medium, RebelMouse, Arc – content management software, open to all including experts and professionals, and competes for publishers; ● Leaf Group Ltd. and Future PLC – competes for partners and ad dollars; ● YouTube, Twitter, Facebook, Reddit – social platforms open to all including experts and professionals; and ● Affiliate networks such as Liberty Alliance – competes for ad dollars.
The following is a list of possible competitors and their respective categories: ● Vice, Buzzfeed, Business Insider, et al., producers of niche content, leveraging social media, mobile, and video to compete for ad dollars; ● Fortune, CNN, ESPN, Yahoo!, Google, et al., major media companies and producers of general content which compete for ad dollars; ● WordPress, Medium, RebelMouse, Arc, content management software providers, open to all including experts and professionals, which compete for publishers; ● Leaf Group Ltd.
As of December 31, 2022, we also owned approximately 1,300 U.S. copyright registrations and had unregistered copyrights in our software documentation, software code, marketing materials, and website content that we develop, and owned over 1,600 registered domain names.
As of December 31, 2023, we had seven issued patents in the United States, all expiring by 2033. As of December 31, 2023, we also owned approximately 1,300 U.S. copyright registrations and had unregistered copyrights in our software documentation, software code, marketing materials, and website content that we developed, and owned over 1,600 registered domain names.
Further, there are a number of legislative proposals in the United States and internationally, that could impose new obligations in areas affecting our business, such as liability for copyright infringement by third parties and liability for defamation or other claims arising out of user-posted content.
Further, legislative proposals in the United States and internationally could impose new obligations in areas affecting our business, such as liability for copyright infringement by third parties and liability for defamation or other claims arising out of user-posted content. Our business could be negatively impacted if applicable laws subject us to greater regulation or risk of liability.
The primary means of expansion is adding independent Publisher Partners or acquiring publishers that have premium branded content and can broaden the reach and impact of the Platform. As our digital revenue and gross margin grows, we believe we can further accelerate our growth.
The primary means of expansion is adding independent Publisher Partners or acquiring publishers that have premium branded content and can broaden the reach and impact of the Platform.
In addition, even though do not compete in the same market, we view Nexstar Media Group, Inc. and Ziff Davis as peer companies for purposes of comparing our performance.
In addition, we view Nexstar Media Group, Inc. and Ziff Davis as peer companies for purposes of performance comparisons even though we do not consider them direct competitors.
We are addressing this issue, for instance, by including standard contractual clauses as part of our Data Processing Agreements; however, it is uncertain whether the standard contractual clauses will also be invalidated by the European courts or legislature, which seems possible given the rationale behind the CJEU’s concerns about U.S. law and practice on government surveillance.
We are addressing this issue, for instance, by including standard contractual clauses as part of our Data Processing Agreements; however, it is uncertain whether the standard contractual clauses will also be invalidated by the European courts or legislature.
There are conflicting interpretations of the law that have been adopted by various parties in the digital media industry, and given the lack of guidance to date on many of these issues, our compliance posture on some issues might not be accepted by the State of California.
There are conflicting interpretations of adopted law in the digital media industry, and given the lack of guidance to date on many of these issues, our compliance posture on some issues might not be accepted by the State of California. 9 In addition to the laws of the United States, we may be subject to foreign laws regulating web sites and online services that in some jurisdictions are stricter than the laws in the United States.
Pursuant to the Partner Agreements, we and our Publisher Partners split revenue generated from the Platform Services used in connection with the Publisher Partner’s content based on certain criteria such as whether the revenue was from direct or programmatic advertising sales, was generated by our Publisher Partner or us, was generated in connection with a subscription or a membership, was generated from syndicating or licensing the content to third-parties, or whether the revenue was derived from affiliate links.
Criteria include whether the revenue was from direct or programmatic advertising sales, was generated by our Publisher Partner or us, was generated in connection with a subscription or a membership, was generated from syndicating or third party licensing, or whether the revenue was derived from affiliate links.
Men’s Journal We acquired the digital assets of Men’s Journal from Weider Publications, a subsidiary of A360 Media, LLC in December 2022 to supplement our growing lifestyle vertical.
Men’s Journal We acquired the digital assets of Men’s Journal from Weider Publications, a subsidiary of A360 Media, LLC in December 2022 to supplement our growing lifestyle vertical. This suite of digital assets provides our audience with access to premium active lifestyle brands including Men’s Journal, Men’s Fitness, Surfer, Powder, Bike, SKATEboarding, Snowboarder and NewSchoolers.
We believe that we compete on the basis of our technology, substantial scale in traffic, ease of use, recognized lead media brands, and platform evolution through a continuing development and acquisition program.
We believe that our technology, our substantial scale in traffic, the ease of use of our Platform, our well-known lead media brands, and the continuing development and evolution of our Platform and an acquisition program provides us with a basis to compete effectively for market share in terms of ad spend and membership revenue.
In particular, an attorney general or the FTC may examine privacy policies to ensure that a company discloses all material practices and fully complies with representations in the policies regarding the manner in which the information provided by visitors to a website is used and disclosed, and the failure to do so could give rise to penalties under state or federal unfair competition or consumer protection laws.
At the U.S. federal the Federal Trade Commission (“FTC”) and state attorneys general have oversight of business operations concerning the use of personal information and breaches of the privacy laws and may examine privacy policies to ensure that a company discloses all material practices and fully complies with representations in the policies regarding the use of personal information and the failure to do so could give rise to penalties under state or federal unfair competition or consumer protection laws.
In addition, some EU countries are considering or have passed legislation implementing additional data protection requirements or requiring local storage and processing of personal data or similar requirements that could increase the cost and complexity of delivering our services.
For example, the General Data Protection Regulation (the “GDPR”) includes operational requirements for companies that receive or process personal data of residents of the European Union (“EU”). Some EU countries are considering or have passed legislation implementing additional data protection requirements that could increase the cost and complexity of delivering our services.
It is possible that state and foreign governments might also attempt to regulate our transmissions of content on our website or prosecute us for violations of their laws. United States law offers limited safe harbors and immunities to publishers for certain liability arising out of user-posted content, but other countries do not.
United States law offers limited safe harbors and immunities to publishers for certain liability arising out of user-posted content, but other countries do not.
GDPR imposes substantial fines for breaches and violations (up to the greater of €20 million or 4% of our consolidated annual worldwide gross revenue). 12 Social networking websites are also under increasing scrutiny. Legislation has been introduced on the state and federal level that could regulate social networking websites.
GDPR also convers a private right of action to lodge complaints with supervisory authorities to seek judicial remedies and obtain compensation for damages for violations of the GDPR. GDPR imposes substantial fines for breaches and violations (up to the greater of €20 million or 4% of our consolidated annual worldwide gross revenue). Social networking websites are also under increasing scrutiny.
All U.S. states have enacted some form of data security legislation, including data breach notification laws. There are a number of federal laws governing data privacy, and a growing number of U.S. states have enacted laws regarding the collection, use and disclosure of personal information.
Several government authorities, both in the United States and abroad are increasing their focus on privacy issues and the use of personal information. All U.S. states have enacted some form of data security legislation and there are several federal laws governing data privacy.
Parade has become the anchor of our new lifestyle vertical, and Athlon Sports, one of Parade’s premium-brands, has expanded our sports vertical. In the fourth quarter of 2022, we discontinued the Parade print business. See Note 3, Discontinued Operations in our accompanying consolidated financial statements for additional information.
In the fourth quarter of 2022, we discontinued the Parade print business, including the print operations of Parade, and the Relish and Spry Living print products that were acquired as part of the Parade acquisition. See Note 3, Discontinued Operations in our accompanying consolidated financial statements for additional information.
This suite of digital assets provides our audience with access to premium active lifestyle brands including Men’s Journal, Men’s Fitness, Surfer, Powder, Bike, SKATEboarding, Snowboarder and NewSchoolers. 9 HubPages HubPages enhances the user’s experience by including content from individual creators to the HubPages network of premium content channels that are owned and operated by Arena.
HubPages HubPages enhances the user’s experience by including content from individual creators to the HubPages network of premium content channels that are owned and operated by Arena.
We maintain a policy requiring our employees, contractors, consultants and other third parties to enter into confidentiality and proprietary rights agreements to control access to our proprietary information. These laws, procedures and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated.
We rely on a combination of patent, copyright, trademark and trade secret laws, as well as contractual restrictions, to establish and protect our intellectual property. We maintain a policy requiring our employees, contractors, consultants and other third parties to enter into confidentiality and proprietary rights agreements to control access to our proprietary information.
Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States and, therefore, in certain jurisdictions, we may be unable to protect our proprietary technology. As of December 31, 2022, we had 7 issued patents in the United States, all expiring by 2033.
These laws, procedures and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States and, therefore, in certain jurisdictions, we may be unable to protect our proprietary technology.
As a result, Privacy Shield is no longer a valid mechanism for transferring personal data from the E.E.A. to the United States.
On June 16, 2020, the Court of Justice of the European Union (“CJEU”), declared the E.U.-U.S. Privacy Shield framework (“Privacy Shield”) to be invalid. As a result, Privacy Shield is no longer a valid mechanism for transferring personal data from the European Economic Area to the United States.
The MOA is intended to be finalized in the form of a collective bargaining agreement during fiscal 2023. The MOA comprehensively addresses the terms of employment for covered employees and non-employees regarding, among other things, wages, raises, bonuses, severances, benefits, discipline and the like. We have incorporated the terms of the MOA into our fiscal 2022 employment practices.
The MOA addresses the terms of employment for covered employees and non-employees regarding, among other things, wages, raises, bonuses, severances, benefits, discipline and the like.
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 the Publisher Partners benefit from these critical performance improvements they also may save substantially in costs of technology, infrastructure, advertising sales, and member marketing and management.
Additionally, we believe the lead brands within our verticals, create a halo benefit for all Publisher Partners while each of them adds to the breadth and quality of content.
How the GDPR will be fully applied to online services, including cookies and digital advertising, is still being determined through ongoing rulemaking and evolving interpretation by applicable authorities. On June 16, 2020, the Court of Justice of the European Union (“CJEU), declared the E.U.-U.S. Privacy Shield framework (“Privacy Shield”) to be invalid.
The GDPR also includes certain requirements regarding notification of data processing obligations or security incidents to appropriate data protection authorities. How the GDPR will be fully applied to online services, including cookies and digital advertising, is still being determined through ongoing rulemaking and evolving interpretation by applicable authorities.
We believe that our scale, methods, technology, and experience enable us to compete for a material amount of market share of media dollars and membership revenue. 11 Government Regulations Our operations are subject to a number of United States federal and state laws and regulations that involve data privacy, data protection, rights of publicity, content regulation, intellectual property, or other subjects.
Government Regulations Our operations are subject to many United States federal and state laws and regulations that involve data privacy, data protection, rights of publicity, content regulation, intellectual property, or other subjects. The application and interpretation of these laws and regulations often are uncertain and the impact of regulatory changes cannot be predicted with certainty.
Legislation concerning the above-described online activities has either been enacted or is in various stages of development and implementation in other countries around the world and could affect our ability to make our websites available in those countries as future legislation is made effective.
Legislation concerning the above-described online activities could affect our ability to make our websites available in certain countries as future legislation is made effective. It is possible that state and foreign governments might also attempt to regulate our transmissions of content on our website or prosecute us for violations of their laws.
We operate the media businesses for Sports Illustrated (“Sports Illustrated”), own and operate TheStreet, Inc. (“TheStreet”) and College Spun Media Incorporated (“The Spun”), Parade Media (“Parade”), Men’s Journal and power more than 225 independent Publisher Partners, including the many sports team sites that comprise FanNation.
We own and operate TheStreet, The Spun, Parade, and Men’s Journal and power more than 320 independent Publisher Partners, including the many sports team sites that comprise FanNation. Each Publisher Partner joins the Platform by invitation only with the objective of improving our position in key verticals while optimizing the performance of the Publisher Partner.
In addition, we may be subject to changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements. 13 Human Capital Resources Our total number of employees as of December 31, 2021, was 400, of which 391 were full-time employees and 9 were part-time employees.
In addition, we may be subject to changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements. 10 Available Information We file our annual, periodic and current reports, and other required information, electronically with the SEC.
The former Chief Executive Officer of The Spun is now serving as our Senior Vice President of Growth, a role we believe will continue to assist us in growing our sports vertical business. Parade We acquired Parade, a premium-branded company in April 2022 which helped to expand our digital audience reach.
Parade We acquired Parade, a premium-branded company in April 2022 which helped to expand our digital audience reach. Parade has become the anchor of our new lifestyle vertical, and Athlon Sports, one of Parade’s premium-brands, has expanded our sports vertical.
California has been the most active in consumer privacy legislation, including passing a comprehensive law requiring transparency, access, and choice known as the California Consumer Privacy Act of 2018 (the “CCPA”), which was amended by the California Privacy Rights Act (the “CPRA”) which went into effect January 1, 2020, with enforcement beginning in June 2023.
A growing number of U.S. states have enacted laws regarding the collection, use and disclosure of personal information such as the California Consumer Privacy Act of 2018 (the “CCPA”), which was amended by the California Privacy Rights Act (the “CPRA”) which went into effect January 1, 2020.
Intellectual Property We use proprietary technology to operate our business, and our success depends, in part, on our ability to protect our technology and intellectual property. We rely on a combination of patent, copyright, trademark and trade secret laws, as well as contractual restrictions, to establish and protect our intellectual property.
On February 9, 2022, our common stock began trading on the NYSE American under the trading symbol “AREN”. Intellectual Property We use proprietary technology to operate our business, and our success depends, in part, on our ability to protect our technology and intellectual property.
The Council meets monthly, and meets with and advises senior leadership on how to direct an annual DEI budget. We expect to launch our first company-wide engagement survey in 2023, alongside multi-faceted efforts to build and sustain an inclusive culture of feedback and engagement.
