Delaware | 0-13803 | 33-0637631 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
902 Broadway, 11 th Floor, New York, New York | 10010 | |
(Address of principal executive offices) | (Zip Code) |
Exhibit Number | Description | ||
23.1 | Consent of Moss Adams LLP | ||
99.1 | Financial statements of Wetpaint.com, Inc. | ||
99.2 | Interim financial statements of Wetpaint.com, Inc. | ||
99.3 | Unaudited pro forma combined financial statements |
VIGGLE INC. | ||
Date: January 9, 2014 | By: | /s/ Mitchell J. Nelson |
Name: Mitchell J. Nelson | ||
Title: Executive Vice President |
Report of Independent Auditors | |
Balance Sheets as of December 31, 2012 and 2011 | |
Statements of operations for the years ended December 31, 2012 and 2011 | |
Statements of comprehensive loss for the years ended December 31, 2012 and 2011 | |
Statements of convertible preferred stock and changes in stockholders’ equity (deficit) for the years ended December 31, 2012 and 2011 | |
Statements of cash flows for the years ended December 31, 2012 and 2011 | |
Notes to financial statements |
ASSETS | |||||||||||
December 31, | |||||||||||
2012 | 2011 | ||||||||||
CURRENT ASSETS | |||||||||||
Cash and cash equivalents | $ | 4,318,485 | $ | 6,125,287 | |||||||
Accounts receivable, net of allowance for doubtful | |||||||||||
accounts of $14,793 and $9,988 | 392,533 | 189,235 | |||||||||
Prepaid expenses and other current assets | 120,412 | 160,884 | |||||||||
Total current assets | 4,831,430 | 6,475,406 | |||||||||
PROPERTY AND EQUIPMENT, net | 154,097 | 162,492 | |||||||||
INTANGIBLE ASSETS, net | 186,195 | 125,704 | |||||||||
OTHER LONG-TERM ASSETS | 96,506 | 47,047 | |||||||||
$ | 5,268,228 | $ | 6,810,649 | ||||||||
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
CURRENT LIABILITIES | |||||||||||
Accounts payable | $ | 156,028 | $ | 140,233 | |||||||
Accrued expenses | 21,871 | 15,732 | |||||||||
Accrued wages and benefits | 462,610 | 409,662 | |||||||||
Deferred revenue | 1,567,857 | — | |||||||||
Total current liabilities | 2,208,366 | 565,627 | |||||||||
DEFERRED REVENUE, net of current portion | 457,143 | — | |||||||||
Total liabilities | 2,665,509 | 565,627 | |||||||||
COMMITMENTS AND CONTINGENCIES (Note 8) | |||||||||||
CONVERTIBLE PREFERRED STOCK | |||||||||||
Series C convertible preferred stock - par value $.0001 per share; | |||||||||||
2,500,000 shares authorized; 2,485,089 shares issued | |||||||||||
and outstanding; liquidation preference of $24,999,985 | 24,897,459 | 24,897,459 | |||||||||
Series B convertible preferred stock - par value $.0001 per share; | |||||||||||
3,600,000 shares authorized; 3,512,875 shares issued | |||||||||||
and outstanding; liquidation preference of $9,534,997 | 9,459,175 | 9,459,175 | |||||||||
Series A convertible preferred stock - par value $.0001 per share; | |||||||||||
5,250,000 shares authorized; 5,250,000 shares issued | |||||||||||
and outstanding; liquidation preference of $5,250,000 | 5,180,000 | 5,180,000 |
Total convertible preferred stock | 39,536,634 | 39,536,634 | |||||||||
STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
Common stock - par value $.0001 per share; 18,500,000 | |||||||||||
shares authorized; 3,722,487 and 3,690,162 shares | |||||||||||
issued and outstanding | 372 | 369 | |||||||||
Additional paid-in capital | 1,487,530 | 1,185,443 | |||||||||
Accumulated deficit | (38,421,817 | ) | (34,477,424 | ) | |||||||
Total stockholders’ equity (deficit) | (36,933,915 | ) | (33,291,612 | ) | |||||||
Total liabilities, convertible preferred stock and | |||||||||||
stockholders’ equity (deficit) | $ | 5,268,228 | $ | 6,810,649 |
Years Ended | |||||||||
December 31, | |||||||||
2012 | 2011 | ||||||||
