Stockholders’ Deficiency

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

Stockholders’ Deficiency

21. Stockholders’ Deficiency

Common Stock

The Company has the authority to issue 1,000,000,000 shares of common stock, $0.01 par value per share as the result of filing on December 18, 2020, a Certificate of Amendment with the Secretary of the State of Delaware to increase the number of authorized shares of its common stock from 100,000,000 shares to 1,000,000,000 shares.

Common Stock Private Placement

Private Placement – On May 20, 2021 and May 25, 2021, the Company entered into securities purchase agreements with several accredited investors, pursuant to which the Company sold an aggregate of 974,351 shares of its common stock, at a per share price of $15.40 for aggregate gross proceeds of $15,005,000 in a private placement. On June 2, 2021, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company sold an aggregate of 324,676 shares of its common stock, at a per share price of $15.40 for gross proceeds of $5,000,000 in a private placement that was in addition to the closings that occurred on May 20, 2021 and May 25, 2021. After payment of legal fees and expenses the investors of $167,243, of which $100,000 was paid in cash to B. Riley, the Company received net proceeds of $19,837,757. The Company used the proceeds for general corporate purposes.

Pursuant to the registration rights agreements entered into in connection with the securities purchase agreements, the Company agreed to register the shares of the Company’s common stock issued in the private placements. The Company registered those shares of the Company’s common stock issued in the private placements on behalf of the selling stockholders that notified the Company that they wanted to have their shares registered by filing a registration statement, which was declared effective by the SEC on November 29, 2021.

The security purchase agreements 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 at any time during the period commencing from the twelve (12) month anniversary of the date the Company becomes current in its filing obligations and ending at such time that all of the common stock may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company (i) shall fail for any reason to satisfy the current public information requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information Failure”) then, in addition to such purchaser’s other available remedies, the Company shall pay to a purchaser, in cash, as partial liquidated damages and not as a penalty, an amount in cash equal to one percent (1.0%) of the aggregate subscription amount of the purchaser’s shares then held by the purchaser on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured up to a maximum of five (5) 30-day periods and (b) such time that such public information is no longer required for the purchasers to transfer the shares pursuant to Rule 144. Public Information Failure Damages shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Damages are incurred and (ii) the third (3rd) business day after the event or failure giving rise to the Public Information Failure Damages is cured. In the event the Company fails to make Public Information Failure Damages in a timely manner, such Public Information Failure Damages shall bear interest at the rate of 1.0% per month (prorated for partial months) until paid in full.

LiftIgniter – In connection with the asset acquisition of LiftIgniter, the Company issued 11,667 shares of the Company’s common stock pursuant to the restricted stock units granted at the acquisition date.

Professional Services – In connection with entering into a services agreement, the Company issued 14,205 shares of the Company’s common stock that were recorded at the trading price of the Company’s at the issuance date of $8.80 on January 21, 2021.

Common Stock to be Issued

In connection with the merger of Say Media on December 12, 2018, the Company issued 129,880 shares of the Company’s common stock during the year ended December 31, 2020 out of the total shares required to be issued of 230,326. As of December 31, 2021 and 2020, 46,406 shares of the Company’s common stock have not been issued and are to be issued.

In connection with a closing of a private placement on January 4, 2018, MDB, as the placement agent, was entitled to receive 2,728 shares of the Company’s common stock that have not been issued as of December 31, 2021 and 2020. Further, the 2,728 shares of common stock to be issued were subject to Liquidated Damages (see Note 15).

Restricted Stock Awards

On January 1, 2020, the Company issued 25,569 shares of its common stock as restricted stock awards to certain members of the Board subject to continued service with the Company. The awards vest over a twelve-month period from the grant date and the estimated fair value of these shares is being recognized as compensation expense over the vesting period of the award (see Note 22).

On December 31, 2020, the Company modified certain restricted stock awards and units, which were previously issued to certain employees in connection with the HubPages merger, where the Company agreed to repurchase the underlying common stock of the restricted stock awards at a specified price and forfeited any unvested awards. Pursuant to certain terms of the amendment, the Company agreed to repurchase 48,389 shares of the Company’s stock that were issued as restricted stock awards and forfeited the restricted stock units (as further described in Note 12).

