x
¨ 2023
Delaware | 37-1958714 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
10960 Wilshire Blvd., Suite 2200 | ||||||||
Los Angeles, California 90024 | ||||||||
(Address of |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||
Common Stock, $0.0001 par value per share | PLBY | |||||||||
☐
☐
Large accelerated filer | Accelerated filer | ☒ | |||||||||
Smaller reporting company | ☒ | ||||||||||
Emerging growth company | £ | ||||||||||
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As☒
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MOUNTAIN CREST ACQUISITION CORP
June 30, 2020 | December 31, 2019 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 340,118 | $ | — | ||||
Prepaid expenses | 86,467 | — | ||||||
Total Current Assets | 426,585 | — | ||||||
Deferred offering costs | — | 100,231 | ||||||
Deferred tax asset | 246 | — | ||||||
Marketable securities held in Trust Account | 58,650,863 | — | ||||||
Total Assets | $ | 59,077,694 | $ | 100,231 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
Current liabilities | ||||||||
Accrued expenses | $ | 16,416 | $ | 225 | ||||
Accrued offering costs | 4,000 | — | ||||||
Promissory note – related party | — | 100,498 | ||||||
Total Current Liabilities | 20,416 | 100,723 | ||||||
Deferred underwriting fee payable | 2,012,430 | — | ||||||
Total Liabilities | 2,032,846 | 100,723 | ||||||
Commitments | ||||||||
Common stock subject to possible redemption, 5,102,647 shares at redemption value | 52,044,843 | — | ||||||
Stockholders’ Equity (Deficit) | ||||||||
Common stock, $0.0001 par value; 30,000,000 shares authorized; 2,439,844 and 1,437,500 shares issued and outstanding (excluding 5,102,647 and no shares subject to possible redemption) at June 30, 2020 and December 31, 2019, respectively (1) | 244 | 144 | ||||||
Additional paid in capital | 5,020,064 | 24,856 | ||||||
Stock subscription receivable | — | (25,000 | ) | |||||
Accumulated deficit | (20,303 | ) | (492 | ) | ||||
Total Stockholders’ Equity (Deficit) | 5,000,005 | (492 | ) | |||||
Total Liabilities and Stockholders’ Equity (Deficit) | $ | 59,077,694 | $ | 100,231 |
Unaudited Condensed Consolidated Financial Statements.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net revenues | $ | 33,282 | $ | 45,706 | $ | 103,586 | $ | 140,647 | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||
Cost of sales | (10,909) | (25,302) | (43,545) | (62,833) | ||||||||||||||||||||||
Selling and administrative expenses | (25,514) | (34,988) | (99,693) | (113,774) | ||||||||||||||||||||||
Contingent consideration fair value remeasurement gain | 219 | 1,371 | 486 | 29,310 | ||||||||||||||||||||||
Impairments | (7,674) | (277,197) | (155,864) | (283,496) | ||||||||||||||||||||||
Gain on sale of the aircraft | — | 5,802 | — | 5,802 | ||||||||||||||||||||||
Other operating expense, net | (740) | — | (491) | — | ||||||||||||||||||||||
Total operating expense | (44,618) | (330,314) | (299,107) | (424,991) | ||||||||||||||||||||||
Operating loss | (11,336) | (284,608) | (195,521) | (284,344) | ||||||||||||||||||||||
Nonoperating (expense) income: | ||||||||||||||||||||||||||
Interest expense | (6,620) | (4,306) | (17,586) | (12,439) | ||||||||||||||||||||||
(Loss) gain on extinguishment of debt | — | (220) | 6,133 | (220) | ||||||||||||||||||||||
Fair value remeasurement gain | — | 9,149 | 6,505 | 10,903 | ||||||||||||||||||||||
Other income (expense), net | 121 | (551) | 621 | (1,030) | ||||||||||||||||||||||
Total nonoperating (expense) income | (6,499) | 4,072 | (4,327) | (2,786) | ||||||||||||||||||||||
Loss from continuing operations before income taxes | (17,835) | (280,536) | (199,848) | (287,130) | ||||||||||||||||||||||
Benefit from income taxes | 1,442 | 43,653 | 13,062 | 46,301 | ||||||||||||||||||||||
Net loss from continuing operations | (16,393) | (236,883) | (186,786) | (240,829) | ||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | 1,319 | (27,814) | 149 | (26,640) | ||||||||||||||||||||||
Net loss | (15,074) | (264,697) | (186,637) | (267,469) | ||||||||||||||||||||||
Net loss attributable to PLBY Group, Inc. | $ | (15,074) | $ | (264,697) | $ | (186,637) | $ | (267,469) | ||||||||||||||||||
Net loss per share from continuing operations, basic and diluted | $ | (0.22) | $ | (5.05) | $ | (2.65) | $ | (5.18) | ||||||||||||||||||
Net income (loss) per share from discontinued operations, basic and diluted | 0.02 | (0.60) | — | (0.58) | ||||||||||||||||||||||
Net loss per share, basic and diluted | $ | (0.20) | $ | (5.65) | $ | (2.65) | $ | (5.76) | ||||||||||||||||||
Weighted-average shares outstanding, basic and diluted | 73,891,105 | 46,889,983 | 70,611,492 | 46,472,607 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2020 | 2020 | |||||||
Operating and formation costs | $ | 22,749 | $ | 22,960 | ||||
Loss from operations | (22,749 | ) | (22,960 | ) | ||||
Other income: | ||||||||
Interest earned on marketable securities held in Trust Account | 4,074 | 4,074 | ||||||
Unrealized loss on marketable securities held in Trust Account | (1,171 | ) | (1,171 | ) | ||||
Other income, net | 2,903 | 2,903 | ||||||
Loss before provision for income taxes | (19,846 | ) | (20,057 | ) | ||||
Benefit from income taxes | 246 | 246 | ||||||
Net loss | $ | (19,600 | ) | $ | (19,811 | ) | ||
Weighted average shares outstanding, basic and diluted (1) | 1,497,051 | 1,373,525 | ||||||
Basic and diluted net loss per common share | $ | (0.01 | ) | $ | (0.01 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net loss | $ | (15,074) | $ | (264,697) | $ | (186,637) | $ | (267,469) | |||||||||||||||
Other comprehensive loss: | |||||||||||||||||||||||
Foreign currency translation adjustment | (1,182) | (10,321) | (3,150) | (25,040) | |||||||||||||||||||
Other comprehensive loss | (1,182) | (10,321) | (3,150) | (25,040) | |||||||||||||||||||
Comprehensive loss | $ | (16,256) | $ | (275,018) | $ | (189,787) | $ | (292,509) |
Common Stock | Additional Paid | Stock Subscription | Accumulated | Total Stockholders’ (Deficit) | ||||||||||||||||||||
Shares | Amount | in Capital | Receivable | Deficit | Equity | |||||||||||||||||||
Balance – January 1, 2020 | 1,437,500 | $ | 144 | $ | 24,856 | $ | 25,000 | $ | (492 | ) | $ | (492 | ) | |||||||||||
Collection of stock subscription receivable | — | — | — | (25,000 | ) | — | 25,000 | |||||||||||||||||
Net loss | — | — | — | — | (211 | ) | (211 | ) | ||||||||||||||||
Balance – March 31, 2020 | 1,437,500 | 144 | 24,856 | — | (703 | ) | 24,297 | |||||||||||||||||
Sale of 5,749,800 Units, net of underwriting discount and offering expenses | 5,749,800 | 575 | 53,487,066 | — | — | 53,487,641 | ||||||||||||||||||
Sale of 355,241 Private Units | 355,241 | 35 | 3,552,375 | — | — | 3,552,410 | ||||||||||||||||||
Forfeiture of Founder Shares | (50 | ) | — | — | — | — | — | |||||||||||||||||
Sale of unit purchase option | — | — | 100 | — | — | 100 | ||||||||||||||||||
Common stock subject to possible redemption | (5,102,647 | ) | (510 | ) | (52,044,333 | ) | — | — | (52,044,843 | ) | ||||||||||||||
Net loss | — | — | — | — | (19,600 | ) | (19,600 | ) | ||||||||||||||||
Balance – June 30, 2020 | 2,439,844 | $ | 244 | $ | 5,020,064 | $ | — | $ | (20,303 | ) | $ | 5,000,005 |
September 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 20,028 | $ | 31,640 | |||||||
Receivables, net of allowance for credit losses | 5,396 | 14,214 | |||||||||
Inventories, net | 13,997 | 20,612 | |||||||||
Prepaid expenses and other current assets | 15,141 | 17,221 | |||||||||
Assets held for sale | 19,533 | 34,910 | |||||||||
Total current assets | 74,095 | 118,597 | |||||||||
Restricted cash | 1,940 | 3,809 | |||||||||
Property and equipment, net | 14,942 | 13,804 | |||||||||
Operating right-of-use assets | 28,123 | 28,082 | |||||||||
Goodwill | 53,720 | 123,217 | |||||||||
Other intangible assets, net | 163,329 | 236,137 | |||||||||
Contract assets, net of current portion | 9,070 | 13,680 | |||||||||
Other noncurrent assets | 14,552 | 15,137 | |||||||||
Total assets | $ | 359,771 | $ | 552,463 | |||||||
Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 17,055 | $ | 14,090 | |||||||
Accrued agency fees and commissions | 1,199 | 7,785 | |||||||||
Deferred revenues, current portion | 6,432 | 10,480 | |||||||||
Long-term debt, current portion | 304 | 2,050 | |||||||||
Operating lease liabilities, current portion | 6,906 | 6,278 | |||||||||
Other current liabilities and accrued expenses | 25,420 | 25,106 | |||||||||
Liabilities held for sale | 15,491 | 27,126 | |||||||||
Total current liabilities | 72,807 | 92,915 | |||||||||
Deferred revenues, net of current portion | 22,580 | 21,406 | |||||||||
Long-term debt, net of current portion | 187,905 | 191,125 | |||||||||
Deferred tax liabilities, net | 12,047 | 25,293 | |||||||||
Operating lease liabilities, net of current portion | 25,790 | 26,695 | |||||||||
Mandatorily redeemable preferred stock, at fair value | — | 39,099 | |||||||||
Other noncurrent liabilities | 1,036 | 886 | |||||||||
Total liabilities | 322,165 | 397,419 | |||||||||
Commitments and contingencies (Note 13) | |||||||||||
Redeemable noncontrolling interest | (208) | (208) | |||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $0.0001 par value per share, 5,000,000 shares authorized, 50,000 shares designated Series A preferred stock, of which 0 shares were issued and outstanding as of September 30, 2023; 50,000 shares were issued and outstanding as of December 31, 2022 | — | — | |||||||||
Common stock, $0.0001 par value per share, 150,000,000 shares authorized, 74,603,404 shares issued and 73,903,404 shares outstanding as of September 30, 2023; 47,737,699 shares issued and 47,037,699 shares outstanding as of December 31, 2022 | 7 | 5 | |||||||||
Treasury stock, at cost, 700,000 shares as of September 30, 2023 and December 31, 2022 | (4,445) | (4,445) | |||||||||
Additional paid-in capital | 689,580 | 617,233 | |||||||||
Accumulated other comprehensive loss | (27,295) | (24,145) | |||||||||
Accumulated deficit | (620,033) | (433,396) | |||||||||
Total stockholders’ equity | 37,814 | 155,252 | |||||||||
Total liabilities, redeemable noncontrolling interest and stockholders’ equity | $ | 359,771 | $ | 552,463 |
Cash Flows from Operating Activities: | ||||
Net loss | $ | (19,811 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Interest earned on marketable securities held in Trust Account | (4,074 | ) | ||
Unrealized loss on marketable securities held in Trust Account | 1,171 | |||
Deferred tax benefit | (246 | ) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (86,467 | ) | ||
Accrued expenses | 16,191 | |||
Net cash used in operating activities | (93,236 | ) | ||
Cash Flows from Investing Activities: | ||||
Investment of cash into Trust Account | (58,647,960 | ) | ||
Net cash used in investing activities | (58,647,960 | ) | ||
Cash Flows from Financing Activities: | ||||
Proceeds from collection of stock subscription receivable | 25,000 | |||
Proceeds from sale of Units, net of underwriting discounts paid | 56,060,550 | |||
Proceeds from sale of Private Units | 3,552,410 | |||
Proceeds from sale of unit purchase option | 100 | |||
Proceeds from promissory note - related party | 157,206 | |||
