[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section covers the company's unaudited financial statements, management's analysis, market risk, and internal controls [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for TheMaven, Inc. as of June 30, 2020, and for the three and six-month periods then ended, along with detailed notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2020, the company reported total assets of $196.5 million, total liabilities of $215.4 million, and a stockholders' deficiency of $74.6 million, reflecting a significant increase in deficiency from year-end 2019 Condensed Consolidated Balance Sheet Data (in thousands) | Balance Sheet Items | June 30, 2020 (Unaudited) | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $2,275 | $8,852 | | Total current assets | $42,054 | $48,160 | | Goodwill | $16,139 | $16,139 | | Total assets | $196,506 | $196,991 | | **Liabilities & Stockholders' Deficiency** | | | | Total current liabilities | $104,517 | $87,541 | | Long-term debt | $60,390 | $44,010 | | Total liabilities | $215,427 | $178,406 | | Total stockholders' deficiency | $(74,575) | $(37,068) | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the six months ended June 30, 2020, the company reported revenue of $53.5 million and a net loss of $45.9 million, with substantial revenue growth driven by acquisitions but also significantly widened losses due to increased operating expenses Statement of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $23,091 | $5,770 | $53,504 | $12,044 | | Gross Profit (Loss) | $(1,783) | $283 | $1,891 | $905 | | Loss from Operations | $(21,590) | $(7,147) | $(41,783) | $(12,008) | | Net Loss | $(23,161) | $(10,586) | $(45,938) | $(19,521) | | Basic and Diluted Net Loss per Share | $(0.59) | $(0.30) | $(1.17) | $(0.55) | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2020, the company experienced a net decrease in cash of $6.2 million, primarily due to $17.4 million used in operating activities, partially offset by $14.7 million provided by financing activities Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(17,421) | $(47,084) | | Net cash used in investing activities | $(3,442) | $(17,506) | | Net cash provided by financing activities | $14,665 | $75,332 | | Net (decrease) increase in cash | $(6,197) | $10,743 | | Cash, cash equivalents, and restricted cash – end of period | $3,276 | $13,270 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide critical context to the financial statements, detailing the company's liquidity, significant acquisitions, debt instruments, and subsequent financing events, despite a history of recurring losses - The company has a history of recurring losses, negative working capital, and negative operating cash flows, incurring a net loss of **$45.9 million** and using **$17.4 million** in cash from operations for the six months ended June 30, 2020[33](index=33&type=chunk)[34](index=34&type=chunk) - Despite these conditions, management concluded there is not substantial doubt about the Company's ability to continue as a going concern for one year, based on its 2021 cash flow forecast, operating budget, and ability to raise capital[36](index=36&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk) - On March 9, 2020, the Company acquired substantially all assets of Petametrics Inc. (LiftIgniter) for a total consideration of **$815,289**, consisting of cash and restricted stock units[50](index=50&type=chunk)[51](index=51&type=chunk) - Subsequent to the reporting period, the company engaged in significant financing activities, including issuing new series of preferred stock, amending debt agreements, and increasing its authorized common stock to **1 billion** shares, which triggered the conversion of various preferred stock series[120](index=120&type=chunk)[125](index=125&type=chunk)[129](index=129&type=chunk)[138](index=138&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's business overview, liquidity, and results of operations, highlighting rapid operational expansion and significant revenue growth to $53.5 million for the first six months of 2020, alongside a wider net loss of $45.9 million and the impact of COVID-19 - The company operates a technology platform for premium publishers, including its owned media businesses for Sports Illustrated and TheStreet, and powers over **250** independent brands[142](index=142&type=chunk) - The growth strategy focuses on adding new premium publishers and making strategic acquisitions to expand the platform's scale and improve monetization[143](index=143&type=chunk) - The COVID-19 pandemic caused a decline in traffic and advertising revenue in the first and second quarters of 2020, though a steady recovery began in May 2020[35](index=35&type=chunk)[185](index=185&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=MD%26A_Liquidity%20and%20Capital%20Resources) As of June 30, 2020, the company reported cash of $2.3 million and a working capital deficit of $62.5 million, having historically financed operations through debt and equity, with significant additional capital raised post-quarter Working Capital Deficit (in thousands) | | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Current assets | $42,054 | $48,160 | | Current liabilities | $(104,517) | $(87,541) | | **Working capital deficit** | **$(62,462)** | **$(39,381)** | Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(17,421) | $(47,084) | | Net cash used in investing activities | $(3,442) | $(17,506) | | Net cash provided by financing activities | $14,665 | $75,332 | - From July 1, 2020, to the report's issuance date, the company raised approximately **$20.8 million** in net proceeds from the sale of convertible preferred stock[151](index=151&type=chunk)[154](index=154&type=chunk) [Results of Operations](index=37&type=section&id=MD%26A_Results%20of%20Operations) For the six months ended June 30, 2020, revenue surged **344%** to **$53.5 million** primarily due to acquisitions, but increased costs and operating expenses led to an operating loss of **$41.8 million** Results of Operations Comparison for Six Months Ended June 30 (in thousands) | Metric | 2020 | 2019 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $53,504 | $12,044 | $41,460 | 344.2% | | Cost of revenue | $51,613 | $11,140 | $40,473 | 363.3% | | Gross profit | $1,891 | $905 | $986 | 109.0% | | Total operating expenses | $43,674 | $12,913 | $30,761 | 238.2% | | Loss from operations | $(41,783) | $(12,008) | $(29,775) | 248.0% | | Net loss | $(45,938) | $(19,521) | $(26,417) | 135.3% | Revenue by Product Line for Six Months Ended June 30 (in thousands) | Product Line | 2020 | 2019 | % of 2020 Total | | :--- | :--- | :--- | :--- | | Advertising | $19,380 | $11,808 | 36.2% | | Digital subscriptions | $11,627 | $108 | 21.7% | | Magazine circulation | $21,167 | $0 | 39.6% | | Other | $1,331 | $128 | 2.5% | | **Total revenue** | **$53,504** | **$12,044** | **100.0%** | - The increase in selling and marketing costs of **$15.2 million** for the six-month period was primarily due to higher payroll, circulation costs, and advertising expenses related to expanded operations[180](index=180&type=chunk) - General and administrative expenses increased by **$7.6 million**, driven by higher headcount, professional services (accounting, legal), and facilities costs[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company is a "smaller reporting company" as defined in Item 10(f)(1) of SEC Regulation S-K - Disclosure about market risk is not required for a "smaller reporting company"[186](index=186&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2020, due to identified material weaknesses in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were not effective as of the end of the period covered by this report[188](index=188&type=chunk) - This conclusion was based on the identification of material weaknesses in internal control over financial reporting[200](index=200&type=chunk) - No changes in internal control over financial reporting occurred during the period that materially affected, or are reasonably likely to materially affect, the internal controls[189](index=189&type=chunk) [PART II - OTHER INFORMATION](index=44&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section includes disclosures on legal proceedings, risk factors, equity sales, senior security defaults, and exhibits [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it is not currently a party to any pending or threatened legal proceedings that would be reasonably expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not currently subject to any material legal proceedings[191](index=191&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks, including the material adverse effects of the COVID-19 pandemic, the need for additional capital due to recurring losses, identified material weaknesses in internal controls, and risks related to competition and stock liquidity [Risks Related to Business and Financial Condition](index=44&type=section&id=Risks%20Related%20to%20Business%20and%20Financial%20Condition) The company's business faces material risks from the COVID-19 pandemic, a history of significant losses and an accumulated deficit of **$119.0 million**, identified material weaknesses in internal controls, intense competition, and technology-related threats - The COVID-19 pandemic has materially and adversely affected business operations, causing a decline in revenue and earnings beginning in March 2020 due to event cancellations and decreased advertising[193](index=193&type=chunk)[194](index=194&type=chunk) - The company has incurred losses since inception, with an accumulated deficit of approximately **$119.0 million** as of June 30, 2020, and anticipates continued losses[198](index=198&type=chunk) - Material weaknesses in internal control over financial reporting have been identified, which could result in material misstatements and adversely affect the stock price[200](index=200&type=chunk) - The digital media industry is intensely competitive, with many players having greater financial resources, which could harm operating results[206](index=206&type=chunk) [Risks Related to Investment in Securities](index=52&type=section&id=Risks%20Related%20to%20Investment%20in%20Securities) Investing in the company's securities carries significant risks, including the potential lack of a liquid market for its highly volatile common stock, its classification as a "penny stock," and the financial burden of public reporting requirements - There may be no liquid market for the company's common stock, which is quoted on the OTC Pink market and is likely to be highly volatile[235](index=235&type=chunk) - The company's stock is subject to SEC "penny stock" rules, which can reduce trading activity and make it difficult for investors to sell their shares[239](index=239&type=chunk) - Complying with public reporting requirements is costly and a financial burden, especially as the company is not current in its SEC filings[237](index=237&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states "None," indicating there were no unregistered sales of equity securities or use of proceeds to report for the period that were not previously disclosed - The report indicates no unregistered sales of equity securities for the period[242](index=242&type=chunk) [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states "None," indicating the company has not defaulted on any senior securities during the reporting period - The company reports no defaults upon senior securities[242](index=242&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) This section states "None," indicating there is no other information required to be disclosed in this report - The company reports no other information for this item[242](index=242&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists the documents filed as exhibits to the Quarterly Report, including various agreements and certifications by the CEO and CFO - Exhibits filed with the report include forms of warrants, a PPP loan note, executive employment and chairman agreements, and CEO/CFO certifications[244](index=244&type=chunk)

