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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended June 30, 2021

or

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

 

For the transition period from _____________ to _____________

 

Commission File Number: 000-55353

 

fuboTV Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Florida   26-4330545

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

     
1330 Avenue of the Americas, New York, NY   10019
(Address of Principal Executive Offices)   (Zip Code)

 

(212) 672-0055

(Registrant’s Telephone Number, Including Area Code)

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.0001 per share   FUBO   New York Stock Exchange

 

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

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

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

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

As of July 31 2021, there were 141,666,712 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

 

 

 

 
 

 

fuboTV Inc.

TABLE OF CONTENTS

    Page
     
  PART I - FINANCIAL INFORMATION 1
     
Item 1. Financial Statements 1
     
  Condensed Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020 1
     
  Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited) 2
     
  Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited) 3
     
  Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (unaudited) 4
     
  Notes to Condensed Consolidated Financial Statements (unaudited) 5
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 28
     
Item 4. Controls and Procedures 28
     
  PART II - OTHER INFORMATION 30
     
Item 1. Legal Proceedings 30
     
Item 1A. Risk Factors 31
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 60
     
Item 3. Defaults Upon Senior Securities 61
     
Item 4. Mine Safety Disclosures 61
     
Item 5. Other Information 61
     
Item 6. Exhibits 61
     
Signatures 63

 

 
 

 

BASIS OF PRESENTATION

 

As used in this Quarterly Report on Form 10-Q (“Quarterly Report”), unless expressly indicated or the context otherwise requires, references to “fuboTV Inc.,” “fuboTV,” “we,” “us,” “our,” “the Company,” and similar references refer to fuboTV Inc., a Florida corporation and its consolidated subsidiaries, including fuboTV Media Inc., a Delaware corporation (“fuboTV Sub”). “fuboTV Pre-Merger” refers to fuboTV Inc., a Delaware corporation, prior to the Merger (as defined herein) and “FaceBank Pre-Merger” refers to FaceBank Group, Inc. and its subsidiaries prior to the Merger.

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements, which are subject to a number of risks, uncertainties, and assumptions, generally relate to future events or our future financial or operating performance. In some cases, you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would,” “target,” “project,” “contemplate,” or the negative version of these words and other comparable terminology that concern our expectations, strategy, plans, intentions, or projections. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

 

  market conditions and global economic factors beyond our control, including the potential adverse effects of the ongoing global COVID-19 pandemic on our business and results of operations, on live sports and entertainment, and on the global economic environment;
     
  our ability to access debt and equity financing;
     
  our efforts to maintain proper and effective internal controls;
     
  factors relating to our business, operations, and financial performance, including:

 

    our ability to effectively compete in the live TV streaming and entertainment industries;
       
    our ability to successfully integrate new operations, including the ability to implement our wagering strategy;
       
    our ability to maintain and expand our content offerings;
       
    our ability to expand into the sports wagering market;
       
    our ability to recognize deferred tax assets and tax loss carryforwards;

 

  the impact of management changes and organizational restructuring;
     
  changes in applicable laws or regulations;
     
  litigation and our ability to adequately protect our intellectual property rights;
     
  our ability to operate a sportsbook and other gaming-related products and services, including, without limitation, our ability to gain state market access and to obtain and maintain required state regulatory approvals;
     
  our success in retaining or recruiting officers, key employees, or directors; and
     
  the possibility that we may be adversely affected by other economic, business and/or competitive factors.

 

We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part II, Section 1A titled “Risk Factors.” These risks are not exhaustive. Other sections of this Quarterly Report include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements and you should not place undue reliance on our forward-looking statements.

 

In addition, forward-looking statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

 

The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. You should read this Quarterly Report in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2020 included in our Annual Report on Form 10-K, filed with the SEC on March 25, 2021, as amended on Form 10-K/A filed with the SEC on March 29, 2021 (the “Annual Report”).