REVENUES | |||||||||
Advertising | $ | 1,963,814 | $ | 1,455,031 | |||||
Partner service | 2,975,000 | 209,737 | |||||||
Total revenues | 4,938,814 | 1,664,768 | |||||||
COST OF REVENUE | 347,676 | 467,920 | |||||||
GROSS PROFIT | 4,591,138 | 1,196,848 | |||||||
OPERATING EXPENSES | |||||||||
Salaries and wages | 5,719,986 | 5,551,438 | |||||||
Professional fees | 1,044,039 | 1,699,976 | |||||||
Sales and marketing | 136,720 | 109,412 | |||||||
General and administrative | 1,674,433 | 1,646,335 | |||||||
Total operating expenses | 8,575,178 | 9,007,161 | |||||||
LOSS FROM OPERATIONS | (3,984,040 | ) | (7,810,313 | ) | |||||
OTHER INCOME | |||||||||
Interest income | 1,905 | 1,159 | |||||||
Other income | 37,742 | — | |||||||
Total other income | 39,647 | 1,159 | |||||||
NET LOSS | $ | (3,944,393 | ) | $ | (7,809,154 | ) |
Years Ended | ||||||||||
December 31, | ||||||||||
2012 | 2011 | |||||||||
NET LOSS | $ | (3,944,393 | ) | $ | (7,809,154 | ) | ||||
REALIZED GAIN FROM SALE OF MARKETABLE SECURITIES | — | (4,663 | ) | |||||||
COMPREHENSIVE LOSS | $ | (3,944,393 | ) | $ | (7,813,817 | ) |
Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||
Series C Convertible | Series B Convertible | Series A Convertible | Additional | Other | Total | |||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Convertible | Common Stock | Paid-In | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Preferred Stock | Shares | Amount | Capital | Deficit | Income | Equity(Deficit) | ||||||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2010 | 2,485,089 | $ | 24,897,459 | 3,512,875 | $ | 9,459,175 | 5,250,000 | $ | 5,180,000 | $ | 39,536,634 | 3,655,787 | $ | 366 | $ | 1,133,596 | $ | (26,668,270 | ) | $ | 4,663 | $ | (25,529,645 | ) | ||||||||||||||||||||||||||
Exercise of common stock options | — | — | — | — | — | — | — | 34,375 | 3 | 5,362 | — | — | 5,365 | |||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | 46,485 | — | — | 46,485 | |||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (7,809,154 | ) | — | (7,809,154 | ) | |||||||||||||||||||||||||||||||||||
Realized gain from sale of | ||||||||||||||||||||||||||||||||||||||||||||||||||
marketable securities | — | — | — | — | — | — | — | — | — | — | — | (4,663 | ) | (4,663 | ) | |||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2011 | 2,485,089 | 24,897,459 | 3,512,875 | 9,459,175 | 5,250,000 | 5,180,000 | 39,536,634 | 3,690,162 | 369 | 1,185,443 | (34,477,424 | ) | — | (33,291,612 | ) | |||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | — | — | — | — | — | 32,325 | 3 | 3,593 | — | — | 3,596 | |||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | 298,494 | — | — | 298,494 | |||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (3,944,393 | ) | — | (3,944,393 | ) | |||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2012 | 2,485,089 | $ | 24,897,459 | 3,512,875 | $ | 9,459,175 | 5,250,000 | $ | 5,180,000 | $ | 39,536,634 | 3,722,487 | $ | 372 | $ | 1,487,530 | $ | (38,421,817 | ) | — | $ | (36,933,915 | ) |
Years Ended | |||||||||||
December 31, | |||||||||||
2012 | 2011 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net loss | $ | (3,944,393 | ) | $ | (7,809,154 | ) | |||||
Adjustments to reconcile net loss to net cash | |||||||||||
used in operating activities | |||||||||||
Depreciation and amortization | 103,185 | 167,481 | |||||||||
Impairment of intangible assets | — | 40,443 | |||||||||
Stock-based compensation | 298,494 | 46,485 | |||||||||
Realization of gain from sale of investments | — | (4,663 | ) | ||||||||
Change in assets and liabilities | |||||||||||
Accounts receivable, net | (203,298 | ) | (13,698 | ) | |||||||
