3. Going Concern

The Company’s consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company’s activities are subject to significant risks and uncertainties, including the need for additional capital, as described below.

As of March 31, 2018, the Company, since the Recapitalization, has generated less than $200,000 in revenue and has financed its operations through (a) the Recapitalization transaction with Parent, (b) a loan from Parent that was cancelled upon closing of the Recapitalization and (c) four private placements of common stock in April and October 2017 and January and March 2018. The Company has incurred operating losses and negative operating cash flows, and it expects to continue to incur operating losses and negative operating cash flows for at least the next year. As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern, and the Company’s independent registered public accounting firm, in its report on the Company’s 2017 consolidated financial statements on Form 10-K, has raised substantial doubt about the Company’s ability to continue as a going concern.

As fully described in Note 9, in April 2017, the Company completed a private placement of its common stock, raising proceeds of $3.5 million net of cash offering costs. In October 2017, the Company completed a private placement of its common stock, raising proceeds of $2.7 million, net of cash offering costs. In January 2018 and March 2018, the Company raised pursuant to a private placement $3,000,000 and $1,250,000, respectively. The $3 million was received prior to December 31, 2017 and was classified as Restricted Cash in the December 31, 2017 balance sheet and then subsequently reclassified to Cash in January 2018 upon completion of the private placement subscription documents for the sale of 1,200,000 shares at $2.50 per share. In addition, the investment was classified as Investor Demand Payable in the December 31, 2017 balance sheet and then subsequently reclassified to equity in January 2018. On March 30, 2018 the Company, pursuant to a private placement of its common stock, sold 500,000 shares at $2.50 per share for total gross proceeds of $1,250,000.

The Company believes that it does not have sufficient funds to support its operations through the end of the second quarter of 2019. In order to continue business operations past that point, the Company currently anticipates that it will need to raise additional debt and/or equity capital. However, there can be no assurances that the Company will be able to secure any such additional financing on acceptable terms and conditions, or at all. If cash resources become insufficient to satisfy the Company’s ongoing cash requirements, the Company will be required to scale back or discontinue its technology development programs, or obtain funds, if available (although there can be no certainty), or to discontinue its operations entirely.

From January 1, 2018 to May 31, 2018, the Company has continued to incur operating losses and negative cash flow from operating and investing activities. The Company raised $1,250,000 in gross proceeds pursuant to a pending private placement of its common stock initiated in the first quarter. During May 2018, the Company borrowed a total of $663,000 from the CEO of the Company in order to continue to fund operations. The loan is evidenced by a promissory note payable upon demand with interest at the minimum applicable federal rate, which is approximately 2.34 percent. However, the Company’s cash balance at May 31, 2018 was approximately $47,000.

On June 6, 2018, the Company repaid $50,000 of the amount borrowed from the CEO in May 2018 and on June 6, 2018 the Company borrowed $121,000 from the CEO on a new promissory note payable upon demand with interest at the minimum applicable federal rate which is approximately 2.34 percent.

On June 6, 2018, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with L2 Capital, LLC (“L2”), pursuant to which L2 purchased from the Company a Promissory Note (the “Note”), issuable in tranches, in the aggregate principal amount of $1,681,668 for an aggregate purchase price of $1,500,000 (the “Consideration”). The initial tranche of $570,555.72 (which includes $15,000 of L2’s legal expenses), for an aggregate purchase price of $500,000, was issued by the Company to L2 on June 11, 2018 when the proceeds were received by the Company. In addition, on the date hereof, the Company issued a warrant to L2 (the “Warrant”), exercisable for approximately 216,120 shares of the Company’s Common Stock, provided, that at the time of L2’s funding of each additional tranche under the Note, if any, the number of shares issuable under the Warrant shall increase by the quotient of 50% of the face value of the respective tranche and 110% multiplied by the VWAP of the Company’s Common Stock on the trading day immediately prior to the funding date of the respective tranche. The Warrant is exercisable for a period of five years at an exercise price equal to 110% of the VWAP of the Company’s Common Stock on the trading day immediately prior to the funding date of the respective tranche, subject to customary anti-dilution adjustments, and may, in the event there is no effective registration statement covering the re-sale of the warrant shares, be exercised on a cashless basis.

On June 15, 2018, four investors invested a total of $4,775,000 in a convertible debt offering (“Debentures”). Included in the total was an investment of $1 million by the Company’s CEO. Interest is payable on the Debentures at the rate of 10% per annum, payable in cash semi-annually on December 31 and June 30, and on maturity, beginning on December 31, 2018, and the Debentures are due and payable on June 30, 2019 (the “Maturity Date”). On the Maturity Date, and on any conversion prior to the Maturity Date, each Investor will be entitled to receive additional interest payment to provide the Investor with a 20% annual Internal Rate of Return.

The Debentures are convertible into shares of the Company’s common stock, at the option of the Investor at any time prior to the Maturity Date, at a conversion price of $1.2912 per share or the Company must pay liquidated damages as defined in the Debenture. The Company also has the option to redeem some or all of the outstanding principal amount of the Debenture and further provides that if after the Company undertakes a subsequent financing (or financings) for gross proceeds of at least $20 million (a “Qualified Offering”), the Company has the option, to cause the Investors to convert, plus make a cash payment to the Investors in an aggregate amount to provide the Investor with a 20% annual Internal Rate of Return through the date of payment, in addition to other obligations defined in the Debenture Agreement.

As long as any portion of the Debentures remain outstanding, unless Investors holding at least 51% in principal amount of the then outstanding Debentures otherwise agree, the Company shall not, among other things enter into, incur, assume or guarantee any indebtedness, except for certain permitted indebtedness, as set forth in the Debenture, as set forth in the Debenture.

In addition, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors, pursuant to which the Company agreed to register the Conversion Shares for resale by the Investors. The Company has committed to file the registration statement by no later than 45 days after June 15, 2018 and to cause the registration statement to become effective by no later than 120 days after June 15, 2018 (or, in the event of a full review by the staff of the Securities and Exchange Commission, 150 days following June 15, 2018). The Agreement provides for liquidated damages for failure to file or cause registration to become effective.

Additionally, on June 14th, 2018, Strome Mezzanine Fund LP (the “Fund”), agreed to surrender certain existing rights for up to 1,750,000 shares of the Company’s common stock, under two securities purchase agreements, dated January 4, 2018 and March 30, 2018 (the “Agreements”), between the Company and the Fund, to help clean up the Company’s capital structure by reducing the number of shares that may be potentially issued to the Fund in the future and thus bring certainty to the Company’s obligations, in exchange for 1,500,000 warrants of the Company’s common stock. The Warrant is exercisable for a period of five years at an exercise price of $1.19 per share, subject to customary anti-dilution adjustments, and may, in the event there is no effective registration statement covering the re-sale of the shares of common stock underlying the Warrant (the “Warrant Shares”), be exercised on a cash-less basis. The Warrant Shares are entitled to registration rights under a registration rights agreement, dated March 30, 2018, between the Company and the Fund. The Fund was granted observer rights on the Company’s Board of Directors.

On June 15, 2018 the Company used the majority of the funding noted above to fund the Company’s $5,000,000 payment obligation under the previously disclosed Amendment to its Merger Agreement with HubPages, Inc. (“HubPages”). The Company owes a final payment of an additional $5,600,000 to HubPages due August 31st, 2018, in accordance with final merger agreement.

There can be no assurance that Maven will be able to obtain the necessary funds on terms acceptable to it or at all. Additional funds for working capital will be required to fund operations. There are no assurances that we will be able to obtain further funds required for our continued operations. We will pursue various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.