In 2023, the Council met monthly to share employee experiences, identify opportunities to improve our culture, and advise senior leadership on how to direct an annual DEI budget.
Removed
Each Publisher Partner joins the Platform by invitation only and is drawn from premium media brands and independent publishing businesses with the objective of augmenting our position in key verticals and optimizing the performance of the Publisher Partner.
Added
Pursuant to the Partner Agreements, we and our Publisher Partners split revenue generated from the Platform Services used in connection with the Publisher Partner’s content based on certain criteria.
Removed
ABG is a brand development, marketing, and entertainment company. Since assuming management of the Sports Illustrated media assets in October 2019, we have implemented significant changes to rebuild the historic brand and beacon of sports journalism, to evolve and expand the business, and to position it for growth and continued success going forward.
Added
Sports Vertical In 2019, we launched our sports vertical by entering into a Licensing Agreement (as described below) with Authentic Brands Group (“ABG”), pursuant to which we were granted the exclusive right and license in the United States, Canada, Mexico, the United Kingdom, Republic of Ireland, Australia, and New Zealand to operate the Sports Illustrated print and digital media business under the Sports Illustrated brand.
Removed
With respect to Sports Illustrated Swim (“SI Swim”), we have transitioned to a female-focused lifestyle brand, with the annual content release in May 2022. Our fan-facing event to celebrate the 2022 annual content release and ongoing digital sponsorships was held over several nights in May 2022 and we partnered with Hard Rock, Maybelline, Celsius, Frida Mom and others.
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While continuing to evolve and expand the sports business and leverage the Sports Illustrated brand, in October 2020 we launched FanNation, a curated collection of independent sports journalists, each focused on a single professional or leading collegiate sports team. FanNation and other sports Publisher Partners helped to more than triple pageviews in our sports vertical from 2020 to 2023.
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SI Sportsbook, an online sports betting app, was launched in 2021 in Colorado and has expanded to several states through the end of fiscal 2022.
Added
In 2023 our sports Publisher Partners represented more than double the traffic of Sports Illustrated internet domains.
Removed
Pursuant to a licensing agreement, we provide content for SI Sportsbook and our partner, 888 Holdings PLC, one of the world’s leading online betting and gaming companies, provides the gambling engine, which it makes available to users in certain states in which it is registered.
Added
Athlon Sports was acquired by us as part of the Parade acquisition in April 2022. It had been a print-only property publishing newsstand magazines covering the various drafts and both professional and collegiate sports. We leveraged its expertise and appeal on-line as part of our sports vertical and today it is a significant part of our digital sports presence.
Removed
This all happens within our vertical structure, which leverages the iconic brands leading each vertical to deliver a highly engaging and effective experience for our users, advertisers and subscribers.
Added
As further described in the section titled “Risk Factors” and elsewhere in this Annual Report on Form 10-K, in connection with our failure to make a quarterly payment due ABG pursuant to the Licensing Agreement for the Sports Illustrated media business, of approximately $3,750,000, on January 18, 2024, ABG notified the Company of its intention to terminate our Licensing Agreement, effective immediately, for the Sports Illustrated media business, dated June 14, 2019, by and between us and ABG (as amended to date, the “Licensing Agreement”).
Removed
The web provides unlimited access to the market by niche or general media companies, so there are a large number and variety of direct competitors of ours competing for audience and ad and membership dollars.
Added
Upon such termination, a fee of $45.0 million became immediately due and payable by us to ABG pursuant to the terms and conditions of the Licensing Agreement.
Removed
Many of these laws and regulations are still evolving and being tested in courts and could be interpreted in ways that could harm our business. In addition, the application and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which we operate.
Added
In addition, upon termination of the Licensing Agreement, all outstanding and unvested warrants to purchase shares of our common stock issued to ABG in connection with the Licensing Agreement became immediately vested and exercisable.
Removed
We continue to monitor existing and pending laws and regulations. and the impact of regulatory changes cannot be predicted with certainty. Several government authorities, both in the United States and abroad, and private parties are increasing their focus on privacy issues and the use of personal information.
Added
On March 18, 2024, ABG announced it had reached an agreement in principle with a third party that will become the new operator of the Sports Illustrated media business.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur services, products and properties are may be adversely impacted by uncertain economic conditions, including the impact of the ongoing COVID-19 pandemic; the Ukraine – Russia conflict; adverse changes in interest rates, foreign currency exchange rates, tax laws or tax rates; inflation; a recession; contraction in the availability of credit in the marketplace due to legislation or other economic conditions, which may potentially impair our ability to access the capital markets on terms acceptable to us or at all; and the effects of government initiatives to manage economic conditions.
Biggest changeOur services, products, properties, and our ability to access the capital markets on terms acceptable or at all may be adversely impacted by uncertain economic conditions, including but not limited to, regional conflicts, pandemics, adverse changes in interest rates, foreign currency exchange rates, tax laws or tax rates, inflation, economic downturns, recessions, contraction in the availability of credit, and the effects of government initiatives to manage economic conditions. 17 Our ongoing cash management strategy is to maintain diversity in our deposit accounts across financial institutions to manage risks from potential instability in the banking system, but deposits in these institutions may exceed the amount of insurance provided on such deposits and there can be no assurance that this strategy will be successful.
However, Section 382 of the Internal Revenue Code of 1986, as amended, may limit the NOLs we may use in any year for U.S. federal income tax purposes in the event of certain changes in ownership of our Company.
However, Section 382 of the Internal Revenue Code of 1986, as amended, may limit certain NOLs we may use in any year for U.S. federal income tax purposes in the event of certain changes in ownership of our Company.
Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. ● We may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law. ● We are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification. ● The rights conferred in our Certificate of Incorporation are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees, and agents and to obtain insurance to indemnify such persons. ● We may not retroactively amend our Certificate of Incorporation or indemnification agreement, if any, to reduce our indemnification obligations to directors, officers, employees, and agents.
Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. ● We may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law. ● We are required to advance expenses, as incurred, to our directors and officers in connection with defending a legal proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification. ● The rights conferred in our Certificate of Incorporation are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees, and agents and to obtain insurance to indemnify such persons. ● We may not retroactively amend our Certificate of Incorporation or indemnification agreement, if any, to reduce our indemnification obligations to directors, officers, employees, and agents.
If adequate funds are not available on acceptable terms, we may not be able to continue operating, develop or enhance products, take advantage of future opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, operating results, and financial condition. 24 We have a history of losses.
If adequate funds are not available on acceptable terms, we may not be able to continue operating, develop or enhance products, take advantage of future opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, operating results, and financial condition. We have a history of losses.
We and our third-party service providers experience cyber-attacks of varying degrees on a regular basis, one of which infiltrated our systems and accessed a limited amount of our non-financial and encrypted data. We expect to incur significant, increasing costs in ongoing efforts to detect and prevent cybersecurity-related incidents.
We and our third party service providers experience attempted cyber-attacks of varying degrees on a regular basis, one of which infiltrated our systems and accessed a limited amount of our non-financial and encrypted data. We expect to incur significant, increasing costs in ongoing efforts to detect and prevent cybersecurity-related incidents.
In addition, Section 145 of the DGCL or our Certificate of Incorporation provides that: ● We will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law.
In addition, Section 145 of the DGCL or our Certificate of Incorporation provides that: ● We indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law.
Litigation might result in substantial costs and may divert management’s attention and resources, which could adversely affect our business, financial condition, results of operations, and prospects. Our ability to utilize our net operating loss carryforwards may be limited.
Litigation may result in substantial costs and may divert management’s attention and resources, which could adversely affect our business, financial condition, results of operations, and prospects. Our ability to utilize our net operating loss carryforwards may be limited.
As a public company, we are required to comply with the periodic reporting obligations of the Exchange Act, Sarbanes and other applicable securities rules and regulations, including the preparation of annual reports, quarterly reports, and current reports.
As a public company, we are required to comply with the periodic reporting obligations of the Exchange Act, Sarbanes-Oxley and other applicable securities rules and regulations, including the preparation of annual reports, quarterly reports, and current reports.
Factors that could cause fluctuations in the trading price of our common stock, some of which are beyond our control and may not be related to our operational or financial performance, include, among others, the following: ● price and volume fluctuations in the overall stock market from time to time; ● announcements of new products, solutions or technologies, commercial relationships, acquisitions, or other events by us or our competitors; ● the public’s reaction to our press releases, other public announcements, and filings with the SEC; 28 ● fluctuations in the trading volume of our shares or the size of our public float, including in connection with an acquisition; ● sales of large blocks of our common stock; ● actual or anticipated changes or fluctuations in our results of operations or financial projections; ● failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● recruitment or departures of key personnel; ● governmental or regulatory developments or actions, or litigation involving us, our industry, or both ● general economic conditions and trends, including inflation and fluctuating interest rates; ● general political conditions and trends, political instability and acts of war or terrorism, including the ongoing conflict between Russia and Ukraine; ● public health crises and related measures to protect the public health (such as the COVID-19 pandemic); ● major catastrophic events in our domestic and foreign markets; ● changes in accounting standards, policies, guidelines, interpretations, or principles; and ● “flash crashes,” “freeze flashes,” or other glitches that disrupt trading on the securities exchange on which we are listed.
Factors that could cause fluctuations in the trading price of our common stock, some of which are beyond our control and may not be related to our operational or financial performance, include, among others, the following: ● price and volume fluctuations in the overall stock market from time to time; ● announcements of new products, solutions or technologies, commercial relationships, acquisitions, or other events by us or our competitors; ● the public’s reaction to our press releases, other public announcements, and filings with the SEC; ● fluctuations in the trading volume of our shares or the size of our public float, including in connection with an acquisition; ● sales of large blocks of our common stock; ● actual or anticipated changes or fluctuations in our results of operations or financial projections; ● failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● recruitment or departures of key personnel; ● governmental or regulatory developments or actions, or litigation involving us, our industry, or both ● general economic conditions and trends, including inflation and fluctuating interest rates; 22 ● general political conditions and trends, political instability and acts of war or terrorism, including the ongoing conflict between Russia and Ukraine, as well as in the Middle East; ● public health crises and related measures to protect the public health (such as the COVID-19 pandemic); ● major catastrophic events in our domestic and foreign markets; ● changes in accounting standards, policies, guidelines, interpretations, or principles; and ● “flash crashes,” “freeze flashes,” or other glitches that disrupt trading on the securities exchange on which we are listed.
If we fail to meet or exceed such expectations for these or any other reasons, the trading price of our common stock could fall, and we could face costly litigation, including securities class action lawsuits. 25 Any future litigation against us could be costly and time-consuming to defend.
If we fail to meet or exceed such expectations for these or any other reasons, the trading price of our common stock could fall, and we could face costly litigation, including securities class action lawsuits. 19 Any future litigation against us could be costly and time-consuming to defend.
Future acquisitions and the subsequent integration of new assets and businesses into our own would require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations.
Future acquisitions and the subsequent integration of new assets and businesses into our own will require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations.
Moreover, insurance might not cover any such claims that rise in the ordinary course of business, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us.
Moreover, insurance may not cover any such claims that rise in the ordinary course of business, may not provide sufficient payments to cover all the costs to resolve one or more such claims, and may not continue to be available on terms acceptable to us.
These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional technology and development resources, and we may not be able to complete it successfully.
These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated services unless and until we can re-engineer them to avoid infringement. This could require significant additional technology and development resources, and we may not be able to complete such re-engineering successfully.
We operate our exclusive coalition of professional-managed online media channels on third party cloud platforms and data center hosting facilities. We rely on software and services licensed from, and cloud platforms provided by, third parties in order to offer our digital media services.
We operate our exclusive coalition of professional-managed online media channels on third party cloud platforms and data center hosting facilities. We rely on software and services licensed from, and cloud platforms provided by, third parties to offer our digital media services.
Furthermore, acts of terrorism, which may be targeted at metropolitan areas that have higher population density than rural areas, could cause disruptions in our or our Publisher Partners’ businesses or the economy as a whole.
Furthermore, acts of terrorism, which may be targeted at metropolitan areas that have higher population density than rural areas, could cause disruptions in our or our Publisher Partners’ businesses or the U.S. economy as a whole.
Moreover, we cannot predict how future economic conditions will affect our users and Publisher Partners and any negative impact on our users or Publisher Partners may also have an adverse impact on our results of operations or financial condition.
We cannot predict how future economic conditions will affect our users and Publisher Partners and any negative impact on our users or Publisher Partners may also have an adverse impact on our own results of operations or financial condition.
In addition, our ability to use our net operating losses is dependent on our ability to generate taxable income, and the net operating losses could expire before we generate sufficient taxable income to make use of our net operating losses.
In addition, our ability to use our net operating losses is dependent on our ability to generate taxable income, and certain net operating losses could expire before we generate sufficient taxable income to make use of our net operating losses.
We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.
We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffer negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association.
The loss or limitation of the services of any of our executive officers, members of our management team, or key personnel, including our regional and country managers, or the inability to attract and retain additional qualified key personnel, could have a material adverse effect on our business, financial condition, or results of operations. 26 The elimination of monetary liability against our directors, officers, and employees under Delaware law and the existence of indemnification rights for our obligations to our directors, officers, and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers, and employees.
The loss or limitation of the services of any of our executive officers, members of our management team, or other key personnel or the inability to attract and retain additional qualified key personnel, could have a material adverse effect on our business, financial condition, or results of operations. 20 The elimination of monetary liability against our directors, officers, and employees under Delaware law and the existence of indemnification rights for our obligations to our directors, officers, and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers, and employees.
If an “ownership change” occurs, Section 382 would impose an annual limit on the amount of pre-ownership change NOLs and other tax attributes we can use to reduce our taxable income, potentially increasing and accelerating our liability for income taxes, and also potentially causing those tax attributes to expire unused.