Repayment of promissory note - related party | (257,704 | ) | ||
Payment of offering costs | (456,248 | ) | ||
Net cash provided by financing activities | 59,081,314 | |||
Net Change in Cash | 340,118 | |||
Cash – Beginning | — | |||
Cash – Ending | $ | 340,118 | ||
Non-cash investing and financing activities: | ||||
Initial classification of common stock subject to possible redemption | $ | 52,064,441 | ||
Change in value of common stock subject to possible redemption | $ | (19,598 | ) | |
Deferred underwriting fee payable | $ | 2,012,430 | ||
Offering costs included in accrued offering costs | $ | 4,000 |
Three Months Ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||
Series A Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||
Balance at June 30, 2023 | — | $ | — | 73,797,250 | $ | 7 | $ | (4,445) | $ | 688,280 | $ | (26,113) | $ | (604,959) | $ | 52,770 | ||||||||||||||||||||||||||||
Shares issued in connection with equity incentive plans | — | — | 106,154 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense and vesting of restricted stock units | — | — | — | — | — | 1,300 | — | — | 1,300 | |||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (1,182) | — | (1,182) | |||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (15,074) | (15,074) | |||||||||||||||||||||||||||||||||||
Balance at September 30, 2023 | — | $ | — | 73,903,404 | $ | 7 | $ | (4,445) | $ | 689,580 | $ | (27,295) | $ | (620,033) | $ | 37,814 |
Three Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
Series A Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | 25,000 | $ | — | 45,621,763 | $ | 4 | $ | (4,445) | $ | 601,237 | $ | (18,444) | $ | (158,464) | $ | 419,888 | ||||||||||||||||||||||||||||
Shares issued in connection with options exercise, net exercised | — | — | 142,021 | — | — | 476 | — | — | 476 | |||||||||||||||||||||||||||||||||||
Shares issued in connection with equity incentive plans | — | — | 15,029 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Shares issued pursuant to a license, services and collaboration agreement | — | — | 3,312 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Shares issued in connection with preferred shares agreement | 25,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense and vesting of restricted stock units | — | — | — | — | — | 5,295 | — | — | 5,295 | |||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (10,321) | — | (10,321) | |||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (264,697) | (264,697) | |||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | 50,000 | $ | — | 45,782,125 | $ | 4 | $ | (4,445) | $ | 607,008 | $ | (28,765) | $ | (423,161) | $ | 150,641 |
Nine Months Ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||
Series A Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | 50,000 | $ | — | 47,037,699 | $ | 5 | $ | (4,445) | $ | 617,233 | $ | (24,145) | $ | (433,396) | $ | 155,252 | ||||||||||||||||||||||||||||
Issuance of common stock in rights offering | — | — | 19,561,050 | 2 | — | 47,600 | — | — | 47,602 | |||||||||||||||||||||||||||||||||||
Issuance of common stock in registered direct offering | — | — | 6,357,341 | — | — | 13,890 | — | — | 13,890 | |||||||||||||||||||||||||||||||||||
Exchange of mandatorily redeemable preferred shares | (50,000) | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Shares issued in connection with equity incentive plans | — | — | 944,002 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Shares issued pursuant to a license, services and collaboration agreement | — | — | 3,312 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense and vesting of restricted stock units | — | — | — | — | — | 10,857 | — | — | 10,857 | |||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (3,150) | — | (3,150) | |||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (186,637) | (186,637) | |||||||||||||||||||||||||||||||||||
Balance at September 30, 2023 | — | $ | — | 73,903,404 | $ | 7 | $ | (4,445) | $ | 689,580 | $ | (27,295) | $ | (620,033) | $ | 37,814 |
Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
Series A Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | — | $ | — | 42,296,121 | $ | 4 | $ | (4,445) | $ | 586,349 | $ | (3,725) | $ | (155,692) | $ | 422,491 | ||||||||||||||||||||||||||||
Shares issued in connection with options exercise, net exercised | — | — | 495,052 | — | — | 1,925 | — | — | 1,925 | |||||||||||||||||||||||||||||||||||
Shares issued in connection with equity incentive plans | — | — | 2,506,860 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Shares issued pursuant to a license, services and collaboration agreement | — | — | 27,599 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Shares issued in connection with asset purchase | — | — | 103,570 | — | — | 1,333 | — | — | 1,333 | |||||||||||||||||||||||||||||||||||
Shares issued in connection with preferred shares agreement | 50,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Shares issued in connection with the settlement of the performance holdback contingent consideration relating to the acquisition of GlowUp | — | — | 352,923 | — | — | 260 | — | — | 260 | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense and vesting of restricted stock units | — | — | — | — | — | 17,141 | — | — | 17,141 | |||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (25,040) | — | (25,040) | |||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (267,469) | (267,469) | |||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | 50,000 | $ | — | 45,782,125 | $ | 4 | $ | (4,445) | $ | 607,008 | $ | (28,765) | $ | (423,161) | $ | 150,641 |
NOTE
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash Flows From Operating Activities | |||||||||||
Net loss | $ | (186,637) | $ | (267,469) | |||||||
Net loss from continuing operations | $ | (186,786) | $ | (240,829) | |||||||
Income (loss) from discontinued operations, net of tax | $ | 149 | $ | (26,640) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 5,332 | 10,444 | |||||||||
Stock-based compensation | 8,910 | 15,829 | |||||||||
Fair value measurement of liabilities | (6,991) | (40,213) | |||||||||
(Gain) loss on extinguishment of debt | (6,133) | 220 | |||||||||
Gain on sale of aircraft | — | (5,802) | |||||||||
Impairments | 155,864 | 283,496 | |||||||||
Inventory reserve charges | 6,084 | 5,902 | |||||||||
Amortization of right-of-use assets | 5,873 | 5,357 | |||||||||
Deferred income taxes | (13,191) | (48,567) | |||||||||
Other | 1,271 | (883) | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Receivables, net | (3,884) | 1,226 | |||||||||
Inventories | 3,194 | (2,752) | |||||||||
Contract assets | (83) | 665 | |||||||||
Prepaid expenses and other assets | (922) | (6,982) | |||||||||
Accounts payable | 3,038 | (5,424) | |||||||||
Accrued agency fees and commissions | (4,386) | 3,425 | |||||||||
Deferred revenues | (2,955) | (18,948) | |||||||||
Operating lease liabilities | (4,326) | (5,244) | |||||||||
Other | 3,338 | (8,917) | |||||||||
Net cash used in operating activities from continuing operations | (36,753) | (57,997) | |||||||||
Net cash (used in) provided by operating activities from discontinued operations | (4,616) | 1,063 | |||||||||
Net cash used in operating activities | (41,369) | (56,934) | |||||||||
Cash Flows From Investing Activities | |||||||||||
Purchases of property and equipment | (1,437) | (5,701) | |||||||||
Proceeds from promissory note repayment | 1,300 | — | |||||||||
Proceeds from sale of aircraft | — | 17,196 | |||||||||
Proceeds from sale of Yandy | 1,000 | — | |||||||||
Net cash provided by investing activities - continuing operations | 863 | 11,495 | |||||||||
Net cash used in investing activities - discontinued operations | (97) | (404) | |||||||||
Net cash provided by investing activities | 766 | 11,091 | |||||||||
Cash Flows From Financing Activities | |||||||||||
Proceeds from issuance of common stock in rights offering, net | 47,600 | — | |||||||||
Proceeds from issuance of common stock in registered direct offering, net | 13,890 | — | |||||||||
Proceeds from issuance of long-term debt | 11,828 | — | |||||||||
Net proceeds from issuance of preferred stock | — | 48,250 | |||||||||
Repayment of long-term debt | (45,552) | (10,452) | |||||||||
Payment of financing costs | (508) | (2,500) | |||||||||
Proceeds from exercise of stock options | — | 1,925 | |||||||||
Settlement of the performance holdback contingent consideration | — | (151) | |||||||||
Net cash provided by financing activities - continuing operations | 27,258 | 37,072 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (136) | (1,139) | |||||||||
Net decrease in cash and cash equivalents and restricted cash | (13,481) | (9,910) | |||||||||
Balance, beginning of year | $ | 35,449 | $ | 75,486 | |||||||
Balance, end of period | $ | 21,968 | $ | 65,576 | |||||||
Cash and cash equivalents and restricted cash consist of: | |||||||||||
Cash and cash equivalents | $ | 20,028 | $ | 60,062 | |||||||
Restricted cash | 1,940 | 5,514 | |||||||||
Total | $ | 21,968 | $ | 65,576 |
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Supplemental Disclosures | |||||||||||
Cash paid for income taxes | $ | 519 | $ | 4,971 | |||||||
Cash paid for interest | $ | 13,981 | $ | 11,522 | |||||||
Supplemental Disclosure of Non-cash Activities | |||||||||||
Right-of-use assets in exchange for lease liabilities - continuing operations | $ | 4,334 | $ | 5,039 | |||||||
Right-of-use assets in exchange for lease liabilities - discontinued operations | $ | 1,018 | $ | 4,359 | |||||||
Shares issued in connection with asset purchase | $ | — | $ | 1,333 | |||||||
Shares issued in connection with the settlement of the performance holdback contingent consideration relating to the acquisition of GlowUp | $ | — | $ | 260 | |||||||
Shares issued pursuant to a license, services and collaboration agreement | $ | — | $ | 950 |
Mountain Crest Acquisition CorpBasis of Presentation and Summary of Significant Accounting Policies
Although the Company is not limitedaddition to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on businesses that are located in North America. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of June 30, 2020, the Company had not commenced any operations. All activity through June 30, 2020 relates to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s Initial Public Offering was declared effective on June 4, 2020. On June 9, 2020, the Company consummated the Initial Public Offering of 5,000,000 units (the “Units” and, with respect to the common stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $50,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 321,500 units (the “Private Units”) at a price of $10.00 per Private Unit in a private placementdirect-to-consumer products under its
Following the closing of the Initial Public Offering on June 9, 2020, an amount of $51,000,000 ($10.20 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Units was placed in a trust account (the “Trust Account”) which will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended, or the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account as described below.