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) Provides an overview of the company's financial performance and position for the quarter ended March 31, 2020, including detailed statements and explanatory notes [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements for the quarter ended March 31, 2020, show revenue growth to $30.4 million, a widened net loss of $22.8 million, increased assets and liabilities, and a $55.6 million stockholders' deficiency, raising going concern considerations despite management's plans [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2020, total assets increased to $209.1 million from $197.0 million at year-end 2019, accompanied by a rise in total liabilities to $209.0 million from $178.4 million, worsening the total stockholders' deficiency to $55.6 million from $37.1 million over the same period, reflecting ongoing net losses Condensed Consolidated Balance Sheet Highlights (unaudited) | Balance Sheet Item | March 31, 2020 ($) | December 31, 2019 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | $7,536,767 | $8,852,281 | | Total current assets | $50,605,328 | $48,160,360 | | Total assets | $209,107,506 | $196,991,291 | | Total current liabilities | $107,458,999 | $87,541,031 | | Total liabilities | $209,037,693 | $178,405,545 | | Total stockholders' deficiency | ($55,583,917) | ($37,067,984) | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2020, revenue surged to $30.4 million compared to $6.3 million in the prior-year period, but despite a gross profit increase to $3.7 million, the loss from operations expanded to $20.2 million from $4.9 million, driven by a significant rise in operating expenses, resulting in a net loss of $22.8 million, or ($0.59) per share, a substantial increase from the $8.9 million, or ($0.26) per share, loss in Q1 2019 Condensed Consolidated Statements of Operations (unaudited) | Metric | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | | :--- | :--- | :--- | | Revenue | $30,412,853 | $6,273,963 | | Gross Profit | $3,674,020 | $621,398 | | Loss from Operations | ($20,192,803) | ($4,861,487) | | Net Loss | ($22,776,624) | ($8,934,980) | | Basic and Diluted Net Loss per Share | ($0.59) | ($0.26) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first quarter of 2020, net cash used in operating activities was $10.2 million, a significant increase from $1.2 million in the same period of 2019, reflecting the expanded net loss, with net cash used in investing activities at $2.0 million and net cash provided by financing activities at $11.2 million, resulting in a net decrease in cash of $0.9 million Cash Flow Summary (unaudited) | Cash Flow Activity | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($10,153,653) | ($1,202,177) | | Net cash used in investing activities | ($2,028,294) | ($438,418) | | Net cash provided by financing activities | $11,246,433 | $1,372,617 | | Net decrease in cash | ($935,514) | ($267,978) | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, acquisitions, debt structure, and subsequent events, including the company's assessment of its ability to continue as a going concern despite recurring losses, the acquisition of LiftIgniter in March 2020, significant long-term debt and convertible debentures, and various post-quarter financing activities - The company has a history of recurring losses, with a net loss of **$22.8 million** and cash used in operations of **$10.2 million** for Q1 2020, but management concluded these conditions do not raise substantial doubt about the company's ability to continue as a going concern for one year[30](index=30&type=chunk)[31](index=31&type=chunk)[37](index=37&type=chunk) - On March 9, 2020, the company acquired substantially all assets of Petametrics Inc. (LiftIgniter) for a total consideration of **$815,289**, consisting of cash and restricted stock units, primarily adding developed technology valued at **$917,762**[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - Subsequent to March 31, 2020, the company received a PPP loan of **$5.7 million**, raised funds through multiple series of preferred stock, and amended terms on its senior secured notes and delayed draw term note[102](index=102&type=chunk)[113](index=113&type=chunk)[115](index=115&type=chunk) - On December 18, 2020, the company increased its authorized common stock from **100 million** to **1 billion** shares, enabling the conversion of various series of preferred stock[132](index=132&type=chunk)[133](index=133&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 384.7% year-over-year revenue growth in Q1 2020 to platform expansion, including the Sports Illustrated media business, with the increased net loss of $22.8 million driven by higher growth-related costs, and the company's working capital deficit increasing to $56.9 million, while management focuses on adding new publishers and strategic acquisitions, supported by approximately $26.5 million in post-quarter debt and equity financing Q1 2020 vs Q1 2019 Results of Operations | Metric | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $30,412,853 | $6,273,963 | 384.7% | | Gross Profit | $3,674,020 | $621,398 | 491.3% | | Loss from Operations | ($20,192,803) | ($4,861,487) | 315.4% | | Net Loss | ($22,776,624) | ($8,934,980) | 154.9% | Revenue by Product Line (Q1 2020) | Product Line | Revenue ($) | % of Total | | :--- | :--- | :--- | | Advertising | $11,837,984 | 38.9% | | Magazine circulation | $12,537,532 | 41.2% | | Digital subscriptions | $5,537,247 | 18.2% | | Other | $500,090 | 1.6% | | **Total Revenue** | **$30,412,853** | **100.0%** | - The working capital deficit increased from **$39.4 million** at the end of 2019 to **$56.9 million** as of March 31, 2020, highlighting liquidity challenges[140](index=140&type=chunk)[141](index=141&type=chunk) - Subsequent to Q1 2020, the company raised approximately **$20.8 million** from preferred stock issuances and **$5.7 million** from a PPP loan to fund operations[145](index=145&type=chunk)[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a "smaller reporting company" under SEC regulations - The company is not required to provide quantitative and qualitative disclosures about market risk because it is a "smaller reporting company" as defined by the SEC[168](index=168&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were not effective as of March 31, 2020, based on an evaluation of their design and operation, with no material changes to internal control over financial reporting reported during the quarter - Management concluded that the company's disclosure controls and procedures were not effective as of the end of the period covered by this report[170](index=170&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[171](index=171&type=chunk) [PART II - OTHER INFORMATION](index=34&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) Covers legal proceedings, risk factors, unregistered sales of equity, defaults on senior securities, and other required disclosures [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not currently a party to any pending or threatened legal proceedings that would be reasonably expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not currently subject to any material legal proceedings[173](index=173&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) The company identifies several significant risks to its business, primarily the material adverse effect of the COVID-19 pandemic on operations, revenue, and earnings, alongside a history of losses, an accumulated deficit of $95.8 million, potential need for more capital, material weaknesses in internal controls, intense market competition, and various operational risks - The COVID-19 pandemic, which began impacting the company in March 2020, has materially and adversely affected business operations, causing a decline in revenue and earnings due to event cancellations and reduced advertising[175](index=175&type=chunk)[176](index=176&type=chunk) - The company has a history of losses, with an accumulated deficit of **$95.8 million** as of March 31, 2020, and may need to raise additional capital to continue operations, especially given the uncertainty of the pandemic's impact[179](index=179&type=chunk)[181](index=181&type=chunk) - Management has identified material weaknesses in internal control over financial reporting, which could lead to material misstatements in financial statements and adversely affect the business and stock price[183](index=183&type=chunk) - The company faces significant cybersecurity risks, including malware, viruses, and hacking attacks, which could compromise data security, damage its reputation, and result in significant costs and litigation[202](index=202&type=chunk)[204](index=204&type=chunk)[211](index=211&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period covered by this report - There were no unregistered sales of equity securities reported for the quarter[225](index=225&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities - There were no defaults upon senior securities[225](index=225&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) The company reported no other information required to be disclosed in this section - No other information was reported[225](index=225&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the quarterly report, including various agreements such as the Second Amended and Restated Note Purchase Agreement, a sublease agreement, and an asset purchase agreement, as well as officer certifications - Lists various agreements and certifications filed with the Form 10-Q, including debt agreements, leases, and the asset purchase agreement for LiftIgniter[224](index=224&type=chunk)[227](index=227&type=chunk)

Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) TheMaven operates a technology platform for premium publishers, including Sports Illustrated and TheStreet, providing digital publishing, distribution, and monetization capabilities, with growth through acquisitions and coalition expansion - TheMaven operates a technology platform for premium publishers, including Sports Illustrated and TheStreet, and over 250 independent brands, offering digital publishing, distribution, and monetization capabilities[13](index=13&type=chunk)[42](index=42&type=chunk) - The company's growth strategy involves expanding its coalition of independent publishers and acquiring entities with premium branded content to enhance scale and monetization[41](index=41&type=chunk)[43](index=43&type=chunk) - Key acquisitions include HubPages (August 2018), Say Media (December 2018), and TheStreet (August 2019), alongside a **100-year** licensing agreement for Sports Illustrated media business (October 2019)[17](index=17&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk)[25](index=25&type=chunk)[43](index=43&type=chunk) - The Maven Platform offers comprehensive services including content management, video publishing, analytics, advertising solutions, and user account management[34](index=34&type=chunk)[36](index=36&type=chunk) - The company holds **seven patent registrations** in the U.S. for its technology and numerous trademark registrations for its brands like MAVEN, MAVEN COALITION, THE STREET, and HUBPAGES across multiple countries[50](index=50&type=chunk)[51](index=51&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk) - The company expects typical media company advertising and membership sales seasonality, with strong performance in Q4 and slower in Q1[57](index=57&type=chunk)[206](index=206&type=chunk) - The digital media industry is highly competitive, with numerous niche and general media companies, content management software providers, social platforms, and affiliate networks vying for audience and ad revenue[58](index=58&type=chunk)[60](index=60&type=chunk) - The company's operations are subject to evolving U.S. federal and state laws, and foreign regulations concerning privacy, data protection (e.g., CCPA, CPRA, GDPR), content, and intellectual property, which could impact business and incur compliance costs[62](index=62&type=chunk)[64](index=64&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) [Item 1A. Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including the adverse impact of COVID-19, a history of losses, material weaknesses in internal controls, operational challenges, and legal and investment-related market volatility - The COVID-19 pandemic has materially and adversely affected business operations, leading to declines in revenue and earnings, particularly due to sports event cancellations and decreased traffic[75](index=75&type=chunk)[76](index=76&type=chunk) - The company has incurred losses since inception, with an accumulated deficit of approximately **$34.5 million** as of December 31, 2018, and relies on capital funding or borrowings to finance operations[81](index=81&type=chunk)[183](index=183&type=chunk) - Material weaknesses in internal control over financial reporting were identified at December 31, 2018, and are expected for 2019 and 2020, posing risks of financial misstatements and adverse impact on stock price[82](index=82&type=chunk)[266](index=266&type=chunk) - Business success is highly dependent on retaining and growing its user base and engagement, which is challenged by intense competition, the need for continuous innovation, and potential technical issues or negative publicity[85](index=85&type=chunk)[87](index=87&type=chunk) - The company relies on its ability to collect and disclose data for advertisers, and any restrictions on this could seriously harm advertising revenue, which has also been impacted by the COVID-19 pandemic[91](index=91&type=chunk)[93](index=93&type=chunk) - Dependence on key executive officers and management, as well as third-party cloud platforms and software, poses risks if services are lost or systems experience interruptions, errors, or cybersecurity attacks[95](index=95&type=chunk)[97](index=97&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - Inability to protect intellectual property rights, maintain brand awareness, or defend against infringement claims could adversely affect business and growth prospects[104](index=104&type=chunk)[105](index=105&type=chunk)[107](index=107&type=chunk) - The company is subject to various U.S. and foreign laws and regulations concerning privacy, data protection, content, and intellectual property, with potential for new obligations, penalties, or litigation[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Investment in the company's securities carries risks due to a potentially illiquid market, high stock price volatility, and compliance with 'penny stock' rules that may limit trading activity[119](index=119&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) [Item 1B. Unresolved Staff Comments](index=25&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - Not Applicable[125](index=125&type=chunk) [Item 2. Properties](index=25&type=section&id=Item%202.%20Properties) The company's executive offices are in New York, with software development and operations in California and Seattle, managing various office leases and subleases, some acquired through business transactions - Executive offices are at 225 Liberty Street, New York, with software development and operations in California and Seattle[31](index=31&type=chunk) - Key property changes include: sublease of **7,457 sq ft** in Seattle (April 2018, assumed entire lease March 2020), membership agreement for San Francisco office (Sept 2018, terminated Oct 2020), assumed Portland lease (Dec 2018, expired June 2020), assumed **35,000 sq ft** Wall Street, NY lease (Aug 2019, surrendered Oct 2020)[126](index=126&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - New leases include **5,258 sq ft** in Santa Monica, CA (Oct 2019, 5-year term) and **40,868 sq ft** in New York, NY (Feb 2020, lease payments commence Nov 2020, expiring Nov 2032)[131](index=131&type=chunk)[132](index=132&type=chunk) [Item 3. Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to materially adversely affect its business, financial condition, or operations - The company is not currently subject to any pending or threatened legal proceedings that are expected to have a material adverse effect on its business, financial condition, results of operations or cash flows[133](index=133&type=chunk) [Item 4. Mine Safety Disclosure](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company - Not applicable[133](index=133&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock (MVEN) is quoted on the OTC Pink Market, exhibiting volatility, with **175.6 million** shares outstanding as of December 31, 2020, and no history or plans for cash dividends - The company's common stock (MVEN) is quoted on the OTC Markets Group Inc.'s Pink Open Market since December 1, 2016[136](index=136&type=chunk) Common Stock High and Low Bid Prices (2017-2020) | Year | Quarter | High ($) | Low ($) | |:---|:---|:---|:---| | **2020** | First Quarter | 0.99 | 0.31 | | | Second Quarter | 0.80 | 0.30 | | | Third Quarter | 1.12 | 0.50 | | | Fourth Quarter | 0.90 | 0.50 | | **2019** | First Quarter | 0.75 | 0.40 | | | Second Quarter | 0.70 | 0.37 | | | Third Quarter | 1.00 | 0.50 | | | Fourth Quarter | 0.94 | 0.56 | | **2018** | First Quarter | 2.57 | 1.26 | | | Second Quarter | 1.75 | 1.00 | | | Third Quarter | 1.30 | 0.43 | | | Fourth Quarter | 0.81 | 0.25 | | **2017** | First Quarter | 1.38 | 0.80 | | | Second Quarter | 2.00 | 1.00 | | | Third Quarter | 1.68 | 1.01 | | | Fourth Quarter | 2.22 | 1.05 | - As of December 31, 2020, there were approximately 200 holders of record and **175,597,695 shares** of Common Stock outstanding[138](index=138&type=chunk) - The company has never paid cash dividends and plans to retain future earnings to support operations and business growth[139](index=139&type=chunk) - No issuer purchases of equity securities or recent sales of unregistered securities (not previously reported) occurred[140](index=140&type=chunk) [Item 6. Selected Financial Data](index=29&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is not applicable as the company qualifies as a 'smaller reporting company' under SEC Regulation S-K - Not applicable to a "smaller reporting company" as defined in Item 10(f)(1) of SEC Regulation S-K[140](index=140&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition, operational results, and future outlook, covering its business model, growth strategy, liquidity, COVID-19 impact, going concern assessment, and key accounting policies [Overview](index=29&type=section&id=Overview) The company operates a technology platform for premium publishers, including Sports Illustrated and TheStreet, with a growth strategy focused on expanding its publisher coalition and acquiring high-quality brands - The company operates a best-in-class technology platform empowering premium publishers, including Sports Illustrated and TheStreet, and over 250 independent brands[142](index=142&type=chunk) - The growth strategy is to expand by adding new premium publishers and acquiring entities with high-quality brands and content to increase user scale and monetization effectiveness[143](index=143&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2018, the company had **$2.4 million** in cash, a **$12.3 million** working capital deficit, and relied on equity and debt financings, with operating activities using **$7.4 million** and investing activities using **$23.6 million** - As of December 31, 2018, principal liquidity sources included **$2,406,596** in cash, approximately **$2.5 million** available under a factoring facility, and anticipated **$2.1 million** from convertible debenture financing[144](index=144&type=chunk) - The company has financed working capital requirements since inception through equity securities issuances and various debt financings[145](index=145&type=chunk) Working Capital (2018 vs. 2017) | Indicator | As of Dec 31, 2018 ($) | As of Dec 31, 2017 ($) | |:---|:---|:---| | Current assets | 9,533,342 | 3,860,967 | | Current liabilities | (21,849,647) | (416,444) | | Working (deficit) capital | (12,316,305) | 3,444,523 | Cash Flows (2018 vs. 2017) | Cash Flow Activity | 2018 ($) | 2017 ($) | |:---|:---|:---| | Net cash used in operating activities | (7,417,680) | (4,194,392) | | Net cash used in investing activities | (23,589,027) | (2,039,599) | | Net cash provided by financing activities | 29,914,747 | 9,254,946 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | (1,091,960) | 3,020,955 | | Cash, cash equivalents, and restricted cash, end of year | 2,527,289 | 3,619,249 | - Net cash used in operating activities in 2018 was primarily due to **$7.08 million** in general and administrative expenses[148](index=148&type=chunk) - Net cash used in investing activities in 2018 was mainly for business acquisitions (**$18.04 million**), promissory notes receivable (**$3.37 million**), and capitalized platform development (**$2.16 million**)[149](index=149&type=chunk) - Net cash provided by financing activities in 2018 included **$12.32 million** from Series H preferred stock, **$1.25 million** from common stock private placement, and **$16.64 million** from various debt issuances[150](index=150&type=chunk) [Future Liquidity](index=31&type=section&id=Future%20Liquidity) From January 2019 to the financial statement issuance date, the company raised approximately **$150.7 million** in net proceeds from equity and debt, with a cash balance of **$9.4 million** as of January 4, 2021, and all Series I, J, and K Preferred Stock converting to common stock by December 2020 - From January 