UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

~~[X]~~☒

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2020~~March 31, 2021

~~[ ]~~☐

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 000-55353

fuboTV Inc.

(Exact Name of Registrant as Specified in Its Charter)

Florida		26-4330545
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1330 Avenue of the Americas, New York, NY		10019
(Address of Principal Executive Offices)		(Zip Code)

(212) 672-0055

(Registrant’s Telephone Number, Including Area Code)

~~N/A~~

~~(Former name, former address and former fiscal year, if changed since last report)~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
~~N/A~~Common Stock, par value $0.0001 per share		~~N/A~~FUBO		~~N/A~~New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~[X]~~☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ~~[X]~~☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	~~[ ]~~☐	Accelerated filer	~~[ ]~~ ☐
Non-accelerated filer	~~[X]~~ ☒	Smaller reporting company	~~[X]~~☒
Emerging growth company	~~[ ]~~ ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ~~[ ]~~☐ No ~~[X]~~☒

As of ~~August~~May 7, ~~2020,~~2021, there were ~~42,064,459~~140,465,829 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

fuboTV Inc.

~~INDEX~~TABLE OF CONTENTS

		Page

	PART I - FINANCIAL INFORMATION	41

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020	1

	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020 (unaudited)	2

	Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020 (unaudited)	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (unaudited)	4

	~~Condensed Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019~~	4

	~~Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)~~	5

	~~Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)~~	6

	~~Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019 (unaudited)~~	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	86

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4421

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5328

Item 4.	Controls and Procedures	5328

	PART II - OTHER INFORMATION	5330

Item 1.	Legal Proceedings	5330

Item 1A.	Risk Factors	5431

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7460

Item 3.	Defaults Upon Senior Securities	7560

Item 4.	Mine Safety Disclosures	7560

Item 5.	Other Information	7560

Item 6.	Exhibits	7661

Signatures			7962

~~FORWARD-LOOKING STATEMENTS~~BASIS OF PRESENTATION

As used in this Quarterly Report on Form 10-Q (“Quarterly Report”), unless expressly indicated or the context otherwise requires, references to “fuboTV Inc.,” “fuboTV,” “we,” “us,” “our,” “the Company,” and similar references refer to fuboTV Inc., a Florida corporation and its consolidated subsidiaries, including fuboTV Media Inc., a Delaware corporation (“fuboTV Sub”). “fuboTV Pre-Merger” refers to fuboTV Inc., a Delaware corporation, prior to the Merger (as defined herein) and “FaceBank Pre-Merger” refers to FaceBank Group, Inc. and its subsidiaries prior to the Merger.

FORWARD-LOOKING STATEMENTS

This Quarterly Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements, which are subject to a number of risks, uncertainties, and assumptions, generally relate to future events or our future financial or operating performance. In some cases, you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would,” “target,” “project,” “contemplate,” or the negative version of these words and other comparable terminology that concern our expectations, strategy, plans, intentions, or projections. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

	●	market conditions and global economic factors beyond our control, including the potential adverse effects of the ongoing global COVID-19 pandemic on our business and results of operations, on live sports and entertainment, and on the global economic environment;

	●	our ability to access debt and equity financing;

	●	our efforts to maintain proper and effective internal controls;

	●	factors relating to our business, operations, and financial performance, including:

		○	our ability to effectively compete in the live TV streaming and entertainment industries;

		○	our ability to successfully integrate new ~~operations;~~operations, including the ability to implement our wagering strategy;

		○	our ability to maintain and expand our content offerings;

		○	our ability to expand into the sports wagering market;

		○	our ability to recognize deferred tax assets and tax loss carryforwards;

	●	the impact of management changes and organizational restructuring;

	●	~~our ability to uplist the combined company to a national stock exchange;~~

	●	~~the anticipated effects of the Merger (as hereinafter defined);~~

	●	changes in applicable laws or regulations;

	●	litigation and our ability to adequately protect our intellectual property rights;

	●	our ability to operate a sportsbook and other gaming-related products and services, including, without limitation, our ability to gain state market access and to obtain and maintain required state regulatory approvals;

	●	our success in retaining or recruiting officers, key employees, or directors; and

	●	the possibility that we may be adversely affected by other economic, business and/or competitive factors.

We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part II, Section 1A titled “Risk Factors.” These risks are not exhaustive. Other sections of this Quarterly Report include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements and you should not place undue reliance on our forward-looking statements.

In addition, ~~statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These~~forward-looking statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. You should read this Quarterly Report in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, ~~2019~~2020 included in our Annual Report on Form 10-K, filed with the SEC on March 25, 2021, as amended on Form 10-K/A filed with the SEC on ~~August 10, 2020.~~March 29, 2021 (the “Annual Report”).

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

~~fuboTV Inc.~~

fuboTV Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share and per share information)

June 30, 2020 December 31, 2019
(unaudited) *
ASSETS
Current assets:
Cash and cash equivalents $ 7,356 $ 7,624
Accounts receivable, net 4,112 8,904
Prepaid expenses and other current assets 2,839 1,445
Assets held for sale (Note 7) 35,494 —
Total current assets

49,801

17,973

Property and equipment, net 1,933 335
Restricted cash 1,330 —
Financial assets at fair value — 1,965
Intangible assets, net 340,785 116,646
Goodwill 710,962 227,763
Operating leases – right-of-use assets 5,152 3,519
Other non-current assets 403 24

Total assets $ 1,110,366 $ 368,225

Liabilities, convertible preferred stock and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other current liabilities $
109,404
$ 56,775
Accounts payable – due to related parties 17,010 665
Accrued expenses – due to related parties 43,170 —
Notes payable, net of discount 16,542 4,090
Note payable – related parties 539 368
Convertible notes, net of $2,027 and $710 discount as of June 30, 2020 and December 31, 2019, respectively 4,407 1,358
Shares settled liability for intangible asset — 1,000
Deferred revenue 8,855 —
Profit share liability 2,119 1,971
Warrant liability – subsidiary 21 24
Warrant liabilities 40,617 —
Derivative liabilities 163 376
Long term borrowings – current portion 8,154 —
Current portion of operating lease liabilities 970 815
Liabilities held for sale (Note 7) 56,137 —

Total current liabilities 308,108 67,442

Deferred income taxes 90,794 30,879
Operating lease liability 4,189 2,705
Long term borrowings 19,197 43,982
Other long-term liabilities 1 41

Total liabilities 422,289 145,049

Commitments and contingencies (Note 19)

Series D Convertible Preferred stock, $0.0001 par value, 2,000,000 shares authorized, 203,000 and 456,000 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively; aggregate liquidation preference of $208 and $462 as of June 30, 2020 and December 31, 2019, respectively 208 462

Stockholders’ equity:
Series AA Convertible Preferred stock, par value $0.0001, 35,800,000 shares authorized, 27,412,193 and 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 566,124 —
Series A Preferred stock, par value $0.0001, 5,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively — —
Series B Convertible Preferred stock, par value $0.0001, 1,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively — —
Series C Convertible Preferred stock, par value $0.0001, 41,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively — —
Series X Convertible Preferred stock, par value $0.0001, 1,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively — —
Common stock par value $0.0001: 400,000,000 shares authorized; 38,684,514 and 28,912,500 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively 4 3
Additional paid-in capital 315,871 257,002
Accumulated deficit (210,540 ) (56,123 )
Non-controlling interest 16,410 22,602
Accumulated other comprehensive loss — (770 )

Total stockholders’ equity 687,869 222,714

TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY $ 1,110,366 $ 368,225

	March 31,			December 31,
	2021			2020
ASSETS		(Unaudited)
Current assets
Cash and cash equivalents	$	459,532		$	134,942
Accounts receivable, net		17,968			17,495
Prepaid and other current assets		6,149			4,277
Total current assets		483,649			156,714