Prepaid expenses and other current assets | 40,472 | (3,677 | ) | ||||||||
Other long-term assets | (49,459 | ) | 11,110 | ||||||||
Accounts payable | 15,795 | (88,725 | ) | ||||||||
Accrued expenses | 6,139 | 58,508 | |||||||||
Accrued wages and benefits | 52,948 | (68,833 | ) | ||||||||
Deferred revenue | 2,025,000 | (5,000 | ) | ||||||||
Net cash used in operating activities | (1,655,117 | ) | (7,669,723 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Purchases of marketable securities | — | (617,478 | ) | ||||||||
Sales of marketable securities | — | 7,194,096 | |||||||||
Purchases of property and equipment | (87,827 | ) | (94,849 | ) | |||||||
Capitalized license costs | (15,000 | ) | — | ||||||||
Capitalized patent costs | (52,454 | ) | (3,128 | ) | |||||||
Net cash (used in) provided by investing activities | (155,281 | ) | 6,478,641 | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Exercise of employee stock options | 3,596 | 5,365 | |||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (1,806,802 | ) | (1,185,717 | ) | |||||||
CASH AND CASH EQUIVALENTS | |||||||||||
Beginning of year | 6,125,287 | 7,311,004 | |||||||||
End of year | $ | 4,318,485 | $ | 6,125,287 |
2012 | 2011 | ||||
Dividend yield | —% | —% | |||
Risk-free interest rate | 0.40% | 0.98% | |||
Expected life | 6.25 years | 6.25 years | |||
Expected volatility | 79% | 83% |
2012 | 2011 | ||||||||
Computer equipment | $ | 662,747 | $ | 623,251 | |||||
Office equipment and furniture | 152,276 | 133,855 | |||||||
Leasehold improvements | 89,671 | 70,862 | |||||||
Software | 54,322 | 43,222 | |||||||
959,016 | 871,190 | ||||||||
Less: Accumulated depreciation and amortization | (804,919 | ) | (708,698 | ) | |||||
Property and equipment, net | $ | 154,097 | $ | 162,492 |
Net | |||||||||||
Accumulated | Carrying | ||||||||||
Cost | Amortization | Value | |||||||||
Patents | $ | 121,856 | $ | — | $ | 121,856 | |||||
Trademarks | 67,616 | 22,175 | 45,441 | ||||||||
Domain names | 8,415 | 3,600 | 4,815 | ||||||||
Licenses | 15,000 | 917 | 14,083 | ||||||||
Total | $ | 212,887 | $ | 26,692 | $ | 186,195 |
Net | |||||||||||
Accumulated | Carrying | ||||||||||
Cost | Amortization | Value | |||||||||
Patents | $ | 70,378 | $ | — | $ | 70,378 | |||||
Trademarks | 67,616 | 17,666 | 49,950 | ||||||||
Domain names | 8,415 | 3,039 | 5,376 | ||||||||
Total | $ | 146,409 | $ | 20,705 | $ | 125,704 |
2013 | $ | 5,987 | ||
2014 | 6,070 | |||
2015 | 6,070 | |||
2016 | 6,070 | |||
2017 | 6,070 | |||
Thereafter | 155,928 | |||
Total | $ | 186,195 |
Weighted | ||||||||||
Weighted | Average | |||||||||
Average | Remaining | |||||||||
Options | Exercise | Contractual | ||||||||
Outstanding | Price | Life (in years) | ||||||||
Outstanding at December 31, 2010 | 3,026,336 | $ | 0.84 | 7.80 | ||||||
Options granted | 479,050 | |||||||||
Options exercised | (34,375 | ) | ||||||||
Options forfeited or cancelled | (727,020 | ) | ||||||||
Outstanding at December 31, 2011 | 2,743,991 | $ | 0.79 | 7.06 | ||||||
Options granted | 335,450 | |||||||||
Options exercised | (32,325 | ) | ||||||||
Options forfeited or cancelled | (202,075 | ) | ||||||||
Outstanding at December 31, 2012 | 2,845,041 | $ | 0.77 | 6.40 | ||||||
Vested and expected to vest at December 31, 2012 | 2,845,041 | $ | 0.70 | 5.63 | ||||||
Exercisable at December 31, 2012 | 2,073,612 | $ | 0.78 | 5.78 |
2012 | 2011 | ||||||||
Deferred tax assets | |||||||||
Net operating loss carryforwards | $ | 13,114,194 | $ | 11,828,234 | |||||
Non-qualified stock options | 51,105 | 30,575 | |||||||
Accrued expenses | 54,244 | 44,390 | |||||||
Fixed assets and intangibles | 26,828 | 33,718 | |||||||
Allowance for bad debts | 5,268 | 3,551 | |||||||
