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Subsequent Events | 6 Months Ended
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Jun. 30, 2018
Subsequent Events [Abstract] |
Subsequent Events | 13. Subsequent Events Notes Payable to Officers On July 13, 2018, the Company borrowed $225,000 from the Chief Executive Officer and issued a new promissory note payable upon demand with interest at the minimum applicable federal rate of approximately 2.34% per annum. Warrant Adjustment Effective as of August 3, 2018, the Company adjusted the exercise price of a warrant to purchase up to 1,500,000 shares of the Company’s common stock that was issued to the investor on June 15, 2018 from $1.19 per share to $0.50 per share. Series H Convertible Preferred Stock On August 8, 2018, 23,000 authorized shares of the Company’s preferred stock were designated as “Series H Convertible Preferred Stock”. On August 10, 2018, the Company closed on a securities purchase agreement (the “Securities Purchase Agreement”) with certain accredited investors, pursuant to which the Company issued an aggregate of 19,399 shares of Series H Convertible Preferred Stock (the “Series H Preferred Stock”) at a stated value of $1,000, initially convertible into 58,784,849 shares of the Company’s common stock at a conversion rate equal to the stated value divided by the conversion price of $0.33 per share (the “Conversion Price”), for aggregate gross proceeds of $19,399,000. Of the shares of Series H Preferred Stock issued, 5,730 shares were issued upon conversion of an aggregate principal amount of $4,775,000, plus prepayment obligations of $955,000, of the 10% Convertible Debenture issued by the Company on June 15, 2018 to certain accredited investors, including 1,200 shares of Series H Preferred Stock issued to James Heckman, the Company’s Chief Executive Officer, and 30 shares of Series H Preferred Shares issued to Josh Jacobs, the Company’s President. Also included in the shares of Series H Preferred Stock issued was 669 shares of Series H Preferred Stock issued to B. Riley FBR, Inc. (“B. Riley FBR”) for its services as placement agent. B. Riley FBR is a registered broker-dealer owned by B. Riley Financial, Inc., a diversified publicly-traded financial services company (“B. Riley”), which acted as placement agent for the Series H Preferred Stock financing. In consideration for its services as placement agent, the Company paid B. Riley FBR a cash fee of $575,000 (including a previously paid retainer of $75,000) and issued to B. Riley FBR 669 shares of Series H Preferred Stock. In addition, entities affiliated with B. Riley FBR purchased 5,592 shares of Series H Preferred Stock in the financing. John A. Fichthorn joined the Board of Directors of the Company in September 2018 and was elected as Chairman of the Board of Directors and Chairman of the Finance and Audit Committee in November 2018. Mr. Fichthorn currently serves as Head of Alternative Investments for B. Riley Capital Management, LLC, which is an SEC-registered investment adviser and a wholly-owned subsidiary of B. Riley. Todd D. Sims also joined the Board of Directors of the Company in September 2018 and is also a member of the Board of Directors of B. Riley. Mr. Fichthorn and Mr. Sims serve on the Board of Directors of the Company as designees of B. Riley. Since August 2018, B. Riley FBR has been instrumental in raising debt and equity capital for the Company to supports it acquisitions of HubPages, Inc. and Say Media, Inc., and for refinancing and working capital purposes. The number of shares of common stock issuable upon conversion of the Series H Preferred Stock is currently 58,784,848 shares. The terms of Series H Preferred Stock and the number of shares of common stock issuable is adjustable in the event of stock splits, stock dividends, combinations of shares and similar transactions. In addition, if at any time prior to the nine month anniversary of the closing date, the Company sells or grants any option or right to purchase or issues any shares of common stock, or securities convertible into shares of common stock, with net proceeds in excess of $1,000,000 in the aggregate, entitling any person to acquire shares of common stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price”), then the Conversion Price shall be reduced to equal the Base Conversion Price. All of the shares of Series H Preferred Stock shall convert automatically into shares of common stock on the fifth anniversary of the closing date at the then Conversion Price. The Company used the net proceeds from the financing to consummate its acquisitions of HubPages and Say Media, and for working capital and general corporate purposes. Additionally, pursuant to a Registration Rights Agreement (“Registration Rights Agreement”) entered into in connection with the Securities Purchase Agreement, the Company agreed to register the shares issuable upon conversion of the Series H Preferred Stock for resale by the investors. The Company has committed to file the registration statement by no later than 75 days after the Closing Date and to cause the registration statement to become effective by no later than 120 days after the closing date (or, in the event of a full review by the staff of