Property and equipment, net		2,546			1,771
Restricted cash		5,403			1,279
Intangible assets, net		207,376			216,449
Goodwill		489,089			478,406
Right-of-use assets		4,388			4,639
Other non-current assets		391			91
Total assets	$	1,192,842		$	859,349

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	22,677		$	31,160
Accrued expenses		130,698			126,393
Notes payable		4,718			4,593
Deferred revenue		20,199			17,428
Warrant liabilities		8,030			22,686
Short-term borrowings		17,736			24,255
Current portion of lease liability		695			799
Total current liabilities		204,753			227,314

Convertible notes, net of discount		304,344			-
Deferred income taxes		4,635			5,100
Lease liability		3,720			3,859
Other long-term liabilities		83			128
Total liabilities		517,535			236,401

COMMITMENTS AND CONTINGENCIES (Note 13)

Stockholders’ equity:
Series AA Convertible Preferred stock, par value $0.0001, 35,800,000 shares authorized, no shares outstanding and 23,219,613 shares issued and outstanding as of March 31, 2021 and December 31, 2020		-			406,665
Common stock par value $0.0001: 400,000,000 shares authorized; 140,549,783 and 92,490,768 shares issued at March 31, 2021 and December 31, 2020, respectively; 140,372,851 and 91,690,768 shares outstanding at March 31, 2021 and December 31, 2020, respectively		14			9
Additional paid-in capital		1,383,029			853,824
Treasury stock, at cost, 176,932 and 800,000 shares at March 31, 2021 and December 31, 2020		-			-
Accumulated deficit		(696,566	)		(626,456	)
Non-controlling interest		(11,170	)		(11,094	)
Total stockholders’ equity		675,307			622,948
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,192,842		$	859,349

* Derived from audited informationThe accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

fuboTV Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)

	For the Three Months Ended March 31,
	2021			2020
Revenues
Subscriptions		107,114		$	-
Advertisements		12,606			-
Other		-			7,295
Total revenues		119,720			7,295
Operating expenses
Subscriber related expenses		113,307			-
Broadcasting and transmission		10,551			-
Sales and marketing		22,143			-
Technology and development		11,438			-
General and administrative		18,154			20,203
Depreciation and amortization		9,209			5,220
Total operating expenses		184,802			25,423
Operating loss		(65,082	)		(18,128	)

Other income (expense)
Interest expense and financing costs		(2,454	)		(2,581	)
Amortization of debt discount		(2,512	)		-
Loss on issuance of notes, bonds, and warrants		-			(24,053	)
Loss on deconsolidation of Nexway		-			(11,919	)
Change in fair value of warrant liabilities		(585	)		(366	)
Change in fair value of subsidiary warrant liabilities		-			(15	)
Change in fair value of shares settled liability		-			(180	)
Change in fair value of derivative liability		-			297
Other expense		(18	)		(436	)
Total other expense		(5,569	)		(39,253	)
Loss before income taxes		(70,651	)		(57,381	)
Income tax benefit		465			1,038
Net loss		(70,186	)		(56,343	)
Less: net loss attributable to non-controlling interest		76			873
Net loss attributable to controlling interest		(70,110	)	$	(55,470	)
Less: Deemed dividend - beneficial conversion feature on preferred stock		-			(171	)
Net loss attributable to common stockholders		(70,110	)	$	(55,641	)

Net loss per share attributable to common stockholders
Basic and diluted		(0.59	)	$	(1.83	)
Weighted average shares outstanding:
Basic and diluted		118,584,166			30,338,073

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

fuboTV Inc.

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity

(Unaudited)

(in thousands, except share and per share amounts)

Three Months Ended March 31, 2021

																						Accumulated
											Additional											Other					Total
	Preferred stock						Common Stock				Paid-In			Treasury Stock					Accumulated			Comprehensive		Noncontrolling			Stockholders’
	Shares			Amount			Shares		Amount		Capital			Shares			Amount		Deficit			Loss		Interest			Equity
Balance at December 31, 2020		23,219,613		$	406,665			92,490,768	$	9	$	853,824			(800,000	)	$	-	$	(626,456	)	$	-	$	(11,094	)	$	622,948
Conversion of Series AA Preferred Stock		(23,219,613	)	$	(406,665	)		46,439,226		5		406,660			-			-		-			-		-			-
Exercise of common stock warrants		-			-			536,825		-		15,803			-			-		-			-		-			15,803
Issuance of treasury stock in connection with acquisition		-			-			-		-		8,538			623,068			-		-			-		-			8,538
Recognition of debt discount on 2026 Convertible Notes		-			-			-		-		88,059			-			-		-			-		-			88,059
Exercise of stock options		-			-			1,082,964		-		776			-			-		-			-		-			776
Stock based compensation		-			-			-		-		9,374			-			-		-			-		-			9,374
Other		-			-			-		-		(5	)		-			-					-		-			(5	)
Net loss		-			-			-		-		-			-			-		(70,110	)		-		(76	)		(70,186	)
Balance at March 31, 2021 (Unaudited)		-		$	-			140,549,783	$	14	$	1,383,029			(176,932	)	$	-	$	(696,566	)	$	-	$	(11,170	)	$	675,307

Three Months Ended March 31, 2020

															Accumulated
									Additional						Other						Total
	Preferred stock				Common Stock				Paid-In			Accumulated			Comprehensive			Noncontrolling			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Interest			Equity
Balance at December 31, 2019		-	$	-		28,912,500	$	3	$	257,002		$	(56,123	)	$	(770	)	$	22,602		$	222,714
Issuance of common stock for cash		-		-		795,593		-		2,297			-			-			-			2,297
Issuance of common stock - subsidiary share exchange		-		-		1,552,070		-		1,150			-			-			(1,150	)		-
Common stock issued in connection with note payable		-		-		7,500		-		67			-			-			-			67
Stock based compensation		-		-		1,040,000		-		10,061			-			-			-			10,061
Deemed dividend related to immediate accretion of redemption feature of convertible preferred stock		-		-		-		-		(171	)		-			-			-			(171	)
Accrued Series D Preferred Stock dividends		-		-		-		-		(9	)		-			-			-			(9	)
Deconsolidation of Nexway		-		-		-		-		-			-			770			(2,595	)		(1,825	)
Net loss		-		-		-		-		-			(55,470	)		-			(873	)		(56,343	)
Balance at March 31, 2020 (Unaudited)		-	$	-		32,307,663	$	3	$	270,397		$	(111,593	)	$	-		$	17,984		$	176,791

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

fuboTV Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands, except share and per share amounts)

	For the Three Months Ended March 31,
	2021			2020
Cash flows from operating activities
Net loss		(70,186	)		(56,343	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		9,209			5,220
Stock-based compensation		9,374			9,061
Loss on deconsolidation of Nexway, net of cash retained by Nexway		-			8,564
Loss on issuance of notes, bonds, and warrants		-			24,053
Common stock issued in connection with note payable		-			67
Amortization of debt discount		2,512			1,664
Deferred income tax benefit		(465	)		(1,038	)
Change in fair value of derivative liability		-			(297	)
Change in fair value of warrant liabilities		585			366
Change in fair value of subsidiary warrant liabilities		-			15
Change in fair value of shares settled liability		-			180
Amortization of right-of-use assets		251			13
Accrued interest on notes payable		125			112
Other adjustments		(5	)		(55	)
Changes in operating assets and liabilities of business, net of acquisitions:
Accounts receivable		(473	)		(927	)
Notes receivable		-			(179	)
Prepaid expenses and other assets		(2,419	)		1,102
Accounts payable		(8,528	)		1,295
Accrued expenses		3,625			(277	)
Due from related parties		-			(60	)
Deferred revenue		2,771			-
Lease liability		(243	)		(14	)
Net cash used in operating activities		(53,867	)		(7,478	)