1, 2019, to the financial statement issuance date, the company raised approximately **$150.7 million** in net proceeds (**$64.7 million** from equity, **$85.9 million** from debt)[154](index=154&type=chunk) - Cash balance as of January 4, 2021, was approximately **$9.4 million**[154](index=154&type=chunk) - Debt financings included 12% Convertible Debentures (converted to common stock or repaid in cash by Dec 31, 2020), Amended and Restated 12% Senior Secured Notes (**$56.3 million** outstanding as of issuance date), a **$15 million** FastPay Credit Facility (approx. **$7.18 million** outstanding as of Dec 31, 2020), a 15% Delayed Draw Term Note (approx. **$4.29 million** outstanding as of Dec 31, 2020), and a **$5.7 million** Payroll Protection Program Loan (expected **100%** forgiveness)[155](index=155&type=chunk)[157](index=157&type=chunk)[159](index=159&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[166](index=166&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) - Equity raises included Series H Preferred Stock (**$2.73 million** gross proceeds), Series I Preferred Stock (**$23.1 million** gross proceeds), Series J Preferred Stock (**$20 million** + **$6 million** gross proceeds), and Series K Preferred Stock (**$18.04 million** gross proceeds)[173](index=173&type=chunk)[174](index=174&type=chunk)[176](index=176&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - All outstanding shares of Series I, J, and K Preferred Stock automatically converted into common stock by December 18, 2020, following an increase in authorized common shares[175](index=175&type=chunk)[178](index=178&type=chunk)[180](index=180&type=chunk) [Going Concern](index=35&type=section&id=Going%20Concern) The company has a history of recurring losses, negative working capital, and operating cash flows, with a **$44.1 million** net loss in 2018, but management concluded no substantial doubt about its going concern ability for one year, supported by cash flow forecasts and a 2021 operating budget - The company has a history of recurring losses, negative working capital, and negative operating cash flows, with a net loss attributable to common stockholders of **$44,113,379** and an accumulated deficit of **$34,539,954** in 2018[183](index=183&type=chunk)[446](index=446&type=chunk) - The COVID-19 pandemic caused a decline in traffic, advertising revenue, and earnings in early March 2020, partially offset by cost reduction measures and growth in digital subscriptions[185](index=185&type=chunk)[447](index=447&type=chunk) - Management's going concern assessment for 2021 considered the use of an **$8 million** FastPay working capital line, potential additional **$5 million** borrowings from 12% Amended Senior Secured Notes, and a 2021 operating budget with **65%** recurring subscription revenue[188](index=188&type=chunk)[451](index=451&type=chunk) - Digital subscription revenue, accounting for approximately **30%** of total subscription revenue, grew approximately **30%** in 2020, demonstrating brand strength and plans for continued growth from TheStreet acquisition and Sports Illustrated licensed brands[188](index=188&type=chunk)[451](index=451&type=chunk) - Based on quantitative and qualitative factors, management concluded that conditions and events do not raise substantial doubt about the company's ability to continue as a going concern for a one-year period from the financial statement issuance date[189](index=189&type=chunk)[452](index=452&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Net loss significantly increased to **$26.1 million** in 2018 from **$6.3 million** in 2017, despite revenue surging over **7,300%** to **$5.7 million**, primarily due to rapid operational expansion, increased cost of revenue, and higher operating and other expenses - Total net loss increased by **$19,783,570** to **$26,067,883** in 2018 from **$6,284,313** in 2017, primarily due to rapid operational expansion and a deemed dividend on Series H Preferred Stock[191](index=191&type=chunk) Key Financial Performance (2018 vs. 2017) | Metric | 2018 ($) | 2017 ($) | $ Change | % Change | |:---|:---|:---|:---|:---| | Revenue | 5,700,199 | 76,995 | 5,623,204 | 7,303.3% | | Cost of revenue | 7,641,684 | 1,590,636 | 6,051,048 | 380.4% | | Gross loss | (1,941,485) | (1,513,641) | (427,844) | 28.3% | | Total operating expenses | 12,072,387 | 4,835,697 | 7,236,690 | 149.7% | | Loss from operations | (14,013,872) | (6,349,338) | (7,664,534) | 120.7% | | Total other (expense) income | (12,145,644) | 65,025 | (12,210,669) | -18,778.4% | | Net loss | (26,067,883) | (6,284,313) | (19,783,570) | 314.8% | | Deemed dividend on Series H preferred stock | (18,045,496) | - | (18,045,496) | 100.0% | | Net loss attributable to common shareholders | (44,113,379) | (6,284,313) | (37,829,066) | 602.0% | | Basic and diluted net loss per common share | (1.69) | (0.42) | | | | Weighted average common shares outstanding | 26,128,796 | 14,919,232 | | | - Revenue in 2018 was **$5,700,199**, primarily from advertising (**$5,614,953**) and membership subscriptions (**$85,246**), significantly up from **$76,995** in 2017, driven by new online media channels and acquisitions of HubPages and Say Media[194](index=194&type=chunk) - Cost of revenue increased by **$6,051,048** to **$7,641,684** in 2018, mainly due to Channel Partners' guarantee payments (**$896,928**), payroll and benefits (**$450,366**), amortization of capitalized platform development (**$1,324,373**), amortization of acquired developed technology (**$558,423**), and revenue share payments (**$2,247,453**)[196](index=196&type=chunk) - Research and development expenses increased to **$1,179,944** in 2018 from **$114,873** in 2017, driven by payroll, stock-based compensation, and other R&D costs[198](index=198&type=chunk) - General and administrative expenses rose by **$6,171,619** to **$10,892,443** in 2018, primarily due to increased headcount (from **24** to **87**), additional senior executives, stock-based compensation, and professional fees[199](index=199&type=chunk) - Other expenses in 2018 included a **$2,971,694** loss from embedded derivative liabilities, a **$1,344,648** true-up termination fee, **$3,366,031** for settlement of promissory notes receivable, **$2,508,874** in interest expense, and **$2,940,654** in liquidated damages[200](index=200&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Our Future Business](index=40&type=section&id=Our%20Future%20Business) In 2019-2020, the company pursued strategic growth through acquisitions, including TheStreet for **$16.5 million**, a **100-year** Sports Illustrated licensing agreement with a **$45 million** prepaid royalty, and LiftIgniter for content personalization - In 2019, the company completed the acquisition of TheStreet, Inc. for **$16.5 million** in cash, funded through debt financing[209](index=209&type=chunk)[210](index=210&type=chunk)[212](index=212&type=chunk) - A content agreement with Jim Cramer and Cramer Digital was established, involving a revenue share, an annualized guarantee payment of **$3 million**, and issuance of stock options[211](index=211&type=chunk)[212](index=212&type=chunk) - In June 2019, the company entered a **100-year** exclusive licensing agreement with ABG-SI LLC to operate the Sports Illustrated media business in multiple territories, including a **$45 million** prepaid royalty and issuance of **21,989,844** common stock warrants[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[218](index=218&type=chunk)[220](index=220&type=chunk) - In March 2020, the company acquired substantially all assets of LiftIgniter, a machine learning platform for content personalization, for cash payments and restricted stock units[221](index=221&type=chunk)[804](index=804&type=chunk) [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting estimates include revenue recognition, platform development, impairment of long-lived assets, and stock-based compensation, with specific policies for recognizing advertising and subscription revenue, capitalizing development costs, and expensing stock-based awards - Critical accounting estimates include revenue recognition, platform development, impairment of long-lived assets, and stock-based compensation[222](index=222&type=chunk) - Revenue is recognized when control of promised goods or services is transferred to customers. Advertising revenue is recognized in real-time, and membership subscription revenue is recognized over the subscription term[224](index=224&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[464](index=464&type=chunk)[465](index=465&type=chunk) - Cost of revenue includes channel partner guarantees and revenue share, amortization of developed technology and platform development, hosting fees, and stock-based compensation[228](index=228&type=chunk)[469](index=469&type=chunk) - Platform development costs are capitalized during the application development stage and amortized on a straight-line basis over **three years**[231](index=231&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk) - Stock-based compensation for employees, directors, and consultants is measured at fair value on the grant date and expensed over the vesting period, using the Black-Scholes model for options and warrants[233](index=233&type=chunk)[236](index=236&type=chunk)[499](index=499&type=chunk)[501](index=501&type=chunk) - The company uses the asset and liability method for income taxes and periodically evaluates the carrying value of long-lived assets for impairment[238](index=238&type=chunk)[239](index=239&type=chunk)[485](index=485&type=chunk)[506](index=506&type=chunk) - A sequencing policy is adopted for reclassification of contracts from equity to assets or liabilities if sufficient authorized shares are unavailable, with earliest grants receiving first allocation[240](index=240&type=chunk)[512](index=512&type=chunk) [Recently Issued Accounting Pronouncements](index=46&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) The company adopted ASC 606 and ASU 2016-18 with no material impact, and plans future adoptions of ASU 2016-02, 2016-13, 2017-04, 2017-11, 2018-07, 2020-06, and 2020-08, with ongoing evaluation of their financial impact - Adopted ASU 2014-09 (Revenue from Contracts with Customers) in Q3 2017 and ASU 2016-18 (Statement of Cash Flows) in Q1 2018, with no material impact[513](index=513&type=chunk)[515](index=515&type=chunk) - Intends to adopt ASU 2016-02 (Leases) in Q1 2019, expecting no material impact on results of operations or cash flows[516](index=516&type=chunk) - Will adopt ASU 2016-13 (Credit Losses) and ASU 2017-04 (Goodwill Impairment) in Q1 2020, and ASU 2017-11 (Down Round Features) and ASU 2018-07 (Nonemployee Share-Based Payment) in Q1 2019[518](index=518&type=chunk)[519](index=519&type=chunk)[520](index=520&type=chunk)[521](index=521&type=chunk) - Will adopt ASU 2020-06 (Debt with Conversion and Other Options) and ASU 2020-08 (Receivables – Nonrefundable Fees and Other Costs) in Q1 2021[522](index=522&type=chunk)[523](index=523&type=chunk) [Off-Balance Sheet Arrangements](index=46&type=section&id=Off-Balance%20Sheet%20Arrangements) As of December 31, 2018, off-balance sheet arrangements included **$1.36 million** in warrant derivative liabilities and **$7.39 million** in embedded derivative liabilities from 12% Convertible Debentures, both carried at fair value due to specific features - As of December 31, 2018, off-balance sheet arrangements included warrant derivative liabilities (**$1,364,235**) and embedded derivative liabilities (**$7,387,000**)[245](index=245&type=chunk)[251](index=251&type=chunk)[575](index=575&type=chunk)[584](index=584&type=chunk) - Warrant derivative liabilities (L2, Strome, B. Riley Warrants) were carried at fair value due to reset provisions or restrictions on delivering unregistered shares upon exercise[245](index=245&type=chunk)[246](index=246&type=chunk)[248](index=248&type=chunk)[571](index=571&type=chunk)[572](index=572&type=chunk) - Embedded derivative liabilities from 12% Convertible Debentures were carried at fair value due to conversion options, buy-in features, and default remedy features[249](index=249&type=chunk)[251](index=251&type=chunk)[606](index=606&type=chunk)[607](index=607&type=chunk) [Contractual Obligations](index=48&type=section&id=Contractual%20Obligations) As of December 31, 2018, total principal cash operating obligations and commitments amounted to **$1,871,106**, primarily comprising operating leases, employment contracts, and a consulting agreement, with most due in 2019 - As of December 31, 2018, total principal cash operating obligations and commitments were **$1,871,106**[253](index=253&type=chunk)[254](index=254&type=chunk) Contractual Obligations as of December 31, 2018 | Category | Total ($) | 2019 Payments ($) | 2020 Payments ($) | 2021 Payments ($) | |:---|:---|:---|:---|:---| | Operating leases | 1,100,689 | 526,027 | 347,845 | 226,817 | | Employment contracts | 297,917 | 297,917 | - | - | | Consulting agreement | 472,500 | 465,300 | 7,200 | - | | **Total** | **1,871,106** | **1,289,244** | **355,045** | **226,817** | [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=48&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable as the company qualifies as a 'smaller reporting company' under SEC Regulation S-K - Not applicable to a "smaller reporting company" as defined in Item 10(f)(1) of SEC Regulation S-K[255](index=255&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=48&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item refers to the consolidated financial statements and supplementary data, including auditor reports, balance sheets, statements of operations, equity, cash flows, and notes, located in Part IV of this Annual Report - All information required by this item is listed in the Index to Financial Statements in Part IV, Item 15(a)1 of this Annual Report[256](index=256&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=48&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company experienced changes in its independent registered public accounting firm, dismissing Gumbiner Savett Inc. and BDO USA, LLP, and engaging Marcum LLP, with no reported disagreements except for Gumbiner's going concern and material weaknesses observations - Gumbiner Savett Inc. was dismissed as the independent registered public accounting firm on February 5, 2018[256](index=256&type=chunk) - Gumbiner's report for 2016 contained an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern and noted material weaknesses in internal control over financial reporting[257](index=257&type=chunk) - BDO USA, LLP was engaged on February 5, 2018, and subsequently dismissed on September 28, 2018[258](index=258&type=chunk) - Marcum LLP was engaged as the new independent registered public accounting firm on January 9, 2019[260](index=260&type=chunk) - No disagreements on accounting principles or practices were reported with Gumbiner or BDO, except for the going concern and material weaknesses noted by Gumbiner[257](index=257&type=chunk)[258](index=258&type=chunk)[260](index=260&type=chunk) [Item 9A. Controls and Procedures](index=49&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were ineffective as of December 31, 2018, due to material weaknesses, with remediation efforts underway and expected completion by March 31, 2021 - Management concluded that disclosure controls and procedures were not effective as of December 31, 2018[262](index=262&type=chunk) - Management concluded that internal control over financial reporting was not effective as of December 31, 2018, based on COSO framework[266](index=266&type=chunk) - Material weaknesses identified include lack of monitoring over accounting records and IT systems, ineffective period-end financial disclosure, inadequate segregation of duties, and a history of untimely SEC filings[266](index=266&type=chunk) - Remediation plans include engaging external CPAs, utilizing accounting experience from TheStreet Merger, Audit Committee oversight, updating control documentation, and implementing segregation of duties, with expected completion by March 31, 2021[267](index=267&type=chunk)[268](index=268&type=chunk) - This Annual Report does not include an attestation report from the registered public accounting firm regarding internal control over financial reporting, as permitted for smaller reporting companies[269](index=269&type=chunk) [Item 9B. Other Information](index=50&type=section&id=Item%209B.%20Other%20Information) There is no other information to report - None[270](index=270&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=50&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section details current and former executive officers and directors, including their biographical information, delinquent Section 16(a) reports, Code of Ethics, and Audit Committee composition, noting three independent directors Current Officers and Directors | Name | Age | Current Title | Dates in Position or Office | |:---|:---|:---|:---| | Ross Levinsohn | 57 | Chief Executive Officer and Director | August 26, 2020 – Present | | Paul Edmondson | 46 | President | October 10, 2019 – Present | | Douglas B. Smith | 60 | Chief Financial Officer and Secretary | May 3, 2019 – Present | | Andrew Kraft | 47 | Chief Operating Officer | October 1, 2020 – Present | | Avi Zimak | 46 | Chief Revenue & Strategy Officer | December 19, 2019 – Present | | Jill Marchisotto | 48 | Chief Marketing Officer | October 1, 2020 – Present | | John Fichthorn | 47 | Chairman of our Board | August 23, 2018 – Present | | Peter Mills | 65 | Director | September 20, 2006 - Present | | Todd Sims | 51 | Director | August 23, 2018 – Present | | Rinku Sen | 54 | Director | November 3, 2017 – Present | | David Bailey | 30 | Director | January 28, 2018 – Present | | Joshua Jacobs | 50 | Director | May 31, 2017 – Present | Former Officers and Directors (Fiscal 2018) | Name | Age | Current Title | Dates in Position or Office | |:---|:---|:---|:---| | James C. Heckman | 55 | Chief Executive Officer and Director | November 4, 2016 – August 26, 2020 | | Martin Heimbigner | 62 | Chief Financial Officer | March 20, 2017 – May 3, 2019 | | William Sornsin | 58 | Chief Operating Officer | November 4, 2016 – August 23, 2018; December 9, 2019 – September 4, 2020 | | Benjamin Joldersma | 42 | Chief Technology Officer | November 4, 2016 – September 30, 2020 | - Several reporting persons, including John Fichthorn, Ross Levinsohn, Peter Mills, Joshua Jacobs, Rinku Sen, David Bailey, Todd Sims, Paul Edmondson, Douglas B. Smith, James C. Heckman, Benjamin Joldersma, Avi Zimak, and William Sornsin, had delinquent Section 16(a) reports for transactions between 2017 and 2020[297](index=297&type=chunk)[298](index=298&type=chunk) - A Code of Ethics, applicable to executive officers and employees, was approved and adopted by the Board on January 1, 2020[299](index=299&type=chunk) - The Audit Committee, formed September 14, 2018, consists of Peter Mills (Chairman and 'audit committee financial expert') and John Fichthorn. Three board members (Mr. Mills, Ms. Sen, Mr. Bailey) qualify as 'independent'[301](index=301&type=chunk)[383](index=383&type=chunk) [Item 11. Executive Compensation](index=57&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for 2018 included base salaries and stock options for named executive officers, with total compensation for Mr. Heckman at **$1.36 million**, Mr. Jacobs at **$1.67 million**, and Mr. Joldersma at **$0.50 million**; director compensation also included cash and equity awards Summary Compensation Table for Named Executive Officers (2018 vs. 2017) | Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) | All Other Compensation ($) | Total Compensation ($) | |:---|:---|:---|:---|:---|:---|:---| | James C. Heckman, CEO | 2018 | 300,000 | - | 1,057,500 | - | 1,357,500 | | | 2017 | 300,003 | - | - | - | 300,003 | | Joshua Jacobs, President | 2018 | 300,000 | 18,947 | 1,347,000 | - | 1,665,947 | | | 2017 | 137,769 | 17,500 | 303,520 | - | 458,789 | | Benjamin Joldersma, CTO | 2018 | 272,917 | 10,000 | 212,910 | - | 495,827 | | | 2017 | 250,001 | - | - | - | 250,001 | - James C. Heckman's employment agreement (Nov 2016) included a **$300,000** annual salary and severance provisions. He resigned Aug 2020 and entered a one-year consulting agreement for approx. **$29,200**/month[308](index=308&type=chunk)[321](index=321&type=chunk) - Joshua Jacobs' amended employment agreement (Jan 2018) increased his annual base salary to **$300,000** and included performance-based bonuses. He resigned as President in Oct 2019 but remains a director, receiving **$20,000**/month for consulting services from May 2020[312](index=312&type=chunk)[313](index=313&type=chunk)[322](index=322&type=chunk) - Benjamin Joldersma's employment agreement (Nov 2016) included an annual base salary (increased to **$275,000** in 2018) and three months' severance. He resigned as CTO in Sept 2020 and received approx. **$111,000** in severance[315](index=315&type=chunk)[323](index=323&type=chunk) Director Compensation (2018) | Name of Director | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | All other compensation ($) | Total ($) | |:---|:---|:---|:---|:---|:---| | Peter B. Mills | 18,750 | 29,167 | 73,350 | - | 121,267 | | David Bailey | 16,944 | 12,500 | 80,850 | - | 110,294 | | Rinku Sen | 12,500 | 12,500 | 73,350 | 6,250 | 104,630 | | Christopher A. Marlett | - | - | 73,350 | - | 73,350 | | Todd D. Sims | - | 33,334 | - | - | 33,334 | | John A. Fichthorn | - | 33,334 | - | - | 33,334 | - Director compensation policies were updated in August and September 2018, shifting from cash compensation to restricted stock awards (valued at **$50,000**) for non-employee directors, with additional stock option awards for committee chairpersons[319](index=319&type=chunk)[320](index=320&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=63&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of December 31, 2018, **12.8 million** securities were issuable under equity plans at a **$0.82** weighted average exercise price; post-2018, the 2019 Stock Incentive Plan authorized **85 million** shares, and significant beneficial owners of common and Series H Preferred Stock were identified as of December 31, 2020 Securities Authorized for Issuance Under Equity Compensation Plans (as of Dec 31, 2018) | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights ($) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |:---|:---|:---|:---| | Equity