 

 
 

 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

fuboTV Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share and per share information)

 

   June 30   December 31, 
   2021   2020 
   (Unaudited)      
ASSETS          
Current assets          
Cash and cash equivalents  $406,740   $134,942 
Accounts receivable, net   20,908    17,495 
Prepaid and other current assets   8,785    4,277 
Total current assets   436,433    156,714 
           
Property and equipment, net   3,871    1,771 
Restricted cash   5,404    1,279 
Intangible assets, net   199,603    216,449 
Goodwill   489,089    478,406 
Right-of-use assets   7,537    4,639 
Other non-current assets   919    91 
Total assets  $1,142,856   $859,349 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities          
Accounts payable  $32,657   $31,160 
Accrued expenses   140,806    126,393 
Notes payable   4,846    4,593 
Deferred revenue   24,496    17,428 
Warrant liabilities   14,049    22,686 
Long-term borrowings – current portion   -    24,255 
Current portion of lease liabilities   1,331    799 
Total current liabilities   218,185    227,314 
           
Convertible notes, net of discount   307,981    - 
Deferred income taxes   3,877    5,100 
Lease liabilities   6,395    3,859 
Other long-term liabilities   21    128 
Total liabilities   536,459    236,401 
           
COMMITMENTS AND CONTINGENCIES (Note 13)   -     -  
           
Stockholders’ equity:          
Series AA Convertible Preferred stock, par value $0.0001, 35,800,000 shares authorized, no shares issued and outstanding at June 30, 2021 and 23,219,613 shares issued and outstanding at December 31, 2020   -    406,665 
Common stock par value $0.0001: 400,000,000 shares authorized; 141,097,294 and 92,490,768 shares issued at June 30, 2021 and December 31, 2020, respectively; 140,920,362 and 91,690,768 shares outstanding at June 30, 2021 and December 31, 2020, respectively   14    9 
Additional paid-in capital   1,409,049    853,824 
Treasury stock, at cost, 176,932 and 800,000 shares at June 30, 2021 and December 31, 2020   -    - 
Accumulated deficit   (791,481)   (626,456)
Non-controlling interest   (11,185)   (11,094)
Total stockholders’ equity   606,397    622,948 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $1,142,856   $859,349 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

1
   

 

fuboTV Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)

 

                 
   For the Three Months Ended June 30,   For the Six Months Ended
June 30,
 
   2021   2020   2021   2020 
Revenues                    
Subscription  $114,368   $39,511   $221,482   $39,511 
Advertisement   16,466    4,323    29,072    4,323 
Other   50    338    50    7,633 
Total revenues   130,884    44,172    250,604    51,467 
Operating expenses                    
Subscriber related expenses   120,500    53,087    233,807    53,087 
Broadcasting and transmission   12,395    9,492    22,946    9,492 
Sales and marketing   21,514    7,577    43,657    11,256 
Technology and development   20,001    9,551    31,439    9,551 
General and administrative   28,293    17,338    46,447    33,862 
Depreciation and amortization   9,247    14,417    18,456    19,637 
Total operating expenses   211,950    111,462    396,752    136,885 
Operating loss   (81,066)   (67,290)   (146,148)   (85,418)
                     
Other income (expense)                    
Interest expense and financing costs   (4,175)   (13,325)   (6,629)   (15,906)
Amortization of debt discount   (4,043)   -    (6,555)   - 
Loss on issuance of notes, bonds, and warrants   -   (602)   -   (24,655)
Loss on extinguishment of debt   (380)   -    (380)   - 
Loss on deconsolidation of Nexway   -    -    -    (11,919)
Change in fair value of warrant liabilities   (6,019)   4,966    (6,604)   4,600 
Change in fair value of subsidiary warrant liability   -    18    -    3 
Change in fair value of shares settled liability   -    (1,485)   -    (1,665)
Change in fair value of derivative liability   -    (823)   -    (526)
Unrealized gain on equity method investment   -    2,614    -    2,614 
Other expense   -    (1,158)   (18)   (1,594)
Total other expense   (14,617)   (9,795)   (20,186)   (49,048)
Loss before income taxes   (95,683)   (77,085)   (166,334)   (134,466)
Income tax benefit   753    3,481    1,218    4,519 
Net loss   (94,930)   (73,604)   (165,116)   (129,947)
Less: Net loss attributable to non-controlling interest   15    682    91    1,555 
Net loss attributable to controlling interest   (94,915)   (72,922)   (165,025)   (128,392)
Less: Deemed dividend - beneficial conversion feature on preferred stock   -    -    -    (171)
Net loss attributable to common stockholders  $(94,915)  $(72,922)  $(165,025)  $(128,563)
                     
Net loss per share attributable to common stockholders                    
Basic and diluted  $(0.68)  $(2.08)  $(1.27)  $(3.97)
Weighted average shares outstanding:                    
Basic and diluted   140,596,001    35,045,390    129,591,310    32,390,829 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

2
   

 

fuboTV Inc.