If an “ownership change” occurs, Section 382 would impose an annual limit on certain pre-ownership NOLs and other tax attributes we can use to reduce our taxable income, potentially increasing and accelerating our liability for income taxes, and also potentially causing those tax attributes to expire unused.
It is possible that the Platform may experience performance problems due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints due to an overwhelming number of users accessing the Platform software simultaneously, denial of service attacks, or other security related incidents.
We may experience performance problems due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints due to an overwhelming number of users accessing the Platform software simultaneously, denial of service attacks, or other security related incidents.
A number of factors could negatively affect user retention, growth, and engagement, including if: ● our users increasingly engage with competing platforms instead of ours; ● we fail to introduce new and exciting products and services, or such products and services do not achieve a high level of market acceptance; ● we fail to accurately anticipate user needs, or we fail to innovate and develop new software and products that meet these needs; ● we fail to price our products competitively; ● we do not provide a compelling user experience because of the decisions we make regarding the type and frequency of advertisements that we display; ● we are unable to combat spam, bugs, malwares, viruses, hacking, or other hostile or inappropriate usage of our products or the Platform; ● there are changes in user sentiment about the quality or usefulness of our existing products in the short-term, long-term, or both; ● there are increased user concerns related to privacy and information sharing, safety, or security on the Platform; ● there are adverse changes in our products or services that are mandated by legislation, regulatory authorities, or legal proceedings; ● technical or other problems frustrate the user experience, particularly if those problems prevent us from delivering our products in a fast and reliable manner; ● we, our Publisher Partners, or other companies in our industry are the subject of adverse media reports or other negative publicity, some of which may be inaccurate or include confidential information that we are unable to correct or retract; or ● we fail to maintain our brand image or our reputation is damaged.
Several factors could negatively affect user retention, growth, and engagement, including if: ● our users increasingly engage with competing platforms instead of the Platform; ● we fail to introduce new and exciting products and services, or such products and services do not achieve a high level of market acceptance; ● we fail to accurately anticipate user needs, or we fail to innovate and develop new software and products that meet these needs; ● we fail to price our products competitively; ● we do not provide a compelling user experience because of the decisions we make regarding the type and frequency of advertisements that we display; ● we are unable to combat spam, bugs, malwares, viruses, hacking, or other hostile or inappropriate usage of our products or the Platform (as defined below); ● there are changes in user sentiment about the quality or usefulness of our existing products in the short-term, long-term, or both; ● there are increased user concerns related to privacy and information sharing, safety, or security on the Platform; ● there are adverse changes in our products or services that are mandated by legislation, regulatory authorities, or legal proceedings; ● technical or other problems frustrate the user experience, particularly if those problems prevent us from delivering our products in a fast and reliable manner; ● we, our Publisher Partners, or other companies in our industry are the subject of adverse media reports or other negative publicity, some of which may be inaccurate or include confidential information that we are unable to correct or retract; or ● we fail to maintain our brand image or our reputation is damaged. 11 Our license agreement to operate the Sports Illustrated media business was terminated by the licensor, which may materially harm our business, operating results and financial condition.
As of December 31, 2022, we had federal net operating loss carryforwards, or NOLs, due to prior period losses of $190,070, and the NOLs could expire before we generate sufficient taxable income to make use of our NOLs. Subject to certain limitations, NOLs can be used to offset taxable income for U.S. federal income tax purposes.
As of December 31, 2023, we had federal net operating loss carryforwards, or NOLs, due to prior period losses of $193.8 million, and certain NOLs could expire before we generate sufficient taxable income to make use of our NOLs. Subject to certain limitations, NOLs can be used to offset taxable income for U.S. federal income tax purposes.
Acquisitions may not achieve our goals and could be viewed negatively by users, business partners or investors. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business.
Acquisitions may not achieve our goals and could be viewed negatively by users, business partners or investors, use substantial amounts of cash, cause potentially dilutive issuances of equity securities, require significant goodwill impairment charges or amortization expenses for other intangible assets and expose us to unknown liabilities of the acquired business.
Our business, profitability and growth prospects could be adversely affected if we fail to receive adequate protection of our proprietary rights. 19 We could be required to cease certain activities or incur substantial costs as a result of any claim of infringement of another party’s intellectual property rights.
Our business, profitability and growth prospects could be adversely affected if we fail to receive adequate protection of our proprietary rights. We could be required to cease certain activities or incur substantial costs due to claims of infringement of another party’s intellectual property rights.
Moreover, the costs of identifying and consummating acquisitions may be significant. In addition to possible shareholders’ approval, we may also have to obtain approvals and licenses from relevant authorities for the acquisitions, which could result in increased delay and costs. Our products may require availability of components or known technology from third parties and their non-availability can impede our growth.
In addition to, in some cases, having to obtain shareholders’ approval, we may also have to obtain approvals and licenses from relevant authorities for the acquisitions, which could result in increased delay and costs. 16 Our products may require availability of components or known technology from third parties and their non-availability can impede our growth.
RISKS RELATED TO GOVERNANCE We are dependent on the continued services and on the performance of our key executive officers, management team, and other key personnel, the loss of which could adversely affect our business. Our future success largely depends upon the continued services of our key executive officers, management team, and other key personnel.
RISKS RELATED TO GOVERNANCE AND COMMON STOCK We are dependent on the continued services and on the performance of our key executive officers, management team, and other key personnel, the loss of which could adversely affect our business. We are dependent on the continued services and on the performance of our key executive officers, management team, and other key personnel.
Our technology infrastructure may also be vulnerable to computer viruses, break-ins, denial-of-service attacks, and similar disruptions from unauthorized tampering with our computer systems, which could lead to interruptions, delays, loss of critical data. We may not have sufficient protection or recovery plans in some circumstances, such as natural disasters affecting New York and other states where we have properties.
Our technology infrastructure may also be vulnerable to computer viruses, break-ins, denial-of-service attacks, and similar disruptions from unauthorized tampering with our computer systems, which could lead to interruptions, delays and loss of critical data. We may not have sufficient protection or recovery plans in some circumstances.
ECONOMIC AND OPERATIONAL RISKS We may have difficulty managing our growth. We have added, and expect to continue to add, Publisher Partner and end-user support capabilities, to continue software development activities, and to expand our administrative operations. In the past two years, we have entered into multiple strategic transactions.
ECONOMIC AND OPERATIONAL RISKS We may have difficulty managing our growth. We have added, and expect to continue to add, Publisher Partner and end-user support capabilities, continue software development activities, and expand our administrative capabilities. In the past two years, we have entered into multiple strategic transactions which have significantly expanded our business and placed significant strain on our resources.
The loss of this customer, or a significant reduction in sales to such customer, could adversely affect our financial condition and operating results. We attempt to diversify our business in order to minimize any revenue concentration risk. Interruptions or performance problems associated with our technology and infrastructure may adversely affect our business and operating results.
The loss of this customer, or a significant reduction in sales to such customer, could adversely affect our financial condition and operating results. Interruptions or performance problems associated with our technology and infrastructure may adversely affect our business and operating results.
We are also subject to certain standard terms and conditions with Amazon Web Services and Google Cloud related to data storage purposes. These providers have broad discretion to change their terms of service and other policies with respect to us, and those changes may be unfavorable to us.
We are subject to certain standard terms and conditions with Amazon Web Services and Google Cloud, companies which have broad discretion to change their terms of service and other policies with respect to us, and those changes may be unfavorable to us.
RISKS RELATED TO OUR BUSINESS If we fail to retain current users or add new users, or if our users decrease their level of engagement with the Platform, our business would be seriously harmed. The success of our business heavily depends on the size of our user base and the level of engagement of our users.
RISKS RELATED TO OUR BUSINESS If we fail to retain current users or add new users, or if our users decrease their level of engagement with the Platform, our business would be seriously harmed.
We rely heavily on our ability to collect and disclose data and metrics in order to attract new advertisers and retain existing advertisers. Any restriction, whether by law, regulation, policy, or other reason, on our ability to collect and disclose data that our advertisers find useful would impede our ability to attract and retain advertisers.
Any restriction, whether by law, regulation, policy, or other reason, on our ability to collect and disclose data that our advertisers find useful would impede our ability to attract and retain advertisers.
We may enter into strategic alliances with various third parties to further our business purpose from time to time. These alliances could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business.
These alliances could subject us to risks, including risks associated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business.
Our Board has the power to issue any or all authorized but unissued shares of our common stock at any price and, in respect of our preferred stock, at any price and with any attributes our Board considers sufficient, without stockholder approval.
Our Board has the authority to issue any or all authorized but unissued shares of our common stock at any price and, with regard to our preferred stock, at any price and with any attributes our Board considers appropriate, absent stockholder approval.
Prior employers may try to assert that our employees are breaching restrictive covenants and other limitations imposed by past employment arrangements. We believe that all of our employees are free to work for us in their various capacities and have not breached past employment arrangements. Notwithstanding our care in our employment practices, a prior employer may assert a claim.
Our employees are highly experienced, having worked in our industry for many years and prior employers may try to assert that our employees are breaching restrictive covenants and other limitations imposed by past employment arrangements. We believe that all of our employees are free to work for us in their various capacities and have not breached past employment arrangements.
For example, we could face claims relating to information that is published or made available on the Platform. In particular, the nature of our business exposes us to claims related to defamation, intellectual property rights and rights of publicity and privacy.
For example, we could face claims relating to information published or made available on the Platform. In particular, the nature of our business exposes us to claims related to defamation, intellectual property rights and rights of publicity and privacy. We might not be able to monitor or edit a significant portion of the content that appears on the Platform.
We could also face fines or orders restricting or blocking our services in particular geographies as a result of content hosted on our services. If any of these events occur, our business could be seriously harmed. Further, our employees are highly experienced, having worked in our industry for many years and.
We could also face fines or orders restricting or blocking our services in particular geographies as a result of content hosted on our services. If any of these events occur, our business could be seriously harmed.
Additionally, our Certificate of Incorporation or Bylaws establish limitations on the removal of directors and include advance notice requirements for nominations for election to our Board and for proposing matters that can be acted upon at stockholder meetings. 27 In addition, our Certificate of Incorporation provides that a state or federal court located within the state of Delaware will be the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the DGCL, our Certificate of Incorporation, or our Bylaws; any action to interpret, apply, enforce, or determine the validity of our Certificate of Incorporation or our Bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine.
In addition, our Certificate of Incorporation provides that a state or federal court located within the state of Delaware will be the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the DGCL, our Certificate of Incorporation, or our Bylaws; any action to interpret, apply, enforce, or determine the validity of our Certificate of Incorporation or our Bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine.
Although we believe the Platform is well-positioned to continue to provide key data insights to advertisers without cookies, actions by advertisers to buy advertising based on alternative identifiers could lead to changes in purchase behavior of such advertisers, thereby possibly impacting our operations, and our financial condition could be adversely affected.
Although we believe the Platform is well-positioned to continue to provide key data insights to advertisers without cookies, actions by advertisers to buy advertising based on alternative identifiers could lead to changes in purchase behavior of such advertisers, thereby possibly impacting our operations, and our financial condition could be adversely affected. 13 Our Publisher Partners may engage in intentional or negligent misconduct or other improper activities on the Platform or otherwise misuse the Platform, which may damage our brand image, our business and our results of operations.
Our business is vulnerable to damage or interruption from pandemics, including the ongoing COVID-19 pandemic, earthquakes, flooding, fire, power outages, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins, and similar events.
Our business is subject to the risk of catastrophic events such as pandemics, earthquakes, flooding, fire, and power outages, and to interruption by man-made acts, such as war and terrorism. Our business is vulnerable to damage or interruption from pandemics, earthquakes, flooding, fire, power outages, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins, and similar events.
We are a “smaller reporting company,” as defined in Item 10(f)(1) of Regulation S-K.
Following the consummation of the Business Combination, we will be a “smaller reporting company,” as defined in Item 10(f)(1) of Regulation S-K.
The growth and development of Internet content, commerce and communities may prompt calls for more stringent consumer protection laws, privacy laws and data protection laws, both in the United States and abroad, as well as new laws governing the taxation of these activities.
In particular, the growth and development of Internet content, commerce and communities may prompt more stringent consumer protection, privacy, and data protection laws, both in the United States and abroad, as well as new laws governing their taxation. Compliance with any newly adopted laws may prove difficult and costly for us.
We might not be able to monitor or edit a significant portion of the content that appears on the Platform. This risk is enhanced in certain jurisdictions outside the United States where our protection from liability for third-party actions may be unclear and where we may be less protected under local laws than we are in the United States.
This risk is enhanced in certain jurisdictions outside the United States where our protection from liability for third party actions may be unclear and where we may be less protected under local laws than we are in the United States.
If we are unable to manage growth effectively, our business could be harmed. The strategic relationships that we may be able to develop and on which we may come to rely may not be successful.
To manage any further growth, we will be required to improve existing, and implement new, operational and financial systems and properly manage our employee base. If we are unable to manage growth effectively, our business could be harmed. The strategic relationships that we may be able to develop and on which we may come to rely may not be successful.
Any failure to achieve and maintain profitability could have a materially adverse effect on our ability to implement our business plan, our results and operations, and our financial condition. Our results of operations may fluctuate significantly and may not meet our expectations or those of securities analysts and investors.
Any failure to achieve and maintain profitability could have a materially adverse effect on our ability to implement our business plan, our results and operations, and our financial condition.
The growing percentage of users whose computers, tablets, or phones that do not support identification through third-party cookies, mobile identifiers, or other tracking technologies could adversely affect our business, results of operations, and financial conditions.