compensation plans approved by security holders | 3,000,000 | 1.48 | - | | Equity compensation plans not approved by security holders | 9,836,681 | 0.61 | 982,860 | | **Total** | **12,836,681** | **0.82** | **982,860** | - The 2016 Stock Incentive Plan, approved by stockholders, authorized up to **10,000,000** shares for awards. The Channel Partner Warrant Program, not approved by stockholders, authorized up to **2,000,000** shares (later increased to **5,000,000** and then modified)[332](index=332&type=chunk)[333](index=333&type=chunk)[337](index=337&type=chunk)[341](index=341&type=chunk)[342](index=342&type=chunk) - Post-2018, the 2019 Stock Incentive Plan was approved for up to **85,000,000** shares, and warrants to acquire **21,989,844** shares were granted to ABG in connection with the Sports Illustrated licensing agreement[343](index=343&type=chunk)[344](index=344&type=chunk)[347](index=347&type=chunk) Beneficial Ownership of Common Stock (as of Dec 31, 2020) | Name and Address of Beneficial Owner | Beneficial Ownership () | % Class | |:---|:---|:---| | **Five Percent Stockholders** | | | | B. Riley FBR, Inc. | 32,858,214 | 18.61% | | 180 Degree Capital Corp. | 22,928,571 | 12.76% | | Warlock Partners LLC | 20,714,286 | 11.79% | | Athletes First Media LLC | 15,000,000 | 8.54% | | **Directors and Named Executive Officers** | | | | James C. Heckman | 8,010,758 | 4.46% | | Benjamin Joldersma | 2,412,271 | 1.37% | | Ross Levinsohn | 3,023,212 | ** | | John Fichthorn | 1,986,473 | ** | | Todd Sims | 642,858 | ** | | Rinku Sen | 242,605 | ** | | Peter Mills | 686,875 | ** | | David Bailey | 215,898 | ** | | Joshua Jacobs | 1,493,550 | ** | | Total Executive Officers and Directors, as a group (12 persons) | 12,617,818 | 7.13% | Beneficial Ownership of Series H Preferred Stock (as of Dec 31, 2020) | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership () | Percent of Class (%) | |:---|:---|:---| | **Five Percent Stockholders** | | | | Mark E. Strome | 6,400 | 32.7 | | B. Riley FBR, Inc. | 4,245 | 21.7 | | 180 Degree Capital Corp. | 1,320 | 6.7 | | Warlock Partners LLC | 1,320 | 6.7 | | **Directors and Named Executive Officers** | | | | James C. Heckman | 689 | 3.5 | | Peter Mills | 33 | ** | | Joshua Jacobs | 30 | ** | | Total Executive Officers and Directors, as a group (12 persons) | 66 | ** | - As of December 18, 2020, all outstanding shares of Series I, J, and K Preferred Stock automatically converted into common stock following an increase in authorized common shares[357](index=357&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=68&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) The company engaged in numerous financing transactions with related parties, including MDB Capital, Strome Mezzanine Fund, and B. Riley FBR, involving private placements and debt, with key executives also participating; the board has three independent directors, but John Fichthorn and Todd D. Sims are not considered independent - The company completed multiple private placements of common stock, convertible debentures, and preferred stock between 2017 and 2020, involving related parties such as MDB Capital Group, LLC, Strome Mezzanine Fund LP, and B. Riley FBR, Inc[358](index=358&type=chunk)[359](index=359&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk)[366](index=366&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk)[369](index=369&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk)[375](index=375&type=chunk)[376](index=376&type=chunk)[377](index=377&type=chunk)[378](index=378&type=chunk) - Christopher Marlett (former director) was CEO of MDB, which acted as placement agent for several common stock private placements, receiving cash and equity[358](index=358&type=chunk)[359](index=359&type=chunk)[361](index=361&type=chunk)[642](index=642&type=chunk)[643](index=643&type=chunk)[645](index=645&type=chunk) - Strome Mezzanine Fund LP (an affiliate of Mark Strome, a >10% stockholder) invested significantly in 10% OID convertible debentures and Series H Preferred Stock, and received warrants[362](index=362&type=chunk)[363](index=363&type=chunk)[364](index=364&type=chunk)[367](index=367&type=chunk)[376](index=376&type=chunk)[717](index=717&type=chunk)[718](index=718&type=chunk)[719](index=719&type=chunk) - B. Riley FBR, Inc. (an affiliate of B. Riley) acted as placement agent for numerous debt and equity financings, receiving fees and equity. John A. Fichthorn (Chairman of the Board) and Todd D. Sims (Director) have affiliations with B. Riley[364](index=364&type=chunk)[365](index=365&type=chunk)[366](index=366&type=chunk)[367](index=367&type=chunk)[369](index=369&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk)[375](index=375&type=chunk)[376](index=376&type=chunk)[377](index=377&type=chunk)[378](index=378&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk)[723](index=723&type=chunk) - Key executives James C. Heckman (former CEO) and Joshua Jacobs (former President) also invested in convertible debentures and received Series H Preferred Stock[362](index=362&type=chunk)[364](index=364&type=chunk)[717](index=717&type=chunk)[719](index=719&type=chunk) - The Cramer Agreement (August 2019) with Jim Cramer and Cramer Digital involves content services, revenue share, an annualized guarantee payment of **$3 million**, stock options, and reimbursement for office space[380](index=380&type=chunk)[381](index=381&type=chunk) - Officer promissory notes were issued to James C. Heckman in May 2018 for advancing funds to meet operating needs, totaling **$680,399** (including interest) as of December 31, 2018[382](index=382&type=chunk)[726](index=726&type=chunk) - The board has three independent directors (Peter B. Mills, Rinku Sen, David Bailey). John A. Fichthorn and Todd D. Sims are not considered independent due to their affiliations with B. Riley[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk)[723](index=723&type=chunk) [Item 14. Principal Accountant Fees and Services](index=75&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The company incurred **$1,195,671** in fees from Marcum LLP in 2018, primarily for audit and tax services, and **$157,878** from BDO USA, LLP in 2017 for audit services, with the Audit Committee pre-approving all services to ensure independence Principal Accountant Fees and Services (2018 vs. 2017) | Category | 2018 Marcum ($) | 2017 BDO ($) | |:---|:---|:---| | Audit Fees | 1,158,047 | 157,878 | | Audit-related Fees | - | - | | All Other Fees | - | - | | Tax Fees | 37,624 | - | | **Total** | **1,195,671** | **157,878** | - Audit fees for 2018 were **$1,158,047** (Marcum) and for 2017 were **$157,878** (BDO)[389](index=389&type=chunk) - No audit-related or other fees were billed or paid in fiscal 2018 and 2017[390](index=390&type=chunk)[391](index=391&type=chunk) - Tax fees for 2018 were **$37,624** (Marcum)[392](index=392&type=chunk) - The Audit Committee pre-approves all audit and non-audit services to ensure auditor independence[393](index=393&type=chunk)[395](index=395&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=76&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Annual Report, including the Index to Consolidated Financial Statements, auditor reports, balance sheets, statements of operations, equity, cash flows, notes, and a comprehensive list of exhibits - The section includes the Index to Consolidated Financial Statements and Reports of Independent Registered Public Accounting Firms (Marcum LLP and BDO USA, LLP)[396](index=396&type=chunk)[397](index=397&type=chunk) - Consolidated financial statements include Balance Sheets, Statements of Operations, Stockholders' Equity (Deficiency), and Cash Flows for the years ended December 31, 2018 and 2017, along with Notes to Consolidated Financial Statements[397](index=397&type=chunk) - A detailed list of exhibits is provided, covering merger agreements, certificates of incorporation, bylaws, stock incentive plans, securities purchase agreements, licensing agreements, employment agreements, and various certifications[398](index=398&type=chunk)[400](index=400&type=chunk)[401](index=401&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk)[405](index=405&type=chunk)[406](index=406&type=chunk)[407](index=407&type=chunk)[408](index=408&type=chunk) [Item 16. Form 10–K Summary](index=82&type=section&id=Item%2016.%20Form%2010%E2%80%93K%20Summary) There is no Form 10-K Summary provided - None[408](index=408&type=chunk)

PART I - FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The unaudited statements reveal significant net losses and a going concern warning amid acquisitions and financing activities [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance sheets reflect substantial growth in assets and liabilities from acquisitions, shifting stockholders' equity to a deficiency Key Balance Sheet Metrics | Metric | September 30, 2018 (Unaudited) | December 31, 2017 | | :--- | :--- | :--- | | Total Assets | $19,674,651 | $6,568,694 | | Total Liabilities | $6,720,057 | $3,416,444 | | Total Stockholders' (Deficiency) Equity | $(5,259,398) | $2,983,754 | | Cash | $1,862,012 | $619,249 | | Goodwill | $1,857,663 | - | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Operations show significant revenue growth but also substantially increased net losses due to higher operating and interest expenses Key Operational Metrics | Metric | 3 Months Ended Sep 30, 2018 | 3 Months Ended Sep 30, 2017 | 9 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2017 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,157,917 | $6,064 | $1,460,958 | $6,064 | | Net Loss | $(8,629,564) | $(1,778,296) | $(17,418,151) | $(4,371,491) | | Net Loss Attributable to Common Shareholders | $(26,675,060) | $(1,778,296) | $(35,463,647) | $(4,371,491) | | Basic and Diluted Net Loss per Common Share | $(0.96) | $(0.11) | $(1.40) | $(0.33) | | Deemed dividend on Series H convertible preferred stock | $(18,045,496) | - | $(18,045,496) | - | [Condensed Consolidated Statement of Stockholders' Equity (Deficiency)](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders%27%20Equity%20(Deficiency)) Stockholders' equity shifted to a significant deficiency, driven by net losses and a large deemed dividend on preferred stock Stockholders' Equity (Deficiency) Summary | Metric | January 1, 2018 | September 30, 2018 | | :--- | :--- | :--- | | Total Stockholders' Equity (Deficiency) | $2,983,754 | $(5,259,398) | | Accumulated Deficit | $(8,472,071) | $(25,890,222) | | Deemed dividend on Series H convertible preferred stock | - | $(18,045,496) | - The reclassification of investor demand payable contributed **$3,000,000 to total stockholders' equity** in Q1 2018[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flows show substantial use in operations and investments, offset by significant proceeds from financing activities Cash Flow Summary | Cash Flow Activity | 9 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2017 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(6,288,695) | $(2,654,964) | | Net Cash Used in Investing Activities | $(14,417,240) | $(1,513,813) | | Net Cash Provided by Financing Activities | $18,948,698 | $5,269,544 | | Cash, cash equivalents, and restricted cash — end of period | $1,862,012 | $1,699,061 | - Investing activities in 2018 included **$9,032,596 for business acquisitions** and **$1,660,331 for capitalized platform development**[11](index=11&type=chunk) - Financing activities in 2018 were significantly boosted by **$12,474,704 from Series H convertible preferred stock issuance** and **$4,775,000 from 10% convertible debentures**[11](index=11&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, acquisitions, financing, and subsequent events, including a going concern warning [Note 1. Organization and Basis of Presentation](index=10&type=section&id=Note%201.