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity

Three and Six Months Ended June 30, 2021 and 2020

(Unaudited)

(in thousands, except share and per share amounts)

 

   Shares   Amount   Shares   Amount   Capital   Shares   Amount   Deficit         Interest   Equity 
                                 Accumulated           
               Additional                

Other

        Total 
   Preferred stock   Common Stock   Paid-In   Treasury Stock   Accumulated     Comprehensive      Noncontrolling   Stockholders’ 
   Shares   Amount   Shares   Amount   Capital   Shares   Amount   Deficit    

Loss 

    Interest   Equity 
Balance at December 31, 2020   23,219,613    406,665    92,490,768    9    853,824    (800,000)   -    (626,456)    -      (11,094)   622,948 
Conversion of Series AA Preferred Stock   (23,219,613)  $(406,665)   46,439,226    5    406,660    -    -    -            -    - 
Exercise of common stock warrants   -    -    536,825    -    15,803    -    -    -     -      -    15,803 
Issuance of treasury stock in connection with acquisition   -    -    -    -    8,538    623,068    -    -            -    8,538 
Recognition of debt discount on 2026 Convertible Notes   -    -    -    -    88,059    -    -    -            -    88,059 
Exercise of stock options   -    -    1,082,964    -    776    -    -    -            -    776 
Stock based compensation   -    -    -    -    9,374    -    -    -            -    9,374 
Other   -    -    -    -    (5)   -    -                 -    (5)
Other, shares                                                          
Net loss   -    -    -    -    -    -    -    (70,110)           (76)   (70,186)
Balance at March 31, 2021 (Unaudited)   -   $-    140,549,783   $14   $1,383,029    (176,932)  $-   $(696,566)    -     $(11,170)  $675,307 
Exercise of common stock warrants   -    -    71,428    -    500    -    -    -            -    500 
Recognition of debt discount on 2026 Convertible Notes   -    -    -    -    (113)   -    -    -            -    (113)
Exercise of stock options   -    -    508,664    -    1,200    -    -    -            -    1,200 
Stock based compensation   -    -    -    -    24,431    -    -    -            -    24,431 
Other   -    -    (32,581)   -    2    -    -    -            -    2 
Net loss   -    -    -    -    -    -    -    (94,915)    -      (15)   (94,930)
Balance at June 30, 2021 (Unaudited)   -    -    141,097,294    14    1,409,049    (176,932)   -    (791,481)    -      (11,185)   606,397 

 