the Securities and Exchange Commission, 150 days following the closing date). The Registration Rights Agreement provides for liquidated damages upon the occurrence of certain events up to a maximum amount of 6% of the aggregate amount invested by such Investor pursuant to the Purchase Agreement. See “Registration Rights Penalties”. The Securities Purchase Agreement also included a provision that requires the Company to maintain its periodic filings with the SEC in order to satisfy the public information requirements under Rule 144(c) of the Securities Act. If the Company fails for any reason to satisfy the current public information requirement (a “Public Information Failure”), then the Company will be obligated to pay to each holder a cash payment equal to 1% of the amount invested as partial liquidated damages, up to a maximum of six months. Such payments are subject to interest at the rate of 1% per month until paid in full. The Company did not incur any obligation under this provision at June 30, 2018. Acquisition of HubPages, Inc. On August 23, 2018, the Company consummated the merger between HubPages and the Company’s wholly-owned subsidiary, HP Acquisition Co., Inc. (“HPAC”), in which HPAC merged with and into HubPages, with HubPages continuing as the surviving corporation in the merger and a wholly-owned subsidiary of the Company, pursuant to the terms of the Agreement and Plan of Merger, dated as of March 13, 2018, as amended, among the Company, HubPages, HPAC and Paul Edmondson, solely in his capacity as a representative of the HubPages security holders. In connection with the consummation of the merger, the Company paid a total of $10,000,000 to the stockholders and holders of vested options of HubPages. The Company also issued a total of 2,400,000 shares of the Company’s common stock, subject to vesting, to certain key personnel of HubPages who agreed to continue their employment with HubPages subsequent to the closing of the transaction. Repayment of 8% Convertible Notes Payable On September 6, 2018, the Company repaid the 8% Convertible Notes Payable to L2. The total amount borrowed was $1,000,000, and under the terms of the loan agreement the Company repaid $1,351,334 to satisfy the debt obligation. A loss on repayment of the debt in the amount of $499,760 was recorded upon repayment. 10% Original Issue Discount Senior Secured Debentures On October 18, 2018, the Company entered into a purchase agreement with two accredited investors, B. Riley and an affiliated entity of B. Riley, pursuant to which the Company issued to the investors 10% Original Issue Discount Senior Secured Debentures in the aggregate principal amount of $3,500,000, which, after taking into account the 5% original issue discount, and legal fees and expenses of the investors, resulted in the Company receiving net proceeds of $3,285,000. The debentures are due and payable on October 31, 2019 (the “Maturity Date”). Interest accrued on the debentures at the rate of 10% per annum, payable on the earlier of conversion, redemption or the Maturity Date. 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 $1.00 per share, subject to adjustment for stock splits, stock dividends and similar transactions. If the Company does not perform certain of its obligations in a timely manner, it must pay liquidated damages to the investors as set forth in the debenture. Upon the Company’s first equity or debt financing following the issuance of the debentures (a “Subsequent Financing”), the Company has the option to redeem some or all of the outstanding principal amount of the debentures for an amount equal to the principal amount (plus accrued but unpaid interest thereon) being redeemed plus any other amounts due under the debentures. Otherwise, the Company may not prepay any portion of the principal amount of a debenture without the prior written consent of the investor. The debentures further provide that, subject to the Company exercising its rights to redeem the debentures as described above, upon the consummation of the first Subsequent Financing, the investors shall exchange the outstanding principal amount of the debentures (plus accrued but unpaid interest thereon and all other amounts then due under the debentures) for any securities or units (including warrants) issued in such Subsequent Financing on a $1.00 principal amount of debenture for $1.00 new subscription amount basis based on the outstanding principal amount of the debentures, along with any accrued but unpaid interest, and all other amounts then due under the debentures. In connection with this financing, the Company also issued warrants to the investors to purchase up to 875,000 shares of the Company’s common stock. See “12% Senior Secured Subordinated Convertible Debentures” for a description of the subsequent roll-over of the 10% Original Issue Discount Senior Secured Debentures into 12% Senior Secured Subordinated Convertible Debentures. 