The terms under which the restricted stock awards and units were granted are summarized as follows:

● The Company issued a total of 109,091 shares of common stock to certain key personnel of HubPages who agreed to continue their employment, as restricted stock awards, subject to a repurchase right and vesting in connection with the merger that were fair valued upon issuance by an independent appraisal firm;

● The repurchase right, which expired in March 2019 unexercised, gave the Company the option to repurchase a certain number of shares at par value based on a performance condition as defined in the terms of the merger agreement;

● The shares were subject to vesting over twenty-four equal monthly installments beginning September 23, 2019, and ending September 23, 2021;

● The restricted stock awards provided for a true-up period (in general, the true-up period was for 13 months after the consummation of the merger until 90 days following completion of vesting, or July 30, 2021) that if the common stock was sold for less than $2.50 the holder would receive, subject to certain conditions, additional shares of common stock (i.e. the restricted stock units) up to a maximum of the number of shares originally received (or 109,091 in aggregate to all holders) for the shares that re-sold for less than $2.50, which was settled on May 31, 2019 (as further described in Note 22);

During the year ended December 31, 2021, the Company issued an aggregate of 48,856 shares of its common stock as restricted stock awards to certain members of the Board subject to continued service with the Company. The awards generally vest over a twelve-month period (or shorter if granted after January 1, 2021 so that the awards are fully vested as of December 31, 2021) from the grant date and the estimated fair value of these shares is being recognized as compensation expense over the vesting period of the award (see Note 22).

On June 4, 2021, in connection with the merger of The Spun, the Company issued an aggregate of 194,806 restricted stock awards of the Company’s common stock, with one-half of the shares vesting on the first anniversary of the closing date and the remaining one-half of the shares vesting on the second anniversary of the closing date. The vesting of the restricted stock awards are subject to the continued employment of certain selling employees and the estimated fair value of these awards are being recognized as compensation expense over the vesting period of the award (see Note 22).

Unless otherwise stated, the fair value of a restricted stock award is determined based on the number of shares granted and the quoted price of the Company’s common stock on the date issued.

A summary of the restricted stock award activity during the years ended December 31, 2021 and 2020 is as follows:

							Weighted Average
	Number of Shares						Grant-Date
	Unvested			Vested			Fair Value
Restricted stock awards outstanding at January 1, 2020		108,713			77,077		$	12.32
Issued		25,569			-			10.56
Vested		(101,706	)		101,706
Subject to repurchase		-			(48,389	)
Forfeited		(18,182	)		(33,947	)
Restricted stock awards outstanding at December 31, 2020		14,394			96,447			9.24
Issued		243,662			-			16.15
Vested		(56,415	)		56,415
Exchange of shares		-			(4,035	)
Forfeited		(6,835	)		(4,355	)
Restricted stock awards outstanding at December 31, 2021		194,806			144,472			14.93

The Company permitted an exchange of 4,035 shares from vested restricted stock awards for the exercise of 7,893 common stock options (issued under the 2019 Plan, see Note 22) for the recorded net exercise of common stock options of 3,858 shares during the year ended December 31, 2021, on the consolidated statements of stockholders’ deficiency.

The Company recorded forfeited unvested restricted stock awards and/or forfeited vested restricted stock awards used for tax withholding of 11,190 (6,835 forfeited awards and 4,355 used for tax withholding) and 52,129 (18,182 forfeited awards and 33,947 used for tax withholding) during the years ended December 31, 2021 and 2020, respectively, on the consolidated statements of stockholders’ deficiency.

On October 7, 2021, the Company modified certain restricted stock awards upon the resignation of certain board members from the Board as follows:

● 18,940 restricted stock awards that were issued to certain members of the Board were modified to accelerate the vesting upon resignation from the Board, resulting in incremental cost of $41,667 (recognized at the modification date).