   Shares   Amount   Shares   Amount   Capital    Shares           Deficit   Loss   Interest   Equity 
                                        Accumulated         
                   Additional                      Other       Total 
   Preferred stock   Common Stock   Paid-In    Treasury       Stock     Accumulated   Comprehensive   Noncontrolling   Stockholders’ 
   Shares   Amount   Shares   Amount   Capital    Shares       Amount     Deficit   Loss   Interest   Equity 
Balance at December 31, 2019   -   $-    28,912,500   $3   $257,002    -       -     $(56,123)  $(770)  $22,602   $222,714 
Issuance of common stock for cash   -    -    795,593    -    2,297                   -    -    -    2,297 
Issuance of common stock -subsidiary share exchange   -    -    1,552,070    -    1,150                   -    -    (1,150)   - 
Common stock issued in connection with note payable   -    -    7,500    -    67                   -    -    -    67 
Stock based compensation   -    -    1,040,000    -    10,061                   -    -    -    10,061 
Deemed dividend related to immediate accretion of redemption feature of convertible preferred stock   -    -    -    -    (171)                  -    -    -    (171)
Accrued Series D Preferred Stock dividends   -    -    -    -    (9)                  -    -    -    (9)
Deconsolidation of Nexway   -    -    -    -    -                   -    770    (2,595)   (1,825)
Net loss   -    -    -    -    -    -       -      (55,470)   -    (873)   (56,343)
Balance at March 31, 2020 (Unaudited)   -   $-    32,307,663   $3   $270,397    -       -     $(111,593)  $-   $17,984   $176,791 
Issuance of common stock for cash   -    -    3,906,313    1    478                   -    -    -    479 
Issuance of common stock  - subsidiary share exchange   -    -    1,201,749    -    892                   -    -    (892)   - 
Common stock issued in connection with note payable   -    -    25,000    -    192                   -    -    -    192 
Right to receive Series AA Preferred Stock in connection with acquisition of fuboTV Pre-Merger   32,324,362    566,124    -    -    -                   -    -    -    566,124 
Settlement of share settled liability             900,000         9,054                                  9,054 
Stock based compensation   -    -    343,789    -    8,715                   -    -    -    8,715 
Deemed dividend related to immediate accretion of redemption feature of convertible preferred stock   -    -    -    -    -                   126    -    -    126 
Accrued Series D Preferred Stock dividends   -    -    -    -    (8)                       -    -    (8)
Net loss   -    -    -    -    -    -       -      (72,922)   -    (682)   (73,604)
Balance at June 30, 2020 (Unaudited)   32,324,362   $566,124    38,684,514   $4   $289,720    -       -     $(184,389)  $-   $16,410   $687,869 

 

The

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

3
   

 

fuboTV Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands, except share and per share amounts)

 

         
   For the Six Months Ended June 30, 
   2021   2020 
Cash flows from operating activities          
Net loss  $(165,116)  $(129,947)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   18,456    19,637 
Stock-based compensation   33,805    17,776 
Loss on deconsolidation of Nexway, net of cash retained by Nexway   -    8,564 
Loss on issuance of notes, bonds and warrants       24,655 
Loss on extinguishment of debt   380    - 
Common stock issued in connection with note payable   -    67 
Non-cash expense relating to issuance of warrants and common stock        2,208 
Amortization of debt discount   6,555    10,981 
Deferred income tax benefit   (1,218)   (4,519)
Change in fair value of derivative liability   -    526 
Change in fair value of warrant liabilities   6,604    (4,600)
Change in fair value of subsidiary warrant liability   -    (3)
Change in fair value of shares settled liability   -    1,665 
Change in fair value of profit share liability   -    148 
Unrealized gain on investment   -    (2,614)
Amortization of right-of-use assets   624    167 
Accrued interest on notes payable   

-

    246 
Other adjustments   245   979 
Changes in operating assets and liabilities of business, net of acquisitions:          
Accounts receivable, net   (3,413)   792 
Prepaid expenses and other assets   (5,583)   (614)
Accounts payable   1,390    3 
Accrued expenses   13,233    796 
Due to related parties   -    10,889 
Deferred revenue   7,068    46 
Lease liabilities   (454)   (162)
Net cash used in operating activities   (87,424)   (42,314)
           
Cash flows from investing activities          
Advance to fuboTV Pre-Merger   -    (10,000)
Acquisition of fuboTV’s Pre-Merger cash and cash equivalents and restricted cash   -    9,373 
Cash paid for acquisition   (1,740)   - 
Purchases of property and equipment   (2,138)   (70)
Purchase of intangible assets   (1,300)   - 
Net cash used in investing activities   (5,178)   (697)
           
Cash flows from financing activities          
Proceeds from sale of common stock and warrants, net of fees   -    28,926 
Proceeds from convertible note, net of issuance costs   389,946    3,003 
Proceeds from exercise of stock options   1,976    - 
Proceeds from the exercise of common stock warrants   1,312    - 
Repayments of convertible notes   -    (1,140)
Proceeds from notes payable and long-term borrowings   -    23,649 
Repayments of notes payable and long-term borrowings   (24,709)   (9,657)
Proceeds from the issuance of Series D Preferred Stock   -    203 
Redemption of Series D Preferred Stock   -    (611)
Repayments to related parties   -    (300)
Net cash provided by financing activities   368,525    44,073 
           
Net increase in cash, cash equivalents and restricted cash   275,923    1,062 
Cash, cash equivalents and restricted cash at beginning of period   136,221    7,624 
Cash, cash equivalents and restricted cash at end of period  $412,144   $8,686 
           