12% Senior Secured Subordinated Convertible Debentures On December 12, 2018, the Company entered into a securities purchase agreement with three accredited investors, pursuant to which the Company issued to the investors 12% Senior Secured Subordinated Convertible Debentures (the “12% Debentures”) in the aggregate principal amount of $13,091,528, which includes (i) the roll-over of an aggregate of $3,551,528 in principal and interest of the 10% Original Issue Discount Senior Secured Debentures issued to two of the investors on October 18, 2018, and (ii) a placement fee, payable in cash, of $540,000 to the Company’s placement agent, B. Riley FBR, in the offering. After taking into account legal fees and expenses of the investors, the Company received net proceeds of $8,950,000. The 12% Debentures are due and payable on December 31, 2020 (the “Maturity Date”). Interest accrues on the 12% Debentures at the rate of 12% per annum, payable on the earlier of conversion or the Maturity Date. Subject to the Company receiving shareholder approval to increase its authorized shares of common stock, principal and interest accrued on the 12% Debentures are convertible into shares of common stock, at the option of the investor at any time prior to the Maturity Date, at a conversion price of $0.33 per share, subject to adjustment for stock splits, stock dividends and similar transactions, and beneficial ownership blocker provisions. If the Company does not perform certain of its obligations in a timely manner, it must pay liquidated damages to the investors as set forth in the 12% Debentures. As long as any portion of the 12% Debentures remain outstanding, unless investors holding at least 51% in principal amount of the then outstanding 12% 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 12% Debentures. The Company’s obligations under the 12% Debentures are secured by a security agreement, dated as of October 18, 2018, by and among the Company and each investor thereto. On March 18, 2019, the Company entered into a purchase agreement with two accredited investors, including John Fichthorn, the Company’s Chairman of the Board of Directors, pursuant to which the Company issued 12% Debentures in the aggregate principal amount of $1,696,000, which includes a placement fee of $96,000 paid to B. Riley in the form of a 12% Debenture, for acting as the Company’s placement agent in the offering. After taking into account legal fees and expenses of $10,000 which were paid in cash, the Company received net proceeds of $1,590,000. On March 27, 2019, the Company entered into a securities purchase agreement with an accredited investor pursuant to which the Company issued 12% Debentures in the aggregate principal amount of $318,000, which includes a placement fee of $18,000 paid to B. Riley in the form of a 12% Debenture for acting as the Company’s placement agent in the offering. After taking into account legal fees and expenses, the Company received net proceeds of $300,000. On April 8, 2019, the Company entered into a securities purchase agreement with an accredited investor, Todd D. Sims, a member of the Company’s Board of Directors, pursuant to which the Company issued a 12% Debenture in the aggregate principal amount of $100,000. In connection with this placement, B. Riley waived its placement fee of $6,000 for acting as the Company’s placement agent in the offering. After taking into account legal fees and expenses, the Company received net proceeds of $100,000. The 12% Debentures issued on March 18, 2019, March 27, 2019 and April 8, 2019 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 $0.40 per share, subject to adjustment for stock splits, stock dividends and similar transactions, and beneficial ownership blocker provisions. All other terms of the 12% Debentures issued on March 18, 2019, March 27, 2019 and April 8, 2019 are identical to the 12% Debentures issued on December 12, 2018. Additionally, pursuant to the Registration Rights Agreements (“Registration Rights Agreements”) entered into in connection with the purchase agreements on March 18, 2019, March 27, 2019 and April 8, 2019, the Company agreed to register the shares issuable upon conversion of the 12% Debentures for resale by the investors. The Company committed to file the registration statement the later of (i) the 30th calendar day following the date the Company files its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 with the SEC, but in no event later than May 15, 2019, and (ii) the 30th calendar day after all the Series H Underlying Shares have been registered pursuant to a registration statement under that certain Registration Rights Agreement, dated as of August 9, 2018. The Registration Rights Agreements provide for liquidated damages upon the occurrence of certain events up to a maximum amount of 6% of the aggregate amount invested by such Investor pursuant to the purchase agreement. See “Registration Rights Penalties”. The Securities Purchase Agreements also included a provision that requires the Company to maintain its periodic filings with the SEC in order to satisfy the public information requirements under Rule 144(c) of the Securities Act. If the Company fails for any reason to satisfy the current public information requirement (a “Public Information Failure”), then the Company will be obligated to pay to each holder a cash payment equal to 1% of the amount invested as partial liquidated damages, up to a maximum of six months. Such payments are subject to interest at the rate of 1% per month until paid in full. See “Public