On June 19, 2020, the underwriters exercised their over-allotment option in part, resulting in an additional 749,800 Units issued on June 19, 2020 for $7,498,000, less the underwriters’ discount of $187,450. In connection with the underwriters’ exercise of their over-allotment option, the Company also consummated the sale of an additional 33,741 Private Units at $10.00 per Private Unit, generating total proceeds of $337,410. A total of $7,647,960 was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $58,647,960.
Transaction costs amounted to $4,010,359, consisting of $1,437,450 of underwriting fees, $2,012,430 of deferred underwriting fees and $560,479 of other offering costs. In addition, at June 30,2020, cash of $340,118 was held outside of the Trust Account (as defined below) and is available for working capital purposes.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and net of amounts previously released to the Company to pay its tax obligations) at the time of the signing an agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
MOUNTAIN CREST ACQUISITION CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially $10.20 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed to stockholders who redeem their shares will not be reduced by the deferred underwriting commission the Company will pay to the underwriters (as discussed in Note 6).
The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 immediately prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor has agreed to (a) vote its Founder Shares (as defined in Note 5), Private Shares (as defined in Note 4) and any Public Shares held by it in favor of a Business Combination and (b) not to redeem any shares in connection with a stockholder vote to approve a Business Combination or sell any such shares to the Company in a tender offer in connection with a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed to (i) waive its redemption rights with respect to Founder Shares, Private Shares and any Public Shares it may acquire during or after the Initial Public Offering in connection with the consummation of a Business Combination and (ii) not to propose an amendment to the Company’s Amended and Restated Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders an opportunity to redeem their Public Shares in conjunction with any such amendment. However, the Initial Stockholders will be entitled to liquidating distributions with respect to any Public Shares acquired if the Company fails to consummate a Business Combination or liquidates within the Combination Period (defined below).
The Company will have until June 9, 2021 to consummate a Business Combination. However, if the Company anticipates that it may not be able to consummate a Business Combination by June 9, 2021, the Company may extend the period of time to consummate a Business Combination up to three times, each by an additional three months (for a total of 21 months to complete a Business Combination (the “Combination Period”). In order to extend the time available for the Company to consummate a Business Combination, the Sponsor or its affiliate or designees must deposit into the Trust Account $500,000, or $575,000 if the underwriters’ over-allotment option is exercised in full ($0.10 per Public Share in either case), on or prior to the date of the applicable deadline, for each three month extension.
If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes, divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
MOUNTAIN CREST ACQUISITION CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
The Sponsor has agreed to waive its liquidation rights with respect to the Private Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor or any of its respective affiliates acquire Public Shares after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below the lesser of (i) $10.20 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.20 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party who executed a waiver of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statement. The financial statement does not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
three and nine months ended September 30, 2023 and 2022. The accompanying unauditedfinancial data and other financial information disclosed in these notes to the interim condensed consolidated financial statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the SEC on June 5, 2020, as well as the Company’s Current Reports on Form 8-K, as filed with the SEC on June 10, 2020, June 15, 2020 and June 22, 2020 . The interim results forrelated to the three and sixnine-month periods are also unaudited. The interim condensed consolidated results of operations for the nine months ended JuneSeptember 30, 20202023 are not necessarily indicative of the results to be expected for the year ending December 31, 20202023 or for any future annual or interim periods.
Emerging Growth Company
period. The Company is an “emerging growth company,”condensed consolidated balance sheet as definedof December 31, 2022 included herein was derived from the audited financial statements as of that date. These interim condensed consolidated financial statements should be read in Section 2(a) ofconjunction with our audited financial statements included in the Annual Report on Form 10-K as filed by us with the Securities Act, as modified byand Exchange Commission on March 16, 2023.
MOUNTAIN CREST ACQUISITION CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transitioncurrent period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
presentation.
Making
Customer | September 30, 2023 | December 31, 2022 | |||||||||
Customer A | * | 31 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Customer | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Customer A | 16 | % | 12 | % | 16 | % | 11 | % |
Cashdate these interim financial statements are issued.
The Company considers all short-term investments with an original maturitythe satisfaction of liabilities in the normal course of business.
Marketable Securities Heldthe cost of capital. Impairment charges on our goodwill at the impairment date were $66.7 million in Trust Account
At June 30, 2020the second quarter of 2023. There were no impairment charges to goodwill and December 31, 2019,Playboy-branded trademarks to be recognized in the third quarter of 2023.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemptionbe completed within one year. A disposal group that is classified as a liability instrument andheld for sale is initially measured at the lower of its carrying value or fair value. Conditionally redeemable common stock (including common stock that features redemption rights thatvalue less any costs to sell. Any loss resulting from this measurement is either withinrecognized in the controlperiod in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a disposal group until the date of sale. The fair value of a disposal group less any costs to sell is assessed each reporting period it remains classified as held for sale and any subsequent changes are reported as an adjustment to the carrying value of the holder or subject to redemption upondisposal group, as long as the occurrencenew carrying value does not exceed the carrying value of uncertain events not solely within the Company’s control) isasset at the time it was initially classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheets.
Income Taxes
The Company follows the asset and liability method of accountingheld for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognizedsale.
MOUNTAIN CREST ACQUISITION CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
ASC 740 prescribes a recognition threshold and a measurement attribute forease the financial statement recognitionreporting burdens of the expected market transition from the London Interbank Offered Rate (“LIBOR”) and measurement of tax positions taken or expectedother interbank offered rates to be takenalternative reference rates. The standard was effective upon issuance and we may apply the optional expedients and elections in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2020 andTopic 848 prospectively through December 31, 2019.2024. Upon amendment and restatement of our Credit Agreement on May 10, 2023, LIBOR was replaced with the Secured Overnight Financing Rate (“SOFR”) published by the Federal Reserve Bank of New York. Refer to Note 10, Debt. The Company is currentlyprovisions of this pronouncement did not aware of any issues under review that could result in significant payments, accruals orhave a material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The effective tax rate of 1.2% for the three and six months ended June 30, 2020 differs from the statutory tax rate of 21% due to the valuation allowance recorded against the Company’s net operating losses.
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security "CARES" Act into law. The CARES Act includes several significant business tax provisions that, among other things, would eliminate the taxable income limit for certain net operating losses ("NOL) and allow businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five prior years, suspend the excess business loss rules, accelerate refunds of previously generated corporate alternative minimum tax credits, generally loosen the business interest limitation under IRC section 163(j) from 30 percent to 50 percent among other technical corrections included in the Tax Cuts and Jobs Act tax provisions. The Company doesimpact on our condensed consolidated financial statements.
Net Loss Per Common Share
Net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. The Company applies the two-class method in calculating earnings per share. Shares of common stock subject to possible redemption at June 30, 2020, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per common share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered the effect of rights sold in the Initial Public Offering and the private placement to purchase 610,504 shares of common stock, in the calculation of diluted loss per share, since the exercise of the warrants are contingent upon the occurrence of future events. As a result, diluted net loss per common share is the same as basic net loss per common share for the period presented.
Reconciliation of Net Loss Per Common Share
The Company’s net loss is adjusted for the portion of income that is attributable to common stock subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly, basic and diluted loss per share is calculated as follows:
Three Months June 30, | Six Months June 30, | |||||||
2020 | 2020 | |||||||
Net loss | $ | (19,600 | ) | $ | (19,811 | ) | ||
Less: Income attributable to common stock subject to possible redemption | — | — | ||||||
Adjusted net loss | $ | (19,600 | ) | $ | (19,811 | ) | ||
Weighted average shares outstanding, basic and diluted | 1,497,051 | 1,373,525 | ||||||
Basic and diluted net loss per common share | $ | (0.01 | ) | $ | (0.01 | ) |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
MOUNTAIN CREST ACQUISITION CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Recent Accounting Standards
Management does not believe thatthere were any recently issued, but not yet effective, accounting standards, if currently adopted,pronouncements that would have a material effect on the Company’s condensedour financial statements.
NOTE 3. PUBLIC OFFERING
Pursuant to
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor and Chardan (and/or their designees) purchased an aggregate of 321,500 Private Units at a price of $10.00 per Private Unit, of which 296,500 Private Units were purchased by the Sponsor and 25,000 Private Units were purchased by Chardanthat would be received for an aggregate purchase price of $3,215,000. The Sponsor and Chardan have agreedasset or paid to purchase an additional aggregate amount of 33,741 Private Units, for an aggregate purchase price of $337,410, if the over-allotment option is exercised in full by the underwriters. Each Private Unit consists of one share of common stock (“Private Share”) and one right (“Private Right”). Each Private Right entitles the holder to receive one-tenth of one share of common stock at the closing oftransfer a Business Combination. The proceeds from the Private Units were added to the proceeds from the Initial Public Offering heldliability (an exit price) in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Units and all underlying securities will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On November 12, 2019, the Company issued 100 shares of common stock to the Sponsor for an aggregate purchase price of $25,000. The Company received paymentprincipal or most advantageous market for the shares on January 28, 2020. Accordingly, as of December 31, 2019, the $25,000 payment due to the Company is recorded as stock subscription receivable in the stockholder’s deficit section of the accompanying balance sheet. On January 17, 2020, the Company effected a share dividend of 21,561.50 shares of common stock for each outstanding share, resulting in 2,156,250 shares of common stock being issued and outstanding. In May 2020, the Company declared a reverse split of one share of common stock for every 1.5 outstanding share of common stock, resulting in 1,437,500 shares of common stock being outstanding (the “Founder Shares”). All share and per share information have been retroactively adjusted to reflect the share dividend and reverse split. The 1,437,500 Founder Shares included an aggregate of up to 187,500 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in fullasset or in part, so that the Sponsor would collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering and excluding the Private Shares). As a result of the underwriters’ election to partially exercise their over-allotment option on June 19, 2020, 50 Founders Shares were forfeited and 187,450 Founder Shares are no longer subject to forfeiture.
The Sponsor has agreed not to transfer, assign or sell any of the Founder Shares (except to certain permitted transferees) until, with respect to 50% of the Founder Shares, the earlier of six months after the date of the consummation of a Business Combination and the date on which the closing price of the Company’s common stock equals or exceeds $12.50 per share for any 20 trading days within a 30-trading day period following the consummation of a Business Combination and, with respect to the remaining 50% of the Founder Shares, six months after the date of the consummation of a Business Combination, or earlier in each case if, subsequent to a Business Combination, the Company completes a liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property.