The growing percentage of users whose computers, tablets, or phones do not support identification through third party cookies, mobile identifiers, or other tracking technologies could adversely affect our business, results of operations, and financial conditions. We rely heavily on our ability to collect and disclose data and metrics in order to attract new advertisers and retain existing advertisers.
As we rely heavily on our computer and communications systems and the Internet to conduct our business and provide high-quality user and customer service, these disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt our Publisher Partners’ businesses, which could adversely affect our business, results of operations, and financial condition. 22 Compliance with the reporting obligations under the United States securities laws and Section 404 of the Sarbanes-Oxley Act (“Sarbanes”) require expenditure of capital and other resources and may divert management’s attention.
As we rely heavily on our computer and communications systems and the Internet to conduct our business and provide high-quality user and customer service, these disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt our Publisher Partners’ businesses, which could adversely affect our business, results of operations, and financial condition.
Malware, viruses, and hacking attacks have become more prevalent in our industry and have occurred on our systems and may occur in the future.
Malware, viruses, hacking attacks, and improper or illegal use of the Platform could harm our business and results of operations. Malware, viruses, and hacking attacks have become more prevalent in our industry and have occurred on our systems and may occur in the future.
If we fail to timely meet our reporting obligations under the Exchange Act, Sarbanes and other applicable securities rules and regulations in their entirety, we could be subject to penalties under federal securities laws and regulations of the NYSE American and face lawsuits, and our ability to access financing on favorable terms could be restricted severely.
If we fail to timely meet our reporting obligations under the Exchange Act, Sarbanes-Oxley and other applicable securities rules and regulations in their entirety, we could be subject to penalties under federal securities laws and regulations of the NYSE American and face lawsuits, and we will not be able to obtain independent accountant certifications required for public companies under Sarbanes-Oxley.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”), which prohibits an “interested stockholder” owning in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which such stockholder acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition. 21 Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”), which prohibits an “interested stockholder” owning in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which such stockholder acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Any errors or defects in third-party software or cloud platforms could result in errors in, or a failure of, our digital media services, which could harm our business. Any damage to, or failure of, these third-party systems generally could result in interruptions in the availability of our digital media services.
Any errors or defects in third party software or cloud platforms could result in errors in, or a failure of, our digital media services, which could harm our reputation, our business and force us to seek more expensive alternatives.
We are subject to a variety of laws and regulations in the United States and abroad that are constantly evolving and involve matters central to our business, including privacy, data protection, and personal information, rights of publicity, content, intellectual property, advertising, marketing, distribution, data security, data retention and deletion, personal information, electronic contracts and other communications, competition, protection of minors, consumer protection, telecommunications, employee classification, product liability, taxation, economic or other trade prohibitions or sanctions, securities law compliance, and online payment services, and the related compliance costs and our failure to comply with these laws and regulations could adversely affect our business.
These include, among others, privacy, data protection, and personal information, rights of publicity, content, intellectual property, advertising, marketing, distribution, data security, data retention and deletion, personal information, electronic contracts and other communications, competition, protection of minors, consumer protection, telecommunications, employee classification, product liability, taxation, economic or other trade prohibitions or sanctions, securities law compliance, and online payment services, and the related compliance costs.
Any claim or litigation alleging that we have infringed or otherwise violated intellectual property or other rights of third parties, with or without merit, and whether or not settled out of court or determined in our favor, could be time-consuming and costly to address and resolve, and could divert the time and attention of our management and technical personnel.
Any claim or litigation alleging that we have infringed or otherwise violated intellectual property or other rights of third parties, with or without merit, whether or not settled out of court or determined in our favor, could be time-consuming and costly to address and resolve, and could divert the time and attention of our management and technical personnel. 15 If we are required to make substantial payments, cease using the challenged intellectual property, obtain a license or redesign existing technology due to any intellectual property infringement claims against us, such payments or actions could have a material adverse effect upon our business and financial results.
In fiscal 2022, we had net loss of approximately $70,858 compared to approximately $89,940 in fiscal 2021. Our accumulated deficit as of December 31, 2022 was approximately $323,071. We may continue to incur losses in the future if we do not achieve sufficient revenue to achieve and maintain profitability.
Our accumulated deficit as of December 31, 2022 was approximately $378.7 million. We may continue to incur losses in the future if we do not achieve sufficient revenue or adequately reduce costs to achieve and maintain profitability.
Our growth will depend in part on the ability of our users, customers and Publisher Partners to access the Platform at any time and within an acceptable amount of time. We believe that the Platform is proprietary, and we rely on the expertise of members of our engineering, operations, and software development teams for their continued performance.
Our growth will depend in part on the ability of our users, customers, and Publisher Partners to access the Platform at any time and within an acceptable amount of time.
The Platform provides our owned and operated media businesses, Publisher Partners, and individual creators contributing content to our owned and operated sites the ability to produce and manage editorially focused content through tools and services provided by us.
The Platform provides our owned and operated media businesses, Publisher Partners, and individual creators contributing content the ability to produce and manage editorially focused content through tools and services provided by us. We might not be able to monitor or edit a significant portion of the content, such as advertising content, that appears on the Platform.
If Publisher Partner misconduct and misuse of the Platform for inappropriate or illegal purposes occurs, user experience on the Platform may suffer, and claims may be brought against us.
If misconduct and misuse of the Platform for inappropriate or illegal purposes occurs, user experience on the Platform may suffer, and claims may be brought against us. Our business and public perception of our brands may be materially and adversely affected if we face any related lawsuits or other liabilities.
Our business and public perception of our brands may be materially and adversely affected if we face any related lawsuits or other liabilities. 16 The Platform and our technology systems contain open source software, which may pose particular risk to our proprietary software and Platform features and functionalities in a manner that negatively affect our business.
The Platform and our technology systems contain open-source software, which may pose particular risk to our proprietary software, features and functionalities in a manner that negatively affect our business. We use open-source software in the Platform and our technology systems and will continue to use open-source software in the future.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
Complying with these rules and regulations have caused us and will continue to cause us to incur additional legal and financial compliance costs, make some activities more difficult, be time-consuming or costly, and continue to increase demand on our systems and resources.
Complying with these rules and regulations have caused us and will continue to cause us to incur additional legal and financial compliance costs and make some activities more difficult, time-consuming and costly. Further, by complying with public disclosure requirements, our business and financial condition are more visible, which may result in increased threatened or actual litigation.
There are many players in the digital media market, many with greater name recognition and financial resources, which may give them a competitive advantage. Some of our current and potential competitors have substantially greater financial, technical, marketing, distribution, and other resources than we do.
The digital media industry is fragmented and highly competitive. There are many players in the digital media market, many with greater name recognition and financial resources, which may give them a competitive advantage.
In addition, some advertisers and sponsors take months after the campaign runs to pay, and some may not pay at all, or require partial “make-goods” based on performance. 15 We are dependent on the continued services and on the performance of key third party content contributors, the loss of which could adversely affect our business.
In addition, some advertisers and sponsors take months after the campaign runs to pay, and some may not pay at all, or require partial “make-goods” based on performance. This could have a material adverse effect on our business, financial condition, or results of operations.
Therefore, we believe that maintaining successful partnerships with Amazon Web Services, Google Cloud, and other third-party suppliers is critical to our success. 18 Real or perceived errors, failures, or bugs in the Platform could adversely affect our operating results and growth prospects. Because the Platform is complex, undetected errors, failures, vulnerabilities, or bugs may occur, especially when updates are deployed.
Real or perceived errors, failures, or “bugs” in the Platform could adversely affect our operating results and growth prospects. Because the Platform is complex, undetected errors, failures, vulnerabilities, or bugs may occur despite prior testing, especially when updates are deployed.
We rely on content contributed by third party providers, which has in turn attracted users that drive advertising and subscription revenue. The loss of the services of any of such key contributors could have a material adverse effect on our business, operating results, and financial condition.
The loss of the services of any of such key contributors could have a material adverse effect on our business, operating results, and financial condition.
We will seek to develop strategic relationships with advertising, media, technology, and other companies to enhance the efforts of our market penetration, business development, and advertising sales revenues. These relationships are expected to, but may not, succeed.
We will seek to develop strategic relationships with advertising, media, technology, and other companies to enhance our market penetration, business development, and advertising sales revenues. There can be no assurance that these relationships will develop and mature, or that potential competitors will not develop more substantial relationships with the same or more attractive partners.
Any sale of securities could adversely affect the interests or voting rights of the holders of our common stock, result in substantial dilution to existing stockholders, or adversely affect the market price of our common stock. 29 Item 1B. Unresolved Staff Comments Not Applicable.
Any sale of securities could adversely affect the interests or voting rights of the holders of our common stock, result in substantial dilution to existing stockholders, or adversely affect the market price of our common stock. Cyber-attacks and other security threats and disruptions could have a material adverse effect on our business.
Our inability to do so would have an adverse impact on our business, financial condition, and results of operations. The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed. The digital media industry is fragmented and highly competitive.
Any of these actions would have a material adverse effect on our business, financial condition, or results of operations and could lead to selling assets, cutting costs, reducing cash requirements, filing bankruptcy or ceasing operations. 12 The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed.
The loss or limitation of the services of any of our key third party contributors, or our inability to attract and retain additional qualified key contributors, could have a material adverse effect on our business, financial condition, or results of operations. Our revenues could decrease if the Platform does not continue to operate as intended.
Competition for such contributors is intense, and there can be no assurance that we will be able to successfully attract, assimilate, or retain them which could have a material adverse effect on our business, financial condition, or results of operations. Our revenues could decrease if the Platform does not continue to operate as intended.
Additionally, we may face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software.
We have set up an internal system to monitor the open-source software we use in our operation and its functionality, and to manage the risk it poses to our business. We may face claims from third parties claiming ownership of, or demanding release of, the open-source software or derivative works that we developed using such software.
Moreover, the Partner Agreements with our Publisher Partners include service level standards that obligate us to provide credits or termination rights in the event of a significant disruption in the Platform.
If the Platform software is unavailable or if our users are unable to access it within a reasonable amount of time or at all, our business would be negatively affected. 14 Moreover, the Partner Agreements with our Publisher Partners include service level standards that obligate us to provide credits or termination rights in the event of a significant disruption of the Platform, which may adversely affect our business and operating results.
With the introduction of new technologies, the evolution of the Platform, and new market entrants, we expect competition to intensify in the future. The sales and payment cycle for online advertising is long, and such sales may not occur when anticipated or at all, all of which could adversely affect our business.
The sales and payment cycle for online advertising is long, and such sales may not occur when anticipated or at all, all of which could adversely affect our business. The decision process is typically lengthy for brand advertisers and sponsors to commit to online campaigns and subject to delays which may be beyond our control.
If we fail to comply with these reporting obligations or to maintain adequate internal control over financial reporting, our business, financial condition, and results of operations, and investors’ confidence in us, could be materially and adversely affected.
Compliance with the reporting obligations under the United States securities laws and Section 404 of Sarbanes-Oxley requires expenditure of capital and other resources and may divert management’s attention. If we fail to comply with these reporting obligations or to maintain adequate internal controls our operations, and investors’ confidence in us, could be materially and adversely affected.
However, our remediation efforts may be inadequate, or we may in the future discover material weaknesses in other areas of our internal control over financial reporting that require remediation.
In preparing our financial statements for the year ended December 31, 2022, we identified material weaknesses in our internal control over financial reporting, which were remediated in 2023 with the implementation of additional controls and procedures. However, we may in the future discover material weaknesses in other areas of our internal control over financial reporting that require remediation.
Such claims will be costly to contest, highly disruptive to our work environment, and may be detrimental to our operations.
Notwithstanding our care in our employment practices, a prior employer may assert a claim against us. Such claims can be costly to contest, disruptive to our work environment, and may be detrimental to our operations and financial results.
Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.
Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations, cause us to lose investor confidence, prevent us from obtaining capital on favorable terms or at all, and subject us to sanctions or investigations by the SEC, the NYSE American or other regulatory authorities.
We rely on a combination of copyright, trademark and trade secret laws, employee and third-party non-disclosure and invention assignment agreements and other methods to protect our proprietary technology. However, these only afford limited protection, and unauthorized parties may attempt to copy aspects of the Platform’s features and functionality, or to use information that we consider proprietary or confidential.
If we are unable to protect our intellectual property rights, our business could suffer. Our success significantly depends on our proprietary technology. We rely on a combination of copyright, trademark and trade secret laws, employee and third party non-disclosure and invention assignment agreements and other methods to protect our proprietary technology.
While our insurance policies include liability coverage for certain of these types of matters, a significant cybersecurity incident could subject us to liability or other damages that exceed our insurance coverage, increase the cost of our insurance policy going forward, and preclude us from obtaining adequate insurance levels in the future. 21 Existing or future strategic alliances, long-term investments and acquisitions may have a material and adverse effect on our business, reputation and results of operations.
We cannot ensure that our efforts to prevent cyber security incidents will succeed. While we purchase liability coverage for certain of these types of matters, a significant cybersecurity incident could subject us to reputational harm, loss of revenue, financial liability and other damage that may exceed our insurance coverage and preclude us from obtaining adequate insurance levels in the future.
As a result of this third-party reliance, we may experience the aforementioned issues, which could cause us to render credits or pay penalties, could cause our Publisher Partners to terminate their contractual arrangements with us, and could adversely affect our ability to grow our audience of unique visitors, all of which could reduce our ability to generate revenue.
Failure of these third party systems could cause us to render credits or pay penalties or cause our Publisher Partners to terminate their contractual arrangements with us.
Such actions could affect the manner in which we provide our services or adversely affect our financial results. Furthermore, significant penalties could be imposed on us for failure to comply with various statutes or regulations.
Our failure to comply with these laws and regulations could adversely affect our business and cause significant penalties to be imposed on us.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties As of the end of fiscal 2022, we have leases in New Jersey and California. The space in Hoboken, New Jersey is occupied by The Spun. In Santa Monica, California we have a leased space which we sublet and a lease for office space that we do not occupy in Carlsbad, California.