Information Failure Penalties”. Acquisition of Say Media, Inc. On October 12, 2018, the Company, Say Media, Inc., a Delaware corporation (“Say Media”), SM Acquisition Co., Inc., a Delaware corporation (“SMAC”), which is a wholly-owned subsidiary of the Company incorporated in Delaware on September 6, 2018 to facilitate the merger, and Matt Sanchez, solely in his capacity as a representative of the Say Media security holders, entered into an Agreement and Plan of Merger (as amended on October 17, 2018), pursuant to which SMAC will merge with and into Say Media, with Say Media continuing as the surviving corporation in the merger as a wholly-owned subsidiary of the Company. On December 12, 2018, the Company consummated the merger with Say Media, pursuant to the terms of an Agreement and Plan of Merger, dated as of October 12, 2018, as amended. In connection with the consummation of the merger, the Company paid (i) $6,703,653 to a creditor of Say Media, (ii) a transaction bonus of $250,000 to a designated employee of Say Media, and (iii) a further $55,246 to Say Media’s legal counsel for legal fees and expenses, in additional to a previously paid deposit of $450,000, incurred in connection with the Merger. The Company also issued a total of 2,000,000 shares of common stock, subject to vesting, to certain key personnel of Say Media who agreed to continue their employment with Say Media subsequent to the closing of the transaction. Furthermore, under the terms of the Merger Agreement, the Company is obligated to issue up to 5,500,000 shares of its common stock to the former holders of Say Media’s Preferred Stock. 2016 Equity Incentive Plan In August 2018, the Company increased the authorized number of shares of common stock under the 2016 Equity Incentive Plan (the “2016 Plan”) to 10,000,000 shares from 5,000,000 shares. The Company’s shareholders have not yet ratified this increase in the number of shares authorized under the 2016 Plan. 2019 Equity Incentive Plan On April 4, 2019, the Board of Directors of the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”). The purpose of the 2019 Plan is to seek, to better secure, and to retain the services of a select group of persons, to provide incentives for those persons to exert maximum efforts for the success of the Company and its affiliates, and to provide a means by which those persons have an opportunity to benefit from increases in the value of the Company’s common stock through the granting of stock awards. The 2019 Plan allows the Company to grant non-statutory stock options, stock appreciation rights, restricted stock awards and/or restricted stock units awards to acquire up to 48,364,018 shares of the Company’s common stock to the Company’s employees, directors and consultants, all of which require the achievement of certain price targets by the Company’s common stock. From April 10, 2019 through June 11, 2019, the Company granted stock options pursuant to the 2019 Plan to acquire 48,730,300 shares of the Company’s common stock to officers, directors, employees and consultants, of which 48,364,018 shares were granted in accordance with the plan’s authorized share limit and the remaining 366,282 shares were in excess of the plan’s authorized share limit. The Company does not currently have sufficient authorized but unissued common shares to allow for the exercise of the stock options granted under this plan; accordingly, any stock option grants under this plan are considered as unfunded. Equity Grants Outside of 2016 Equity Incentive Plan and 2019 Equity Incentive Plan From September 1, 2018 through March 11, 2019, the Company granted restricted stock awards for 1,039,839 shares of common stock and stock options to acquire 3,726,000 shares of the Company’s common stock to officers, directors and employees outside of the 2016 Plan and the 2019 Plan. As the Company does not currently have sufficient authorized but unissued common shares to allow for the exercise of these stock options, these stock option grants are considered as unfunded and cannot be exercised until sufficient common shares have been authorized. Registration Rights Penalties Common Stock – On July 23, 2018, the Company determined that the registration statement covering the Common Stock sold on January 4, 2018 to MDB for their placement services would not be declared effective within the requisite time frame, and therefore the Company accrued liquidated damages under the registration rights agreement aggregating $15,001, which is presented as a current liability at June 30, 2018. Series H Convertible Preferred Stock – On October 23, 2018, the Company determined that the registration statement covering the Series H Convertible Preferred Stock sold on August 10, 2018 would not be declared effective within the requisite time frame and therefore, as of August 10, 2018, the Company accrued six months liquidated damages under the registration rights agreement aggregating $1,066,500, which will be presented as a current liability at September 30, 2018. Public Information Failure Penalties 12% Senior Secured Subordinated Debentures – On June 12, 2019, the Company determined that it had failed to satisfy a public information requirement, as described in the Securities Purchase