Supplemental disclosure of cash flows information:          
Interest paid  $432   $4,110 
Supplemental disclosure of non-cash financing and investing activities:          
Conversion of Series AA preferred stock to common stock  $406,665   $- 
Issuance of convertible preferred stock for Merger  $-   $566,124 
Reclass of shares settled liability to additional paid-in capital for issuance of common stock  $-   $9,054 
Reclass of shares settled liability for intangible asset to stock-based compensation  $-   $1,000 
Issuance of treasury stock in connection with acquisition  $8,538   $- 
Cashless exercise of common stock warrants  $14,991   $- 
Lender advanced loan proceeds direct to fuboTV  $-   $7,579 
Issuance of common stock - subsidiary share exchange  $-   $2,042 
Accrued Series D Preferred Stock dividends  $-   $17 
Deemed dividend related to immediate accretion of redemption feature of convertible preferred stock  $-   $171 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4
   

 

fuboTV Inc.

Notes to the Condensed Consolidated Financial Statements
(Unaudited)

 

Note 1 - Organization and Nature of Business

 

Incorporation

 

fuboTV Inc. (“fuboTV” or the “Company”) was incorporated under the laws of the State of Florida in February 2009 under the name York Entertainment, Inc. The Company changed its name to FaceBank Group, Inc. on September 30, 2019. On August 10, 2020, the Company changed its name to fuboTV Inc. and as of May 1, 2020, the Company’s trading symbol was changed from “FBNK” to “FUBO.” The Company’s common stock was approved for listing on the New York Stock Exchange (“NYSE”) in connection with a public offering in October 2020 and commenced trading on the NYSE on October 8, 2020.

 

Unless the context otherwise requires, “fuboTV,” “we,” “us,” “our,” and the “Company” refers to fuboTV and its subsidiaries on a consolidated basis.

 

Merger with fuboTV Inc.

 

On April 1, 2020, fuboTV Acquisition Corp., a Delaware corporation and our wholly-owned subsidiary (“Merger Sub”) merged with and into fuboTV Pre-Merger, whereby fuboTV Pre-Merger continued as the surviving corporation and became our wholly-owned subsidiary pursuant to the terms of the Agreement and Plan of Merger and Reorganization dated as of March 19, 2020, by and among us, Merger Sub and fuboTV Pre-Merger (the “Merger Agreement” and such transaction, the “Merger”).

 

Nature of Business

 

The Company is focused on developing its technology-driven IP in sports, movies, and live performances. The Company is principally focused on offering consumers a leading live TV streaming platform for sports, news, and entertainment through fuboTV. The Company’s revenues are almost entirely derived from the sale of subscription services and the sale of advertisements in the United States.

 

The Company’s subscription-based streaming services are offered to consumers who can sign-up for accounts through which the Company provides basic plans with the flexibility for consumers to purchase incremental features that include additional content or enhanced functionality (“Attachments”) best suited for them. Besides the website, consumers can also sign-up via some TV-connected devices. The fuboTV platform provides a broad suite of unique features and personalization tools such as multi-channel viewing capabilities, favorites lists and a dynamic recommendation engine, as well as 4K streaming and Cloud DVR offerings.

 

Note 2 - Liquidity, Going Concern and Management Plans

 

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

The Company had cash and cash equivalents of $406.7 million, working capital of $218.2 million and an accumulated deficit of $791.5 million as of June 30, 2021. The Company incurred a $94.9 million and $165.1 million net loss for the three and six months ended June 30, 2021, respectively. Since inception, the Company’s operations have been financed primarily through the sale of equity and debt securities. The Company has incurred losses from operations and negative cash flows from operating activities since inception and expects to continue to incur substantial losses as it continues to fully ramp up its operating activities.

 

As discussed further in Note 10, on February 2, 2021, the Company issued $402.5 million of convertible notes (“2026 Convertible Notes”). The 2026 Convertible Notes will bear interest from February 2, 2021, at a rate of 3.25% per annum, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2021. The 2026 Convertible Notes will mature on February 15, 2026, unless earlier converted, redeemed, or repurchased.