On December 11, 2019, the Company modified the vesting provisions of 90,910 restricted stock awards, issued in connection with the Say Media merger, to remove certain repurchase rights, such that they will vest six equal installments at four-month intervals on the twelfth of each month, starting on December 12, 2019, with the final vesting date on August 12, 2021. Compensation expense was recognized over the vesting period of the awards.

Information with respect to stock-based compensation cost and unrecognized stock-based compensation cost related to the restricted stock awards is provided under the heading Stock-Based Compensation in Note 22.

Common Stock Warrants

Warrants issued to purchase shares of the Company’s common stock to MDB, L2, Strome, and B. Riley (collectively the “Financing Warrants”) are described below.

MDB Warrants – On October 19, 2017, the Company issued warrants to MDB (the “MDB Warrants”) who acted as placement agent in connection with a private placement of its common stock, to purchase 5,435 shares of common stock. The warrants have an exercise price of $25.30 per share, subject to customary anti-dilution adjustments and exercisable for a period of five years.

On January 4, 2018, the Company issued warrants to MDB which acted as placement agent in connection with a private placement of its common stock, to purchase 2,728 shares of common stock. The warrants have an exercise price of $55.00 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 warrant shares, be exercised on a cashless basis, exercisable for a period of five years.

MDB Warrants exercisable for a total of 8,163 shares of the Company’s common stock were outstanding as of December 31, 2021 (as further detailed below).

Strome Warrants – On June 15, 2018, the Company modified the two securities purchase agreements dated January 4, 2018 and March 30, 2018 with Strome Mezzanine Fund LP (“Strome”). As consideration for such modification, the Company issued warrants to Strome (the “Strome Warrants”) to purchase 68,182 shares of common stock, exercisable at price of $11.00 per share (as amended), which were carried on the consolidated balance sheets as a derivative liability at fair value, as adjusted at each period-end since, among other criteria, delivery of unregistered shares was precluded upon exercise (see Note 17).

The Strome Warrants are exercisable for a period of five years, subject to customary anti-dilution adjustments, and may, in the event there is no effective registration statement covering the resale of the warrant shares, be exercised on a cashless basis in certain circumstances.

B. Riley Warrants – On October 18, 2018, the Company issued warrants to B. Riley (the “B. Riley Warrants”) to purchase up to 39,773 shares of the Company’s common stock, with an original exercise price of $22.00 per share (subsequently adjusted to $7.26), subject to customary anti-dilution adjustments, which were carried on the consolidated balance sheets as a derivative liability at fair value, as adjusted at each period-end since, among other criteria, delivery of unregistered shares was precluded upon exercise (see Note 17).

The B. Riley Warrants are exercisable for a period of five years, subject to customary anti-dilution adjustments, and may, in the event, at any time after the six-month anniversary of the issuance of the warrants, if there is no effective registration statement covering the re-sale of the shares of common stock underlying the warrants, the warrants may be exercised on a cashless basis.

A summary of the Financing Warrants activity during the years ended December 31, 2021 and 2020 is as follows:

						Weighted
						Average
				Weighted		Remaining
	Number			Average		Contractual
	of			Exercise		Life
	Shares			Price		(in Years)
Financing Warrants outstanding at January 1, 2020		131,004		$	17.60		3.95
Financing Warrants outstanding at December 31, 2020		131,004			13.20		2.94
Expired		(14,886	)		4.40
Financing Warrants outstanding at December 31, 2021		116,118			14.08		2.21
Financing Warrants exercisable at December 31, 2021		116,118			14.08		2.21

The intrinsic value of exercisable but unexercised in-the-money Financing Warrants as of December 31, 2021 was $481,253, based on a fair market value of the Company’s common stock of $14.08 per share on December 31, 2021.