Total deferred tax assets | 13,251,639 | 11,940,468 | |||||||
Deferred tax liabilities | |||||||||
Unrealized gains | (3,631 | ) | (3,625 | ) | |||||
13,248,008 | 11,936,843 | ||||||||
Less: Valuation allowance | (13,248,008 | ) | (11,936,843 | ) | |||||
$ | — | $ | — |
Years Ended | ||||
December 31, | ||||
2012 | 2011 | |||
Total Revenue | ||||
North America | $1,963,814 | $1,455,031 | ||
Europe | 2,975,000 | 209,737 | ||
$4,938,814 | $1,664,768 |
Balance Sheets as of September 30, 2013 and 2012 | |
Statements of operations for the nine months ended September 30, 2013 and 2012 | |
Statements of convertible preferred stock and changes in stockholders’ equity (deficit) for the nine months ended September 30, 2013 and 2012 | |
Statements of cash flows for the nine months ended September 30, 2013 and 2012 | |
Notes to financial statements |
ASSETS | |||||||||||
September 30, | |||||||||||
2013 | 2012 | ||||||||||
CURRENT ASSETS | |||||||||||
Cash and cash equivalents | $ | 904,336 | $ | 5,285,333 | |||||||
Accounts receivable, net of allowance for doubtful | |||||||||||
accounts of $27,528 and $11,095 | 505,250 | 1,157,271 | |||||||||
Prepaid expenses and other current assets | 118,242 | 82,337 | |||||||||
Total current assets | 1,527,828 | 6,524,941 | |||||||||
PROPERTY AND EQUIPMENT, net | 92,329 | 156,848 | |||||||||
INTANGIBLE ASSETS, net | 311,040 | 161,764 | |||||||||
OTHER LONG-TERM ASSETS | 103,266 | 96,506 | |||||||||
$ | 2,034,463 | $ | 6,940,059 | ||||||||
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
CURRENT LIABILITIES | |||||||||||
Accounts payable | $ | 152,843 | $ | 160,453 | |||||||
Accrued expenses | 21,491 | 27,276 | |||||||||
Accrued wages and benefits | 456,508 | 462,092 | |||||||||
Deferred revenue | 719,043 | 2,842,857 | |||||||||
Total current liabilities | 1,349,885 | 3,492,678 | |||||||||
DEFERRED REVENUE, net of current portion | — | 457,143 | |||||||||
Total liabilities | 1,349,885 | 3,949,821 | |||||||||
COMMITMENTS AND CONTINGENCIES (Note 8) | |||||||||||
CONVERTIBLE PREFERRED STOCK | |||||||||||
Series C convertible preferred stock - par value $.0001 per share; | |||||||||||
2,500,000 shares authorized; 2,485,089 shares issued | |||||||||||
and outstanding; liquidation preference of $24,999,985 | 24,897,459 | 24,897,459 | |||||||||
Series B convertible preferred stock - par value $.0001 per share; | |||||||||||
3,600,000 shares authorized; 3,512,875 shares issued | |||||||||||
and outstanding; liquidation preference of $9,534,997 | 9,459,175 | 9,459,175 | |||||||||
Series A convertible preferred stock - par value $.0001 per share; | |||||||||||
5,250,000 shares authorized; 5,250,000 shares issued | |||||||||||
and outstanding; liquidation preference of $5,250,000 | 5,180,000 | 5,180,000 | |||||||||
Total convertible preferred stock | 39,536,634 | 39,536,634 | |||||||||
STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
Common stock - par value $.0001 per share; 18,500,000 | |||||||||||
shares authorized; 3,722,487 and 3,692,487 shares issued | |||||||||||
and outstanding at September 30, 2013 and 2012, respectively | 372 | 369 | |||||||||
Additional paid-in capital | 1,574,348 | 1,358,204 | |||||||||
Accumulated deficit | (40,426,776 | ) | (37,904,969 | ) | |||||||
Total stockholders’ deficit | (38,852,056 | ) | (36,546,396 | ) | |||||||
Total liabilities, convertible preferred stock and | |||||||||||
stockholders’ equity (deficit) | $ | 2,034,463 | $ | 6,940,059 |
Nine Months Ended | |||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
REVENUES | |||||||||
Advertising | $ | 1,518,247 | $ | 1,413,364 | |||||
Partner service | 2,805,957 | 1,700,000 | |||||||
Total revenues | 4,324,204 | 3,113,364 | |||||||