Cash flows from investing activities
Advance to fuboTV		-			(2,421	)
Cash portion paid for acquisition		(1,740	)		-
Purchases of property and equipment		(639	)		-
Net cash used in investing activities		(2,379	)		(2,421	)

Cash flows from financing activities
Proceeds from sale of common stock and warrants, net of fees		-			2,297
Proceeds from convertible note, net of issuance costs		389,946			900
Proceeds from exercise of stock options		776			-
Proceeds from the exercise of common stock warrants		812			-
Repayments of convertible notes		-			(550	)
Repayments of notes payable and short-term borrowings		(6,574	)		-
Proceeds from the issuance of Series D Preferred Stock		-			203
Redemption of Series D Preferred Stock		-			(272	)
Proceeds from related parties		-			78
Repayments to related parties		-			(300	)
Net cash provided by financing activities		384,960			2,356

Net increase (decrease) in cash, cash equivalents and restricted cash		328,714			(7,543	)
Cash, cash equivalents and restricted cash at beginning of period		136,221			7,624
Cash, cash equivalents and restricted cash at end of period		464,935			81

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

fuboTV Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands, except share and per share amounts)

Supplemental disclosure of cash flows information:
Interest paid	327	170
Supplemental disclosure of non-cash financing and investing activities:
Conversion of Series AA preferred stock to common stock	406,665	-
Reclass of shares settled liability for intangible asset to stock-based compensation	-	1,000
Issuance of treasury stock in connection with acquisition	8,538	-
Cashless exercise of common stock warrants	14,991	-
Lender advanced loan proceeds direct to fuboTV	-	7,579
Issuance of common stock - subsidiary share exchange	-	1,150
Accrued Series D Preferred Stock dividends	-	9
Deemed dividend related to immediate accretion of redemption feature of convertible preferred stock	-	171

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~fuboTV Inc.~~

~~Condensed Consolidated Statements of Operations and Comprehensive Loss~~

~~(Unaudited)~~

~~(in thousands, except share and per share amounts)~~

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenues, net
Subscriptions $ 39,511 $ — $ 39,511 $ —
Advertisements 4,323 — 4,323 —
Software licenses, net — — 7,295 —
Other 338 — 338 —

Total Revenues $ 44,172 $ — $ 51,467 $ —

Operating expenses:
Subscriber related expenses 53,087 — 53,087 —
Broadcasting and transmission 9,492 — 9,492 —
Sales and marketing 7,577 111 11,256 324
Technology and development 9,551 — 9,551 —
General and administrative 17,338 693 33,862 1,517
Depreciation and amortization 14,417 5,158 19,637 10,316

Total operating expenses 111,462 5,962 136,885 12,157

Operating loss (67,290 ) (5,962 ) (85,418 ) (12,157 )

Other income (expense):
Interest expense and financing costs (13,325 ) (454 ) (15,906 ) (900 )
Loss on deconsolidation of Nexway — — (11,919 ) —
Loss on issuance of notes, bonds and warrants (26,753 ) — (50,806 ) —
Change in fair value of warrant liabilities 4,966 — 4,600 —
Change in fair value of subsidiary warranty liability 18 1,124 3 3,601
Change in fair value of shares settled liability (1,485 ) — (1,665 ) —
Change in fair value of derivative liabilities (823 ) 890 (526 ) 1,018
Change in fair value of profit share liability (148 ) — (148 ) —
Unrealized gain on equity method investment 2,614 — 2,614 —
Other expense (1,010 ) — (1,446 ) —

Total other (expense) income (35,946 ) 1,560 (75,199 ) 3,719

Loss before income taxes (103,236 ) (4,402 ) (160,617 ) (8,438 )
Income tax benefit 3,481 1,037 4,519 2,206

Net loss $ (99,755 ) $ (3,365 ) $ (156,098 ) $ (6,232 )
Less: net (loss) income attributable to non-controlling interest (682 ) 2,182 (1,555 ) 2,781

Net loss attributable to controlling interest $ (99,073 ) $ (5,547 ) $ (154,543 ) $ (9,013 )

Less: Deemed divided – beneficial conversion feature on preferred stock — — 171 —

Net loss attributable to common stockholders $ (99,073 ) $ (5,547 ) $ (154,714 ) $ (9,013 )

Net loss per share attributable to common stockholders:
Basic and diluted $ (2.82 ) $ (0.24 ) $ (4.77 ) $ (0.50 )

Weighted average shares outstanding:
Basic and diluted 35,045,390 22,964,199
32,390,829
17,952,188

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~fuboTV Inc.~~

~~Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity~~

~~(Unaudited)~~

~~(in thousands, except share and per share amounts)~~

For the three and six months ended June 30, 2020
Series AA
Convertible
Preferred Stock Common Stock Additional
Paid in Accumulated Accumulated
Other
Comprehensive Noncontrolling Total
Stockholders’
Equity
(unaudited): Shares Amount Shares Amount Capital Deficit Loss Interest
(Deficit)

Balance at December 31, 2019 — $ — 28,912,500 $ 3 $ 257,002 $ (56,123 ) $ (770 ) $ 22,602 $ 222,714
Issuance of common stock for cash — — 795,593 — 2,297 — — — 2,297
Issuance of common stock - subsidiary share exchange — — 1,552,070 — 1,150 — — (1,150 ) —
Common stock issued in connection with note payable — — 7,500 — 67 — — — 67
Stock-based compensation — — 1,040,000 — 10,061 — — — 10,061
Deemed dividend related to immediate accretion of redemption feature of convertible preferred stock — — — — (171 ) — — — (171 )
Accrued Series D Preferred Stock dividends — — — — (9 ) — — — (9 )
Deconsolidation of Nexway — — — — — — 770 (2,595 ) (1,825 )
Net loss — — — — — (55,470 ) — (873 ) (56,343 )

Balance at March 31, 2020 — $ — 32,307,663 $ 3 $ 270,397 $ (111,593 ) $ — $ 17,984 $ 176,791

Issuance of common stock and warrants for cash — — 3,906,313 1 26,629 — — — 26,630
Issuance of common stock - subsidiary share exchange — — 1,201,749 — 892 — — (892 ) —
Common stock issued in connection with note payable — — 25,000 — 192 — — — 192
Right to receive Series AA Preferred Stock in connection with acquisition of fuboTV Pre-Merger
32,324,362 566,124 — — — — — — 566,124
Settlement of share settled liability — — 900,000 — 9,054 — — — 9,054
Stock-based compensation — — 343,789 — 8,715 — — — 8,715
Redemption of redemption feature of convertible preferred stock — — — — — 126 — — 126
Accrued Series D Preferred Stock dividends — — — — (8 ) — — — (8 )
Net loss — — — — — (99,073 ) — (682 ) (99,755 )

Balance at June 30, 2020 32,324,362 $ 566,124 38,684,514 $ 4 $ 315,871 $ (210,540 ) $ — $ 16,410 $ 687,869

For the three and six months ended June 30, 2019 Series AA Convertible Preferred Stock Common Stock Additional
Paid in Accumulated Noncontrolling Total
Stockholders’
Equity
(unaudited): Shares Amount Shares Amount Capital Deficit Interest (Deficit)

Balance at December 31, 2018 1,000,000 $ — 7,532,776 $ 1 $ 227,570 $ (21,763 ) $ 26,742 $ 232,550
Issuance of common stock for cash — — 378,098 — 1,778 — — 1,778
Preferred stock converted to common stock (1,000,000 ) — 15,000,000 1 (1 ) — — —
Common stock issued for lease settlement — — 18,935 — 130 — — 130
Issuance of subsidiary common stock for cash — — — — 65 — — 65
Additional shares issued for reverse stock split — — 1,374 — — — — —
Net loss — — — — — (3,466 ) 599 (2,867 )

Balance at March 31, 2019 — $ — 22,931,183 $ 2 $ 229,542 $ (25,229 ) $ 27,341 $ 231,656

Issuance of common stock for cash — — 386,792 — 422 — — 422
Net loss — — — — — (5,547 ) 2,182 (3,365 )

Balance at June 30, 2019 — $ — 23,317,975 $ 2 $ 229,964 $ (30,776 ) $ 29,523 $ 228,713

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

fuboTV Inc.