%20Organization%20and%20Basis%20of%20Presentation) This note outlines the company's digital media platform business model and includes a significant going concern warning - The Company operates a digital, distribution, and monetization platform for a coalition of independent, professionally managed online media publishers ('Mavens')[17](index=17&type=chunk)[281](index=281&type=chunk) - The growth strategy involves expanding the coalition by adding new Mavens and acquiring entities that enhance the platform[18](index=18&type=chunk)[282](index=282&type=chunk) - Management has concluded there is **substantial doubt about the Company's ability to continue as a going concern** due to recurring net losses and negative cash flows[22](index=22&type=chunk)[25](index=25&type=chunk)[360](index=360&type=chunk) - The **COVID-19 pandemic has led to a decline in revenues and earnings** since early March 2020, with the full impact remaining uncertain[24](index=24&type=chunk)[26](index=26&type=chunk)[279](index=279&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=13&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note details key accounting policies for revenue recognition, platform development, intangibles, and derivative instruments - The Company adopted ASC 606, Revenue from Contracts with Customers, effective January 1, 2017, recognizing revenue when control is transferred[35](index=35&type=chunk) Revenue by Product Line (9 Months Ended September 30, 2018) | Product Line | Amount ($) | | :--- | :--- | | Advertising | 1,414,688 | | Membership Subscriptions | 46,270 | | **Total** | **1,460,958** | - Platform development costs are capitalized and amortized on a straight-line basis over three years[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - Derivative financial instruments are recorded at fair value, with changes in fair value recognized in the statement of operations[58](index=58&type=chunk)[59](index=59&type=chunk) Anti-Dilutive Securities Excluded from EPS Calculation (September 30, 2018) | Security Type | Shares Excluded | | :--- | :--- | | Series G Preferred Stock | 188,791 | | Series H Preferred Stock | 58,785,606 | | Unvested and forfeitable restricted stock awards | 5,340,362 | | Financing Warrants | 3,074,018 | | Channel Partner Warrants | 1,099,008 | | Common stock options | 9,693,831 | | **Total** | **78,181,616** | [Note 3. Acquisition of HubPages, Inc.](index=24&type=section&id=Note%203.%20Acquisition%20of%20HubPages%2C%20Inc.) The company acquired HubPages, Inc. for $10.6 million in cash, recognizing significant intangible assets and goodwill - Acquisition of HubPages, Inc. completed on August 23, 2018, for **total cash consideration of $10,569,904**[94](index=94&type=chunk)[96](index=96&type=chunk) - HubPages operates a network of 27 premium content channels, acquired to increase content and enhance user experience[94](index=94&type=chunk) Purchase Price Allocation (HubPages Acquisition) | Asset/Liability | Fair Value ($) | | :--- | :--- | | Current assets | 1,588,096 | | Accounts receivable and unbilled receivables | 1,033,080 | | Other assets | 25,812 | | Developed technology | 6,740,000 | | Tradename | 268,000 | | Goodwill | 1,857,663 | | Current liabilities | (851,114) | | Deferred tax liability | (91,633) | | **Net assets acquired** | **10,569,904** | - **Goodwill of $1,857,663** was recognized, attributed to the acquired workforce and business synergies[98](index=98&type=chunk)[100](index=100&type=chunk) [Note 4. Promissory Notes Receivable](index=27&type=section&id=Note%204.%20Promissory%20Notes%20Receivable) Promissory notes receivable from Say Media totaling $3.7 million were settled as part of a subsequent acquisition - Total promissory notes receivable amounted to **$3,695,054** as of September 30, 2018, primarily from Say Media[105](index=105&type=chunk) - In December 2018, the Company settled these notes by **forgiving $1,166,556** and reclassifying the remaining **$2,528,498** as an advance for the Say Media acquisition[106](index=106&type=chunk) [Note 5. Property and Equipment](index=27&type=section&id=Note%205.%20Property%20and%20Equipment) Net property and equipment increased slightly, reflecting ongoing capital expenditures and depreciation expense | Metric | September 30, 2018 | December 31, 2017 | | :--- | :--- | :--- | | Net Property and Equipment Costs | $64,588 | $54,670 | - Depreciation expense for the nine months ended September 30, 2018, was **$19,341**, up from $7,990 in the prior year period[107](index=107&type=chunk) [Note 6. Platform Development](index=28&type=section&id=Note%206.%20Platform%20Development) Net platform development costs reached $4.5 million, reflecting continued investment in the company's technology | Metric | September 30, 2018 | | :--- | :--- | | Net Platform Development Costs | $4,530,996 | - Amortization expense for platform development costs for the nine months ended September 30, 2018, was **$1,271,281**, a substantial increase from $226,000 in 2017[110](index=110&type=chunk) [Note 7. Intangible Assets](index=28&type=section&id=Note%207.%20Intangible%20Assets) Intangible assets totaled $6.9 million net, primarily from the HubPages acquisition, with amortization scheduled over five years Intangible Assets (September 30, 2018) | Asset Type | Carrying Amount ($) | Accumulated Amortization ($) | Net Carrying Amount ($) | | :--- | :--- | :--- | :--- | | Developed technology | 6,740,000 | (141,323) | 6,598,677 | | Tradename | 268,000 | (5,619) | 262,381 | | Website domain name | 20,000 | - | 20,000 | | **Total** | **7,028,000** | **(146,942)** | **6,881,058** | - Amortization expense for intangible assets for the three and nine months ended September 30, 2018, was **$146,942**[111](index=111&type=chunk) Estimated Amortization Expense for Intangible Assets | Year | Amount ($) | | :--- | :--- | | 2019 | 1,401,600 | | 2020 | 1,401,600 | | 2021 | 1,401,600 | | 2022 | 1,401,600 | | 2023 | 1,254,658 | | **Total** | **6,861,058** | [Note 8. Goodwill](index=29&type=section&id=Note%208.%20Goodwill) Goodwill of $1.9 million was acquired through the HubPages acquisition, with no impairment reported for the period - **Goodwill of $1,857,663** was acquired in the HubPages acquisition and remained unchanged as of September 30, 2018[114](index=114&type=chunk) - **No impairment was recognized** for goodwill during the nine months ended September 30, 2018[114](index=114&type=chunk) [Note 9. Accrued Expenses](index=29&type=section&id=Note%209.%20Accrued%20Expenses) Accrued expenses increased significantly due to higher accrued payroll, publisher expenses, and related taxes Accrued Expenses | Category | September 30, 2018 ($) | December 31, 2017 ($) | | :--- | :--- | :--- | | General accrued expenses | 175,140 | 150,136 | | Accrued payroll and related taxes | 191,425 | - | | Accrued publisher expenses | 609,525 | - | | Other accrued expenses | 52,082 | - | | **Total accrued expenses** | **1,028,172** | **150,136** | [Note 10. Liquidating Damages Payable](index=29&type=section&id=Note%2010.%20Liquidating%20Damages%20Payable) The company recorded $2.7 million in liquidating damages payable for failing to meet registration requirements - A total of **$2,667,798 was recorded as Liquidated Damages Payable** as of September 30, 2018[116](index=116&type=chunk) - These damages arose from the Company's failure to meet timeframes for the registration statement covering Series H Preferred Stock[117](index=117&type=chunk)[118](index=118&type=chunk) [Note 11. Fair Value Measurements](index=29&type=section&id=Note%2011.%20Fair%20Value%20Measurements) Derivative liabilities of $1.3 million, related to warrants and conversion features, were measured at fair value using Level 3 inputs - Derivative liabilities are carried at fair value and classified as **Level 3** due to subjective valuation inputs[119](index=119&type=chunk)[121](index=121&type=chunk) Derivative Liabilities (September 30, 2018) | Derivative Type | Carrying Amount ($) | | :--- | :--- | | L2 Warrants | 545,872 | | Strome Warrants | 767,449 | | **Total Derivative Liabilities** | **1,313,321** | - The change in valuation of derivative liabilities resulted in a **gain of $368,694** for the nine months ended September 30, 2018[122](index=122&type=chunk) [Note 12. Notes Payable](index=31&type=section&id=Note%2012.%20Notes%20Payable) This note details various notes payable, including repayments resulting in extinguishment losses and conversions into preferred stock - Officer promissory notes, including accrued interest, totaled **$966,389** as of September 30, 2018[125](index=125&type=chunk) - The 8% Promissory Notes were repaid, resulting in a **loss on extinguishment of $722,619**[126](index=126&type=chunk)[131](index=131&type=chunk) - The 10% Convertible Debentures were converted into Series H Preferred Stock, leading to a **loss on extinguishment of $249,630**[132](index=132&type=chunk)[138](index=138&type=chunk) - Interest expense for the nine months ended September 30, 2018, was **$1,552,006**, primarily from debt discount amortization and extinguishment losses[393](index=393&type=chunk) [Note 13. Preferred Stock](index=33&type=section&id=Note%2013.%20Preferred%20Stock) The issuance of Series H Preferred Stock resulted in a significant deemed dividend due to its beneficial conversion feature - 168.496 shares of Series G Convertible Preferred Stock were outstanding, classified as a **mezzanine obligation**[141](index=141&type=chunk)[142](index=142&type=chunk) - 19,399.25 shares of Series H Convertible Preferred Stock were issued for gross proceeds of **$19,399,250**[144](index=144&type=chunk) - A beneficial conversion feature of **$18,045,496 was recorded as a deemed dividend** on Series H Preferred Stock[151](index=151&type=chunk) - The Company recognized **$1,347,254 in liquidated damages** for registration rights and **$1,305,544 for public information failure** related to the Series H Preferred Stock[148](index=148&type=chunk)[149](index=149&type=chunk) [Note 14. Stockholders' Equity](index=35&type=section&id=Note%2014.%20Stockholders%27%20Equity) This note details changes in common stock, restricted stock awards, and warrants, including private placements and fair value adjustments - The Company issued 1,700,000 shares of common stock for **$4,250,000** through private placements in 2018[153](index=153&type=chunk)[157](index=157&type=chunk) - As of September 30, 2018, **5,340,362 unvested restricted stock awards** were outstanding, with **$4,101,987 in unrecognized compensation cost**[165](index=165&type=chunk) - L2 Warrants and Strome Warrants had their exercise prices adjusted to **$0.50 per share** and are classified as derivative liabilities[169](index=169&type=chunk)[174](index=174&type=chunk) Financing Warrants Activity (9 Months Ended September 30, 2018) | Activity | Number of Shares | | :--- | :--- | | Outstanding at January 1, 2018 | 1,289,172 | | Issued | 1,986,558 | | Exercised | (842,117) | | Issued as result of reset provision | 640,405 | | **Outstanding at September 30, 2018** | **3,074,018** | [Note 15. Stock Based Compensation](index=39&type=section&id=Note%2015.