LICENSE AND MEDIA RIGHTS

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

LICENSE AND MEDIA RIGHTS

MLB Promotion Rights Agreement

On October 11, 2022, the Company entered into a Promotional Rights Agreement (the “MLB Promotional Rights Agreement”) with MLB Advanced Media L.P., on its own behalf and on behalf of Major League Baseball Properties, Inc., the Office of the Commissioner of Baseball, The MLB Network, LLC and the Major League Baseball Clubs (collectively, the “MLB”), pursuant to which the Company entered into an strategic partnership with MLB to promote the Company’s new NSF-Certified for Sport® product line.

As consideration under the MLB promotional rights agreement, the Company has paid and is committed to pay a combination of cash over the license period, along with upfront non-cash consideration in the form of equity, as well as contingent consideration in the form of contingent payments based on revenue. The consideration is as follows: 4% of the Company’s fully diluted outstanding common shares; $30.5 million in cash consideration from 2022 through 2025, paid in accordance with the payment schedule below; 10% royalty on the Company’s gross revenue from the sale of MLB branded products, after cumulative gross sales of all such branded products exceed $18.0 million.

As of October 11, 2022, the Company measured the assets acquired under the MLB promotional rights agreement based on the pro-rated fair value of i) the equity grant, ii) the committed cash payments, and iii) the revenue royalty payment for the acquired assets of 1) licensed properties and 2) prepaid media rights. The Company issued the MLB 6,119,121 common shares, the fair value of equity grant was $3,060. The fair value of the $30.5 million committed cash consideration was $28,339, based on the discounted future payments through the term of the agreement using a risk free interest rate of 4.31%. The fair value of the contingent 10% revenue royalty payment was $0 as the payment of the royalty fee is not considered probable.

As of December 31, 2022, the fair value of the total licensed properties was $23,399 recorded as a license and media rights asset, and the fair value of the media rights was $7,482 recorded as a $2,500 prepaid asset and a $4,982 license and media rights asset within the consolidated balance sheets. For the year ended December 31, 2022, the Company paid the MLB $500 as part of the committed cash payments, and recognized $1,516 in amortization expense related to the licensed properties, and $518 in media expense related to the media rights.

Maturities of the MLB license and media rights payable as of December 31, 2022 are as follows:


Year Ending December 31:
2023	$	8,000
2024	10,000
2025	12,000
Total payments	$	30,000
Less: Imputed interest	(1,858)
Total license and media rights payable	$	28,142
Less: Current license liabilities	(7,759)
Total non-current license and media rights payable	$	20,383

As of December 31, 2022, expected amortization of licensed properties is as follows:


Year Ending December 31:
2023	$	7,294
2024	7,294
2025	7,294
Total future amortization	$	21,882