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

~~(in thousands, except share and per share amounts)~~

Six Months Ended June 30,
2020 2019

Operating activities
Net loss $ (156,098 ) $ (6,232 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 19,637 10,316
Stock-based compensation 17,776 —
Loss on deconsolidation of Nexway, net of cash retained by Nexway 8,564 —
Common stock issued in connection with note payable 67 —
Loss on issuance of notes, bonds and warrants 50,806 —
Non-cash expense relating to issuance of warrants and common stock 2,208 —
Amortization of debt discount 10,981 454
Deferred income tax benefit (4,519 ) (2,206 )
Change in fair value of derivative liabilities 526 (1,018 )
Change in fair value of warrant liabilities (4,600 ) —
Change in fair value of subsidiary warrant liability (3 ) (3,601 )
Change in fair value of shares settled liability 1,665 —
Change in fair value of profit share liability 148 —
Unrealized gain on investment (2,614 ) —
Amortization of right-of-use assets 167 26
Foreign exchange loss 1,010 —
Accrued interest on note payable 246 295
Other, net (31 ) —
Changes in operating assets and liabilities:
Accounts receivable 792 —
Prepaid expenses and other current and long-term assets (614 ) (15 )
Due to related parties
10,889
—
Accounts payable, accrued expenses and other current and long-term liabilities
799
459
Operating lease liabilities (162 ) (26 )
Deferred revenue 46 —

Net cash used in operating activities (42,314 ) (1,548 )

Investing activities
Capital expenditures (70 ) (9 )
Investment in Panda Productions (HK) Limited — (1,000 )
Advance to fuboTV Pre-Merger (10,000 ) —
Acquisition of fuboTV’s Pre-Merger cash and cash equivalents and restricted cash 9,373 —
Sale of profit interest in investment in Panda Productions (HK) Limited — 655
Lease security deposit — (20 )

Net cash used in investing activities (697 ) (374 )

Financing activities
Proceeds from issuance of convertible notes 3,003 —
Repayments of convertible notes (1,140 ) (523 )
Proceeds from issuance Series D Preferred Stock 203 —
Proceeds from sale of common stock 28,926 2,199
Proceeds from sale of subsidiary’s common stock — 65
Redemption of Series D Preferred Stock (611 ) —
Proceeds from short-term borrowings 18,950 —
Repayments of short-term borrowings (8,407 ) —
Proceeds from long-term borrowings 4,699 —
Repayments of long-term borrowings (1,250 ) —
Proceeds from related parties — 410
Repayments to related parties (300 ) (109 )

Net cash provided by financing activities 44,073 2,042

Net increase in cash and cash equivalents and restricted cash 1,062 120
Cash and cash equivalents and restricted cash, beginning of period 7,624 31

Cash and cash equivalents and restricted cash, end of period $ 8,686 $ 151

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~fuboTV Inc.~~

Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Note 1 - Organization and Nature of Business

1.	~~Organization and Nature of Business~~

Incorporation

fuboTV Inc. (“fuboTV” or the “Company”) was incorporated under the laws of the State of Florida in February 2009 under the name York Entertainment, Inc. The Company changed its name to FaceBank Group, Inc. on September 30, 2019. On August 10, 2020, the Company changed its name to fuboTV Inc. ~~(the “Name Change”)~~ and as of May 1, 2020, the Company’s trading symbol was changed from “FBNK” to “FUBO.” The ~~Company has filed~~Company’s common stock was approved for listing on the New York Stock Exchange (“NYSE”) in connection with a ~~Notice of Corporate Action (the “Action”) with FINRA regarding~~public offering in October 2020 and commenced trading on the ~~Name Change. The Action is pending FINRA approval at this time.~~NYSE on October 8, 2020.

Unless the context otherwise requires, “fuboTV,” “we,” “us,” “our,” and the “Company” refers to fuboTV and its subsidiaries on a consolidated basis, and “fuboTV Pre-Merger” refers to fuboTV Inc., a Delaware corporation, prior to the Merger, and “fuboTV Sub” refers to fuboTV Inc., a Delaware corporation, and the Company’s wholly-owned subsidiary following the Merger. “FaceBank Pre-Merger” refers to FaceBank Group, Inc. prior to the Merger and its subsidiaries prior to the closing of the Merger, and “fuboTV Pre-Merger” refers to fuboTV Inc., a Delaware corporation and its subsidiaries prior to the Merger.basis.

Merger with fuboTV ~~Pre-Merger~~Inc.

On April 1, 2020, fuboTV Acquisition Corp., a Delaware corporation and ~~FaceBank Pre-Merger’s~~our wholly-owned subsidiary (“Merger Sub”) merged with and into fuboTV Pre-Merger, whereby fuboTV Pre-Merger continued as the surviving corporation and became our wholly-owned subsidiary pursuant to the terms of the Agreement and Plan of Merger and Reorganization dated as of March 19, 2020, by and among us, Merger Sub and fuboTV Pre-Merger (the “Merger Agreement” and such transaction, the “Merger”) ~~(See Note 4)~~.

In accordance with the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), all of the capital stock of fuboTV Pre-Merger was converted into shares of our newly-created class of Series AA Convertible Preferred Stock, par value $0.0001 per share (the “Series AA Preferred Stock”) (See Note 17). Each share of Series AA Convertible Preferred Stock is entitled to 0.8 votes per share and is convertible into two shares of our common stock, only in connection with the sale of such shares on an arms’-length basis either pursuant to an exemption from registration under Rule 144 promulgated under the Securities Act or pursuant to an effective registration statement under the Securities Act. Until the time we are able to uplist to a national securities exchange, the Series AA Convertible Preferred Stock benefits from certain protective provisions that, for example, require us to obtain the approval of a majority of the shares of outstanding Series AA Convertible Preferred Stock, voting as a separate class, before undertaking certain matters.

~~Prior to the Merger,~~ the Company was, and after the Merger continues to be, a character-based virtual entertainment company and a leading developer of digital human likeness for celebrities and consumers, focused on applications in traditional entertainment, sports entertainment, live events, social networking, mixed reality (AR/VR) and artificial intelligence. As a result of the Merger, fuboTV Pre-Merger, a leading live TV streaming platform for sports, news, and entertainment, became a wholly-owned subsidiary of the Company.

In connection with the Merger, on March 11, 2020, the Company and HLEE Finance S.a r.l. (“HLEE”) entered into a Credit Agreement, dated as of March 11, 2020, pursuant to which HLEE provided the Company with a $100.0 million revolving line of credit (the “Credit Facility”). The Credit Facility is secured by substantially all the assets of the Company. As of June 30, 2020, there were no amounts outstanding under the Credit Facility. See Note 13 for more information about the Credit Facility. The Credit Facility was terminated on July 8, 2020.