%20Stock%20Based%20Compensation) This note details stock-based compensation, including an expansion of the incentive plan and significant recognized expense - The 2016 Stock Incentive Plan's authorized shares were increased from **3,000,000 to 10,000,000**[179](index=179&type=chunk) - As of September 30, 2018, **9,693,831 common stock options** were outstanding, with **$4,950,651 in unrecognized compensation expense**[183](index=183&type=chunk)[185](index=185&type=chunk) - Channel Partner Warrants outstanding totaled **1,099,008** as of September 30, 2018[189](index=189&type=chunk) Total Stock-Based Compensation (9 Months Ended September 30) | Year | Total Stock-Based Compensation ($) | | :--- | :--- | | 2018 | 4,924,999 | | 2017 | 2,045,812 | [Note 16. Related Party Transactions](index=43&type=section&id=Note%2016.%20Related%20Party%20Transactions) This note discloses transactions with related parties, including investment banking services, consulting fees, and officer loans - MDB and B. Riley FBR, entities with board representation, acted as placement agents for multiple private placements[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[196](index=196&type=chunk) - The Company's CEO advanced **$966,389** (including interest) through promissory notes to meet operating needs[199](index=199&type=chunk) - Promissory notes receivable from Say Media were settled by **forgiving $1,166,556** and reclassifying **$2,528,498** as an acquisition advance[201](index=201&type=chunk) [Note 17. Commitments and Contingencies](index=44&type=section&id=Note%2017.%20Commitments%20and%20Contingencies) This note outlines contractual obligations for operating leases and revenue share guarantees, with no material legal proceedings Operating Lease Commitments (Seattle Office) | Year | Amount ($) | | :--- | :--- | | 2018 (Oct – Dec) | 48,000 | | 2019 | 233,000 | | 2020 | 265,000 | | 2021 | 227,000 | | **Total** | **773,000** | Channel Partner Revenue Guarantees (Aggregate Commitment) | Year | Amount ($) | | :--- | :--- | | 2018 (Oct – Dec) | 12,250 | | 2019 | 11,500 | | **Total** | **23,750** | - The Company is not currently a party to any pending or threatened legal proceedings expected to have a material adverse effect[207](index=207&type=chunk) [Note 18. Subsequent Events](index=45&type=section&id=Note%2018.%20Subsequent%20Events) This note details significant events after the reporting period, including major financings, acquisitions, and a key licensing deal - From October 2018 through April 2020, the Company raised approximately **$139 million** through various debt and preferred stock private placements[26](index=26&type=chunk)[209](index=209&type=chunk)[212](index=212&type=chunk)[253](index=253&type=chunk)[258](index=258&type=chunk)[262](index=262&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk) - Acquired **Say Media, Inc.** on December 12, 2018, for **$9,537,397 cash** plus equity[223](index=223&type=chunk)[224](index=224&type=chunk) - Acquired **TheStreet, Inc.** on August 7, 2019, for **$16,500,000 cash**[237](index=237&type=chunk)[238](index=238&type=chunk) - Entered into an exclusive licensing agreement to operate the **Sports Illustrated** media business, prepaying **$45,000,000** in royalties[240](index=240&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) - Appointed Douglas Smith as CFO, William Sornsin as COO, and Avi Zimak as CRO[231](index=231&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) - Entered into a new operating lease for offices in New York, with total minimum lease payments of **$38,415,920** through November 2032[270](index=270&type=chunk) - The **COVID-19 pandemic** has caused a decline in revenues and earnings since early March 2020[279](index=279&type=chunk)[280](index=280&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=55&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, results of operations, strategic developments, and liquidity challenges [Overview](index=55&type=section&id=Overview) The company operates a digital media platform for independent publishers, with a growth strategy focused on acquisitions - The Company operates a digital, monetization, and distribution platform shared by a coalition of independent online media publishers ('Mavens')[281](index=281&type=chunk) - Mavens leverage a proprietary technology platform to engage niche audiences and benefit from improved advertising and membership systems[281](index=281&type=chunk) - The growth strategy involves expanding the coalition by adding new Mavens and acquiring crucial content providers[282](index=282&type=chunk) [Recent Developments](index=56&type=section&id=Recent%20Developments) This section highlights key post-period events, including major financings, acquisitions, and the Sports Illustrated licensing agreement - The Company issued multiple series of convertible debentures, preferred stock, and loans to raise substantial capital[283](index=283&type=chunk)[285](index=285&type=chunk)[330](index=330&type=chunk)[334](index=334&type=chunk)[339](index=339&type=chunk)[351](index=351&type=chunk)[353](index=353&type=chunk) - Acquired **Say Media, Inc.**, **TheStreet, Inc.**, and the assets of **Petametrics Inc. (LiftIgniter)**[297](index=297&type=chunk)[314](index=314&type=chunk)[350](index=350&type=chunk) - Entered into an exclusive licensing agreement to operate the **Sports Illustrated** media business with a **$45,000,000 prepaid royalty**[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk) - Key executive appointments include a new CFO, COO, and CRO[307](index=307&type=chunk)[344](index=344&type=chunk)[345](index=345&type=chunk) - The **COVID-19 pandemic** has led to a decline in revenues and earnings since early March 2020[357](index=357&type=chunk)[358](index=358&type=chunk) [Results of Operations](index=68&type=section&id=Results%20of%20Operations) The company experienced substantial revenue growth, but this was offset by significantly higher costs and expenses, widening net losses Key Operational Metrics | Metric | 3 Months Ended Sep 30, 2018 | 3 Months Ended Sep 30, 2017 | 9 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2017 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,157,917 | $6,064 | $1,460,958 | $6,064 | | Cost of Revenue | $1,784,073 | $449,567 | $3,922,594 | $641,606 | | Gross Loss | $(626,156) | $(443,503) | $(2,461,636) | $(635,542) | | General and Administrative | $2,573,142 | $1,300,767 | $7,998,609 | $3,639,204 | | Net Loss | $(8,629,564) | $(1,778,296) | $(17,418,151) | $(4,371,491) | - General and administrative costs **increased by $4,359,405 (119.8%)** for the nine months ended September 30, 2018, due to business expansion[391](index=391&type=chunk) - Interest expense for the nine months ended September 30, 2018, was **$1,552,006**, mainly from amortization and debt extinguishment losses[393](index=393&type=chunk) - A **deemed dividend of $18,045,496** on Series H convertible preferred stock was recognized due to a beneficial conversion feature[399](index=399&type=chunk) [Liquidity and Capital Resources – September 30, 2018](index=72&type=section&id=Liquidity%20and%20Capital%20Resources%20%E2%80%93%20September%2030%2C%202018) The company faced a working capital deficiency and relied on external financing, prompting a going concern warning - The Company had a **working capital deficiency of $2,890,964** at September 30, 2018[404](index=404&type=chunk) - Management concluded there is **substantial doubt about the Company's ability to continue as a going concern**[401](index=401&type=chunk)[405](index=405&type=chunk) - From October 2018 through April 2020, the Company raised approximately **$139 million** through various debt and preferred stock private placements[407](index=407&type=chunk) Principal Cash Operating Obligations and Commitments (September 30, 2018) | Obligation Type | Total ($) | 2018 (Oct-Dec) ($) | 2019 ($) | 2020 ($) | 2021 ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating leases | 804,024 | 58,580 | 253,282 | 265,345 | 226,817 | | Employment contracts | 435,417 | 137,500 | 297,917 | - | - | | Consulting agreements | 566,040 | 93,540 | 465,300 | 7,200 | - | | **Total** | **1,805,481** | **289,620** | **1,016,499** | **272,545** | **226,817** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No quantitative and qualitative disclosures about market risk are applicable to the company for the reported period [Item 4. Controls and Procedures](index=74&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective due to material weaknesses in internal control - Disclosure controls and procedures were deemed **not effective** as of September 30, 2018, due to material weaknesses in internal control[414](index=414&type=chunk) - Identified material weaknesses include lack of a functioning audit committee, inadequate segregation of duties, and insufficient accounting resources[416](index=416&type=chunk) - A remediation plan was commenced in the second quarter of 2019[417](index=417&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The Company is not currently a party to any pending or threatened legal proceedings that it believes would have a material adverse effect[417](index=417&type=chunk) [Item 1A. Risk Factors](index=75&type=section&id=Item%201A.%20Risk%20Factors) This section highlights the adverse impact of the COVID-19 outbreak and refers to the 2017 Form 10-K for other risks - The Company's business has been, and is expected to continue to be, **adversely affected by the recent COVID-19 outbreak**[419](index=419&type=chunk)[420](index=420&type=chunk) - Readers should review the Risk Factors outlined in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017[418](index=418&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the company for the reported period [Item 3. Defaults Upon Senior Securities](index=75&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reported period [Item 4. Mine Safety Disclosures](index=75&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reported period [Item 5. Other Information](index=75&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company for the reported period [Item 6. Exhibits](index=75&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including officer certifications and XBRL data - Includes Officer's Certification Pursuant to Section 302 (Exhibit 31.1) and Section 906 (Exhibit 32.1) of the Sarbanes-Oxley Act[423](index=423&type=chunk) - XBRL related information (Exhibit No. 101) is furnished but not filed[424](index=424&type=chunk) [SIGNATURES](index=75&type=section&id=SIGNATURES) The report is officially signed by the Chief Executive Officer and Chief Financial Officer - The report is signed by James C. Heckman, Jr., Chief Executive Officer, and Douglas B. Smith, Chief Financial Officer, on May 18, 2020[422](index=422&type=chunk)