COST OF REVENUE | 82,642 | 258,148 | |||||||
GROSS PROFIT | 4,241,562 | 2,855,216 | |||||||
OPERATING EXPENSES | |||||||||
Salaries and wages | 4,144,346 | 4,184,135 | |||||||
Professional fees | 898,814 | 758,450 | |||||||
Sales and marketing | 14,746 | 99,222 | |||||||
General and administrative | 1,189,025 | 1,242,787 | |||||||
Total operating expenses | 6,246,931 | 6,284,594 | |||||||
LOSS FROM OPERATIONS | (2,005,369 | ) | (3,429,378 | ) | |||||
INTEREST INCOME | 410 | 1,833 | |||||||
NET LOSS | $ | (2,004,959 | ) | $ | (3,427,545 | ) |
Series C Convertible | Series B Convertible | Series A Convertible | Additional | Total | ||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Convertible | Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Preferred Stock | Shares | Amount | Capital | Deficit | Equity (Deficit) | |||||||||||||||||||||||||||||||||
BALANCE, December 31, 2012 | 2,485,089 | $ | 24,897,459 | 3,512,875 | $ | 9,459,175 | 5,250,000 | $ | 5,180,000 | $ | 39,536,634 | 3,722,487 | $ | 372 | $ | 1,487,530 | $ | (38,421,817 | ) | $ | (36,933,915 | ) | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | 86,818 | — | 86,818 | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (2,004,959 | ) | (2,004,959 | ) | ||||||||||||||||||||||||||||||
BALANCE, September 30, 2013 | 2,485,089 | $ | 24,897,459 | 3,512,875 | $ | 9,459,175 | 5,250,000 | $ | 5,180,000 | $ | 39,536,634 | 3,722,487 | $ | 372 | $ | 1,574,348 | $ | (40,426,776 | ) | $ | (38,852,056 | ) | ||||||||||||||||||||||
Series C Convertible | Series B Convertible | Series A Convertible | Additional | Total | ||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Convertible | Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Preferred Stock | Shares | Amount | Capital | Deficit | Equity (Deficit) | |||||||||||||||||||||||||||||||||
BALANCE, December 31, 2011 | 2,485,089 | $ | 24,897,459 | 3,512,875 | $ | 9,459,175 | 5,250,000 | $ | 5,180,000 | $ | 39,536,634 | 3,690,162 | $ | 369 | $ | 1,185,443 | $ | (34,477,424 | ) | $ | (33,291,612 | ) | ||||||||||||||||||||||
Exercise of common stock options | — | — | — | — | — | — | — | 2,325 | — | 595 | — | 595 | ||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | 172,166 | — | 172,166 | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (3,427,545 | ) | (3,427,545 | ) | ||||||||||||||||||||||||||||||
BALANCE, September 30, 2012 | 2,485,089 | $ | 24,897,459 | 3,512,875 | $ | 9,459,175 | 5,250,000 | $ | 5,180,000 | $ | 39,536,634 | 3,692,487 | $ | 369 | $ | 1,358,204 | $ | (37,904,969 | ) | $ | (36,546,396 | ) |
Nine Months Ended | |||||||||||
September 30, | |||||||||||
2013 | 2012 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net loss | $ | (2,004,959 | ) | $ | (3,427,545 | ) | |||||
Adjustments to reconcile net loss to net cash | |||||||||||
used in operating activities | |||||||||||
Depreciation and amortization | 74,072 | 75,975 | |||||||||
Stock-based compensation | 86,818 | 172,166 | |||||||||
Gain from sale of intangible assets | (25,000 | ) | — | ||||||||
Change in assets and liabilities | |||||||||||
Accounts receivable, net | (112,717 | ) | (968,036 | ) | |||||||
Prepaid expenses and other current assets | 2,170 | 78,547 | |||||||||
Other long-term assets | (6,760 | ) | (49,459 | ) | |||||||
Accounts payable | (3,185 | ) | 20,220 | ||||||||
Accrued wages and benefits | (6,102 | ) | 52,430 | ||||||||
Accrued expenses | (380 | ) | 11,544 | ||||||||
Deferred revenue | (1,305,957 | ) | 3,300,000 | ||||||||
Net cash used in operating activities | (3,302,000 | ) | (734,158 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Purchases of property and equipment | (6,079 | ) | (65,863 | ) | |||||||
Sale of intangible assets | 25,000 | — | |||||||||