On March 19, 2020, the Company, Merger Sub, Evolution AI Corporation (“EAI”) and Pulse Evolution Corporation (“PEC” and collectively with EAI, Merger Sub and the Company, the “Initial Borrower”) and FB Loan Series I, LLC (“FB Loan”) entered into a Note Purchase Agreement (the “Note Purchase Agreement”), pursuant to which the Initial Borrower sold to FB Loan senior secured promissory notes in an aggregate principal amount of $10.1 million (the “Senior Notes”). The Company received proceeds of $7.4 million, net of an original issue discount of $2.7 million. In connection with the FB Loan, the Company, fuboTV Sub and certain of their respective subsidiaries granted a lien on substantially of their assets to secure the obligations under the Senior Notes. See Note 13 for more information about the Note Purchase Agreement.

~~fuboTV Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

Prior to the Merger, fuboTV Pre-Merger and its subsidiaries were party to a Credit and Guaranty Agreement, dated as of April 6, 2018 (the “AMC Agreement”), with AMC Networks Ventures LLC as lender, administrative agent and collateral agent (“AMC Networks Ventures”). fuboTV Pre-Merger previously granted AMC Networks Ventures a lien on substantially all of its assets to secure its obligations thereunder. The AMC Agreement survived the Merger and, as of the Effective Time, there was $23.6 million outstanding under the AMC Agreement, net of debt issuance costs. In connection with the Merger, the Company guaranteed the obligations of fuboTV Pre-Merger under the AMC Agreement on an unsecured basis. The liens of AMC Networks Ventures on the assets of fuboTV Pre-Merger are senior to the liens in favor of FB Loan and FaceBank Pre-Merger securing the Senior Notes.

Nature of Business ~~after the Merger~~

~~Prior to the Merger, the~~The Company is focused on developing its technology-driven IP in sports, movies, and live performances. ~~Since the acquisition of fuboTV Pre-Merger, we are~~The Company is principally focused on offering consumers a leading live TV streaming platform for sports, news, and entertainment through fuboTV. The Company’s revenues are almost entirely derived from the sale of subscription services and the sale of advertisements in the United States.

~~Our~~The Company’s subscription-based streaming services are offered to consumers who can sign-up for accounts through which ~~we provide~~the Company provides basic plans with the flexibility for consumers to purchase ~~the add-ons and~~incremental features that include additional content or enhanced functionality (“Attachments”) best suited for them. Besides the website, consumers can also sign-up via some TV-connected devices. The fuboTV platform provides a broad suite of unique features and personalization tools such as multi-channel viewing capabilities, favorites lists and a dynamic recommendation engine, as well as 4K streaming and Cloud DVR offerings.

2.	~~Liquidity, Going Concern and Management Plans~~

Note 2 - Liquidity, Going Concern and Management Plans

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

The Company had cash and cash equivalents of ~~$7.4~~$459.5 million, a working capital ~~deficiency~~ of ~~$258.3~~$278.9 million and an accumulated deficit of ~~$210.5~~$696.6 million as of ~~June 30, 2020.~~March 31, 2021. The Company incurred a ~~$156.1~~$70.2 million net loss for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. Since inception, the Company’s operations have been financed primarily through the sale of equity and debt securities. The Company has incurred losses from operations and negative cash flows from operating activities since inception and expects to continue ~~incurring~~to incur substantial losses as it continues to fully ramp up its operating activities.

As discussed further in Note 10, on February 2, 2021, the ~~foreseeable future and~~Company issued $402.5 million of convertible notes (“2026 Convertible Notes”). The 2026 Convertible Notes will ~~need to raise additional capital to fund its operations, meet its obligations in the ordinary course~~bear interest from February 2, 2021 at a rate of ~~business and execute its longer-term business plan. Our obligations include liabilities assumed from acquisitions that are~~3.25% per annum, payable semiannually in arrears on February 15 and ~~payable~~August 15 of each year, beginning on ~~demand. These factors raise substantial doubt about~~August 15, 2021. The 2026 Convertible Notes will mature on February 15, 2026, unless earlier converted, redeemed, or repurchased.

The net proceeds from this offering were approximately $389.9 million, after deducting a discount and estimated offering expenses of approximately $12.6 million. The Company intends to use the proceeds from this offering for general corporate purposes, including working capital, business development, sales and marketing activities and capital expenditures.

fuboTV Inc.

Notes to the Condensed Consolidated Financial Statements
(Unaudited)

The Company’s ~~ability~~current cash and cash equivalents provide us with the necessary liquidity to continue as a going concern ~~within~~for at least one year from the date ~~that~~of issuance of these financial statements are issued. The unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.statements.

The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including its ability to successfully attract and retain subscribers, develop new technologies that can compete in a rapidly changing market with many competitors and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product and service offerings.

Management believes that the Company has access to capital resources through potential issuances of debt and equity securities. The ability of the Company to continue as a going concern is dependent on the Company’s ability to execute its strategy and raise additional funds. Management is currently seeking additional funds, primarily through the issuance of equity securities for cash, to operate its business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of an equity financing. In addition to the foregoing, ~~based on the Company’s current assessment,~~ the Company ~~does not expect any material~~cannot predict the long-term impact on its ~~long-term~~ development ~~timeline~~timelines, revenue levels and its liquidity due to the worldwide spread of ~~a novel strain~~COVID-19. Based upon the Company’s current assessment, it does not expect the impact of ~~coronavirus (“COVID 19”).~~the COVID-19 pandemic to materially impact the Company’s operations. However, the Company is continuing to assess the ~~effect on its operations by monitoring~~impact the spread of COVID-19 ~~and the actions implemented to combat the virus throughout the world.~~ ~~Given the daily evolution of the COVID-19 outbreak and the global response to curb~~may have on its ~~spread, COVID-19 may affect the Company’s results of operations, financial condition or liquidity.~~

~~fuboTV Inc.~~operations.

~~Notes to Condensed Consolidated Financial Statements~~Note 3 - Summary of Significant Accounting Policies

3.	~~Summary of Significant Accounting Policies~~

Principles of Consolidation and Basis of Presentation

The ~~accompanying unaudited condensed~~Company’s consolidated financial statements include the accounts ~~as of June 30, 2020,~~ of the Company ~~its~~and the accounts of the Company’s wholly-owned subsidiaries and ~~its 99.7%-owned operating subsidiary EAI, which, until~~non-wholly owned subsidiaries where the Merger, was the Company’s principal operating subsidiary; inactive subsidiaries York Production LLC and York Production II LLC; wholly-owned subsidiaries Facebank AG, StockAccess Holdings SAS (“SAH”) and FBNK Finance Sarl (“FBNK Finance”); its 70.0% ownership in Highlight Finance Corp. (“HFC”); and its 76% ownership in Pulse Evolution Corporation (“PEC”). Subsequent to the Merger, fuboTV Pre-Merger became our wholly owned subsidiary.Company has a controlling interest. All ~~inter-company~~intercompany balances and transactions have been eliminated in consolidation.

Investments in business entities in which we lack control but have the ability to exercise significant influence over operating and financial policies are accounted for using the equity method. We have elected the fair value option to account for our equity method investments.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“~~U.S.~~GAAP” or “U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments ~~and events in the current period such as the Nexway deconsolidation and acquisition of fuboTV Pre-Merger,~~ considered necessary for a fair presentation of such interim results.

The results for the unaudited condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, ~~2020~~2021 or for any future interim period. The ~~unaudited~~ condensed consolidated balance sheet as atof December 31, ~~2019~~2020 has been derived from the audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, ~~2019~~2020 and notes thereto included in the Company’s Annual Report on Form 10-K/A filed with the SEC on August 10, 2020 along with the consolidated financial statements for fuboTV Pre-Merger for the year ended December 31, 2019 and notes thereto included on Form 8-K/A filed with the SEC on June 17, 2020.

~~Reclassifications~~Report.

