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Discontinued Operations
9 Months Ended
Sep. 30, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

2. Discontinued Operations

 

On March 18, 2024, the Company discontinued the Sports Illustrated media business (the “SI Business”) that was operated under the Licensing Agreement with ABG-SI, LLC (“ABG”) dated June 14, 2019 (as amended to date, the “Licensing Agreement”). This discontinuation of the SI Business (i.e., discontinued operations) followed the termination of the Licensing Agreement by ABG on January 18, 2024. The last date of any obligation of the Company to perform under the Licensing Agreement was March 18, 2024. In connection with the termination, certain ABG Warrants vested (further details are provided under the heading Vesting of Warrants in Note 15).

 

 

The table below sets forth the loss from discontinued operations:

 

   2024   2023   2024   2023 
  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2024   2023   2024   2023 
   ($ in thousands, except share data) 
Revenue  $45   $26,422   $22,297   $74,118 
Cost of revenue   160    12,199    15,006    40,431 
Gross profit (loss)   (115)   14,223    7,291    33,687 
Operating expense                    
Selling and marketing   140    12,849    12,142    37,570 
General and administrative (1)   567    88    46,060    287 
Depreciation and amortization   -    3,671    2,401    11,011 
Loss on impairment of assets (2)   -    -    39,391    - 
Total operating expenses   707    16,608    99,994    48,868 
Loss from discontinued operations   (822)   (2,385)   (92,703)   (15,181)
Income tax provision   -    (9)   (6)   (23)
Net loss from discontinued operations  $(822)  $(2,394)  $(92,709)  $(15,204)

 

(1) General and administrative expenses for the nine months ended September 30, 2024, includes a $45,000 termination fee liability.

 

(2) Loss on impairment of assets for the nine months ended September 30, 2024 of $39,391, includes $8,601 for the impairment of intangible assets and $30,790 for the impairment of subscription acquisition costs.

 

The table below sets forth the major classes of assets and liabilities of the discontinued operations:

 

   September 30, 2024   December 31, 2023 
   As of 
   September 30, 2024   December 31, 2023 
Assets        
Accounts receivable, net  $528   $13,135 
Subscription acquisition costs, current portion   -    29,706 
Prepayments and other current assets   -    807 
Current assets from discontinued operations   528    43,648 
Subscription acquisition costs, net of current portion   -    7,215 
Acquired and other intangibles assets, net   -    11,002 
Noncurrent assets from discontinued operations   -    18,217 
Total assets from discontinued operations  $528   $61,865 
Liabilities          
Accounts payable  $1,994   $2,554 
Accrued expenses and other   1,927    1,868 
Subscription refund liability   423    403 
Royalty fee liability (1)   3,750    - 
Termination fee liability (1)   45,000    - 
Subscription liability, current portion   45,284    42,848 
Current liabilities from discontinued operations   98,378    47,673 
Subscription liability, net of current portion   -    10,137 
Noncurrent liabilities from discontinued operations   -    10,137 
Total liabilities from discontinued operations  $98,378   $57,810 

 

(1) Further details related to the alleged and disputed royalty fee liability of $3,750 and termination fee liability of $45,000 are described under the heading ABG Group Legal Matters in Note 19.

 

 

The table below sets forth the cash flows of the discontinued operations:

 

   2024   2023 
  

Nine Months Ended

September 30,

 
   2024   2023 
Cash flows from operating activities from discontinued operations          
Net loss from discontinued operations  $(92,709)  $(15,204)
Adjustments to reconcile net loss to net cash used in operating activities:          
Amortization of intangible assets   2,401    11,011 
Loss on impairment of assets   39,391    - 
Stock-based compensation   592    1,861 
Bad debt expense   561    - 
Change in operating assets and liabilities:          
Accounts receivable, net   12,046    2,770 
Subscription acquisition costs   6,131    (1,631)
Prepayments and other current assets   807    422 
Accounts payable   3,190    (3,739)
Accrued expenses and other   59    707 
Subscription refund liability   20    (371)
Subscription liability   (7,701)   (276)
Termination fee liability   45,000    - 
Net cash provided by operating activities from discontinued operations  $9,788   $(4,450)

 

Further details regarding legal matters in connection with the discontinued operations are provided under the heading ABG Group Legal Matters in Note 19.