Capitalized license costs | — | (15,000 | ) | ||||||||
Capitalized patent costs | (131,070 | ) | (25,528 | ) | |||||||
Net cash used in investing activities | (112,149 | ) | (106,391 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Cash proceeds from exercise of employee stock options | — | 595 | |||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (3,414,149 | ) | (839,954 | ) | |||||||
CASH AND CASH EQUIVALENTS | |||||||||||
Beginning of year | 4,318,485 | 6,125,287 | |||||||||
End of period | $ | 904,336 | $ | 5,285,333 |
2013 | 2012 | ||||
Dividend yield | —% | —% | |||
Risk-free interest rate | 0.52% | 0.40% | |||
Expected life | 6.25 years | 6.25 years | |||
Expected volatility | 59% | 77% |
Net | |||||||||||
Accumulated | Carrying | ||||||||||
Cost | Amortization | Value | |||||||||
Patents | $ | 251,154 | $ | — | $ | 251,154 | |||||
Trademarks | 67,616 | 25,557 | 42,059 | ||||||||
Domain names | 8,515 | 4,021 | 4,494 | ||||||||
Licenses | 15,000 | 1,667 | 13,333 | ||||||||
Total | $ | 342,285 | $ | 31,245 | $ | 311,040 |
Net | |||||||||||
Accumulated | Carrying | ||||||||||
Cost | Amortization | Value | |||||||||
Patents | $ | 95,808 | $ | — | $ | 95,808 | |||||
Trademarks | 67,616 | 21,048 | 46,568 | ||||||||
Domain names | 8,515 | 3,460 | 5,055 | ||||||||
Licenses | 15,000 | 667 | 14,333 | ||||||||
Total | $ | 186,939 | $ | 25,175 | $ | 161,764 |
Weighted | ||||||||||
Weighted | Average | |||||||||
Average | Remaining | |||||||||
Options | Exercise | Contractual | ||||||||
Outstanding | Price | Life (in years) | ||||||||
Outstanding at December 31, 2012 | 2,845,041 | $ | 0.77 | 6.40 | ||||||
Options granted | 290,450 | |||||||||
Options forfeited or canceled | (761,802 | ) | ||||||||
Outstanding at September 30, 2013 | 2,373,689 | $ | 0.82 | 6.53 | ||||||
Vested and expected to vest at September 30, 2013 | 2,111,630 | $ | 0.73 | 6.23 | ||||||
Exercisable at September 30, 2013 | 1,778,424 | $ | 0.89 | 5.91 |
Weighted | ||||||||||
Weighted | Average | |||||||||
Average | Remaining | |||||||||
Options | Exercise | Contractual | ||||||||
Outstanding | Price | Life (in years) | ||||||||
Outstanding at December 31, 2011 | 2,743,991 | $ | 0.79 | 7.06 | ||||||
Options granted | 247,900 | |||||||||
Options exercised | (2,325 | ) | ||||||||
Options forfeited or canceled | (232,075 | ) | ||||||||
Outstanding at September 30, 2012 | 2,757,491 | $ | 0.77 | 4.05 | ||||||
Vested and expected to vest at September 30, 2012 | 2,412,180 | $ | 0.69 | 5.69 | ||||||
Exercisable at September 30, 2012 | 2,002,050 | $ | 0.76 | 5.82 |
2013 | 2012 | ||||||||
Deferred tax assets | |||||||||
Net operating loss carryforwards | $ | 14,040,548 | $ | 13,015,176 | |||||
Non-qualified stock options | 57,216 | 51,104 | |||||||
Accrued expenses | 69,637 | 54,246 | |||||||
Fixed assets and intangibles | 28,749 | 26,828 | |||||||
Allowance for bad debts | 9,983 | 5,268 | |||||||
Total deferred tax assets | 14,206,133 | 13,152,622 | |||||||
Deferred tax liabilities | |||||||||
Unrealized gains | (3,697 | ) | (3,631 | ) | |||||
14,202,436 | 13,148,991 | ||||||||
Less: Valuation allowance | (14,202,436 | ) | (13,148,991 | ) | |||||
$ | — | $ | — |
Remainder of 2013 | $ | 118,664 | |
2014 | 106,128 | ||
2015 | 36,256 | ||
Total | $ | 261,048 |
Nine Months Ended | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
Total Revenue | ||||||||
North America | $ | 1,518,247 | $ | 1,413,364 | ||||
Europe | 2,805,957 | 1,700,000 | ||||||
$ | 4,324,204 | $ | 3,113,364 |
Three Months Ended September 30, 2013 | |||||||||||||||
Historical | Historical | Pro forma | Pro forma | ||||||||||||
Viggle | Wetpaint | Adjustments | Combined | ||||||||||||