Agreement covering the 12% Senior Secured Subordinated Debentures sold on December 12, 2018 and therefore, as of June 12, 2019, the Company accrued liquidated damages under the agreement aggregating $785,492, which will be presented as a current liability at June 30, 2019. The public information failure penalty bears interest at 1% per month from the date of the failure until paid. Appointment of New Chief Financial Officer On May 3, 2019, the Company announced the appointment of Douglas Smith as the Company’s Chief Financial Officer. Pursuant to the terms of an Employment Agreement with the Company, dated as of May 1, 2019, Mr. Smith shall receive an annual salary of $400,000 and be entitled to receive bonuses to be agreed by Company and Mr. Smith in good faith from time to time based on then current financial status of the Company. If Mr. Smith’s employment with the Company is terminated by the Company Without Cause or by Mr. Smith for Good Reason (as those terms are defined in the Employment Agreement), then Mr. Smith shall be entitled to receive a lump sum payment equal to six months of his annual salary. Mr. Smith was granted options to purchase up to 1,500,000 shares of the Company’s common stock, having an exercise price of $0.57 per share, a term of 10 years, and subject to vesting as described below. These options were granted outside of the 2016 Plan and the 2019 Plan. Of the 1,500,000 options granted: (i) 1,000,000 options will vest over 36 months, with 1/3 vesting after 12 months of continuous service and 1/36 vesting monthly for each month of continuous service thereafter; and (ii) 500,000 will vest over 36 months, with 1/3 vesting after 12 months of continuous service and 1/36 vesting monthly for each month of continuous service thereafter, subject to the Company’s common stock being listed on a national securities exchange. Mr. Smith was also granted options to purchase up to 1,064,008 shares of the Company’s common stock, having an exercise price of $0.46 per share, a term of 10 years, and subject to vesting based both on time and targets tied to the Company’s common stock, as follows: (i) the options will vest over 36 months, with 1/3 vesting after 12 months of continuous service and 1/36 vesting monthly for each month of continuous service thereafter; and (ii) the Company’s common stock must be listed on a national securities exchange, with incremental vesting upon achievement of certain stock price targets based on a 45-day VWAP during which time the average monthly trading volume of the common stock must be at least 15% of the Company’s aggregate market capitalization. Acquisition of TheStreet, Inc. and Partnership with Cramer Digital On June 11, 2019, the Company, TST Acquisition Co., Inc., a Delaware corporation (“TSTAC”), a newly-formed indirect wholly-owned subsidiary of the Company, and TheStreet, Inc., a Delaware corporation (“TheStreet”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which TSTAC will merge with and into TheStreet, with TheStreet continuing as the surviving corporation in the merger and as a wholly-owned subsidiary of the Company. The Merger Agreement provided that all issued and outstanding shares of common stock of TheStreet (other than those shares with respect to which appraisal rights have been properly exercised) will be exchanged for an aggregate of $16,500,000 in cash (the “Merger Consideration”). Pursuant to the terms of the Merger Agreement, on June 10, 2019, the Company deposited the Merger Consideration into an escrow account pursuant to an Escrow Agreement, dated June 10, 2019, by and among the Company, TheStreet and Citibank, N.A., as escrow agent. On August 7, 2019, the Company consummated the merger between TheStreet and TSTAC, pursuant to which TSTAC merged with and into TheStreet, with TheStreet continuing as the surviving corporation in the merger and as an indirect wholly-owned subsidiary of the Company (the “Merger”), pursuant to the terms of the Merger Agreement dated as of June 11, 2019, as amended. In connection with the consummation of the Merger, the Company paid a total of $16,500,000 in cash to TheStreet’s stockholders. This transaction was funded through a debt financing arranged by a subsidiary of B. Riley Financial, Inc. (see “Amended and Restated Note Purchase Agreement” below). On August 8, 2019, in connection with the Merger, finance and stock market expert Jim Cramer, who co-founded TheStreet, agreed to enter into a new partnership with TheStreet through Cramer Digital, a new production company featuring the digital rights and content created by Mr. Cramer and his team of financial experts. The partnership will allow Mr. Cramer to continue his subscription and content offerings, and will be under his editorial control. The Company expects that TheStreet’s senior management will continue with the Company subsequent to the Merger. Note Purchase Agreement On June 10, 2019, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with one accredited investor, BRF Finance Co., LLC (the “Investor”), an affiliated entity of B. Riley FBR, pursuant to which the Company issued to the Investor a 12.0% senior secured note (the “Note”), due July 31, 2019, in the aggregate principal amount of $20,000,000, which after taking