MOUNTAIN CREST ACQUISITION CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
Promissory Note — Related Party
On December 1, 2019, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate amount of $500,000 to cover expenses related to the Initial Public Offering. The Promissory Note was non-interest bearing and payable on the completion of the Initial Public Offering. Upon the consummation of the Initial Public Offering on June 9, 2020, the Company repaid an aggregate amount of $165,000 under the Promissory Note. At June 9, 2020, there was $92,704 outstanding under the Promissory Note, which amount was repaid on June 11, 2020.
Administrative Support Agreement
The Company entered into an agreement whereby, commencing on June 4, 2020 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. For the three and six months ended June 30, 2020, the Company incurred $10,000 in fees for these services, of which $10,000 is included in accrued expenses in the accompanying condensed balance sheet.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, as may be required (“Working Capital Loans”). Each Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of a Business Combination, without interest, or, at the holder’s discretion, up to $1,500,000 of the Working Capital Loans may be converted into private units at a price of $10.00 per unit. The private units would be identical to the Private Units. In the event that a Business Combination does not close, the Company may use a portion of the proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
Related Party Extension Loans
As discussed in Note 1, the Company may extend the period of time to consummate a Business Combination up to three times, each by an additional three months (for a total of 21 months to complete a Business Combination). In order to extend the time available for the Company to consummate a Business Combination, the Sponsor or its affiliates or designees must deposit into the Trust Account $500,000, or $575,000 if the underwriters’ over-allotment option is exercised in full ($0.10 per Public Share in either case), on or prior to the date of the applicable deadline, for each three month extension. Any such payments would be made in the form of a non-interest bearing, unsecured promissory note. Such notes would either be paid upon consummation of a Business Combination, or, at the relevant insider’s discretion, converted upon consummation of a Business Combination into additional Private Units at a price of $10.00 per Private Unit. The Sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to complete a Business Combination.
NOTE 6. COMMITMENTS
MOUNTAIN CREST ACQUISITION CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
Registration Rights
Pursuant to a registration rights agreement entered into on June 4, 2020, the holders of the Founder Shares, the Private Units, and any shares that may be issued in payment of Working Capital Loans (and all underlying securities) are entitled to registration rights. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founders Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Private Units (and underlying securities) and securities issued in payment of Working Capital Loans can elect to exercise these registration rights at any time commencing on the date that the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option from the date of the Initial Public Offering to purchase up to 750,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On June 19, 2020, the underwriters partially exercised their over-allotment option to purchase an additional 749,800 Units at $10.00 per Unit and forfeited the option to exercise the remaining 200 Units.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $2,012,430. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Right of First Refusal
Subject to certain conditions, the Company granted Chardan, for a period of 15 months after the date of the consummation of a Business Combination, a right of first refusal to act as lead underwriters or minimally as a co-manager, with at least 30% of the economics; or, in the case of a three-handed deal 20% of the economics, for any and all future public and private equity and debt offerings. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of the registration statement related to the Initial Public Offering.
NOTE 7. STOCKHOLDERS’ EQUITY
Common Stock — On June 4, 2020, the Company amended its Certificate of Incorporation such that the Company is authorized to issue 30,000,000 shares of common stock with a par value of $0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share. At June 30, 2020 and December 31, 2019, there were 2,439,844 and 1,437,500 shares of common stock issued and outstanding, excluding 5,102,647 and no shares of common stock subject to possible redemption, respectively.
Rights — Except in cases where the Company is not the surviving company in a Business Combination, each holder of a Public Right will automatically receive one-tenth (1/10) of one share of common stock upon consummation of a Business Combination, even if the holder of a Public Right converted all shares held by him, her or it in connection with a Business Combination or an amendment to the Company’s Amended and Restated Certificate of Incorporation with respect to its pre-business combination activities. In the event that the Company will not be the surviving company upon completion of a Business Combination, each holder of a Public Right will be required to affirmatively convert his, her or its rights in order to receive the one-tenth (1/10) of a share underlying each Public Right upon consummation of the Business Combination. No additional consideration will be required to be paid by a holder of Public Rights in order to receive his, her or its additional shares of common stock upon consummation of a Business Combination. The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company). If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of Public Rights to receive the same per share consideration the holders of the common stock will receive in the transaction on an as-converted into common stock basis.
MOUNTAIN CREST ACQUISITION CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
The Company will not issue fractional shares in connection with an exchange of Public Rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporation Law. As a result, the holders of the Public Rights must hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business Combination. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Rights will not receive any of such funds with respect to their Public Rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Rights, and the Public Rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the Public Rights upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
Unit Purchase Option
On June 9, 2020, the Company sold to Chardan, for $100, an option to purchase up to 300,000 Units exercisable at $11.50 per Unit (or an aggregate exercise price of $3,450,000) commencing at any time between the consummation of a Business Combination and June 4, 2025. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires on June 4, 2025. The Units issuable upon exercise of the option are identical to those sold in the Initial Public Offering. The Company accounted for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Initial Public Offering resulting in a charge directly to stockholders’ equity. The Company estimated that the fair value of the unit purchase option to be approximately $790,000, or $2.63 per Unit, using the Black-Scholes option-pricing model. The fair value of the unit purchase option was estimated as of the date of grant using the following assumptions: (1) expected volatility of 35%, (2) risk-free interest rate of 0.37% and (3) expected life of five years. The option and such units purchased pursuant to the option, as well as the shares of common stock underlying such units, the rights included in such units, the shares of common stock that are issuable for the rights included in such units, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA’s NASDAQ Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date of Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners. The option grants to holders demand and “piggy back” rights for periods of five and seven years, respectively, from the effective date of the registration statement with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the option. The Company will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or the Company’s recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of shares of common stock at a price below its exercise price.
NOTE 8. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilitiesliability in an orderly transaction between market participants aton the measurement date. In connectionWe apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
MOUNTAIN CREST ACQUISITION CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(Unaudited)
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2020 and indicatesby level within the fair value hierarchy (in thousands):
September 30, 2023 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Contingent consideration liability | $ | — | $ | — | $ | (349) | $ | (349) |
December 31, 2022 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Contingent consideration liability | $ | — | $ | — | $ | (835) | $ | (835) | |||||||||||||||
Mandatorily redeemable preferred stock | — | — | (39,099) | (39,099) | |||||||||||||||||||
Total liabilities | $ | — | $ | — | $ | (39,934) | $ | (39,934) |
June 30, | |||||||
Description | Level | 2020 | |||||
Assets: | |||||||
Marketable securities held in Trust Account | 1 | $ | 58,650,863 |
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent eventsvalue gain as a result of contingent liabilities fair value remeasurement for the nine months ended September 30, 2023 and transactions that occurred after2022, respectively. We classified financial liabilities associated with the balance sheet date upcontingent consideration as Level 3 due to the lack of relevant observable inputs. Changes in assumptions described above could have an impact on the payout of contingent consideration.
Contingent Consideration | Mandatorily Redeemable Preferred Stock Liability | Total | |||||||||||||||
Balance at December 31, 2022 | $ | 835 | $ | 39,099 | $ | 39,934 | |||||||||||
Change in fair value | (486) | (6,505) | (6,991) | ||||||||||||||
Exchange of mandatorily redeemable preferred shares | — | (32,594) | (32,594) | ||||||||||||||
Balance at September 30, 2023 | $ | 349 | $ | — | $ | 349 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net revenues | $ | 9,880 | $ | 17,918 | $ | 36,121 | $ | 57,769 | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||
Cost of sales | (4,252) | (11,512) | (16,431) | (30,939) | ||||||||||||||||||||||
Selling and administrative expenses | (4,313) | (10,078) | (19,329) | (30,060) | ||||||||||||||||||||||
Impairments | — | (24,665) | — | (24,665) | ||||||||||||||||||||||
Total operating expense | (8,565) | (46,255) | (35,760) | (85,664) | ||||||||||||||||||||||
Operating income (loss) | 1,315 | (28,337) | 361 | (27,895) | ||||||||||||||||||||||
Nonoperating income (expense): | ||||||||||||||||||||||||||
Other income (expense), net | 9 | 52 | (190) | 134 | ||||||||||||||||||||||
Total nonoperating income (expense) | 9 | 52 | (190) | 134 | ||||||||||||||||||||||
Income (loss) from discontinued operations before income taxes | 1,324 | (28,285) | 171 | (27,761) | ||||||||||||||||||||||
(Expense) benefit from income taxes | (5) | 471 | (22) | 1,121 | ||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | $ | 1,319 | $ | (27,814) | $ | 149 | $ | (26,640) |
September 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Receivables, net of allowance for credit losses | $ | 183 | $ | 4,206 | |||||||
Inventories, net | 4,684 | 12,477 | |||||||||
Prepaid expenses and other current assets | 306 | 539 | |||||||||
Property and equipment, net | 1,531 | 3,571 | |||||||||
