Balance Sheet Components

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Components

3. Balance Sheet Components

The components of certain balance sheet amounts are as follows:

Accounts Receivable – Accounts receivable are presented net of allowance for doubtful accounts. The allowance for doubtful accounts as of September 30, 2022 and December 31, 2021 was $2,278 and $1,578, respectively.

Subscription Acquisition Costs – Subscription acquisition costs include the incremental costs of obtaining a contract with a customer, paid to external parties, if it expects to recover those costs. The Company has determined that sales commissions paid on all third-party agent sales of subscriptions are direct and incremental and, therefore, meet the capitalization criteria. The Company has elected to apply the practical expedient to account for these costs at the portfolio level. The sales commissions paid to third-party agents are amortized as the magazines are sent to the subscriber on an issue-by-issue basis. Subscription acquisition costs are included within selling and marketing expenses in the condensed consolidated statements of operations.

The current portion of the subscription acquisition costs as of September 30, 2022 and December 31, 2021 was $22,800 and $30,162, respectively. The noncurrent portion of the subscription acquisition costs as of September 30, 2022 and December 31, 2021 was $7,497 and $8,235, respectively. Subscription acquisition costs as of September 30, 2022 presented as current assets of $22,800 are expected to be amortized over a one-year period, or through September 30, 2023 and $7,497 presented as long-term assets are expected to be amortized after the one-year period ending September 30, 2023.

Royalty Fees – Royalty fees represent royalties due to ABG-SI, LLC (“ABG”) in connection with the Sports Illustrated media business. The Company’s guaranteed minimum annual royalties are $15,000, with payment to be made in advance on a quarterly basis, and the royalty fee payments are amortized monthly. The Company’s guaranteed minimum annual royalties are $15,000 and require payment in advance on a quarterly basis that are amortized monthly. As of September 30, 2022 and December 31, 2021, $0 and $11,250, respectively, were paid in advance and reflected within current assets on the condensed consolidated balance sheets.

Property and Equipment – Property and equipment are summarized as follows:

	As of
	September 30, 2022			December 31, 2021
Office equipment and computers	$	1,670		$	1,345
Furniture and fixtures		228			1
		1,898			1,346
Less accumulated depreciation and amortization		(1,105	)		(710	)
Net property and equipment	$	793		$	636

Depreciation and amortization expense for the three months ended September 30, 2022 and 2021 was $150 and $114, respectively. Depreciation and amortization expense for the nine months ended September 30, 2022 and 2021 was $395 and $334, respectively. No impairment charges have been recorded for the three and nine months ended September 30, 2022. Impairment charges of $427 have been recorded for the three and nine months ended September 30, 2021.

Platform Development – Platform development costs are summarized as follows:

	As of
	September 30, 2022			December 31, 2021
Platform development	$	19,948		$	21,997
Less accumulated amortization		(9,609	)		(12,698	)
Net platform development	$	10,339		$	9,299

Amortization expense for the three months ended September 30, 2022 and 2021, was $1,511 and $1,144, respectively. Amortization expense for the nine months ended September 30, 2022 and 2021, was $4,268 and $3,273, respectively.

A summary of platform development activity for the nine months ended September 30, 2022 is as follows:

Platform development beginning of year	$	21,997
Payroll-based costs capitalized during the period		3,990
Less dispositions		(7,357	)
Total capitalized costs		18,630
Stock-based compensation		1,529
Impairments		(211	)
Platform development end of period	$	19,948

For the nine months ended September 30, 2022, impairment charges of $211 has been recorded for platform development. For the three and nine months ended September 30, 2021, impairment charges of $435 have been recorded for platform development.

Intangible Assets – Intangible assets subject to amortization consisted of the following:

	As of September 30, 2022							As of December 31, 2021
	Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed technology	$	17,333	$	(14,069	)	$	3,264	$	17,579	$	(11,465	)	$	6,114
Trade names		5,396		(1,069	)		4,327		3,328		(782	)		2,546
Brand names		6,025		(685	)		5,340		5,175		(298	)		4,877
Subscriber relationships		73,459		(43,510	)		29,949		73,459		(32,623	)		40,836
Advertiser relationships		8,372		(1,113	)		7,259		2,240		(570	)		1,670
Digital content		355		(89	)		266		-		-			-
Database		2,397		(1,647	)		750		2,397		(1,104	)		1,293
Subtotal amortizable intangible assets		113,337		(62,182	)		51,155		104,178		(46,842	)		57,336
Website domain name		-		-			-		20		-			20
Total intangible assets	$	113,337	$	(62,182	)	$	51,155	$	104,198	$	(46,842	)	$	57,356

Amortization expense for the three months ended September 30, 2022 and 2021 was $5,230 and $5,039, respectively. Amortization expense for the nine months ended September 30, 2022 and 2021 was $15,560 and $14,941, respectively. For the three and nine months ended September 30, 2022 and 2021, impairment charges of $209 and $42, respectively, were recorded for intangible assets.

Goodwill – The changes in carrying value of goodwill are as follows:

	As of
	September 30, 2022		December 31, 2021
Carrying value at beginning of year	$	19,619	$	16,140
Goodwill acquired in acquisition of The Spun		-		3,479
Goodwill acquired in acquisition of Athlon		2,935		-
Carrying value at end of period	$	22,554	$	19,619

The Company performs its annual impairment test at the reporting unit level, which is the operating segment or one level below the operating segment. Management determined that the Company would be aggregated into a single reporting unit for purposes of performing the impairment test for goodwill.