into account B. Riley’s placement fee of $1,000,000 and legal fees and expenses of the Investor, resulted in the Company receiving net proceeds of $18,865,000, of which $16,500,000 was deposited into escrow the fund the Merger Consideration and the balance of $2,365,000 will be used by the Company for working capital and general corporate purposes. ABG-SI LLC Licensing Agreement On June 14, 2019, the Company and ABG-SI LLC (“ABG”), a Delaware limited liability company and indirect wholly-owned subsidiary of Authentic Brands Group, entered into a Licensing Agreement (the “Licensing Agreement”) pursuant to which the Company shall have the exclusive right and license in the United States, Canada, Mexico, The United Kingdom, The Republic of Ireland, Australia and New Zealand to operate the Sports Illustrated media business (in the English and Spanish languages), including to (i) operate the digital and print editions of Sports Illustrated (including all special interest issues and the swimsuit issue) and Sports Illustrated for Kids, (ii) develop new digital media channels under the Sports Illustrated brands and (iii) operate certain related businesses, including without limitation, special interest publications, video channels, bookazines and the licensing and/or syndication of certain products and content under the Sports Illustrated brand (collectively, the “Licensed Business”). The Company is not required to implement geofiltering or other systems to prevent users located outside the territory from accessing the digital channels in the territory. The initial term of the Licensing Agreement shall commence upon the termination of the Meredith License Agreement (as defined below) and shall continue through December 31, 2029. The Company has the option, subject to certain conditions, to renew the term of the Licensing Agreement for nine consecutive renewal terms of 10 years each (collectively, the “Term”), for a total of 100 years. The Licensing Agreement provides that the Company shall pay to ABG annual royalties in respect of each year of the Term based on gross revenues (“Royalties”) with guaranteed minimum annual amounts. The Company has prepaid ABG $45,000,000 against future Royalties. ABG will pay to the Company a share of revenues relating to certain Sports Illustrated business lines not licensed to the Company, such as commerce. The two companies will be partnering in building the brand worldwide. Pursuant to a publicly announced agreement between ABG and Meredith Corporation (“Meredith”), an Iowa corporation, Meredith currently operates the Licensed Business under license from ABG (the “Meredith License Agreement). Maven and ABG are pursuing discussions with Meredith for it to continue to operate certain aspects of the business, including print operations, however the Licensing Agreement is not contingent on reaching such an agreement with Meredith. The Company has agreed to issue to ABG within 30 days of the execution of the Licensing Agreement warrants to acquire common stock of the Company representing 10% of the Company’s fully diluted equity securities (“Warrants”). Half the Warrants shall have an exercise price of $0.42 per share (the “Forty-Two Cents Warrants”). The other half of the Warrants shall have an exercise price of $0.84 per share (the “Eighty-Four Cents Warrants”). The documentation for all the Warrants shall provide for the following additional terms: (1) 40% of the Forty-Two Cents Warrants and 40% of the Eighty-Four Cents Warrants shall vest in equal monthly increments over a period of two years beginning on the one year anniversary of the date of issuance of the Warrants (any unvested portion of such Warrants to be forfeited by ABG upon certain terminations by the Company of the Licensing Agreement); (2) 60% of the Forty-Two Cents Warrants and 60% of the Eighty-Four Cents Warrants shall vest based on the achievement of certain performance goals for the Licensed Business in calendar years 2020, 2021, 2022 or 2023; (3) under certain circumstances the Company may require ABG to exercise all (and not less than all) of the Warrants, in which case all of the Warrants shall be vested; (4) all of the Warrants shall automatically vest upon certain terminations of the Licensing Agreement by ABG or upon a change of control of the Company; and (5) ABG shall have the right to participate, on a pro-rata basis (including vested and unvested Warrants, exercised or unexercised), in any future equity issuance of the Company (subject to customary exceptions). Additionally, Ross Levinsohn, the former senior executive from Fox and Yahoo!, has agreed to become the new CEO of the Licensed Business. His employment agreement with the Company is pending and has not yet been finalized. Mr. Levinsohn was a director of the Company from November 4, 2016 through October 20, 2017. In conjunction with Mr. Levinsohn’s services as a director of the Company, he received Restricted Stock Awards for 245,434 shares of common stock. Mr. Levinsohn retained his Restricted Stock Awards and they continued to vest subsequent to his resignation from the Board of Directors on October 20, 2017. The Restricted Stock Awards will continue to vest through October 16, 2019. In conjunction with the vesting of the