Operating right-of-use assets | 12,131 | 13,183 | |||||||||
Other intangible assets, net | 433 | 471 | |||||||||
Other noncurrent assets | 265 | 463 | |||||||||
Total assets held for sale | $ | 19,533 | $ | 34,910 | |||||||
Liabilities | |||||||||||
Accounts payable | $ | 1,760 | $ | 6,541 | |||||||
Deferred revenues | — | 282 | |||||||||
Operating lease liabilities | 11,494 | 13,682 | |||||||||
Other current liabilities and accrued expenses | 2,237 | 6,621 | |||||||||
Total liabilities held for sale | $ | 15,491 | $ | 27,126 |
Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Licensing | Direct-to-Consumer | Digital Subscriptions and Content | Other | Total | Licensing | Direct-to-Consumer | Digital Subscriptions and Content | Other | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
Trademark licensing | $ | 10,931 | $ | — | $ | — | $ | — | $ | 10,931 | $ | 30,913 | $ | — | $ | — | $ | — | $ | 30,913 | |||||||||||||||||||||||||||||||||||||||
Digital subscriptions and products | — | — | 3,359 | — | 3,359 | — | — | 9,145 | 4 | 9,149 | |||||||||||||||||||||||||||||||||||||||||||||||||
TV and cable programming | — | — | 1,847 | — | 1,847 | — | — | 5,911 | — | 5,911 | |||||||||||||||||||||||||||||||||||||||||||||||||
Consumer products | — | 17,145 | — | — | 17,145 | — | 57,613 | — | — | 57,613 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 10,931 | $ | 17,145 | $ | 5,206 | $ | — | $ | 33,282 | $ | 30,913 | $ | 57,613 | $ | 15,056 | $ | 4 | $ | 103,586 |
Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Licensing | Direct-to-Consumer | Digital Subscriptions and Content | Other | Total | Licensing | Direct-to-Consumer | Digital Subscriptions and Content | Other | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
Trademark licensing | $ | 14,908 | $ | — | $ | — | $ | — | $ | 14,908 | $ | 45,345 | $ | — | $ | — | $ | — | $ | 45,345 | |||||||||||||||||||||||||||||||||||||||
Magazine, digital subscriptions and products | — | — | 2,403 | 42 | 2,445 | — | — | 7,050 | 720 | 7,770 | |||||||||||||||||||||||||||||||||||||||||||||||||
TV and cable programming | — | — | 2,263 | — | 2,263 | — | — | 7,050 | — | 7,050 | |||||||||||||||||||||||||||||||||||||||||||||||||
Consumer products | — | 26,090 | — | — | 26,090 | — | 80,482 | — | — | 80,482 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 14,908 | $ | 26,090 | $ | 4,666 | $ | 42 | $ | 45,706 | $ | 45,345 | $ | 80,482 | $ | 14,100 | $ | 720 | $ | 140,647 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Point in time | $ | 18,306 | $ | 26,108 | $ | 60,450 | $ | 80,639 | |||||||||||||||
Over time | 14,976 | 19,598 | 43,136 | 60,008 | |||||||||||||||||||
Total revenues | $ | 33,282 | $ | 45,706 | $ | 103,586 | $ | 140,647 |
September 30, 2023 | December 31, 2022 | ||||||||||
Editorial and other pre-publication costs | $ | 260 | $ | 690 | |||||||
Merchandise finished goods | 13,737 | 19,922 | |||||||||
Total | $ | 13,997 | $ | 20,612 |
September 30, 2023 | December 31, 2022 | ||||||||||
Prepaid taxes | $ | 2,889 | $ | 3,150 | |||||||
Deposits | 170 | 205 | |||||||||
Prepaid insurance | 705 | 1,074 | |||||||||
Contract assets, current portion | 1,348 | 2,559 | |||||||||
Prepaid software | 2,440 | 3,714 | |||||||||
Prepaid inventory not yet received | 5,313 | 3,397 | |||||||||
Prepaid platform fees | 434 | 1,126 | |||||||||
Other | 1,842 | 1,996 | |||||||||
Total | $ | 15,141 | $ | 17,221 |
September 30, 2023 | December 31, 2022 | ||||||||||
Leasehold improvements | $ | 10,480 | $ | 9,096 | |||||||
Construction in progress | 492 | 782 | |||||||||
Equipment | 3,665 | 3,704 | |||||||||
Internally developed software | 10,778 | 7,096 | |||||||||
Furniture and fixtures | 1,954 | 1,953 | |||||||||
Total property and equipment, gross | 27,369 | 22,631 | |||||||||
Less: accumulated depreciation | (12,427) | (8,827) | |||||||||
Total | $ | 14,942 | $ | 13,804 |
September 30, 2023 | December 31, 2022 | ||||||||||
Digital assets | $ | 5 | $ | 327 | |||||||
Total amortizable intangible assets, net | 12,495 | 19,796 | |||||||||
Total indefinite-lived intangible assets | 150,829 | 216,014 | |||||||||
Total | $ | 163,329 | $ | 236,137 |
Weighted-Average Life (Years) | Gross Carrying Amount | Accumulated Amortization | Accumulated Impairments* | Net Carrying Amount | |||||||||||||||||||||||||
September 30, 2023 | |||||||||||||||||||||||||||||
Trade names | 12 | $ | 65,409 | $ | (7,659) | $ | (45,854) | $ | 11,896 | ||||||||||||||||||||
Distribution agreements | 15 | 3,720 | (3,121) | — | 599 | ||||||||||||||||||||||||
Total | $ | 69,129 | $ | (10,780) | $ | (45,854) | $ | 12,495 |
Weighted- Average Life (Years) | Gross Carrying Amount | Accumulated Amortization | Accumulated Impairments | Net Carrying Amount | |||||||||||||||||||||||||
December 31, 2022 | |||||||||||||||||||||||||||||
Trade names | 12 | $ | 74,625 | $ | (6,881) | $ | (48,733) | $ | 19,011 | ||||||||||||||||||||
Distribution agreements | 15 | 3,720 | (2,935) | — | 785 | ||||||||||||||||||||||||
Developed technology | 3 | 2,300 | (2,300) | — | — | ||||||||||||||||||||||||
Total | $ | 80,645 | $ | (12,116) | $ | (48,733) | $ | 19,796 |
Remainder of 2023 | $ | 352 | |||
2024 | 1,409 | ||||
2025 | 1,409 | ||||
2026 | 1,202 | ||||
2027 | 1,161 | ||||
Thereafter | 6,962 | ||||
Total | $ | 12,495 |
Gross Goodwill | Impairments | Net Goodwill | |||||||||||||||
Balance at December 31, 2022 | $ | 257,545 | $ | (134,328) | $ | 123,217 | |||||||||||
Foreign currency translation adjustment in relation to Honey Birdette | (2,837) | (2,837) | |||||||||||||||
Impairments* | (66,660) | (66,660) | |||||||||||||||
Balance at September 30, 2023 | $ | 254,708 | $ | (200,988) | $ | 53,720 |
Direct-to-Consumer | Licensing | Digital Subscriptions and Content | |||||||||||||||
Balance at December 31, 2022 | $ | 90,117 | $ | — | $ | 33,100 | |||||||||||
Foreign currency translation and other adjustments | (2,837) | — | — | ||||||||||||||
Impairments* | (66,660) | — | — | ||||||||||||||
Balance at September 30, 2023 | $ | 20,620 | $ | — | $ | 33,100 |
September 30, 2023 | December 31, 2022 | ||||||||||
Accrued interest | $ | 2,898 | $ | 2,096 | |||||||
Accrued salaries, wages and employee benefits | 4,834 | 3,850 | |||||||||
Outstanding gift cards and store credits | 1,297 | 1,571 | |||||||||
Inventory in transit | 5,272 | 6,510 | |||||||||
Sales taxes | 3,793 | 4,542 | |||||||||
Accrued creator fees | 1,887 | — | |||||||||
Other | 5,439 | 6,537 | |||||||||
Total | $ | 25,420 | $ | 25,106 |
September 30, 2023 | December 31, 2022 | ||||||||||
Term loan, due 2027 | $ | 209,848 | $ | 201,613 | |||||||
Total debt | 209,848 | 201,613 | |||||||||
Less: unamortized debt issuance costs | (625) | (1,822) | |||||||||
Less: unamortized debt discount | (21,014) | (6,616) | |||||||||
Total debt, net of unamortized debt issuance costs and debt discount | 188,209 | 193,175 | |||||||||
Less: current portion of long-term debt | (304) | (2,050) | |||||||||
Total debt, net of current portion | $ | 187,905 | $ | 191,125 |
Remainder of 2023 | $ | 76 | |||
2024 | 304 | ||||
2025 | 304 | ||||
2026 | 304 | ||||
2027 | 208,860 | ||||
Total | $ | 209,848 |
September 30, 2023 | December 31, 2022 | ||||||||||
Shares available for grant under equity incentive plans | 3,011,875 | 492,786 | |||||||||
Options issued and outstanding under equity incentive plans | 2,389,361 | 2,599,264 | |||||||||
Unvested restricted stock units | 922,808 | 2,058,534 | |||||||||
Vested restricted stock units not yet settled | 67,479 | 11,761 | |||||||||
Unvested performance-based restricted stock units | 808,191 | 1,089,045 | |||||||||
Shares issuable pursuant to a license, services and collaboration agreement | 9,936 | 48,574 | |||||||||
Maximum number of shares issuable to Glowup sellers pursuant to acquisition indemnity holdback | 249,116 | 249,116 | |||||||||
Total common stock reserved for future issuance | 7,458,766 | 6,549,080 |
Number of Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
Balance – December 31, 2022 | 2,599,264 | $ | 8.41 | 7.2 | $ | — | |||||||||||||||||
Granted | — | — | — | — | |||||||||||||||||||
Exercised | — | — | — | — | |||||||||||||||||||
Forfeited and cancelled | (209,903) | $ | 25.17 | — | $ | — | |||||||||||||||||
Balance – September 30, 2023 | 2,389,361 | $ | 6.94 | 6.3 | $ | — | |||||||||||||||||
Exercisable – September 30, 2023 | 2,238,745 | $ | 6.58 | 6.2 | $ | — | |||||||||||||||||
Vested and expected to vest as of September 30,2023 | 2,389,361 | $ | 6.94 | 6.3 | $ | — |
Number of Awards | Weighted- Average Grant Date Fair Value per Share | ||||||||||
Unvested and outstanding balance at December 31, 2022 | 2,058,534 | $ | 12.79 | ||||||||
Granted | — | — | |||||||||
Vested | (959,031) | 12.69 | |||||||||
Forfeited | (176,695) | 20.12 | |||||||||
Unvested and outstanding balance at September 30, 2023 | 922,808 | $ | 11.49 |
Number of awards | Weighted- average grant date fair value per share | ||||||||||
Unvested and outstanding balance at December 31, 2022 | 1,089,045 | $ | 12.72 | ||||||||
Granted | — | — | |||||||||
Vested | — | — | |||||||||
Forfeited | (280,854) | 15.32 | |||||||||
Unvested and outstanding balance at September 30, 2023 | 808,191 | $ | 11.82 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Cost of sales (1) | $ | 643 | $ | 513 | $ | 190 | $ | 2,156 | |||||||||||||||
Selling and administrative expenses (2) | (103) | 4,030 | 8,720 | 13,673 | |||||||||||||||||||
Total | $ | 540 | $ | 4,543 | $ | 8,910 | $ | 15,829 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Operating lease cost | $ | 2,054 | $ | 1,381 | |||||||
Variable lease cost | 371 | 228 | |||||||||
Short-term lease cost | 387 | 492 | |||||||||
Sublease income | (202) | (65) | |||||||||
Total | $ | 2,610 | $ | 2,036 |
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Operating lease cost | $ | 5,873 | $ | 5,146 | |||||||
Variable lease cost | 1,116 | 594 | |||||||||
Short-term lease cost | 1,678 | 1,417 | |||||||||
Sublease income | (467) | (194) | |||||||||
Total | $ | 8,200 | $ | 6,963 |
Remainder of 2023 | $ | 2,340 | ||||||
2024 | 8,783 | |||||||
2025 | 7,701 | |||||||
2026 | 7,211 | |||||||
2027 | 4,939 | |||||||
Thereafter | 9,353 | |||||||
Total undiscounted lease payments | 40,327 | |||||||
Less: imputed interest | (7,631) | |||||||
Total operating lease liabilities | $ | 32,696 | ||||||
Operating lease liabilities, current portion | $ | 6,906 | ||||||
Operating lease liabilities, noncurrent portion | $ | 25,790 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Direct-to-Consumer | $ | 6 | $ | 10 | $ | 1,133 | $ | 10 | |||||||||||||||
Corporate | — | 635 | 1,221 | 776 | |||||||||||||||||||
Digital Subscriptions and Content | 308 | 72 | 347 | 654 | |||||||||||||||||||
Licensing | — | 35 | 53 | 43 | |||||||||||||||||||
Total | $ | 314 | $ | 752 | $ | 2,754 | $ | 1,483 |
Employee Separation Costs | |||||
Balance at December 31, 2022 | $ | 1,192 | |||
Costs incurred and charged to expense | 2,883 | ||||
Costs paid or otherwise settled | (3,023) | ||||
Balance at September 30, 2023 | $ | 1,052 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Stock options to purchase common stock | 2,389,361 | 2,673,556 | 2,389,361 | 2,673,556 | |||||||||||||||||||
Unvested restricted stock units | 922,808 | 2,190,840 | 922,808 | 2,190,840 | |||||||||||||||||||
Unvested performance-based restricted stock units | 808,191 | 1,089,045 | 808,191 | 1,089,045 | |||||||||||||||||||
Total | 4,120,360 | 5,953,441 | 4,120,360 | 5,953,441 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net revenues: | |||||||||||||||||||||||
Licensing | $ | 10,931 | $ | 14,908 | $ | 30,913 | $ | 45,345 | |||||||||||||||
Direct-to-Consumer | 17,145 | 26,090 | 57,613 | 80,482 | |||||||||||||||||||
Digital Subscriptions and Content | 5,206 | 4,666 | 15,056 | 14,100 | |||||||||||||||||||
All Other | — | 42 | 4 | 720 | |||||||||||||||||||
Total | $ | 33,282 | $ | 45,706 | $ | 103,586 | $ | 140,647 | |||||||||||||||
Operating (loss) income: | |||||||||||||||||||||||
Licensing | $ | 1,049 | $ | (105,403) | $ | (63,665) | $ | (84,699) | |||||||||||||||
