Notes Payable, Long-Term Borrowing, and Convertible Notes

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Notes Payable, Long-Term Borrowing, and Convertible Notes

Notes Payable, Long-Term Borrowing, and Convertible Notes

Notes payable, long-term borrowing, and convertible notes as of September 30, 2022 and December 31, 2021 consist of the following (in thousands):

Note	Stated Interest Rate	Principal Balance		Capitalized Interest		Debt Discount		September 30, 2022
2026 Convertible Notes	3.25%	$	402,500	$	—	$	(9,038)	$	393,462
Note payable	10.0%	2,700		2,802		—		5,502
Bpi France	2.25%	1,887		—		—		1,887
Other	4.0%	30		7		—		37
		$	407,117	$	2,809	$	(9,038)	$	400,888

Note	Stated Interest Rate	Principal Balance		Capitalized Interest		Debt Discount		December 31, 2021
2026 Convertible Notes	3.25%	$	402,500	$	—	$	(86,146)	$	316,354
Note payable	10.0%	2,700		2,377		—		$	5,077
Bpi France	2.25%	2,422		—		—		$	2,422
Société Générale	0.25%	1,246		—		—		$	1,246
Other	4.0%	30		6		—		36
		$	408,898	$	2,383	$	(86,146)	$	325,135

2026 Convertible Notes

On February 2, 2021, the Company issued $402.5 million of convertible notes (“2026 Convertible Notes.”) The 2026 Convertible Notes 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 initial equivalent conversion price of the 2026 Convertible Notes was $57.78 per share of the Company’s common stock. Holders may convert their 2026 Convertible Notes on or after November 15, 2025, until the close of business on the second business day preceding the maturity date or prior to November 15, 2025 under certain circumstances including:

(i)during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ended on March 31, 2021, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(ii)during the five-business day period after any five consecutive trading day period in which the trading price for each trading day of such five consecutive trading day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

(iii)if the Company calls any or all of the 2026 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or

(iv)upon the occurrence of specified corporate events.

The Company may also redeem all or any portion of the 2026 Convertible Notes after February 20, 2024 if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Upon conversion, the Company can elect to deliver cash or shares or a combination of cash or shares.

As discussed in Note 3, the Company adopted ASU 2020-06 and the portion of the debt discount allocated to equity was reclassified to long-term debt. The remaining unamortized debt issuance costs will be amortized as non-cash interest expense through the scheduled maturity of the 2026 Convertible Notes.

During the three and nine months ended September 30, 2022, the Company paid approximately $6.9 million and $13.4 million, respectively, of interest expense in connection with the 2026 Convertible Notes and recorded amortization expense of $0.6 million and $1.8 million, respectively, included in amortization of debt discount in the condensed consolidated statements of operations and comprehensive loss. The fair value (Level 2) of the 2026 Convertible Notes was $191.4 million as of September 30, 2022.

Note payable

The Company has recognized, through the consolidation of its subsidiary Evolution AI Corporation (“EAI”), a $2.7 million note payable bearing interest at the rate of 10% per annum that was due on October 1, 2018 (“CAM Digital Note”). The cumulative accrued interest on the CAM Digital Note amounts to $2.5 million. The CAM Digital Note is currently in a default condition due to non-payment of principal and interest. On June 6, 2022, Cam Digital, LLC filed a lawsuit against Pulse Evolution Corporation (“Pulse Evolution”), a subsidiary of EAI, seeking payment of principal and interest under the Cam Digital Note from Pulse Evolution. The outstanding balance as of September 30, 2022, including interest and penalties, is $5.5 million and is included in notes payable on the accompanying condensed consolidated balance sheet.

Other

The Company assumed, through the consolidation of its subsidiary EAI, a $30,000 note payable due to a relative of the former Chief Executive Officer, John Textor bearing interest at the rate of 4.0% per annum. As of September 30, 2022, the principal balance and accrued interest totaled approximately $37,000 and is included in notes payable on the accompanying condensed consolidated balance sheet.

The Company assumed through the acquisition of Molotov, $3.7 million in notes bearing interest rates between 0.25% - 2.25% per annum. During the nine months ended September 30, 2022, the Company repaid principal and interest of approximately $1.5 million. As of September 30, 2022, the principal balance totaled approximately $1.9 million and is included in long-term borrowings-current portion on the accompanying condensed consolidated balance sheet.