Revenues | $ | 4,338 | $ | 1,685 | $ | 6,023 | |||||||||
Cost of watchpoints and engagement points | (2,579 | ) | (2,579 | ) | |||||||||||
Selling, general and administrative | (25,334 | ) | (2,022 | ) | $ | (642 | ) | a | (27,998 | ) | |||||
Operating loss | (23,575 | ) | (337 | ) | (642 | ) | (24,554 | ) | |||||||
Other income: | |||||||||||||||
Other expense | 84 | 25 | — | 109 | |||||||||||
Interest (expense) income, net | (768 | ) | — | — | (768 | ) | |||||||||
Total other income | (684 | ) | 25 | — | (659 | ) | |||||||||
Net loss before income taxes | (24,259 | ) | (312 | ) | (642 | ) | (25,213 | ) | |||||||
Income taxes | (22 | ) | — | — | (22 | ) | |||||||||
Net loss | $ | (24,281 | ) | $ | (312 | ) | $ | (642 | ) | $ | (25,235 | ) | |||
Net loss per common share - basic and diluted | $ | (0.27 | ) | $ | (0.19 | ) | |||||||||
Weighted average common shares outstanding - basic and diluted | 88,701,516 | 43,273,694 | b | 131,975,210 |
Year Ended June 30, 2013 | |||||||||||||||
Historical | Historical | Pro forma | Pro forma | ||||||||||||
Viggle | Wetpaint | Adjustments | Combined | ||||||||||||
Revenues | $ | 13,907 | $ | 6,222 | $ | 20,129 | |||||||||
Cost of watchpoints and engagement points | (8,461 | ) | (8,461 | ) | |||||||||||
Selling, general and administrative | (102,433 | ) | (9,151 | ) | $ | (2,569 | ) | a | (114,153 | ) | |||||
Operating loss | (96,987 | ) | (2,929 | ) | (2,569 | ) | (102,485 | ) | |||||||
Other income: | |||||||||||||||
Other income (expense) | 7,062 | 38 | — | 7,100 | |||||||||||
Interest (expense) income, net | (1,408 | ) | 1 | — | (1,407 | ) | |||||||||
Total other income | 5,654 | 39 | — | 5,693 | |||||||||||
Net loss before provision for income taxes | (91,333 | ) | (2,890 | ) | (2,569 | ) | (96,792 | ) | |||||||
Income tax expense | (70 | ) | — | — | (70 | ) | |||||||||
Net loss | $ | (91,403 | ) | $ | (2,890 | ) | $ | (2,569 | ) | $ | (96,862 | ) | |||
Net loss per common share - basic and diluted | $ | (1.12 | ) | $ | (0.78 | ) | |||||||||
Weighted average common shares outstanding - basic and diluted | 81,445,220 | 43,273,694 | b | 124,718,914 |
As of September 30, 2013 | |||||||||||||||
Historical | Historical | Pro forma | Pro forma | ||||||||||||
Assets | Viggle | Wetpaint | Adjustments | Combined | |||||||||||
Current Assets: | |||||||||||||||
Cash and Cash Equivalents | $ | 1,792 | $ | 905 | $ | (2,116 | ) | c | $ | 581 | |||||
Accounts Receivable, net | 2,239 | 505 | 2,744 | ||||||||||||
Prepaid Expenses | 879 | 118 | 997 | ||||||||||||
Other Receivables | 329 | 329 | |||||||||||||
Total current assets | 5,239 | 1,528 | (2,116 | ) | 4,651 | ||||||||||
Restricted Cash | 696 | 696 | |||||||||||||
Equipment, Net | 2,753 | 92 | 2,845 | ||||||||||||
Intangibles, Net | 4,367 | 311 | 17,674 | d | 22,352 | ||||||||||
Goodwill | 2,953 | 24,836 | e | 27,789 | |||||||||||
Other assets | 56 | 103 | 159 | ||||||||||||
Total assets | $ | 16,064 | $ | 2,034 | $ | 40,393 | $ | 58,491 | |||||||
Liabilities, convertible redeemable preferred stock and stockholders' deficit | |||||||||||||||
Current liabilities | |||||||||||||||
Accounts Payable and Accrued Expenses | 4,874 | 631 | 9,523 | f | 15,028 | ||||||||||
Reward points payable | 8,837 | 8,837 | |||||||||||||
Common stock warrant liability | 283 | 283 | |||||||||||||
Deferred revenue | — | 719 | 719 | ||||||||||||
Current Portion of Loan Payable | 10,000 | 10,000 | |||||||||||||
Total current liabilities | 23,994 | 1,350 | 9,523 | 34,867 | |||||||||||
Loans Payable, less current portion | 11,000 | 11,000 | |||||||||||||
Other Long-Term Liabilities | 1,275 | 1,275 | |||||||||||||
Total liabilities | 36,269 | 1,350 | 9,523 | 47,142 | |||||||||||