Direct-to-Consumer | (1,614) | (164,852) | (91,672) | (166,568) | |||||||||||||||||||
Digital Subscriptions and Content | (1,884) | (3,013) | (1,491) | (12,855) | |||||||||||||||||||
Corporate | (8,887) | (11,405) | (38,681) | (20,890) | |||||||||||||||||||
All Other | — | 65 | (12) | 668 | |||||||||||||||||||
Total | $ | (11,336) | $ | (284,608) | $ | (195,521) | $ | (284,344) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net revenues: | |||||||||||||||||||||||
United States | $ | 14,932 | $ | 18,847 | $ | 45,566 | $ | 56,946 | |||||||||||||||
China | 6,544 | 10,656 | 20,967 | 32,386 | |||||||||||||||||||
Australia | 7,727 | 10,556 | 22,863 | 33,136 | |||||||||||||||||||
UK | 2,279 | 3,097 | 7,724 | 9,150 | |||||||||||||||||||
Other | 1,800 | 2,550 | 6,466 | 9,029 | |||||||||||||||||||
Total | $ | 33,282 | $ | 45,706 | $ | 103,586 | $ | 140,647 |
operation of the Playboy China joint venture.ITEMMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSReferences in this report (the “Quarterly Report”) to “we,” “us” orManagement’s Discussion and Analysis of Financial Condition and Results of Operations. “Company” refer to Mountain Crest Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Sunlight Global Investment LLC. The following discussion and analysis of the Company’sour financial condition and results of operations should be read in conjunction with theour unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2023 and 2022 and the related notes thereto contained elsewhereincluded in Part I, Item 1 of this Quarterly Report. Certain information containedReport on Form 10-Q, our audited consolidated financial statements as of and for the years ended December 31, 2022, 2021 and 2020 and the related notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 16, 2023. This discussion and analysis set forth below includescontains forward-looking statements that involve risks and uncertainties.Special Note Regarding Forward-Looking StatementsThis Quarterly Report includes “forward-looking statements”uncertainties and that are not historical facts, including statements about our beliefs and involve risksexpectations. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and particularly under the headings “Risk Factors,” “Business” and “Cautionary Note Regarding Forward-Looking Statements” contained in our those expected and projected. Allforward-looking statements. These forward-looking statements include all statements other than statements of historical fact, included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, capital structure, dividends, indebtedness, business strategy and the plans and objectives of management for future operations of the Company. These statements constitute projections, forecasts and forward-looking statements, and are forward-looking statements. Wordsnot guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “expect,“anticipate,” “believe,” “anticipate,“continue,” “could,” “estimate,” “expect,” “intend,” “estimate,“may,” “seek” and variations“might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words and expressionsdoes not mean that a statement is not forward-looking. When we discuss our strategies or plans, we are intended to identify suchmaking projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, our management.relate to future events or future performance, but reflect management’s current beliefs,contained in this Quarterly Report on Form 10-Q are based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performancecurrent expectations and results discussed in thebeliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting us will be those that we anticipated. These forward-looking statements. For information identifying important factorsstatements involve significant risks and uncertainties that could cause the actual results to differ materially from those anticipateddiscussed in the forward-looking statements, please referstatements. Factors that may cause such differences include, but are not limited to: (1) the inability to maintain the Risk Factors sectionlisting of the Company’s final prospectusshares of common stock on Nasdaq; (2) the risk that the Company’s completed or proposed transactions disrupt the Company’s current plans and/or operations, including the risk that the Company does not complete any such proposed transactions or achieve the expected benefits from any transactions; (3) the ability to recognize the anticipated benefits of corporate transactions, commercial collaborations, commercialization of digital assets, cost reduction initiatives and proposed transactions, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably, and the Company's ability to retain its key employees; (4) costs related to being a public company, corporate transactions, commercial collaborations and proposed transactions; (5) changes in applicable laws or regulations; (6) the possibility that the Company may be adversely affected by global hostilities, supply chain delays, inflation, interest rates, foreign currency exchange rates or other economic, business, and/or competitive factors; (7) risks relating to the uncertainty of the projected financial information of the Company, including changes in the Company's estimates of cash flows and the fair value of certain of our intangible assets, including goodwill; (8) risks related to the organic and inorganic growth of the Company’s businesses, and the timing of expected business milestones; (9) changing demand or shopping patterns for its Initial Public Offering filedthe Company’s products and services; (10) failure of licensees, suppliers or other third-parties to fulfill their obligations to the Company; (11) the Company’s ability to comply with the U.S. Securitiesterms of its indebtedness and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed onother obligations; (12) changes in financing markets or the EDGAR sectioninability of the SEC’s website at www.sec.gov. ExceptCompany to obtain financing on attractive terms; and (13) other risks and uncertainties indicated in this Quarterly Report on Form 10-Q, including those under “Part II—Item 1A. Risk Factors”, and in “Part I—Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We caution that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements.expressly required by applicable securities law,of the Company disclaimsdate of this Quarterly Report on Form 10-Q or any intention orearlier date specified for such statements. We do not undertake any obligation to update or revise any forward-looking statements whetherto reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as may be required under applicable securities laws. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this Cautionary Note Regarding Forward-Looking Statements.new information, future events or otherwise.OverviewWe are$45 million in prepayments of our senior debt pursuant to the third and fourth amendments of our Credit Agreement in February 2023. In the second quarter of 2023, we recorded a blank check company formed undergain on partial extinguishment of debt in amount of $8.0 million upon the lawsamendment and restatement of the StateCredit Agreement. See Delawareour corporate aircraft (the “Aircraft”), a related term loan obtained in connection with our initial acquisition of the Aircraft (the “Aircraft Term Loan”) was repaid in full and all related liens discharged. A loss on November 12, 2019early extinguishment of such debt, which was comprised of the write-off of certain deferred financing costs and a prepayment penalty, was $0.2 million.purposeperiods indicated (in thousands, except percentages):Three Months Ended
September 30,2023 2022 $ Change % Change Net revenues $ 33,282 $ 45,706 $ (12,424) (27) % Costs and expenses: — — Cost of sales (10,909) (25,302) 14,393 (57) % Selling and administrative expenses (25,514) (34,988) 9,474 (27) % Contingent consideration fair value remeasurement gain 219 1,371 (1,152) (84) % Impairments (7,674) (277,197) 269,523 (97) % Gain on sale of the aircraft — 5,802 (5,802) (100) % Other operating expense, net (740) — (740) 100 % Total operating expense (44,618) (330,314) 285,696 (86) % Operating loss (11,336) (284,608) 273,272 (96) % Nonoperating (expense) income: Interest expense (6,620) (4,306) (2,314) 54 % Loss on extinguishment of debt — (220) 220 100 % Fair value remeasurement gain — 9,149 (9,149) (100) % Other income (expense), net 121 (551) 672 (122) % Total nonoperating (expense) income (6,499) 4,072 (10,571) (260) % Loss from continuing operations before income taxes (17,835) (280,536) 262,701 (94) % Benefit from income taxes 1,442 43,653 (42,211) (97) % Net loss from continuing operations (16,393) (236,883) 220,490 (93) % Income (loss) from discontinued operations, net of tax 1,319 (27,814) 29,133 (105) % Net loss (15,074) (264,697) 249,623 (94) % Net loss attributable to PLBY Group, Inc. $ (15,074) $ (264,697) $ 249,623 (94) % effectingoperations data expressed as a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar Business Combination with one or more businesses. We intendpercentage of total revenue for the periods indicated:Three Months Ended
September 30,2023 2022 Net revenues 100% 100% Costs and expenses: Cost of sales (33) (55) Selling and administrative expenses (77) (77) Contingent consideration fair value remeasurement gain 1 3 Impairments (23) (606) Gain on sale of the aircraft — 13 Other operating expense, net (2) — Total operating expense (134) (722) Operating loss (34) (622) Nonoperating (expense) income: Interest expense (20) (9) Loss on extinguishment of debt — — Fair value remeasurement gain — 20 Other income (expense), net — (1) Total nonoperating (expense) income (20) 10 Loss from continuing operations before income taxes (54) (612) Benefit from income taxes 4 96 Net loss from continuing operations (50) (516) Income (loss) from discontinued operations, net of tax 4 (61) Net loss (46) (577) Net loss attributable to PLBY Group, Inc. (46)% (577)% effectuatethe prior year comparative period was primarily due to lower direct-to-consumer revenue of $8.9 million, a $4.0 million decrease in licensing revenue, a $0.4 million decrease in TV and cable programming revenue, and a $0.3 million decrease in magazine and digital subscriptions revenue, all due to weaker consumer demand, partly offset by $1.1 million of higher revenues from our Business Combination using cashcreator platform.proceedselimination of the Initial Public Offering, the partial exercise of the over-allotment option, and$1.4 million in aircraft expenses following the sale of the Private Units, our capital stock, debt orAircraft in the third quarter of 2022, and a combination$1.6 million decrease in depreciation and amortization expense, partly offset by $1.0 million of cash, stockcosts associated with the formation and debt.issuancedecrease in contingent consideration fair value remeasurement gain for the three months ended September 30, 2023 as compared to the prior year comparative period was due to the resolution of additional sharescontingent consideration related to the acquisition of Honey Birdette during 2022 and partial settlement of the contingent consideration recorded in connection with the acquisition of GlowUp in the second quarter of 2022.Nine Months Ended
September 30,2023 2022 $ Change % Change Net revenues $ 103,586 $ 140,647 $ (37,061) (26) % Costs and expenses: Cost of sales (43,545) (62,833) 19,288 (31) % Selling and administrative expenses (99,693) (113,774) 14,081 (12) % Contingent consideration fair value remeasurement gain 486 29,310 (28,824) (98) % Impairments (155,864) (283,496) 127,632 (45) % Gain on sale of the aircraft — 5,802 (5,802) (100) % Other operating expense, net (491) — (491) (100) % Total operating expense (299,107) (424,991) 125,884 (30) % Operating loss (195,521) (284,344) 88,823 (31) % Nonoperating (expense) income: Interest expense (17,586) (12,439) (5,147) 41 % Gain (loss) on extinguishment of debt 6,133 (220) 6,353 (100) % Fair value remeasurement gain 6,505 10,903 (4,398) (40) % Other income (expense), net 621 (1,030) 1,651 (160) % Total nonoperating expense (4,327) (2,786) (1,541) 55 % Loss from continuing operations before income taxes (199,848) (287,130) 87,282 (30) % Benefit from income taxes 13,062 46,301 (33,239) (72) % Net loss from continuing operations (186,786) (240,829) 54,043 (22) % Income (loss) from discontinued operations, net of tax 149 (26,640) 26,789 (101) % Net loss (186,637) (267,469) 80,832 (30) % Net loss attributable to PLBY Group, Inc. $ (186,637) $ (267,469) $ 80,832 (30) % Nine Months Ended