For the three and six months ended June 30, 2019, the Company has reclassified certain prior year amounts on the face of the financial statements in order to conform to the current year presentation. These reclassifications had no effect on the Company’s consolidated financial position, results of operations, or liquidity.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. ~~The significant~~Those estimates and assumptions include allocating the fair value of purchase consideration to assets acquired and liabilities assumed in business acquisitions, useful lives of property and equipment and intangible assets, recoverability of goodwill ~~long-lived~~and intangible assets, ~~and investments,~~ accruals for contingent liabilities, ~~valuations~~valuation of ~~derivative liabilities~~warrants, convertible notes, and equity instruments issued in share-based payment arrangements, ~~and~~ fair value of ~~equity method investees,~~stock-based awards, and accounting for income taxes, including the valuation allowance on deferred tax assets.

~~fuboTV Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~Significant Accounting Policies~~

~~For a detailed discussion about the Company’s significant accounting policies, see the Company’s Annual Report on Form 10-K/A filed with the SEC on August 10, 2020.~~

Segment and Reporting Unit Information

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. A committee consisting of the Company’s executives are determined to be the CODM. The CODM reviews financial information ~~on a~~and makes resource allocation decisions at the consolidated ~~basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such,~~group level.

fuboTV Inc.

Notes to the ~~Company has one operating segment.~~Condensed Consolidated Financial Statements
(Unaudited)

Cash and Cash Equivalents ~~and Restricted Cash~~

The Company considers all highly liquid investments with remaining maturities at the date of purchase of three months or less to be cash equivalents, including balances held in the Company’s money market account. ~~The Company also classifies amounts in transit from payment processors for customer credit card and debit card transactions as cash equivalents.~~ Restricted cash primarily represents cash on deposit with financial institutions in support of a letter of credit outstanding in favor of the Company’s landlord for office space. The restricted cash balance has been excluded from the cash balance and is classified as restricted cash on the ~~condensed~~ consolidated balance sheets. The following table provides a reconciliation of cash, cash equivalents and restricted cash within the consolidated balance sheet that sum to the total of the same on the consolidated statement of cash flows:

	June 30,		December 31,
	2020		2019
					March 31, 2021		December 31, 2020
Cash and cash equivalents	$	7,356	$	7,624	$	459,532	$	134,942
Restricted cash		1,330		—		5,403		1,279

Total cash, cash equivalents and restricted cash	$	8,686	$	7,624	$	464,935	$	136,221

Certain Risks and Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of demand ~~deposits.~~deposits and accounts receivable. The Company maintains cash deposits with financial institutions that at times exceed applicable insurance limits.

No individual customer accounted for more than 10% of revenue for each of the three months ended March 31, 2021 and March 31, 2020. Three customers accounted for more than 10% of accounts receivable as of March 31, 2021 and December 31, 2020.

The majority of the Company’s software and computer systems ~~utilizes~~utilize data processing, storage capabilities and other services provided by Amazon Web Services ~~or AWS,~~(“AWS”), which cannot be easily switched to another cloud service provider. As such, any disruption of the Company’s interference with AWS would adversely impact the Company’s operations and business.

~~Fair Value of Financial Instruments~~Treasury Stock

The Company accounts for ~~financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes~~the treasury stock using the cost method, which treats it as a ~~framework~~reduction in stockholders’ equity. In December 2020, the Company repurchased 800,000 shares of its common stock at par value. In February 2021, the Company issued 623,068 shares of treasury stock in connection with the acquisition of Vigtory, Inc. See Note 4 for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizesfurther discussion regarding the ~~inputs to valuation techniques used to measure fair value into three levels as follows:~~

~~Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;~~

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

~~Level 3 — assets and liabilities whose significant value drivers are unobservable.~~acquisition.

~~Accounts Receivable, net~~Significant Accounting Policies

The Company records accounts receivable at the invoiced amount less an allowance for any potentially uncollectable accounts. The Company’s accounts receivable balance includes subscription fees billed by, but not yet received from, third-party app stores and amounts due from the sale of advertisements. In evaluating our ability to collect outstanding receivable balances, we consider many factors, including the ageFor a detailed discussion of the ~~balance, collection history, and current economic trends. Bad debts are written off after all collection efforts have ceased. Based on~~Company’s significant accounting policies, see Note 3 to the consolidated financial statements for the year ended December 31, 2020 included in the Company’s ~~current and historical collection experience, management concluded that an allowance for doubtful accounts was not necessary as of June 30, 2020 or December 31, 2019.~~

~~fuboTV Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~No individual customer accounted for more than 10% of revenue~~Annual Report. Except for the accounting for the 2026 Convertible Notes discussed in Note 10, there were no significant changes to the Company’s accounting policies during the three ~~and six~~ months ended ~~June 30, 2020 and 2019. Three customers accounted for more than 10% of accounts receivable as of June 30, 2020. No customers accounted for more than 10% of accounts receivable as of December~~March 31, ~~2019.~~

~~Property and Equipment, net~~

Property and equipment is stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the assets. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive loss in the period realized. Maintenance and repairs are expensed as incurred.

~~Acquisitions and Business Combinations~~

The Company allocates the fair value of purchase consideration issued in business combination transactions to the tangible assets acquired, liabilities assumed, and separately identified intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets and certain liabilities. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from: (a) acquired technology, (b) trademarks and trade names, and (c) customer relationships, useful lives, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

~~Revenue From Contracts With Customers~~

~~The Company recognizes revenue from contracts with customers under ASC 606,~~ ~~Revenue from Contracts with Customers~~ (the “revenue standard”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. The following five steps are applied to achieve that core principle:

	●	~~Step 1: Identify the contract with the customer~~
	●	~~Step 2: Identify the performance obligations in the contract~~
	●	~~Step 3: Determine the transaction price~~
	●	~~Step 4: Allocate the transaction price to the performance obligations in the contract~~
	●	~~Step 5: Recognize revenue when the company satisfies a performance obligation~~

~~The Company generates revenue from the following sources:~~

Subscriptions – The Company sells various subscription plans through its website and third-party app stores. These subscription plans provide different levels of streamed content and functionality depending on the plan selected. Subscription fees are fixed and paid in advance by credit card on a monthly, quarterly or annual basis. A subscription customer executes a contract by agreeing to the Company’s terms of service. The Company considers the subscription contract legally enforceable once the customer has accepted terms of service and the Company has received credit card authorization from the customer’s credit card company. The terms of service allow customers to terminate the subscription at any time, however, in the event of termination, no prepaid subscription fees are refundable. The Company recognizes revenue at a point in time when it satisfies a performance obligation by transferring control of the promised services to the customers. Upon the customer agreeing to the Company’s terms and conditions and authorization of the credit card, the customer simultaneously receives and consumes the benefits of the streamed content ratably throughout the term of the contract. Subscription services sold through third-party app stores are recorded gross in revenue with fees to the third-party app stores recorded in subscriber related expenses in the consolidated statement of operations. Management concluded that the customers are the end user of the subscription services sold by these third-party app stores.

~~fuboTV Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

	2.	Advertisements – The Company executes agreements with advertisers that want to display ads (“impressions”) within the streamed content. The Company enters into individual insertion orders (“IOs”) with advertisers, which specify the term of each ad campaign, the number of impressions to be delivered and the applicable rate to be charged. The Company invoices advertisers monthly for impressions actually delivered during the period. Each executed IO provides the terms and conditions agreed to in respect of each party’s obligations. The Company recognizes revenue at a point in time when it satisfies a performance obligation by transferring control of the promised services to the advertiser, which generally is when the advertisement has been displayed.