Biggest changeItem 2. Properties As of December 31, 2023, we had two leases in California. In Santa Monica, California we have a leased space which we sublet that terminates in November 2024. In Carlsbad, California we have a lease for office space that is partially sublet. We do not occupy the balance of the space.
To the extent we need to lease physical properties in the future, we believe we would be able to find suitable properties at market rates.
The Carlsbad lease terminates in March 2025. As we operate our business principally in a virtual environment, these two leased spaces are not utilized in our operations. To the extent we need to lease physical properties in the future, we believe we would be able to find suitable properties at market rates.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. 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.
Biggest changeExcept as described in Note 27, Commitments and Contingencies to our accompanying consolidated financial statements under Item 8 of this Annual Report, as of the date of this Annual Report, 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.
Removed
Item 4. Mine Safety Disclosure Not applicable. Part II.
Added
Item 3. Legal Proceedings From time to time, we may be subject to claims and litigation arising in the ordinary course of business.
Added
On January 30, 2024, our former President of Media filed an action against us and Manoj Bhargava, alleging claims for breach of contract, failure to pay wages and defamation, among other things, in the United States District Court of the Southern District of New York, and seeking damages in an unspecified amount.
Added
We believe that we have strong defenses to these claims and intend to vigorously defend ourselves and the allegations made in this lawsuit.
Added
On March 21, 2024, our former CEO and Chairman of the Board filed an action against us, members of the Board of directors and Simplify, alleging claims for retaliation, breach of contract, wrongful termination and age discrimination, among other things, in the Superior Court of the State of California seeking damages in an amount of $20 million.
Added
We believe that we have strong defenses to these claims and intend to vigorously defend ourselves and the allegations made in this lawsuit. Item 4. Mine Safety Disclosure Not applicable. 25 Part II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock began trading on the NYSE American on February 9, 2022 under the symbol “AREN.” Before then, from September 21, 2021 until February 8, 2022, our common stock was quoted on the OTCM’s OTCQX trading under the symbol “MVEN.” Holders As of March 21, 2023, there were approximately 186 holders of record of our common stock.
Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock began trading on the NYSE American on February 9, 2022 under the symbol “AREN.” Before then, from September 21, 2021 until February 8, 2022, our common stock was quoted on the OTCM’s OTCQX trading under the symbol “MVEN.” Holders As of March 28, 2024, there were approximately 162 holders of record of our common stock.
Any future determination related to our dividend policy will be made at the discretion of our Board. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Recent Sales of Unregistered Securities None. 30 Use of Proceeds None. Item 6. [Reserved]
Any future determination related to our dividend policy will be made at the discretion of our Board. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Recent Sales of Unregistered Securities None. Use of Proceeds None. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor the year ended December 31, 2021, net cash provided by financing activities was $28,191 consisting primarily of $19,838 (net of issuance cost paid of $167) in net proceeds from a private placement of common stock; $5,086 in proceeds from long term-debt; $4,809 from advancements of our SLR line of credit, offset by $1,472 related to payments of restricted stock liabilities; and $70 for tax payments relating to the withholding of shares of common stock for certain employees. 36 Results of Operations Comparison of Fiscal 2022 to Fiscal 2021 Years Ended December 31, 2022 versus 2021 2022 2021 $ Change % Change Revenue $ 220,935 $ 189,140 $ 31,795 16.8 % Cost of revenue 132,923 110,530 22,393 20.3 % Gross profit 88,012 78,610 9,402 12.0 % Operating expenses Selling and marketing 72,489 81,929 (9,440 ) -11.5 % General and administrative 53,499 55,612 (2,113 ) -3.8 % Depreciation and amortization 17,650 16,345 1,305 8.0 % Loss on disposition of assets 257 1,192 (935 ) -78.4 % Loss on impairment of lease - 466 (466 ) -100.0 % Loss on termination of lease - 7,345 (7,345 ) -100.0 % Total operating expenses 143,895 162,889 (18,994 ) -11.7 % Loss from operations (55,883 ) (84,279 ) 28,396 -33.7 % Total other expenses (12,568 ) (7,335 ) (5,233 ) 71.3 % Loss before income taxes (68,451 ) (91,614 ) 23,163 -25.3 % Income tax benefit 1,063 1,674 (611 ) -36.5 % Net loss from continuing operations (67,388 ) (89,940 ) 22,552 -25.1 % Net loss from discontinued operations, net of tax (3,470 ) - (3,470 ) 100.0 % Net loss $ (70,858 ) $ (89,940 ) $ 19,082 -21.2 % Basic and diluted net loss per common share: Continued operations $ (3.82 ) $ (7.87 ) $ 4.05 -51.5 % Discontinued operations (0.20 ) - (0.20 ) 100.0 % Basic and diluted net loss per common share $ (4.02 ) $ (7.87 ) $ 3.85 -48.9 % Weighted average number of shares outstanding – basic and diluted 17,625,619 11,429,740 For the year ended December 31, 2022, the net loss was $70,858, as compared to $89,940 in the prior year which represents an improvement of $19,082 or 21.2%.
Biggest changeFor the year ended December 31, 2022, net cash provided by financing activities was $54,416, consisting primarily of $30,490 (net of issuance costs paid of $1,568) in net proceeds from a public offering of common stock, $28,800 (net of issuance costs paid of $1,272 and payments of $5,928) in proceeds from long term-debt, $2,104 from advancements of our Arena Credit Agreement, and $95 from exercises of common stock options, offset by $4,468 for tax payments relating to the withholding of shares of common stock for certain employees, $2,152 related to payments of restricted stock liabilities, and $453 related to deferred cash payments for an acquisition. 31 Results of Operations Comparison of Fiscal 2023 to Fiscal 2022 Years Ended December 31, 2023 versus 2022 2023 2022 $ Change % Change Revenue $ 244,203 $ 220,935 $ 23,268 10.5 % Cost of revenue 142,240 132,923 9,317 7.0 % Gross profit 101,963 88,012 13,951 15.9 % Operating expenses Selling and marketing 74,245 72,489 1,756 2.4 % General and administrative 44,152 53,499 (9,347 ) -17.5 % Depreciation and amortization 18,924 17,650 1,274 7.2 % Loss on impairment of assets 119 257 (138 ) -53.7 % Loss on sale of assets 325 - 325 100.0 % Total operating expenses 137,765 143,895 (6,130 ) -4.3 % Loss from operations (35,802 ) (55,883 ) 20,081 -35.9 % Total other expenses (19,558 ) (12,568 ) (6,990 ) 55.6 % Loss before income taxes (55,360 ) (68,451 ) 13,091 -19.1 % Income tax benefit (222 ) 1,063 (1,285 ) -120.9 % Net loss from continuing operations (55,582 ) (67,388 ) 11,806 -17.5 % Net loss from discontinued operations, net of tax - (3,470 ) 3,470 -100.0 % Net loss $ (55,582 ) $ (70,858 ) $ 15,276 -21.6 % For the year ended December 31, 2023, the loss from operations improved $20,081 to $35,802 as compared to $55,883 during the year ended December 31, 2022 due to a $23,268 increase in revenue, with a $6,130 decrease in operating expenses.
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 both in the short-term and long-term. 32 Going Concern Management performed an annual reporting period going concern assessment.
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 both in the short-term and long-term. Going Concern Management performed an annual reporting period going concern assessment.
Print Revenue Print revenue includes magazine subscriptions and single copy sales at newsstands. Print Subscriptions . Revenue from magazine subscriptions is deferred and recognized proportionately as products are distributed to subscribers. Newsstand . Single copy revenue is recognized on the publication’s on-sale date, net of provisions for estimated returns.
Print Revenue Print revenue includes magazine subscriptions and single copy sales at newsstands. Print Subscriptions . Revenue from magazine subscriptions is deferred and recognized proportionately as products are distributed to subscribers. 38 Newsstand . Single copy revenue is recognized on the publication’s on-sale date, net of provisions for estimated returns.
Advertising related revenues for print advertisements are recognized when advertisements are published (defined as an issue’s on-sale date), net of provisions for estimated rebates, rate adjustments, and discounts. 43 Subscription Revenue Digital Subscriptions .
Advertising related revenues for print advertisements are recognized when advertisements are published (defined as an issue’s on-sale date), net of provisions for estimated rebates, rate adjustments, and discounts. Subscription Revenue Digital Subscriptions .
Our Platform development capitalized during the application development stage of a project include: ● payroll and related expenses for personnel; and ● stock-based compensation of related personnel. Business Combinations We account for business combinations using the acquisition method of accounting.
Our Platform development capitalized during the application development stage of a project include: ● payroll and related expenses for personnel; and ● stock-based compensation of related personnel. 39 Business Combinations We account for business combinations using the acquisition method of accounting.
Recently Issued Accounting Pronouncements Note 2, Summary of Significant Accounting Policies, in our accompanying consolidated financial statements appearing elsewhere in this Annual Report includes Recently Issued Accounting Pronouncements. 46
Recently Issued Accounting Pronouncements Note 2, Summary of Significant Accounting Policies, in our accompanying consolidated financial statements appearing elsewhere in this Annual Report includes Recently Issued Accounting Pronouncements.
We enter into contracts with advertising networks to serve display or video advertisements on the digital media pages associated with its various channels. Although reported advertising transactions are subject to adjustment by the advertising network partners, any such adjustments are known within a few days of month end.
We enter into contracts with advertising networks to serve display or video advertisements on the digital media pages associated with our various channels. Although reported advertising transactions are subject to adjustment by the advertising network partners, any such adjustments are known within a few days of month end.
The balance outstanding under our senior secured notes as of December 31, 2022 was $62,691, which included outstanding principal of $48,791 and payment of in-kind interest of $13,900 that we were permitted to add to the aggregate outstanding principal balance. Delayed Draw Term Notes .
The balance outstanding under our Senior Secured Notes as of December 31, 2023 was $62,691, which included outstanding principal of $48,791 and payment of in-kind interest of $13,900 that we were permitted to add to the aggregate outstanding principal balance. Delayed Draw Term Notes .
(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) Liquidated damages (or interest expense related to accrued liquidated damages) represents amounts 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.
We accounts for stock awards and stock option grants to employees, directors and consultants, and non-employee awards to certain directors and consultants by measuring the cost of services received in exchange for the stock-based payments as compensation expense our consolidated financial statements.
We account for stock awards and stock option grants to employees, directors and consultants, and non-employee awards to certain directors and consultants by measuring the cost of services received in exchange for the stock-based payments as compensation expense our consolidated financial statements.
Fair value determined under the Black-Scholes option-pricing model and Monte Carlo model is affected by several variables, the most significant of which are the life of the stock award, the exercise price of the stock option or warrants, as compared to the fair market value of the common stock on the grant date, and the estimated volatility of the common stock over the term of the stock award.
Fair value determined under the Black-Scholes option-pricing model and Monte Carlo model is affected by several variables, the most significant of which are the life of the stock award, the exercise price of the stock option or warrant, as compared to the fair market value of our common stock on the grant date, and the estimated volatility of our common stock over the term of the stock award.
Estimated volatility was determined under the (1) “Probability Weighted Scenarios” where one scenario assumes that our common stock will be up-listed on a national stock exchange (the “Exchange”) on a certain listing date (the “Up-list”) where the estimated volatility was based on evaluating the average historical volatility of a group of peer companies that are publicly traded and the second scenario assumes our common stock is not up-listed on the Exchange prior to the final vesting date of the grants (the “No Up-list”) where the historical volatility of our common stock was evaluated based upon market comparisons; and the (2) “Up-list Scenario” where our estimated volatility is based on evaluating the average historical volatility of a group of peer companies that are publicly traded after we up-listed to the NYSE American.
Estimated volatility was determined under the (1) “Probability Weighted Scenarios” (prior to our reverse stock split on February 8, 2022) where one scenario assumes that our common stock will be up-listed on a national stock exchange (the “Exchange”) on a certain listing date (the “Up-list”) where the estimated volatility was based on evaluating the average historical volatility of a group of peer companies that are publicly traded and the second scenario assumes our common stock is not up-listed on the Exchange prior to the final vesting date of the grants (the “No Up-list”) where the historical volatility of our common stock was evaluated based upon market comparisons; and the (2) “Up-list Scenario” (after our reverse stock split on February 8, 2022) where our estimated volatility is based on evaluating the average historical volatility of a group of peer companies that are publicly traded after we up-listed to the NYSE American.
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.
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) Stock-based compensation represents noncash costs arise from the grant of stock-based awards to employees, consultants and directors.
Our discussion and analysis of the financial condition and results of operations is based upon our consolidated financial statements included elsewhere in this Annual Report, which have been prepared in accordance with GAAP. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.
Our discussion and analysis of the financial condition and results of operations is based upon our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, which have been prepared in accordance with GAAP. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.
In our evaluation, management determined there is substantial doubt about our ability to continue as a going concern for a one-year period following the financial statement issuance date, unless we are able to refinance or extend the maturities of our current debt.
In our evaluation, management determined there is substantial doubt about our ability to continue as a going concern for a one-year period following the financial statement issuance date, unless we are able to refinance or modify our current debt.
Our accompanying consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We had revenues of $220,935 during fiscal 2022 and have experienced recurring net losses from operations and negative operating cash flows.
Our accompanying consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We had revenues of $244,203 during fiscal 2023 and have experienced recurring net losses from operations and negative operating cash flows.
For further details refer to Note 25, Income Taxes , in our accompanying consolidated financial statements.
For further details refer to Note 24, Income Taxes , in our accompanying consolidated financial statements.
We have made this determination based on our control of the advertising inventory and the ability to monetize the advertising inventory or publications before transfer to the customer and because we are also the primary obligor responsible for providing the services to the customer. Cost of revenues is presented as a separate line item in the statement of operations.