Series A Convertible Redeemable Preferred Stock, $1,000 stated value, authorized 100,000 shares, issued and outstanding 33,320 shares as of September 30, 2013 | 36,837 | 36,837 | |||||||||||||
Series C Convertible Preferred Stock, par value $.0001 per share, 2,500,000 shares authorized, 2,485,089 shares issued and outstanding | 24,897 | (24,897 | ) | g | — | ||||||||||
Series B Convertible Preferred Stock, par value $.0001 per share, 3,600,000 shares authorized, 3,512,875 shares issued and outstanding | 9,459 | (9,459 | ) | g | — | ||||||||||
Series A Convertible Preferred Stock, par value $.0001 per share, 5,250,000 shares authorized, 5,250,000 shares issued and outstanding | 5,180 | (5,180 | ) | g | — | ||||||||||
Commitments and contingencies | |||||||||||||||
Stockholders' Deficit | |||||||||||||||
Series B Convertible Preferred Stock, $1,000 stated value, authorized 50,000 shares, issued and outstanding 21,364 shares as of September 30, 2013 | 3,916 | 3,916 | |||||||||||||
Common stock, $0.001 par value: authorized 300,000,000 shares, issued and outstanding 75,202,298 shares as of September 30, 2013 | 75 | — | 49 | b | 124 | ||||||||||
Additional paid-in-capital | 198,214 | 1,574 | 33,851 | b g | 233,639 | ||||||||||
Treasury stock, 15,922,154 shares as of September 30, 2013 | (10,986 | ) | (10,986 | ) | |||||||||||
Due from Executive Officer | (3,595 | ) | (3,595 | ) | |||||||||||
Accumulated deficit | (244,666 | ) | (40,426 | ) | 36,506 | g | (248,586 | ) | |||||||
Total stockholders' deficit | (57,042 | ) | (38,852 | ) | 70,406 | (25,488 | ) | ||||||||
Total liabilities, convertible preferred stock and stockholders' deficit | $ | 16,064 | $ | 2,034 | $ | 40,393 | $ | 58,491 |
1. | Description of the Transactions |
2. | Basis of Presentation |
3. | Pro Forma Adjustments |
Consideration transferred: | As of September 30, 2013 | ||
Shares of Viggle common stock and restricted stock units based on closing market price prior to the Acquisition | $ | 31,554 | |
Payable to sellers | 1,619 | ||
Contingent Consideration | 6,100 | ||
Total consideration transferred | 39,273 | ||
Preliminary allocation: | |||
Goodwill | 24,836 | ||
Intangible assets | 17,984 | ||
Other assets | 1,723 | ||
Total liabilities, including acquired accrued expenses | (5,270 | ) | |
$ | 39,273 |
(a) | Represents amortization of intangible assets acquired in the Acquisition based on their preliminary fair values and useful lives. Estimated useful lives of the intangible assets are approximately 7 years and amortization is calculated on a straight-line basis. |
(b) | Represents the issuance of 43,273,694 shares of common stock and 6,030,481 restricted stock units in connection with the Acquisition. |
(c) | Represents payment of $2.1 million for certain transaction expenses and bonus and premium payments to Wetpaint employees. |
(d) | Represents the elimination of previous Wetpaint intangible assets and the preliminary estimate of the fair value of the acquired intangible assets of Wetpaint. Intangible assets that have been identified include technology, trademarks, and customer relationships. |
(e) | Represents the difference between the estimated purchase price and the preliminary estimated fair values of the identified assets acquired and liabilities assumed. |
(f) | Represents liabilities of $1.6 million to be paid to former Wetpaint stockholders, $1.8 million for certain transaction expenses and bonus payments to Wetpaint employees and $6.1 million recorded for contingent consideration as described in Note 1. |
(g) | Represents the elimination of Wetpaint’s historical convertible preferred stock, common stock and accumulated deficit, and the recording of certain acquired accrued expenses. |