Restricted Stock Awards, the Company recognized stock-based compensation cost of $16,616 and $55,003 for the three months and six months ended June 30, 2018, respectively, and $28,634 and $14,317 for the three months and six months ended June 30, 2017, respectively, which was included in general and administrative expenses in the statement of operations. On April 10, 2019, the Company entered into an Advisory Services Agreement with Mr. Levinsohn to provide advisory services with respect to strategic transactions in the media and digital publishing industries, in exchange for which Mr. Levinsohn was granted a stock option to purchase 532,004 shares of common stock, exercisable for a period of 10 years at $0.46 per share (the closing market price on April 10, 2019) subject to vesting (i) based on the achievement by the Company of stock price and liquidity targets and becoming listed on a national securities exchange and (ii) a concurrent 36-month vesting period with a 12-month cliff. At April 10, 2019, the shares of common stock underlying the stock option are not authorized and available for issuance and, as such, are considered to be an unfunded stock option and may not be exercised until the Company has increased its authorized shares of common stock to a sufficient number to permit the full exercise of the stock option. On June 11, 2019, Mr. Levinsohn was granted a stock option to acquire 2,000,000 shares of common stock under the Company’s 2019 Stock Incentive Plan, vesting monthly over three years, with one-third vesting after 12 months of continuous service from the grant date and a further 1/36 vesting at the end of each month of continuous service thereafter, exercisable for a period of ten years at $0.42 per share (the closing market price on June 11, 2019), and may not be exercised until the Company has increased its authorized shares of common stock to a sufficient number to permit the full exercise of the stock option. This stock option was issued in conjunction with Mr. Levinsohn’s services relating to the Company’s entry into the Licensing Agreement. Mr. Levinsohn has also entered into an agreement with the Company to purchase $500,000 of the Company’s newly-designated Series I Convertible Preferred Stock. Amended and Restated Note Purchase Agreement On June 14, 2019, the Company entered into an Amended and Restated Note Purchase Agreement (the “Amended Note Purchase Agreement”) with one accredited investor, BRF Finance Co., LLC (the “Investor”), an affiliated entity of B. Riley FBR, Inc. (“B. Riley”), which amended and restated that previously disclosed Note Purchase Agreement, dated June 10, 2019, by and among the Company and the Investor. Pursuant to the Amended Note Purchase Agreement, the Company issued an amended and restated 12.0% senior secured note (the “Amended Note”), due June 14, 2022, in the aggregate principal amount of $68,000,000, which Amended Note amends, restates and supersedes that $20,000,000 12.0% senior secured note issued by the Company on June 10, 2019 to the Investor. The Company received additional gross proceeds of $48,000,000, which after taking into account B. Riley’s placement fee of $2,400,000 and legal fees and expenses of the Investor, the Company received net proceeds of $45,550,000, of which $45,000,000 was paid to ABG-SI LLC against future royalties in connection with the Company’s previously announced Licensing Agreement, dated June 14, 2019, with ABG-SI LLC, and the balance of $550,000 will be used by the Company for working capital and general corporate purposes Series I Convertible Preferred Stock On June 27, 2019, 25,800 authorized shares of the Company’s preferred stock were designated as “Series I Convertible Preferred Stock”. On June 28, 2019, the Company closed on a securities purchase agreement with certain accredited investors, pursuant to which the Company issued an aggregate of 23,100 shares of Series I Convertible Preferred Stock (the “Series I Preferred Stock”) at a stated value of $1,000, initially convertible into 46,000,000 shares of the Company’s common stock at a conversion rate equal to the stated value divided by the conversion price of $0.50 per share (the “Conversion Price”), for aggregate gross proceeds of $23,100,000. In consideration for its services as placement agent, the Company paid B. Riley FBR a cash fee of $1,386,000 plus $52,500 in reimbursement of legal fees and other transaction costs. The Company has used a portion of the net proceeds from the financing to partially re-pay that previously announced Amended and Restated 12.0% Senior Secured Note, due June 14, 2022, in the aggregate principal amount of $68,000,000, issued on June 14, 2019 to an affiliated entity of B. Riley, and to pay deferred fees of approximately $3,400,000 related to that borrowing facility. The Company performed an evaluation of subsequent events through the date of filing of these condensed consolidated financial statements with the SEC. Other than the above described subsequent events, there were no material subsequent events which affected, or could affect, the amounts or disclosures in the consolidated financial statements.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
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