We have made this determination based on our control of the advertising inventory and the ability to monetize the advertising inventory or publications before transfer to the customer and because we are also the primary obligor responsible for providing the services to the customer. Cost of revenue is presented as a separate line item on the consolidated statements of operations.
For the year ended December 31, 2022, we recorded a deferred income tax benefit of $1,063 primarily related to our acquired deferred tax liabilities from an acquisition during the year and change in valuation allowance as of year-end that was, in part, offset by the book to tax basis differences related to goodwill from certain prior year acquisitions.
For the year ended December 31, 2022, we recorded an income tax benefit of $1,063 primarily from our acquired deferred tax liabilities from an acquisition during the year and change in valuation allowance as of year-end that was, in part, offset by certain previous acquisitions related to tax deductible goodwill.
Some of the limitations is that Adjusted EBITDA: ● does not reflect interest expense and financing fees, or the cash required to service our debt, which reduces cash available to us; ● does not reflect deferred income tax benefit or provision, which is a noncash income or expense; ● 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 stock-based compensation and, therefore, does not include all of our compensation costs; ● does not reflect the change in derivative valuations and, although this is a noncash income or 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 gains upon debt extinguishment, which we do not consider in our evaluation of our business operations; ● does not reflect any losses from the impairment of assets, which is a noncash operating expense; ● does not reflect any losses on impairment of leases, which is a noncash operating expense; ● does not reflect any losses on termination of our leases, 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 severance, which were a cash expense but are not reflective of our business operations.
Some of the limitations is that Adjusted EBITDA: ● does not reflect interest expense and financing fees, or the cash required to service our debt, which reduces cash available to us; 35 ● does not reflect income tax provision or benefit, which is a noncash income or expense; ● 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 stock-based compensation and, therefore, does not include all of our compensation costs; ● does not reflect the change in valuation of contingent consideration and, although this is a noncash income or 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 any losses from the sale of assets, which is a noncash operating expense ● does not reflect the employee retention credits recorded by us for payroll related tax credits under the CARES Act; ● does not reflect payments related to employee severance and employee restructuring changes for our former executives; and ● 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.
See Note 8, Leases, Note 16, Liquidated Damages Payable, Note 19 , Bridge Notes , and Note 20, Long-term Debt , in our accompanying consolidated financial statements for amounts outstanding as of December 31, 2022, related to leases, liquidated damages, bridge financing and long-term debt.
See Note 7, Leases , Note 15, Liquidated Damages Payable , Note 18, Bridge Notes , and Note 19, Long-term Debt , in our accompanying consolidated financial statements for amounts outstanding as of December 31, 2023, related to leases, liquidated damages, bridge financing and long-term debt.
The purchase price consisted of the following: (1) $500 cash paid at closing; (2) $75 cash payments due in three equal installments of $25 on March 1, 2023, April 1, 2023 and May 1, 2023; (3) $200 deferred cash payment due on the first anniversary of the closing date, subject to certain indemnity provisions; and (4) the issuance of 274,692 shares of our common stock, subject to certain lock-up provisions, on the closing date with a fair value of $2,181 (fair value was determined based on our common stock trading price of $7.94 per share on the closing date).
The purchase price consisted of the following: (1) $500 cash paid at closing; (2) $75 cash payments due in three equal installments of $25 on March 1, 2023 (paid), April 1, 2023 (paid) and May 1, 2023 (paid); (3) $200 deferred cash payment due on the first anniversary of the closing date, subject to certain indemnity provisions; and (4) the issuance of 274,692 shares of our common stock, subject to certain lock-up provisions, on the closing date with a fair value of $2,000 (fair value was determined based on an independent appraisal); and which is subject to a put option under certain conditions.
We recorded liquidated damages of $1,140 for the year ended December 31, 2022, as compared to $2,637 for the year ended December 31, 2021.
We recorded liquidated damages of $583 for the year ended December 31, 2023, as compared to $1,140 for the year ended December 31, 2022.
Our accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Most recently, for the year ended December 31, 2022, we incurred a net loss from continuing operations of $67,388, had cash on hand of $13,871 and a working capital deficit of $137,669.
Our accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Most recently, for the year ended December 31, 2023, we incurred a net loss from continuing operations of $55,582, had cash on hand of $9,284 and a working capital deficit of $145,622.
The senior secured notes bears interest at a rate of 10% per annum. Interest payments are payable at BRF Finance’s discretion either in cash quarterly in arrears on the last day of each quarter or by adding the interest to the outstanding principal amount.
On December 1, 2023, Renew purchased the Senior Secured Notes from BRF Finance. The Senior Secured Notes bear interest at a rate of 10% per annum. Interest payments are payable at Renew’s discretion either in cash quarterly in arrears on the last day of each quarter or by adding the interest to the outstanding principal amount.
Interest expense includes $1,581 and $2,106 for amortization of debt discounts for the year ended December 31, 2022 and 2021, respectively, as presented in our condensed consolidated statements of cash flows, which are a noncash item.
Interest expense includes $2,378 and $1,581 for amortization of debt discounts for the years ended December 31, 2023 and 2022, respectively, as presented in our consolidated statements of cash flows, which are noncash items.
The aggregate principal amount outstanding under the Bridge Notes as of December 31, 2022 was $4,000. 34 Acquisition On January 11, 2023, we entered into an asset purchase agreement with Teneology, Inc., pursuant to which we acquired certain assets (consisting of the RoadFood media business, including digital and television assets; the Moveable Feast media business, including digital and television assets; the Fexy-branded content studio business; and the MonkeySee YouTube Channel media business), for a purchase price of $2,956.
The balance outstanding under the Delayed Draw Term Notes as of December 31, 2023 was $4,000. 29 Acquisition On January 11, 2023, we entered into an asset purchase agreement with Teneology, Inc., pursuant to which we acquired certain assets (consisting of the RoadFood media business, including digital and television assets; the Moveable Feast media business, including digital and television assets; the Fexy-branded content studio business; and the MonkeySee YouTube Channel media business, collectively “Fexy Studios”), for a purchase price of $3,307.
Investors should note that interest expense will recur in future periods. 41 (2) Represents depreciation and amortization related to our developed technology and Platform included within cost of revenues of $9,459 and $8,829, for the years ending December 31, 2022 and 2021, respectively, and depreciation and amortization included within operating expenses of $17,650 and $16,345 for the years ending December 31, 2022 and 2021, respectively.
Investors should note that interest expense will recur in future periods. 36 (2) Depreciation and amortization related to our developed technology and Platform is included within cost of revenue of $8,782 and $9,459, for the years ending December 31, 2023 and 2022, respectively, and depreciation and amortization is included within operating expenses of $18,924 and $17,650 for the years ending December 31, 2023 and 2022, respectively.
Revenue In accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers , revenues are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. We generate all of our revenue from contracts with customers.
Actual results may differ from these estimates under different assumptions or conditions. 37 Revenue In accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers , revenues are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.
We account for revenue on a gross basis, as compared to a net basis, in our statement of operations.
We generate all of our revenue from contracts with customers. We account for revenue on a gross basis, as compared to a net basis, in our statement of operations.
Business,” which is in “Part I” of this Annual Report. Key Operating Metrics We monitor and review the key operating metrics described below as we believe that these metrics are relevant for our industry and specifically to us and to understanding our business. Moreover, they form the basis for trends informing certain predictions related to our financial condition.
We monitor and review our key operating metrics as we believe that these metrics are relevant for our industry and specifically to us and to understanding our business. Moreover, they form the basis for trends informing certain predictions related to our financial condition.
Goodwill is not amortized but rather is tested for impairment at least annually on December 31, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable.
Goodwill is not amortized but rather is tested for impairment at least annually on December 31, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. We operate as one reporting unit, therefore, the impairment test is performed at the consolidated entity level.
We incurred interest expense, net of $11,428 for the year ended December 31, 2022, as compared to $10,449 for the year ended December 31, 2021. The increase in interest expense of $979 was primarily from additional cash paid for interest from our debt. Liquidated Damages .
We incurred interest expense, net of $17,965 for the year ended December 31, 2023, as compared to $11,428 for the year ended December 31, 2022. The increase in interest expense of $6,537 was primarily from additional interest from our debt. Liquidated Damages .
The fair value measurement of equity awards and grants used for stock-based compensation is as follows: (1) restricted stock awards and restricted stock units which are time-vested, are determined using the quoted market price of our common stock at the grant date; (2) stock option grants which are time-vested and performance-vested, are determined utilizing the Black-Scholes option-pricing model at the grant date; (3) restricted stock units and stock option grants which provide for market-based vesting with a time-vesting overlay, are determined through consultants with our independent valuation firm using the Monte Carlo model at the grant date; (4) Publisher Partner Warrants are determined utilizing the Black-Scholes option-pricing model; and (5) ABG warrants are determined utilizing the Monte Carlo model (as further described in Note 23, Stock-Based Compensation, in our accompanying consolidated financial statements).
Stock awards and stock option grants to employees and non-employees which are performance-vested, are measured at fair value on the grant date and charged to operations when the performance condition is satisfied or over the service period. 40 The fair value measurement of equity awards and grants used for stock-based compensation is as follows: (1) restricted stock awards and restricted stock units which are time-vested, are determined using the quoted market price of our common stock at the grant date; (2) stock option grants which are time-vested and performance-vested, are determined utilizing the Black-Scholes option-pricing model at the grant date; (3) restricted stock units and stock option grants which provide for market-based vesting with a time-vesting overlay, are determined through consultants with our independent valuation firm using the Monte Carlo model at the grant date; (4) Publisher Partner Warrants are determined utilizing the Black-Scholes option-pricing model; and (5) ABG warrants are determined utilizing the Monte Carlo model.
During 2022, we assumed the lease from Men’s Journal for office space in Carlsbad, California, that expires in March 2025, and we remain responsible for $3,189 over the lease term.
During 2022, we assumed the lease from Men’s Journal for office space in Carlsbad, California, that expires in March 2025, and as of December 31, 2023 we remain responsible for $1,439 over the remaining lease term.
The number of shares of our common stock issued was determined based on a $2,225 value using our common stock trading price on the day immediately preceding the January 11, 2023 closing date.
The number of shares of the Company’s common stock issued was determined based on a $2,225 value using the common stock trading price on the day immediately preceding the January 11, 2023 closing date (on the closing date the common stock trading price was $7.94 per share). Off-Balance Sheet Arrangements None.
For the year ended December 31, 2021, net cash used in operating activities was $14,729, consisting primarily of $184,932 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements, advance of royalty fees and professional services; and $1,393 of cash paid for interest, offset by $171,596 of cash received from customers.
For the year ended December 31, 2022, net cash used in operating activities was $11,304, consisting primarily of $219,282 of cash paid to employees, Publisher Partners, Expert Contributors, suppliers, and vendors, and for revenue share arrangements, advance of royalty fees and professional services, and $9,528 of cash paid for interest, offset by $219,407 of cash received from customers.
We are party to a financing and security agreement with SLR, pursuant to which SLR extended a $25,000 line of credit for working capital purposes secured by a first lien on all our cash and accounts receivable and a second lien on all other assets.
We were party to a financing and security agreement with SLR (the “Arena Credit Agreement”), as amended on December 15, 2022 and August 31, 2023, pursuant to which SLR extended a $40,000 line of credit for working capital purposes secured by a first lien on all our cash and accounts receivable and a second lien on all other assets.
Our working capital deficit as of December 31, 2022 and 2021 was as follows: As of December 31, 2022 2021 Current assets $ 78,695 $ 77,671 Current liabilities (216,364 ) (116,413 ) Working capital deficit (137,669 ) (38,742 ) As of December 31, 2022, we had a working capital deficit of $137,669, as compared to $38,742 as of December 31, 2021, consisting of $78,695 in total current assets and $216,364 in total current liabilities.
Our working capital deficit as of December 31, 2023 and 2022 was as follows: As of December 31, 2023 2022 Current assets $ 90,399 $ 78,695 Current liabilities (236,021 ) (216,364 ) Working capital deficit (145,622 ) (137,669 ) As of December 31, 2023, we had a working capital deficit of $145,622, as compared to $137,669 as of December 31, 2022, consisting of $90,399 in total current assets and $236,021 in total current liabilities.
If the fair value exceeds the carrying amount, no further analysis is required; otherwise, any excess of the goodwill carrying amount over the implied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. 45 Stock-Based Compensation We provide stock-based compensation in the form of (a) stock awards to employees and directors, comprised of restricted stock awards and restricted stock units, (b) stock option grants to employees, directors and consultants, (c) common stock warrants to Publisher Partners (no warrants were issued during the years ended December 31, 2022, 2021 or 2020) (as further described in Note 23, Stock-Based Compensation, in our accompanying consolidated financial statements), and (d) common stock warrants to ABG (as further described in Note 23, Stock-Based Compensation, in our accompanying consolidated financial statements).
Stock-Based Compensation We provide stock-based compensation in the form of (a) stock awards to employees and directors, comprised of restricted stock awards and restricted stock units, (b) stock option grants to employees, directors and consultants, (c) common stock warrants to Publisher Partners (no warrants were issued during the years ended December 31, 2022 or 2021), and (d) common stock warrants to ABG (all as further described in Note 22, Stock-Based Compensation, in our accompanying consolidated financial statements).
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. 44 Platform Development For the years presented, substantially all of our technology expenses are development costs for our Platform that were capitalized as intangible costs.
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.