	3.	~~Software licenses, net –~~Revenue from the sale of software licenses are recognized as a single performance obligation at the point in time that the software license is delivered to the customer. The Company under its contracts is required to provide its customers with 30 days to return the license for a full refund, regardless of reason, and the Company will be provided a refund in full of its cost to sell the license. Therefore, for Nexway, the Company acts as an agent and recognizes revenue on a net basis.

	4.	Other – The Company has an annual contract to sub-license its rights to broadcast certain international sporting events to a third party. The Company recognizes revenue under this contract at a point in time when it satisfies a performance obligation by transferring control of the promised services to the third party, which generally is when the third party has access to the programming content.

~~Subscriber Related Expenses~~

Subscriber related expenses consist primarily of affiliate distribution rights and other distribution costs related to content streaming. The cost of affiliate distribution rights is generally incurred on a per subscriber basis and are recognized when the related programming is distributed to subscribers. The Company has certain arrangements whereby affiliate distribution rights are paid in advance or are subject to minimum guaranteed payments. An accrual is established when actual affiliate distribution costs are expected to fall short of the minimum guaranteed amounts. To the extent actual per subscriber fees do not exceed the minimum guaranteed amounts, the Company will expense the minimum guarantee in a manner reflective of the pattern of benefit provided by these subscriber related expenses, which approximates a straight-line basis over each minimum guarantee period within the arrangement. Subscriber related expenses also include credit card and payment processing fees for subscription revenue, customer service, certain employee compensation and benefits, cloud computing, streaming, and facility costs. The Company receives advertising spots from television networks for sale to advertisers as part of the affiliate distribution agreements.

~~Broadcasting and Transmission~~

~~Broadcasting and transmission expenses are charged to operations as incurred and consist primarily of the cost to acquire a signal, transcode, store, and retransmit it to the subscribers.~~

~~Sales and Marketing~~

Sales and marketing expenses consist primarily of payroll and related costs, benefits, rent and utilities, stock-based compensation, agency costs, advertising campaigns and branding initiatives. All sales and marketing costs are expensed as they are incurred. Advertising expense totaled $4.5 million for the three and six months ended June 30, 2020 and $0.1 million and $0.3 million in advertising expense was incurred for the three and six months ended June 30, 2019, respectively.

~~fuboTV Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~Technology and Development~~

Technology and development expenses are charged to operations as incurred. Technology and development expenses consist primarily of payroll and related costs, benefits, rent and utilities, stock-based compensation, technical services, software expenses, and hosting expenses.

~~General and Administrative~~

General and administrative expenses consist primarily of payroll and related costs, benefits, rent and utilities, stock-based compensation, corporate insurance, office expenses, professional fees, as well as travel, meals, and entertainment costs.2021.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share excludes the potential impact of the Company’s convertible notes, convertible preferred stock, common stock options and warrants because their effect would be anti-dilutive.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			Three Months Ended March 31,
													2021			2020
Basic loss per share:
Net loss		(99,755	)		(3,365	)		(156,098	)		(6,232	)	$	(70,186	)	$	(56,343	)
Less: net (loss) income attributable to non-controlling interest		(682	)		2,182			(1,555	)		2,781
Less: net loss attributable to non-controlling interest														76			873
Less: Deemed dividend - beneficial conversion feature on preferred stock		—			—			171			—			-			(171	)
Add: gain on redemption of Series D Preferred Stock		126			—			126			—
Net loss attributable to common stockholders		(98,947	)		(5,547	)		(154,588	)		(9,013	)		(70,110	)		(55,641	)

Shares used in computation:
Weighted-average common shares outstanding		35,045,390			22,964,199			32,390,829			17,952,188			118,584,166			30,338,073

Basic and diluted loss per share		(2.82	)		(0.24	)		(4.77	)		(0.50	)	$	(0.59	)	$	(1.83	)

148

fuboTV Inc.

Notes to the Condensed Consolidated Financial Statements
(Unaudited)

The following common share equivalents are excluded from the calculation of weighted average common shares outstanding because their inclusion would have been anti-dilutive:

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019

Common stock purchase warrants 603,576 200,007 1,147,844 200,007
Convertible preferred shares 64,355,375 — 32,405,688 —
Stock options 6,377,997 16,667 6,361,982 16,667
Convertible notes variable settlement feature 536,164 524,945 536,164 524,945

Total
71,873,112
741,619
40,451,678
741,619

	As of March 31,
	2021		2020
Common stock purchase warrants		1,822,271		200,007
Series D convertible preferred shares		-		456,000
Stock options		15,488,783		16,667
Unvested restricted stock units		1,131,543		-
Convertible notes variable settlement feature		6,966,078		311,111
Total		25,408,675		983,785

Recently Issued Accounting Standards

In ~~August 2018,~~June 2016, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses”. The ASU ~~No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes~~sets forth a “current expected credit loss” (“CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the ~~Disclosure Requirements for Fair Value Measurement (“~~measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU 2018-13”). The amendments in ASU 2018-13 modify the disclosure requirements on fair value measurements based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon theirwas effective ~~date. The amendments are effective for all entities~~ for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies to calendar year 2023. The adoption of this ASU will not have a material impact on the condensed consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, ~~including adoption in an interim period. The Company is currently evaluating ASU 2018-13 and its impact on its condensed consolidated financial statements.~~

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within thosebut no earlier than fiscal years beginning after December 15, ~~2020, with early adoption permitted.~~2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company is currently evaluating the impact of this ~~standard~~ASU will have on its condensed consolidated financial statements and related disclosures.

4.	~~Acquisitions~~

Note 4 - Acquisition

On ~~April 1, 2020, we completed~~February 26, 2021, the ~~Merger,~~Company consummated the acquisition of Vigtory, Inc., (“Vigtory”) a sports betting and interactive gaming company, as ~~described in Note 1. In accordance with the terms~~a result of the ~~Merger Agreement, all~~merger of fuboBet Inc., a wholly owned subsidiary of the ~~capital stock of fuboTV Pre-Merger~~Company, into Vigtory, whereby Vigtory continued as the surviving corporation (the “Vigtory Acquisition”) and its name was ~~converted, at a stock exchange ratio of 1.82, into the right~~changed to receive 32,324,362 shares of Series AA Convertible Preferred Stock, a newly-created class of our Preferred Stock. Pursuant to the Series AA Certificate of Designation, each share of Series AA Convertible Preferred Stock is convertible into two shares of the Company’s common stock only in connection with the sale of such shares on an arms’-length basis either pursuant to an exemption from registration under Rule 144 promulgated under the Securities Act or pursuant to an effective registration statement under the Securities Act. As of June 30, 2020, 27,412,393 shares of Series AA Convertible Preferred Stock were issued. In addition, each outstanding option to purchase shares of common stock of fuboTV Pre-Merger was assumed by FaceBank Pre-Merger and converted into options to acquire FaceBank Pre-Merger’s common stock at a stock exchange ratio of 3.64. In addition, in accordance with the terms of the Merger Agreement, the Company assumed 8,051,098 stock options issued and outstanding under the fuboTV Pre-Merger’s 2015 Equity Incentive Plan (the “2015 Plan”) with a weighted-average exercise price of $1.32 per share. From and after the Effective Time, such options may be exercised for shares of the Company’s common stock under the terms of the 2015 Plan.Fubo Gaming Inc.

The ~~preliminary~~ purchase price ~~for~~of the ~~merger~~Vigtory Acquisition was determined to be ~~$576.1~~$10.3 million, ~~which consists~~including $1.7 million of ~~(i) $530.1 million market value ($8.20 per share stock price of~~Vigtory’s outstanding convertible notes and other liabilities settled by the Company ~~as of April 1, 2020) of 64.6~~on the closing date. The Vigtory Acquisition consideration does not include $26.9 million ~~common shares, (ii) $36.0 million related to the~~ fair value of ~~outstanding options vested prior~~common shares issued to ~~the Merger and (iii) $10.0 million related to the effective settlement~~former employee shareholders of a preexisting loan receivable from fuboTV Pre-Merger. No gain or loss was recognized on the settlement as the loan was effectively settled at the recorded amount. Transaction costs of $0.9 million were expensed as incurred.Vigtory that will vest over future service periods.