September 30,2023 2022 Net revenues 100 % 100 % Costs and expenses: Cost of sales (42) (45) Selling and administrative expenses (96) (81) Contingent consideration fair value remeasurement gain — 21 Impairments (150) (202) Gain on sale of the aircraft — 4 Other operating expense, net — — Total operating expense (288) (303) Operating loss (188) (203) Nonoperating (expense) income: Interest expense (17) (9) Gain (loss) on extinguishment of debt 6 — Fair value remeasurement gain 6 8 Other income (expense), net 1 (1) Total nonoperating expense (4) (2) Loss from continuing operations before income taxes (192) (205) Benefit from income taxes 13 33 Net loss from continuing operations (179) (172) Loss from discontinued operations, net of tax — (19) Net loss (179) (191) Net loss attributable to PLBY Group, Inc. (179) % (191) % initial Business Combination:•may significantly dilute the equity interest of our investors in this offering who would not have pre-emption rights in respect of any such issuance;•may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock;•will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and•may adversely affect prevailing market prices for our securities.Similarly, ifadditional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, investors should be aware that when evaluating EBITDA and Adjusted EBITDA, we issuemay incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.Three Months Ended
September 30,Nine Months Ended
September 30,2023 2022 2023 2022 Net loss from continuing operations $ (16,393) $ (236,883) $ (186,786) $ (240,829) Adjusted for: Interest expense 6,620 4,306 17,586 12,439 Loss (gain) on extinguishment of debt — 220 (6,133) 220 Benefit from income taxes (1,442) (43,653) (13,062) (46,301) Depreciation and amortization 1,795 5,388 5,332 10,444 EBITDA (9,420) (270,622) (183,063) (264,027) Adjusted for: Stock-based compensation 540 4,543 8,910 15,829 Adjustments 1,531 6,145 6,374 8,860 Inventory reserve charges — — 3,637 — Gain on sale of the aircraft — (5,802) — (5,802) Contingent consideration fair value remeasurement (219) (1,371) (486) (29,310) Mandatorily redeemable preferred stock fair value remeasurement — (9,149) (6,505) (10,903) Impairments 7,674 277,197 155,864 283,496 Write-down of capitalized software — — 4,632 — Adjusted EBITDA $ 106 $ 941 $ (10,637) $ (1,857) Three Months Ended
September 30,2023 2022 $ Change % Change Net revenues: Licensing $ 10,931 $ 14,908 $ (3,977) (27) % Direct-to-Consumer 17,145 26,090 (8,945) (34) % Digital Subscriptions and Content 5,206 4,666 540 12 % All Other — 42 (42) (100) % Total $ 33,282 $ 45,706 $ (12,424) (27) % Operating income (loss): Licensing $ 1,049 $ (105,403) $ 106,452 (101) % Direct-to-Consumer (1,614) (164,852) 163,238 (99) % Digital Subscriptions and Content (1,884) (3,013) 1,129 (37) % Corporate (8,887) (11,405) 2,518 (22) % All Other — 65 (65) (100) % Total $ (11,336) $ (284,608) $ 273,272 (96) % Nine Months Ended
September 30,2023 2022 $ Change % Change Net revenues: Licensing $ 30,913 $ 45,345 $ (14,432) (32) % Direct-to-Consumer 57,613 80,482 (22,869) (28) % Digital Subscriptions and Content 15,056 14,100 956 7 % All Other 4 720 (716) (99) % Total $ 103,586 $ 140,647 $ (37,061) (26) % Operating income (loss): Licensing $ (63,665) $ (84,699) $ 21,034 (25) % Direct-to-Consumer (91,672) (166,568) 74,896 (45) % Digital Subscriptions and Content (1,491) (12,855) 11,364 (88) % Corporate (38,681) (20,890) (17,791) 85 % All Other (12) 668 (680) (102) % Total $ (195,521) $ (284,344) $ 88,823 (31) % itpurchase agreement entered into by us and the Purchaser. We incurred approximately $1.5 million of fees associated with the transaction, $1.0 million of which was netted against the gross proceeds.result in:
further impact the revenue recognized against our ongoing contract assets.•default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to pay our debt obligations;•acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant;•our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;•our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding; and•limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
Since going public, we have yet to generate operating income from our core business operations and have incurred significant accumulated losses of $195.5 million for the nine months ended September 30, 2023. We expect to continue to incur significant costsoperating losses for the foreseeable future.
Resultseffectively implemented within the assessment period and, when implemented, will mitigate the relevant conditions or events and alleviate substantial doubt. Although consequences of Operations
ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity, along with proceeds from asset dispositions and savings from cost reductions initiatives, will be sufficient to meet our obligations as they become due under the A&R Credit Agreement and our other obligations for at least one year following the date of the filing of this Quarterly Report. We have neither engagedmay seek additional equity or debt financing in any operations nor generated any revenuesthe future to date. Our only activitiessatisfy capital requirements, respond to adverse developments such as changes in our circumstances or unforeseen events or conditions, or fund organic or inorganic growth opportunities. In the event that additional financing is required from November 12, 2019 (inception)third-party sources, we may not be able to raise it on acceptable terms or at all.
Forrestatement of the three months ended June 30, 2020, we had a net loss of $19,600, which consisted of operating costs of $22,749 and an unrealized loss on marketable securities heldCredit Agreement (the “Restatement”) in the Trust Accountsecond quarter of $1,171, offset by2023, we recorded $8.0 million of gain for partial debt extinguishment and capitalized an additional $21.0 million of debt discount while deferring and continuing to amortize an existing discount of $2.6 million, which will be amortized over the remaining term of our senior secured debt and recorded in interest income on marketable securities heldexpense in our condensed consolidated statements of operations. As a result of the Restatement, fees of $0.3 million were expensed as incurred and $0.4 million of debt issuance costs were capitalized in the Trust Accountsecond quarter of $4,074 and an income tax benefit of $246.
For the six months ended June 30, 2020, we had a net loss of $19,811, which consisted of operating costs of $22,960 and an unrealized loss on marketable securities held in the Trust Account of $1,171, offset by interest income on marketable securities held in the Trust Account of $4,074 and an income tax benefit of $246.
Liquidity and Capital Resources
On June 9, 2020, we consummated the Initial Public Offering of 5,000,000 Units at a price of $10.00 per Unit, generating gross proceeds of $50,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 321,500 Private Units at a price of $10.00 per Private Unit in a private placement to the Sponsor, generating gross proceeds of $3,215,000.
On June 19, 2020, in2023.
Following our Initial Public Offering,such sales will not be required to prepay the partial exerciseA&R Term Loans); and (b) the Company to elect, through August 31, 2025, to pay in cash accrued interest equal to the applicable SOFR plus 1.00%, with the remainder of any applicable accrued interest not paid in cash capitalized into the A&R Term Loans. The other terms of the over-allotment optionA&R Credit Agreement will remain substantially unchanged from those prior to the First Amendment.
Forthis Quarterly Report on Form 10-Q.
Nine Months Ended September 30, | |||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||||||||||||
Net cash provided by (used in): | |||||||||||||||||||||||
Operating activities | $ | (36,753) | $ | (57,997) | $ | 21,244 | (37) | % | |||||||||||||||
Investing activities | 863 | 11,495 | (10,632) | (92) | % | ||||||||||||||||||
Financing activities | 27,258 | 37,072 | (9,814) | (26) | % |
Ascontinuing operations. The change in assets and liabilities as compared to the prior year comparable period was primarily driven by a $16.0 million decrease in deferred revenues due to the timing of June 30, 2020, we had cashthe direct-to-consumer order shipments as well as impairments and marketable securitiesmodifications of certain trademark licensing contracts, a $8.5 million increase in accounts payable due to the timing of payments, a decrease of $5.9 million in inventories, net due to reduced purchasing, a decrease of $6.1 million in prepaid expenses and other assets primarily due to a restructuring charge taken on direct-to-consumer cloud-based software in the Trust Accountfirst quarter of $58,650,863 (including approximately $3,0002023, a $0.9 million increase in operating lease liabilities, and a $12.3 million increase in other liabilities, net, partly offset by a $5.1 million increase in accounts receivable due to the timing of interestroyalties collections and modifications of certain trademark licensing contracts, a $0.7 million decrease in contract assets due to the impairment, modification or termination of certain trademark licensing contracts and the related $7.8 million decrease in accrued agency fees and comissions. The change in non-cash charges compared to the change in the prior year comparable period was primarily driven by a $127.6 million decrease in non-cash impairment charges, a $6.9 million decrease in stock-based compensation expense, a $6.4 million net gain on the extinguishment of debt in 2023, a $5.1 million decrease in depreciation and amortization, and a $0.5 million increase in amortization of right-of-use assets, partly offset by a $33.2 million change in fair value remeasurement charges, a $35.4 million increase in deferred income taxes, and unrealized losses). We intend to use substantially allthe $5.8 million gain on sale of the funds heldAircraft in the Trust Account, including any amounts representing interest earned onthird quarter of 2022.
As of June 30, 2020, we had cash of $340,118 outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to andproceeds from the offices, plants or similar locationssale of prospective target businesses or their representatives or owners, review corporate documentsYandy and material agreementsthe repayment of prospective target businesses,a related $1.3 million promissory note, and structure, negotiate$4.3 million lower purchases of property and complete our initial Business Combination.
In order
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may2023.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2020.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than an agreement to pay an affiliate of our Sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative support. We began incurring these fees on June 4, 2020 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $2,012,430. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
In addition, subject to certain conditions, we granted Chardan, for a period of 15 months after the date of the consummation of a Business Combination, a right of first refusal to act as lead underwriters or minimally as a co-manager, with at least 30% of the economics; or, in the case of a three-handed deal 20% of the economics, for any and all future public and private equity and debt offerings. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of the registration statement related to the Initial Public Offering.