As of December 31, 2021, our working capital deficit consisted of $77,671 in total current assets and $116,413 in total current liabilities. 35 Our cash flows during the years ended December 31, 2022 and 2021 consisted of the following: Years Ended December 31, 2022 2021 Net cash used in operating activities $ (11,304 ) $ (14,729 ) Net cash used in investing activities (38,590 ) (13,146 ) Net cash provided by financing activities 54,416 28,191 Net (decrease) increase in cash, cash equivalents, and restricted cash $ 4,522 $ 316 Cash, cash equivalents, and restricted cash, end of year $ 14,373 $ 9,851 For the year ended December 31, 2022, net cash used in operating activities was $11,304, consisting primarily of $219,282 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements, advance of royalty fees and professional services; and $9,528 of cash paid for interest, offset by $219,407 of cash received from customers.
As of December 31, 2022, our working capital deficit consisted of $78,695 in total current assets and $216,364 in total current liabilities. 30 Our cash flows during the years ended December 31, 2023 and 2022 consisted of the following: Years Ended December 31, 2023 2022 Net cash used in operating activities $ (24,772 ) $ (11,304 ) Net cash used in investing activities (3,212 ) (38,590 ) Net cash provided by financing activities 22,895 54,416 Net (decrease) increase in cash, cash equivalents, and restricted cash $ (5,089 ) $ 4,522 Cash, cash equivalents, and restricted cash, end of year $ 9,284 $ 14,373 For the year ended December 31, 2023, net cash used in operating activities was $24,772, consisting primarily of $239,737 of cash paid to employees, Publisher Partners, Expert Contributors, suppliers, and vendors, and for revenue share arrangements and professional services, and $12,101 of cash paid for interest, offset by $227,066 of cash received from customers.
The following table presents a reconciliation of Adjusted EBITDA to net loss, which is the most directly comparable GAAP measure, for the periods indicated: Years Ended December 31, 2022 2021 Net loss $ (70,858 ) $ (89,940 ) Loss from discontinued operations, net of tax 3,470 - Loss from continuing operations (67,388 ) (89,940 ) Add (deduct): Interest expense, net (1) 11,428 10,449 Income tax benefit (1,063 ) (1,674 ) Depreciation and amortization (2) 27,109 25,174 Stock-based compensation (3) 31,345 30,493 Change in derivative valuations - (34 ) Liquidated damages (4) 1,140 2,637 Gain upon debt extinguishment (5) - (5,717 ) Loss on impairment of assets (6) 257 1,192 Loss on impairment of lease (7) - 466 Loss on lease termination (8) - 7,345 Professional and vendor fees (9) - 6,901 Employee restructuring payments (10) 273 645 Adjusted EBITDA $ 3,101 $ (12,063 ) (1) Interest expense is related to our capital structure and varies over time due to a variety of financing transactions.
The following table presents a reconciliation of Adjusted EBITDA to net loss, which is the most directly comparable GAAP measure, for the periods indicated: Years Ended December 31, 2023 2022 Net loss $ (55,582 ) $ (70,858 ) Loss from discontinued operations, net of tax - 3,470 Loss from continuing operations (55,582 ) (67,388 ) Add (deduct): Interest expense, net (1) 17,965 11,428 Income tax provision (benefit) 222 (1,063 ) Depreciation and amortization (2) 27,706 27,109 Stock-based compensation (3) 19,060 31,345 Change in fair value of contingent consideration (4) 1,010 - Liquidated damages (5) 583 1,140 Loss on impairment of assets (6) 119 257 Loss on sale of assets (7) 325 - Employee retention credit (8) (6,868 ) - Employee restructuring expenses (9) 5,367 679 Professional and vendor fees (10) 1,194 - Adjusted EBITDA $ 11,101 $ 3,507 (1) Interest expense is related to our capital structure and varies over time due to a variety of financing transactions.
The aggregate principal amount outstanding under the Bridge Notes as of December 31, 2022 was $36,000. Senior Secured Notes . We are party to a third amended and restated note purchase agreement (the “Third A&R NPA”), with one accredited investor, BRF Finance, an affiliated entity of B. Riley.
The balance outstanding under our Bridge Notes as of December 31, 2023 was $36,000. Senior Secured Notes . We are party to a third amended and restated note purchase agreement (the “Third A&R NPA”), with Renew, an affiliated entity of Simplify, where we issued senior secured notes (the “Senior Secured Notes”).
We received net proceeds of $34,728, after the payment of $1,000 to B. Riley for an advisory fee and $272 for other legal costs, from the issuance of the Bridge Notes.
On December 1, 2023, Renew, an affiliated entity of Simplify, in its capacity as agent for the purchasers and as purchaser, purchased the Bridge Notes from BRF Finance. We received net proceeds of $34,728, after the payment of $1,000 to B. Riley for an advisory fee and $272 for other legal costs, from the issuance of the Bridge Notes.
Interest payments are payable, at BRF Finance’s discretion, either in cash quarterly in arrears on the last day of each fiscal quarter or in kind in arrears on the last day of each fiscal quarter.
The Delayed Draw Term Notes bear interest at a rate of 10% per annum. Interest payments are payable, at Renew’s discretion, either in cash quarterly in arrears on the last day of each fiscal quarter or in kind in arrears on the last day of each fiscal quarter.
Interest on the Bridge Notes is payable in cash at a rate of 12% per annum quarterly in arrears on March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023; provided that, on March 1, 2023, May 1, 2023 and July 1, 2023, the interest rate on the Bridge Notes will increase by 1.5% per annum, with maturity on December 31, 2023.
Interest on the Bridge Notes was payable in cash at a rate of 10% per annum as amended on August 31, 2023, from 12% per annum quarterly, with an increase in the interest rate by 1.5% per annum on March 1, 2023, May 1, 2023 and July 1, 2023.
General and Administrative The following table sets forth general and administrative expenses from continuing operations by category: Years Ended December 31, 2022 versus 2021 2022 2021 $ Change % Change Payroll and related expenses for executive and administrative personnel $ 15,800 $ 17,521 $ (1,721 ) -9.8 % Stock-based compensation 18,338 17,639 699 4.0 % Professional services, including accounting, legal and insurance 13,364 13,548 (184 ) -1.4 % Other general and administrative expenses 5,997 6,904 (907 ) -13.1 % Total general and administrative $ 53,499 $ 55,612 $ (2,113 ) -3.8 % For the year ended December 31, 2022, as referenced in the above table, we incurred general and administrative expenses from continuing operations of $53,499 as compared to $55,612 for the year ended December 31, 2021, a decrease of $2,113 or 3.8% from the prior period.
General and Administrative The following table sets forth general and administrative expenses from continuing operations by category: Years Ended December 31, 2023 versus 2022 2023 2022 $ Change % Change Payroll and related expenses for executive and administrative personnel $ 14,337 $ 15,800 $ (1,463 ) -9.3 % Stock-based compensation 10,839 18,338 (7,499 ) -40.9 % Professional services, including accounting, legal and insurance 12,229 13,364 (1,135 ) -8.5 % Other general and administrative expenses 6,747 5,997 750 12.5 % Total general and administrative $ 44,152 $ 53,499 $ (9,347 ) -17.5 % For the year ended December 31, 2023, we incurred general and administrative costs of $44,152 as compared to $53,499 for the year ended December 31, 2022.
Cost of Revenue The following table sets forth cost of revenue from continuing operations by category: Years Ended December 31, 2022 versus 2021 2022 2021 $ Change % Change Publisher Partner revenue share payments $ 20,108 $ 21,568 $ (1,460 ) -6.8 % Technology, Platform and software licensing fees 18,294 9,970 8,324 83.5 % Royalty fees 15,000 15,000 - 0.0 % Content and editorial expenses 44,669 32,850 11,819 36.0 % Printing, distribution and fulfillment costs 14,835 14,757 78 0.5 % Amortization of developed technology and platform development 9,459 8,829 630 7.1 % Stock-based compensation 10,235 7,478 2,757 36.9 % Other cost of revenue 323 78 245 314.1 % Total cost of revenue $ 132,923 $ 110,530 $ 22,393 20.3 % For the year ended December 31, 2022, as referenced in the above table, we recognized cost of revenue from continuing operations of $132,923, as compared to $110,530 for the year ended December 31, 2021, which represents an increase of $22,393 or 20.3% from the prior period.
Cost of Revenue The following table sets forth cost of revenue from continuing operations by category: Years Ended December 31, 2023 versus 2022 2023 2022 $ Change % Change Publisher Partner revenue share payments $ 27,174 $ 20,108 $ 7,066 35.1 % Technology, Platform and software licensing fees 20,990 18,294 2,696 14.7 % Royalty fees 15,000 15,000 - 0.0 % Content and editorial expenses 48,250 44,669 3,581 8.0 % Printing, distribution and fulfillment costs 15,391 14,835 556 3.7 % Amortization of developed technology and platform development 8,782 9,459 (677 ) -7.2 % Stock-based compensation 6,562 10,235 (3,673 ) -35.9 % Other cost of revenue 91 323 (232 ) -71.8 % Total cost of revenue $ 142,240 $ 132,923 $ 9,317 7.0 % For the year ended December 31, 2023, we recognized cost of revenue of $142,240, as compared to $132,923 for the year ended December 31, 2022, representing an increase of $9,317.
With respect to leases, we subleased our office space in Santa Monica, California in November 2021 and remain responsible to the original lessor for $948 through October 2024. Pursuant to the sublease, the sublessee will pay us an aggregate of $477 through October 2024.
Pursuant to two subleases entered into during 2023, the sublessees will pay us an aggregate of $312, net of security deposits, through March 2025. We also subleased our office space in Santa Monica, California in November 2021 and remain responsible to the original lessor for $373 through October 2024.
ASC Topic 350 requires that costs incurred in the preliminary project and post-implementation stages of an internal use software project be expensed as incurred and that certain costs incurred in the application development stage of a project be capitalized. We capitalize internal labor costs, including compensation, benefits and payroll taxes, incurred for certain capitalized platform development projects.
Technology costs are expensed as incurred or in accordance with applicable guidance that requires costs incurred in the preliminary project and post-implementation stages of an internal use software project be expensed as incurred and that certain costs incurred in the application development stage of a project be capitalized.
Our key operating metrics are identified below: ● Revenue per page view (“RPM”) – represents the advertising revenue earned per 1,000 pageviews.
Business,” which is in “Part I” of this Annual Report. 26 Key Operating Metrics Our key operating metrics are: ● Revenue per page view (“RPM”) – represents the advertising revenue earned per 1,000 pageviews.
During 2021, we entered into a termination agreement of our sublease agreement for a property located in New York, New York and remain responsible for $8,000 in cash payments to the sublandlord through October 2024. Working Capital Deficit We have financed our working capital requirements since inception through issuances of equity securities and various debt financings.
Pursuant to the sublease, the sublessee will pay us an aggregate of $225 through October 2024. During 2021, we entered into a termination agreement of our sublease agreement for a property located in New York, New York and remain responsible for $4,000 in cash payments to the sublandlord through October 2024.
The ultimate extent of the impact of global economic conditions on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside of our control and could exist for an extended period of time.
While we are closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve.
We calculate Adjusted EBITDA as net loss as adjusted for loss from discontinued operations, with additional adjustments for (i) interest expense (net), (ii) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, (v) change in derivative valuations, (vi) liquidated damages, (vii) gain upon debt extinguishment, (viii) loss on impairment of assets; (x) loss on impairment of lease, (ix) loss on lease termination, (xi) professional and vendor fees, and (xii) employee restructuring payments. 40 Our non-GAAP Adjusted EBITDA may not be comparable to a similarly titled measure used by other companies, has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our operating results as reported under GAAP.
We calculate Adjusted EBITDA as net loss as adjusted for loss from discontinued operations, with additional adjustments for (i) interest expense (net), (ii) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, (v) change in valuation of contingent consideration, (vi) liquidated damages, (vii) loss on impairment of assets, (viii) loss on sale of assets; (ix) employee retention credit, (x) employee restructuring payments; and (xi) professional and vendor fees.
The Delayed Draw Term Notes have a final maturity date of December 31, 2023, at which time the outstanding principal and accrued but unpaid interest will be due. We paid $5,928 in principal that was due on December 31, 2022, with the remaining principal balance due on December 31, 2023.
We paid $5,928 in principal on December 31, 2022. The Delayed Draw Term Notes have a maturity date of December 31, 2026.
We plan to refinance or extend the maturities of our current debt to alleviate the conditions that raise substantial doubt about our ability to continue as a going concern. 33 Debt Financings and Obligations Net proceeds from our debt financings (see Note 15, Line of Credit , Note 19, Bridge Notes and Note 20, Long-term Debt , in our accompanying consolidated financial statements for additional information) consisted of the following: SLR Credit Facility .
We plan to refinance or modify the maturities of our current debt and complete the Business Combination to alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, however, there can be no assurance that we will be able to refinance or modify our current debt and complete the Business Combination. 28 Debt Financings and Obligations Net proceeds from our debt financings consisted of the following: Arena Credit Agreement .
For the year ended December 31, 2021, net cash used in investing activities was $13,146, consisting primarily of $7,950 for the acquisition of businesses; $4,819 for capitalized costs for our Platform; and $377 for property and equipment.
For the year ended December 31, 2023, net cash used in investing activities was $3,212, consisting primarily of $3,773 for capitalized costs for our Platform and $500 for the acquisition of a business, offset by $1,061 from sale of assets.
On December 15, 2022, we issued $36,000 aggregate principal amount of senior secured notes (the “Bridge Notes”) pursuant to a Third A&R NPA with BRF Finance Co., LLC (“BRF Finance”), an affiliated entity of B. Riley Financial, Inc. (“B. Riley”), in its capacity as agent for the purchasers and as purchaser.
On December 1, 2023, Renew, an affiliated entity of Simplify, in its capacity as agent for the purchasers and as purchaser, purchased the 2023 Notes from BRF Finance Co., LLC (“BRF Finance”), an affiliated entity of B. Riley Financial, Inc. (“B. Riley”). Borrowings under the 2023 Notes bore interest at 10% per annum.