 

The net proceeds from this offering were approximately $389.4 million, after deducting a discount and offering expenses of approximately $13.1 million. The Company intends to use the proceeds from this offering for general corporate purposes, including working capital, business development, sales and marketing activities and capital expenditures.

 

5
   

 

fuboTV Inc.

Notes to the Condensed Consolidated Financial Statements
(Unaudited)

 

The Company’s current cash and cash equivalents provide us with the necessary liquidity to continue as a going concern for at least one year from the date of issuance of these financial statements.

 

In addition to the foregoing, the Company cannot predict the long-term impact on its development timelines, revenue levels and its liquidity due to the worldwide spread of COVID-19. Based upon the Company’s current assessment, it does not expect the impact of the COVID-19 pandemic to materially impact the Company’s operations. However, the Company is continuing to assess the impact the spread of COVID-19 may have on its operations.

 

Note 3 - Summary of Significant Accounting Policies

 

Principles of Consolidation and Basis of Presentation

 

The Company’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiaries and non-wholly owned subsidiaries where the Company has a controlling interest. All intercompany balances and transactions have been eliminated in consolidation.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation of such interim results.

 

The results for the unaudited condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2021 or for any future interim period. The condensed consolidated balance sheet as of December 31, 2020 has been derived from the audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020 and notes thereto included in the Company’s Annual Report.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. Those estimates and assumptions include allocating the fair value of purchase consideration to assets acquired and liabilities assumed in business acquisitions, useful lives of property and equipment and intangible assets, recoverability of goodwill and intangible assets, accruals for contingent liabilities, valuation of warrants, convertible notes, and equity instruments issued in share-based payment arrangements and accounting for income taxes, including the valuation allowance on deferred tax assets.

 

Segment and Reporting Unit Information

 

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. A committee consisting of the Company’s executives are determined to be the CODM. The CODM reviews financial information and makes resource allocation decisions at the consolidated group level.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with remaining maturities at the date of purchase of three months or less to be cash equivalents, including balances held in the Company’s money market account. Restricted cash primarily represents cash on deposit with financial institutions in support of a letter of credit outstanding in favor of the Company’s landlord for office space. The restricted cash balance has been excluded from the cash balance and is classified as restricted cash on the condensed consolidated balance sheets.

 

6
   

 

fuboTV Inc.

Notes to the Condensed Consolidated Financial Statements
(Unaudited)

 

The following table provides a reconciliation of cash, cash equivalents and restricted cash within the condensed consolidated balance sheets that sum to the total of the same on the condensed consolidated statement of cash flows (in thousands):

 

   June 30, 2021   December 31, 2020 
Cash and cash equivalents  $406,740   $134,942 
Restricted cash   5,404    1,279 
Total cash, cash equivalents and restricted cash  $412,144   $136,221 

 

Certain Risks and Concentrations

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of demand deposits and accounts receivable. The Company maintains cash deposits with financial institutions that at times exceed applicable insurance limits.

 

No individual customer accounted for more than 10% of revenue for each of the three and six months ended June 30, 2021, and 2020. Three customers accounted for more than 10% of accounts receivable as of June 30, 2021, and December 31, 2020.

 

The majority of the Company’s software and computer systems utilize data processing, storage capabilities and other services provided by Amazon Web Services (“AWS”), which cannot be easily switched to another cloud service provider. As such, any disruption of the Company’s interference with AWS would adversely impact the Company’s operations and business.

 

Treasury Stock

 

The Company accounts for the treasury stock using the cost method, which treats it as a reduction in stockholders’ equity. In December 2020, the Company repurchased 800,000 shares of its common stock at par value. In February 2021, the Company issued 623,068 shares of treasury stock in connection with the acquisition of Vigtory, Inc. See Note 4 for further discussion regarding the acquisition.

 

Significant Accounting Policies

 

For a detailed discussion of the Company’s significant accounting policies, see Note 3 to the consolidated financial statements for the year ended December 31, 2020, included in the Company’s Annual Report. Except for the accounting for the 2026 Convertible Notes discussed in Note 10, there were no significant changes to the Company’s accounting policies during the six months ended June 30, 2021.

 

Net Loss Per Share

 

Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period.