The Financing Warrants outstanding and exercisable classified within the statement of stockholders’ deficiency as of December 31, 2021 are summarized as follows:

	Exercise Price		Expiration Date	Total Exercisable (Shares)
Strome Warrants	$	11.00	June 15, 2023		68,182
B. Riley Warrants		7.26	October 18, 2025		39,773
MDB Warrants		25.30	October 19, 2022		5,435
MDB Warrants		55.00	October 19, 2022		2,728
Total outstanding and exercisable					116,118

AllHipHop Warrants – On October 26, 2020, the Company exchanged 6,819 of Publisher Partner Warrants (as further described under the heading Publisher Partner Warrants) granted to AllHipHop, LLC (“AllHipHop”) for shares of the Company’s common stock that were originally granted on December 20, 2017 with an exercise price of $45.76, for an aggregate of 5,681 new warrants for shares of the Company’s common stock with an exercise price of $14.30 (the “AllHipHop Warrants”) for the surrender and termination of the original warrants granted (the “Exchange”) (further details are provided in Note 22).

The AllHipHop Warrants are exercisable for a period of five years, subject to customary anti-dilution adjustments, and may be exercised on a cashless basis.

Publisher Partner Warrants – On December 19, 2016, the Board approved up to 227,273 stock warrants to issue shares of the Company’s common stock to provide equity incentive to its Publisher Partners (the “Publisher Partner Warrants”) to motivate and reward them for their services to the Company and to align the interests of the Publisher Partners with those of stockholders of the Company. On August 23, 2018, the Board approved a reduction of the number of warrant reserve shares from 227,273 to 90,910. The issuance of the Publisher Partner Warrants is administered by management and approved by the Board.

Information with respect to stock-based compensation cost and unrecognized stock-based compensation cost related to the Publisher Partner Warrants is provided in Note 22.

ABG Warrants – On June 14, 2019, the Company issued 999,540 warrants to acquire the Company’s common stock to ABG in connection with the Sports Illustrated Licensing Agreement, expiring in ten years. Half the warrants have an exercise price of $9.24 per share (the “$9.24 Warrants”). The other half of the warrants have an exercise price of $18.48 per share (the “$18.48 Warrants”). The warrants provide for the following: (1) 40% of the $9.24 Warrants and 40% of the $18.48 Warrants 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 Sports Illustrated Licensing Agreement) (the “Time-Based Warrants”); (2) 60% of the $9.24 Warrants and 60% of the $18.48 Warrants vest based on the achievement of certain performance goals for the licensed brands 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 will be vested; (4) all of the warrants automatically vest upon certain terminations of the Licensing Agreement by ABG or upon a change of control of the Company (the “Performance-Based Warrants”); and (5) ABG has 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).

On June 4, 2021, the Company amended certain ABG Warrants in exchange for additional benefits under the Sports Illustrated licensing agreement as follows:

● The exercise price of 99,954 Time-Based Warrants (50% of the original warrants granted totaling 199,908) were adjusted from $18.48 to $7.26 per share as adjusted for any stock splits, combinations, stock dividends, reclassifications, recapitalizations and other similar events, resulting in incremental cost of $417,807 (to be recognized over the remaining vesting period, or through June 14, 2022) measured by an independent appraisal by calculating the fair value of the amended warrant over the calculated fair value of the original warrant immediately before the modification, with the excess fair value of the amended warrant recognized as additional compensation cost at the modification date, or the incremental cost, since the modification did not change the expectation that the award would ultimately vest (probable-to-probable).

● The exercise price of 149,931 Performance-Based Warrants (50% of the original warrants granted totaling 299,862) were adjusted from $18.48 to $9.24 per share as adjusted for any stock splits, combinations, stock dividends, reclassifications, recapitalizations and other similar events, resulting in incremental cost of $618,465 (to be recognized over the remaining vesting period, or through December 31, 2023) measured by an independent appraisal by calculating the fair value of the amended warrant over the calculated fair value of the original warrant immediately before the modification, with the excess fair value of the amended warrant recognized as additional compensation cost at the modification date, or the incremental cost, since the modification did not change the expectation that the award would ultimately vest (probable-to-probable).

Information with respect to stock-based compensation cost and unrecognized stock-based compensation cost related to the ABG Warrants is provided in Note 22.