The liquidated damages recorded of $1,140 for the year ended December 31, 2022 primarily resulted from additional liquidated damages assessed under certain agreements as a result of filing a registration statement outside of the agreed upon filing deadline and recording interest expense on the balance that remains outstanding. Gain Upon Debt Extinguishment .
The decrease of $557 in liquidated damages recorded for the year ended December 31, 2023, is primarily because in 2022 we had an assessment under certain agreements as a result of filing a registration statement outside of the agreed upon filing deadline. Income Taxes Income Taxes .
For the year ended December 31, 2022, net cash provided by financing activities was $54,416, consisting primarily of $30,490 (net of issuance costs paid of $1,568) in net proceeds from a public offering of common stock; $28,800 (net of issuance costs paid of $1,272 and payments of $5,928) in proceeds from long term-debt; $2,104 from advancements of our SLR line of credit; and $95 from exercises of common stock options, offset by $4,468 for tax payments relating to the withholding of shares of common stock for certain employees; $2,152 related to payments of restricted stock liabilities; and $453 payment for The Spun deferred cash payment.
For the year ended December 31, 2023, net cash provided by financing activities was $22,895, consisting primarily of $11,333 (excluding accrued offering costs of $167) in net proceeds from the public offering of common stock, $5,517 from borrowings under our Arena Credit Agreement, $7,543 (excluding debt issuance costs of $457) in net proceeds from issuance of our 2023 Notes; offset by $1,423 tax payments relating to the withholding of shares of common stock for certain employees, and $75 payment of deferred cash payments for an acquisition.
In addition, the decrease was also in part due to the expiration of our agreement with Jim Cramer in September 2021. 38 Operating Expenses Selling and Marketing The following table sets forth selling and marketing expenses from continuing operations by category: Years Ended December 31, 2022 versus 2021 2022 2021 $ Change % Change Payroll and employee benefits of selling and marketing account management support teams $ 14,467 $ 12,746 $ 1,721 13.5 % Stock-based compensation 2,772 5,376 (2,604 ) -48.4 % Professional marketing services 4,528 3,100 1,428 46.1 % Circulation costs 5,006 4,144 862 20.8 % Subscription acquisition costs 37,190 46,264 (9,074 ) -19.6 % Advertising costs 5,987 6,962 (975 ) -14.0 % Other selling and marketing expenses 2,539 3,337 (798 ) -23.9 % Total selling and marketing $ 72,489 $ 81,929 $ (9,440 ) -11.5 % For the year ended December 31, 2022, as referenced in the above table, we incurred selling and marketing expenses from continuing operations of $72,489 as compared to $81,929 for the year ended December 31, 2021, a decrease of $9,440 or 11.5% from the prior period.
Cost of revenue for the year ended December 31, 2023 was impacted by increases in (i) Publisher Partner revenue share payments of $7,066, (ii) technology, Platform and software licensing fees of $2,696, (iii) content and editorial expenses of $3,581, and (iv) printing, distribution and fulfillment costs of $556; partially offset by a decrease in stock-based compensation of $3,673. 33 Operating Expenses Selling and Marketing The following table sets forth selling and marketing expenses from continuing operations by category: Years Ended December 31, 2023 versus 2022 2023 2022 $ Change % Change Payroll and employee benefits of selling and marketing account management support teams $ 19,106 $ 14,467 $ 4,639 32.1 % Stock-based compensation 1,659 2,772 (1,113 ) -40.2 % Professional marketing services 3,406 4,528 (1,122 ) -24.8 % Circulation costs 5,257 5,006 251 5.0 % Subscription acquisition costs 38,112 37,190 922 2.5 % Advertising costs 4,372 5,987 (1,615 ) -27.0 % Other selling and marketing expenses 2,333 2,539 (206 ) -8.1 % Total selling and marketing $ 74,245 $ 72,489 $ 1,756 2.4 % For the year ended December 31, 2023, we incurred selling and marketing costs of $74,245 as compared to $72,489 for the year ended December 31, 2022.
As a result, we are subject to continuing risks and uncertainties and continue to closely monitor the impact of the current conditions on our business. For more information regarding these risks and uncertainties, see the section titled “Risk Factors” in Part 1, Item 1A of this Annual Report on Form 10-K.
For more information regarding these risks and uncertainties, see the section titled “Risk Factors” in Part 1, Item 1A of this Annual Report on Form 10-K. 27 Liquidity and Capital Resources Cash and Working Capital Facility As of December 31, 2023, our principal sources of liquidity consisted of cash of $9,284 and accounts receivable, net of our advances under the Arena Credit Agreement of $25,202.
Furthermore, since our Bridge Notes of $36,000, Senior Secured Notes of $62,691 and Delayed Draw Term Notes of $4,000, totaling $102,691 (collectively “our current debt”) are due by December 31, 2023 (see Note 19, Bridge Notes , and Note 20, Long-term Debt , in our accompanying consolidated financial statements), unless we are able to refinance or extend our current debt beyond its current maturity, we may not be able to meet our obligations when due.
Also, since our 2023 Notes, Senior Secured Notes, Delayed Draw Term Notes and 2022 Bridge Notes (as further described below) (collectively “our current debt”) are subject to a forbearance period through the earlier of the following: (a) April 30, 2024, (b) the closing of the Business Combination, and (c) the termination of the Business Combination (see Note 28, Subsequent Events , in our accompanying consolidated financial statements), unless we are able to refinance or modify the terms of our current debt we run the risk that our debt could be called, therefore, we may not be able to meet our obligations when due.
For the years ended December 31, 2022 and 2021 our RPM was $17.24 and $15.24, respectively. For the years ended December 31, 2022 and 2021 our monthly average pageviews were 516,129,297 and 350,761,233, respectively. 31 Impact of Current Global Economic Conditions Uncertainty in the global economy presents significant risks to our business.
For the years ended December 31, 2023 and 2022 our monthly average pageviews were 464,261,595 and 489,659,595, respectively. The 5% decrease in monthly average pageviews reflects algorithmic changes at Google, Facebook and other platforms which subdued user click-throughs to the original content. Impact of Macroeconomic Conditions Uncertainty in the global economy presents significant risks to our business.
Revenue The following table sets forth revenue, cost of revenue, and gross profit from continuing operations: Years Ended December 31, 2022 versus 2021 2022 2021 $ Change % Change Revenue $ 220,935 $ 189,140 $ 31,795 16.8 % Cost of revenue 132,923 110,530 22,393 20.3 % Gross profit $ 88,012 $ 78,610 $ 9,402 12.0 % For the year ended December 31, 2022, we had gross profit of $88,012, as compared to gross profit of $78,610 for year ended December 31, 2021. 37 The following table sets forth revenue from continuing operations by category: Years Ended December 31, 2022 versus 2021 2022 2021 $ Change % Change Digital revenue: Digital advertising $ 109,317 $ 62,865 $ 46,452 73.9 % Digital subscriptions 21,156 29,629 (8,473 ) -28.6 % Licensing and syndication revenue 18,173 8,471 9,702 114.5 % Other digital revenue 1,166 43 1,123 2611.6 % Total digital revenue 149,812 101,008 48,804 48.3 % Print revenue: Print advertising 10,214 9,051 1,163 12.8 % Print subscriptions 60,909 79,081 (18,172 ) -23.0 % Total print revenue 71,123 88,132 (17,009 ) -19.3 % Total revenue $ 220,935 $ 189,140 $ 31,795 16.8 % For the year ended December 31, 2022 we recognized revenue from continuing operations of $220,935, as compared to $189,140 for the year ended December 31, 2021, which represents an increase of $31,795 or 16.8%.
This increase is partially offset by an increase in cost of revenue of $9,317, or 7%, resulting from higher publisher partner revenue share along with increased technology, Platform and software licensing costs. 32 The following table sets forth revenue from continuing operations by category: Years Ended December 31, 2023 versus 2022 2023 2022 $ Change % Change Digital revenue: Digital advertising $ 135,376 $ 109,317 $ 26,059 23.8 % Digital subscriptions 12,764 21,156 (8,392 ) -39.7 % Licensing and syndication revenue 18,482 18,173 309 1.7 % Other digital revenue 5,384 1,166 4,218 361.7 % Total digital revenue 172,006 149,812 22,194 14.8 % Print revenue: Print advertising 9,881 10,214 (333 ) -3.3 % Print subscriptions 62,316 60,909 1,407 2.3 % Total print revenue 72,197 71,123 1,074 1.5 % Total revenue $ 244,203 $ 220,935 $ 23,268 10.5 % For the year ended December 31, 2023, total revenue increased $23,268 to $244,203 from $220,935 for the year ended December 31, 2022.
Our digital advertising revenue increased by $46,452 or 73.9%, primarily due to a 47.1% increase in monthly average pageviews and a 13.1% increase in RPM for the year ended December 31, 2022, as compared to the prior year with 76.0% of the total increase driven by organic growth.
Gross profit percentage for the year ended December 31, 2023 was 41.8%, as compared to 39.8% for the year ended December 31, 2022. The improvement in gross profit percentage was driven by an increase in total revenue of $23,268, or 10.5%, primarily as a result of increased digital advertising due to improved programmatic video inventory monetization.
The quantitative goodwill impairment test identifies goodwill impairment and measures the amount of goodwill impairment loss to be recognized by comparing the fair value of our single reporting unit with its carrying amount.
Recoverability of goodwill is determined by comparing the fair value of our reporting unit to the carrying value of the underlying net assets in the reporting unit.
The decrease is primarily related to $1,721 of payroll and related expenses which reflected a decrease in certain personnel costs offset by the acquisition of Parade which occurred in the second quarter of 2022. 39 Other (Expenses) Income The following table sets forth other (expenses) income: Years Ended December 31, 2022 versus 2021 2022 2021 $ Change % Change Change in valuation of warrant derivative liabilities $ - $ 34 $ (34 ) -100.0 % Interest expense, net (11,428 ) (10,449 ) (979 ) 9.4 % Liquidated damages (1,140 ) (2,637 ) 1,497 -56.8 % Gain upon debt extinguishment - 5,717 (5,717 ) -100.0 % Total other expenses $ (12,568 ) $ (7,335 ) $ (5,233 ) 71.3 % Interest Expense .
The $9,347 decrease in general and administrative expenses is primarily due to decreases in stock-based compensation of $7,499, payroll and related expenses of $1,463 and professional services of $1,135. 34 Other Expenses The following table sets forth other expenses: Years Ended December 31, 2023 versus 2022 2023 2022 $ Change % Change Change in fair value of contingent consideration $ (1,010 ) $ - $ (1,010 ) 100.0 % Interest expense, net (17,965 ) (11,428 ) (6,537 ) 57.2 % Liquidated damages (583 ) (1,140 ) 557 -48.9 % Total other expenses $ (19,558 ) $ (12,568 ) $ (6,990 ) 55.6 % Change in Fair Value of Contingent Consideration .
Pursuant to the Third A&R NPA, we agreed to issue, at BRF Finance’s option, a delayed draw term notes (the “Delayed Draw Term Notes”), in the aggregate principal amount of $12,000 to BRF Finance, of which $9,928 was outstanding on December 31, 2021. The Delayed Draw Term Notes bear interest at a rate of 10% per annum.
Pursuant to the Third A&R NPA, we agreed to issue delayed draw term notes (the “Delayed Draw Term Notes”). On December 1, 2023, Renew, an affiliated entity of Simplify, in its capacity as agent for the purchasers and as purchaser, purchased the Delayed Draw Term Notes from BRF Finance.
We are subject to continuing risks and uncertainties in connection with the current macroeconomic environment, including inflation, rising interest rates and contraction in the availability of credit in the market place, geopolitical factors, including the ongoing conflict between Russia and Ukraine and the responses thereto, and the remaining effects of the COVID-19 pandemic.
Increases in inflation, rising interest rates, instability in the global banking system, geopolitical factors, including the ongoing conflicts in Ukraine and Israel and the responses thereto, and the remaining effects of the COVID-19 pandemic may have an adverse effect on our business.
Removed
We are closely monitoring the impact of these factors on all aspects of our business, including the impacts on our users, customers, employees, Publishers Partners, vendors and business partners. In particular, with the initial onset of COVID-19, we faced significant change in our advertisers’ buying behavior.
Added
For the years ended December 31, 2023 and 2022 our RPM was $23.95 and $18.17, respectively. The 32% increase in RPM reflects a significant increase in video advertising as a percentage of total digital advertising as digital video advertising is sold at a significantly higher price than digital display advertising.
Removed
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.
Added
Most of these developments and factors are outside of our control and could exist for an extended period of time. As a result, we are subject to continuing risks and uncertainties.
Removed
However, given that our sports vertical business relies on sporting events to generate content and comprises a material portion of our revenues, our 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 occurred in the United States and elsewhere during 2020.
Added
As of December 31, 2023, the outstanding balance of the Arena Credit Agreement was $19,609. On March 13, 2024 the Arena Credit Agreement was refinanced with the Simplify Loan.
Removed
Future widespread shutdowns of in-person economic activity could have a material impact on our business. In addition, the COVID-19 pandemic has also caused supply chain inefficiencies, negatively impacting our production and distribution costs in our print operations.
Added
As of the issuance date of our accompanying consolidated financial statements our cash balance is $4,151 and the balance outstanding under the Simplify Loan is $7,748, with the additional availability of $17,252.
Removed
Liquidity and Capital Resources Cash and Working Capital Facility As of December 31, 2022, our principal sources of liquidity consisted of cash of $13,871. In addition, as of December 31, 2022, we had $25,908 available for additional use, subject to eligible accounts receivable, under our working capital line of credit with SLR Digital Finance LLC (formerly FPP Finance LLC) (“SLR”).

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Other AREN 10-K year-over-year comparisons