Critical Accounting Policies
U.S. GAAP. The preparation of condensedthese financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires managementus to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities atas of the date of the condensed consolidated financial statements, and income andas well as the reported expenses incurred during the periods reported. Actual results could materially differ from those estimates. We have identifiedreporting periods. Estimates and judgments used in the following critical accounting policies:
Common Stock Subject to Possible Redemption
We account for common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrumentpreparation of our interim condensed consolidated financial statements are, by their nature, uncertain and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemptionunpredictable, and depend upon, the occurrence of uncertain events not solely within our control) is classified as temporary equity. At allamong other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to bethings, many factors outside of our control, such as demand for our products, inflation, foreign currency exchange rates, economic conditions and subjectother current and future events, such as the impact of public health crises and epidemics and global hostilities. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Net Loss Per Common Share
We applyconsolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the two-class method in calculating earnings per share. Common stock subjecttiming of their adoption, and our assessment, to possible redemption which is not currently redeemable and is not redeemable at fair value,the extent we have been excluded from the calculationmade one, of basic net loss per common share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net income is adjusted for the portion of income that is attributable to common stock subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effectpotential impact on our condensed financial statements.
Aboutabout Market RiskJuneSeptember 30, 2020,2023 and December 31, 2022, we werehad cash of $20.0 million and $31.6 million, respectively, and restricted cash and cash equivalents of $1.9 million and $3.8 million, respectively, primarily consisting of interest-bearing deposit accounts for which the fair market value would be affected by changes in the general level of U.S. interest rates. However, an immediate 10% change in interest rates would not have a material effect on the fair market value of our cash and restricted cash and cash equivalents.any market ora variable interest rate risk.based on prime, federal funds, or SOFR plus an applicable margin based on our total net leverage ratio. The net proceeds heldnature and amount of our long-term debt can be expected to vary as a result of future business requirements, market conditions, and other factors. We may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations, but as of September 30, 2023, we have not entered into any such contracts.Trust Account have been investedpast, and may in the future, negatively affect our revenue and other operating results as expressed in U.S. government treasury bills, notesdollars. For the three months ended September 30, 2023 and 2022, we derived approximately 55% and 59%, respectively, of our revenue from outside the United States, out of which 30% and 29%, respectively, was denominated in foreign currency. For the nine months ended September 30, 2023 and 2022, we derived approximately 56% and 60%, respectively, of our revenue from outside the United States, out of which 29% and 30%, respectively, was denominated in foreign currency. Revenue and related expenses generated from our international operations (other than most international licenses) are denominated in the functional currencies of the corresponding country. The functional currency of our subsidiaries that either operate in or bonds with a maturitysupport these markets is generally the same as the corresponding local currency. The majority of 180 days or less, or in certain money market funds that invest solelyour international licenses are denominated in U.S. treasuries. Duedollars. The results of operations of, and certain of our intercompany balances associated with, our international operations are exposed to foreign exchange rate fluctuations. Upon consolidation, as exchange rates vary, our revenue and other operating results may differ materially from expectations, and we may record significant gains or losses on the remeasurement of intercompany balances. We do not have an active foreign exchange hedging program.short-term naturevolume of these investments,foreign currency-denominated transactions in a given period. Foreign currency transaction exposure from a 10% movement of currency exchange rates would have a material impact on our results, assuming no foreign currency hedging. For the three and nine months ended September 30, 2023, we recorded an unrealized loss of $1.2 million and $3.2 million, respectively, which is included in accumulated other comprehensive loss as of September 30, 2023. This was primarily related to the increase in the U.S. dollar against the Australian dollar during the three and nine months ended September 30, 2023.there willthat inflation has had a material impact on our financial position or results of operations in recent periods, a high rate of inflation in the future may have an adverse effect on our ability to maintain or improve current levels of revenue, gross margin and selling and administrative expenses, or the ability of our customers to make discretionary purchases of our goods and services. See our “Risk Factors—Risks Related to Our Business and Industry—Our business depends on consumer purchases of discretionary items, which can be no associated material exposure to interest rate risk.negatively impacted during an economic downturn or periods of inflation. This could negatively affect our sales, profitability and financial condition,” included in Item 1A of our Annual Report on Form 10-K filed on March 16, 2023.
controlsControls and procedures are controlsProceduresother procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, includingsupervision of our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.Evaluation of Disclosure Controls and ProceduresAs required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation ofhave evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2020.the end of the period covered by this Quarterly Report on Form 10-Q. Based upon theiron that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) underwere not effective due to the Exchange Act) were effective.Changes in Internal Control Over Financial ReportingDuring the most recently completed fiscal quarter, there has been no changematerial weaknesses in our internal control over financial reporting described below. However, after giving full consideration to such material weaknesses, and the additional analyses and other procedures that we performed to ensure that our condensed consolidated financial statements included in this Quarterly Report were prepared in accordance with U.S. GAAP, our management has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. GAAP.isare reasonably likely to materially affect, our internal control over financial reporting.
ITEMLEGAL PROCEEDINGSNone.
ITEMRISK FACTORSFactors that could cause our actual resultsRisk Factors.differ materially from thosethe other information set forth in this Quarterly Report, are any ofincluding the risksrisk factors set forth below, please carefully consider the risk factors described in our final prospectusmost recent Annual Report on Form 10-K for the fiscal year ended December 31, 2022, under the heading “Part I – Item 1A. Risk Factors.” Such risks described are not the only risks facing us. Additional risks and uncertainties not currently known to us, or that our management currently deems to be immaterial, also may adversely affect our business, financial condition, and/or operating results.Initial Public Offering filedcommon stock. Although we may effect a reverse stock split of our issued and outstanding common stock in the future, there can be no assurance that such reverse stock split will enable us to regain, or maintain, compliance with the Nasdaq minimum bid price requirement.June 5, 2020.disclosure and the class of investors to which the broker may sell the common stock; limited news and analyst coverage for our company, in part due to the “penny stock” rules; decreased ability to issue additional securities or obtain additional financing in the future; and potential breaches under or terminations of our agreements with current or prospective large stockholders, strategic investors and banks.resultharm our financial results.significantrestructuring charge of $4.6 million for the nine months ended September 30, 2023, excluding $0.4 million of costs related to discontinued operations. In addition, we reduced headcount within the Playboy Direct-to-Consumer business and our corporate office during fiscal 2023, resulting in a severance charge of $0.3 million and $2.8 million during the three and nine months ended September 30, 2023, respectively, and additional stock-based compensation expenses of $2.4 million due to acceleration of certain equity awards during the nine months ended September 30, 2023.material adverse effectintended cost reduction actions or realize their benefits, including within the anticipated timeline, nor may we be able to identify and/or implement additional asset dispositions or cost reduction actions necessary to achieve positive cash flows, including potentially as a result of factors outside of our control. In addition, the implementation of these dispositions, cost reduction actions and changes to our workforce could have unintended consequences to us, including negatively impacting our sales, diversion of management attention, employee attrition beyond workforce reductions, and lower employee morale among our current employees. If we are not able to fully achieve the expected financial benefits of our asset dispositions and cost reduction actions within the anticipated timeline, we may not be able to effectively mitigate the negative impacts of the current ongoing negative macroeconomic conditions on our resultsbusiness, which in turn, could weaken our ability to support our ongoing operations, satisfy covenants under our Credit Agreement and otherwise meet our obligations as they become due, and further, cause management to change its assessment of operations orour ability to continue as a going concern (refer to Note 1 in our unaudited consolidated financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date ofstatements included in this Quarterly Report other than as described below, there have been no material changesfor further discussion of management’s most recent assessment).risk factors disclosed in our final prospectus for our Initial Public Offering filed with the SEC on June 5, 2020.The securities in which we invest the funds held in the Trust Account could bear a negative rateimplementation of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.20 per share.The proceeds held in the Trust Account are invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it mayadditional restructuring-related activities in the future, adopt similar policies in the United States. In the event thatwhich could exacerbate these risks or introduce new risks which could materially adversely affect our business, financial position, liquidity and results of operations.are unable to completehad not repurchased any shares of our initial business combination or make certain amendments to our Amended and Restated Certificate of Incorporation, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the Trust Account, plus any interest income not released to us, net of taxes payable. Negative interest rates could impact the per-share redemption amount that may be received by public stockholders.ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSOn June 9, 2020, we consummated our Initial Public Offering of 5,000,000 Units. On June 19, 2020, in connection with underwriters’ election to partially exercise their over-allotment option, we sold an additional 749,800 Units. The Units were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $57,498,000. Each Unit consisted of one Class A common stock of the Company, par value $0.0001 per share, and one right. Chardan Capital Markets, LLC acted as the sole book running managers of the offering. The securities sold in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-238320). The SEC declared the registration statement effective on June 4, 2020.Simultaneously with the consummation of the Initial Public Offering and the partial exercise of the over-allotment option, we consummated a private placement of 58,741 Private Units to our Sponsor and Chardan at a price of $10.00 per Private Unit, generating total proceeds of $587,410. Such securities were issuedauthorized pursuant to the exemption from registration contained in Section 4(a)(2)2022 Stock Repurchase Program, which was authorized by the Board of the Securities Act.The Private Units are identical to the Public Units sold in the Initial Public Offering.Of the gross proceeds received from the Initial Public Offering, the partial exercise of the over-allotment option and the Private Units, $58,647,960 was placed in the Trust Account.We paid a total of $1,437,450 underwriting discounts and commissions and $560,479 for other offering costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $2,012,430 in underwriting discounts and commissions.For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Quarterly Report.
Defaults Upon Senior Securities.ITEMDEFAULTS UPON SENIOR SECURITIES
Mine Safety Disclosures.ITEMMINE SAFETY DISCLOSURES
ITEMOTHER INFORMATIONNone.
No Rule 10b5‑1 plans or non-Rule 10b5-1 trading arrangements were adopted, modified or terminated by the Company or officers or directors of the Company, nor were there any material changes to the procedures by which security holders may recommend nominees to the Company’s board of directors, during the quarter ended September 30, 2023.
ITEMEXHIBITSThe following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.*Filed herewith.**Furnished.(1)Previously filed as an exhibit to our Current (submitted electronically with this Quarterly Report on Form 8-K filed on June 10, 202010-Q)104 Cover Page Interactive Data File, formatted in Inline XBRL and incorporated by reference herein.contained in Exhibit 101
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In accordance withMOUNTAIN CREST ACQUISITION CORPPLBY GROUP, INC. Date: August 13, 2020November 9, 2023By: /s/ Suying LiuBen KohnName: Suying LiuBen KohnTitle: Chief Executive Officer and President
(principal executive officer)(Principal Executive Officer)Date: August 13, 2020November 9, 2023By: /s/ Dong LiuMarc CrossmanName: Dong LiuMarc CrossmanTitle: Chief Financial Officer and
Chief Operation Officer
(principal financial officer)(Principal Financial and Accounting Officer)