 

The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data):

 

                 
   Three Months Ended June 30,   Six Months Ended June 30, 
   2021   2020   2021   2020 
Basic loss per share:                    
Net loss  $(94,930)  $(73,604)  $(165,116)  $(129,947)
Less: Net loss attributable to non-controlling interest   15    682    91    1,555 
Less: Deemed dividend - beneficial conversion feature on preferred stock   -    -    -    (171)
Net loss attributable to common stockholders   (94,915)   (72,922)   (165,025)   (128,563)
                     
Shares used in computation:                    
Weighted-average common shares outstanding   140,596,001    35,045,390    129,591,310    32,390,829 
Basic and diluted loss per share  $(0.68)  $(2.08)  $(1.27)  $(3.97)

 

7
   

 

fuboTV Inc.

Notes to the Condensed Consolidated Financial Statements
(Unaudited)

 

The following common share equivalents are excluded from the calculation of weighted average common shares outstanding because their inclusion would have been anti-dilutive:

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2021   2020   2021   2020 
Common stock purchase warrants   1,750,843    603,576    1,750,843    1,147,844 
Convertible preferred shares   -    64,355,375    -    32,405,688 
Stock options   16,630,240    6,377,997    16,630,240    6,361,982 
Unvested restricted stock units   1,243,757    -    1,243,757    - 
Convertible notes variable settlement feature   6,966,078    536,164    6,966,078    536,164 
Total   26,590,918    71,873,112    26,590,918    40,451,678 

 

Recently Issued Accounting Standards

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies to calendar year 2023. The Company intends to adopt this ASU in January 2022. The adoption of this ASU will not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

 

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company intends to adopt this ASU in January 2022. The Company is currently evaluating the impact this ASU will have on its condensed consolidated financial statements and related disclosures.

 

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s condensed financial statements properly reflect the change.

 

Note 4 – Acquisition

 

On February 26, 2021, the Company consummated the acquisition of Vigtory, Inc., (“Vigtory”) a sports betting and interactive gaming company, as a result of the merger of fuboBet Inc., a wholly owned subsidiary of the Company, into Vigtory, whereby Vigtory continued as the surviving corporation (the “Vigtory Acquisition”) and its name was changed to Fubo Gaming Inc.

 

The purchase price of the Vigtory Acquisition was determined to be $10.3 million, including $1.7 million of Vigtory’s outstanding convertible notes and other liabilities settled by the Company on the closing date. The Vigtory Acquisition consideration does not include $26.9 million fair value of common shares issued to former employee shareholders of Vigtory that will vest over future service periods.

 

The Company accounted for the Vigtory Acquisition as a business combination under the acquisition method of accounting. As such, the purchase price was allocated to the net assets acquired with any excess recorded to goodwill. The net assets and liabilities assumed were immaterial and substantially all of the consideration was allocated to goodwill. Goodwill, which is not deductible for tax purposes, primarily represents the benefits expected to result from the assembled workforce of Vigtory. The results of the Vigtory Acquisition are included in the Company’s operations from February 26, 2021.

 

Note 5 - Revenue from Contracts with Customers

 

Disaggregated revenue

 

The following table presents the Company’s revenues disaggregated into categories based on the nature of such revenues (in thousands):

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2021   2020   2021   2020 
Subscription  $114,368   $39,511   $221,482   $39,511 
Advertisement   16,466    4,323    29,072    4,323 
Other   50    338    50    7,633 
Total revenues  $130,884   $44,172   $250,604   $51,467 

 

Contract balances

 

For the six months ended June 30, 2021 and 2020, the Company did not recognize material bad-debt expense and there were no material contract assets recorded on the accompanying condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020.

 

8
   

 

fuboTV Inc.

Notes to the Condensed Consolidated Financial Statements
(Unaudited)

 

The Company’s contract liabilities primarily relate to upfront payments and consideration received from customers for subscription services. As of June 30, 2021 and December 31, 2020, the Company’s contract liabilities totaled approximately $24.5 million and $17.4 million, respectively, and are recorded as deferred revenue on the accompanying condensed consolidated balance sheets.

 

Transaction price allocated to remaining performance obligations

 

The Company does not disclose the transaction price allocated to remaining performance obligations since subscription and advertising contracts have an original expected term of one year or less.