The Company accounted for the ~~Merger~~Vigtory Acquisition as a business combination under the acquisition method of accounting. FaceBank Pre-Merger was determined to be the accounting acquirer based upon the terms of the Merger Agreement and other factors including: (i) FaceBank Pre-Merger’s stockholders own approximately 57% of the voting common shares of the combined company immediately following the closing of the Acquisition (54% assuming the exercise of all vested stock options as of the closing of the transaction) and (ii) directors appointed by FaceBank Pre-Merger will hold a majority of board seats in the combined company.

~~fuboTV Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~The following table presents a preliminary allocation of~~As such, the purchase price was allocated to the net assets acquired ~~inclusive of intangible assets,~~ with ~~the~~any excess ~~fair value~~ recorded to goodwill. The ~~goodwill,~~net assets and liabilities assumed were immaterial and substantially all of the consideration was allocated to goodwill. Goodwill, which is not deductible for tax purposes, ~~is attributable~~primarily represents the benefits expected to result from the assembled workforce of ~~fuboTV Pre-Merger, planned growth in new markets, and synergies expected to be achieved from the combined operations of FaceBank Pre-Merger and fuboTV Pre-Merger.~~Vigtory. The goodwill established will be included within a new fuboTV reporting unit. These estimates are provisional in nature and adjustments may be recorded in future periods as appraisals and other valuation reviews are finalized. Any necessary adjustments will be finalized within one year from the date of acquisition (in thousands).

Fair Value

Assets acquired:
Cash and cash equivalents $ 8,040
Accounts receivable 5,831
Prepaid expenses and other current assets 976
Property & equipment 2,042
Restricted cash 1,333
Other noncurrent assets 397
Operating leases - right-of-use assets 5,395
Intangible assets 243,612
Goodwill 562,908

Total assets acquired $ 830,534

Liabilities assumed
Accounts payable $ 51,687
Accounts payable – due to related parties 14,811
Accrued expenses and other current liabilities 50,249
Accrued expenses and other current liabilities – due to related parties 34,109
Long term borrowings - current portion 5,625
Operating lease liabilities 5,395
Deferred revenue 8,809
Long-term debt, net of issuance costs 18,125
Deferred tax liabilities 65,613

Total liabilities assumed $ 254,423

Net assets acquired $ 576,111

~~The fair values~~results of the ~~intangible assets acquired were determined using the income and cost approaches. The fair value measurements were primarily based on significant inputs that~~Vigtory Acquisition are ~~not observable~~included in the ~~market and thus represent Level 3 measurements as defined in ASC 820. The relief~~Company’s operations from royalty method was used to value the software and technology and tradenames. The relief from royalty method is an application of the income method and estimates fair value for an asset based on the expected cost to license a similar asset from a third-party. Projected cash flows are discounted at a required rate of return that reflects the relative risk of achieving the cash flow and the time value of money. The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was used for customer relationships. The cost to replace a given asset reflects the estimated reproduction or replacement cost for these customer related assets. The estimated useful lives and fair value of the intangible assets acquired are as follows (in thousands):February 26, 2021.

169

fuboTV Inc.

Notes to the Condensed Consolidated Financial Statements

Estimated Useful Life
(in Years)
Fair Value

Software and technology 9 $ 181,737
Customer relationships 2 23,678
Tradenames 9 38,197

Total $ 243,612

The deferred tax liabilities represent the deferred tax impact associated with the differences in book and tax basis, including incremental differences created from the preliminary purchase price allocation and acquired net operating losses. Deferred taxes associated with estimated fair value adjustments reflect an estimated blended federal and state tax rate, net of tax effects on state valuation allowances. For balance sheet purposes, where U.S. tax rates were used, rates were based on recently enacted U.S. tax law. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-merger activities, including cash needs, the geographical mix of income, and changes in tax law. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities of fuboTV Pre-Merger.

For the three month period ended June 30, 2020, our condensed consolidated statement of operations included $44.2 million of revenues and a $47.7 million operating loss, which included $9.1 million of intangible asset amortization, from the acquisition of fuboTV Pre-Merger. Net loss attributable to common stockholders for the six months ended June 30, 2020 reflects $10.1 million of interest expense associated with a short-term loan issued in connection with the Merger. The following unaudited pro forma consolidated results of operations assume that the acquisition of fuboTV Pre-Merger was completed as of January 1, 2019 (in thousands, except per share data).

Six months ended June 30
2020 2019

Total revenues 102,514 62,680
Net loss attributable to common stockholders (190,672 ) (81,828 )
Basic and diluted net loss per share attributable to common stockholders
(1.96
)
(0.99
)

Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.

~~fuboTV Inc.~~

(Unaudited)

~~Notes to Condensed Consolidated Financial Statements~~

Note 5 - Revenue from Contracts with Customers

5.	~~Revenue from contracts with customers~~

Disaggregated revenue

The following table presents the Company’s revenues disaggregated into categories based on the nature of such revenues (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		Three Months Ended March 31,
									2021		2020
Subscriptions	$	39,511	$	—	$	39,511	$	—	$	107,114	$	-
Advertisements		4,323		—		4,323		—		12,606		-
Software licenses, net – Nexway eCommerce Solutions		—		—		7,295		—
Other		338		—		338		—		-		7,295
Total revenue	$	44,172	$	—	$	51,467	$	—	$	119,720	$	7,295

Contract balances

For the three months ended March 31, 2021 and 2020, the Company did not recognize material bad-debt expense and there were no material contract assets recorded on the accompanying condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020.

The Company’s contract liabilities primarily relate to upfront payments and consideration received from customers for subscription services. As of March 31, 2021 and December 31, 2020, the Company’s contract liabilities totaled approximately $20.2 million and $17.4 million, respectively, and are recorded as deferred revenue on the accompanying condensed consolidated balance sheets.

Transaction price allocated to remaining performance obligations

The Company does not disclose the transaction price allocated to remaining performance obligations since subscription and advertising contracts have an original expected term of one year or less.

6.	~~Property and equipment, net~~10

fuboTV Inc.

Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Note 6 - Property and equipment, net

Property and equipment, net, is comprised of the following (in thousands):

Estimated
June 30, December 31,

useful lives
2020 2019

Furniture and fixtures 5 years $ 293 $ 338
Computer equipment 3 years 199 —
Leasehold improvements
Lesser of useful life or lease term
1,572 —
2,064 338
Less: Accumulated depreciation (131 ) (3 )
Total property and equipment, net $ 1,933 $ 335

7.	~~FaceBank AG and Nexway - Assets Held For Sale~~

	March 31, 2021			December 31, 2020
Furniture and fixtures	$	576		$	573
Computer equipment		1,257			801
Leasehold improvements		2,272			2,272
Construction-in-progress		451			-
		4,556			3,646
Less: Accumulated depreciation		(2,010	)		(1,875	)
Total property and equipment, net	$	2,546		$	1,771

~~Through its ownership in FaceBank AG,~~Depreciation expense totaled approximately $0.1 million for the Company had an equity investment of 62.3% in Nexway AG (“Nexway”), which it acquired on September 16, 2019. The equity investment in Nexway was a controlling financial interest and the Company consolidated its investment in Nexway under ASC 810, Consolidation.

On three months ended March 31, ~~2020,~~2021 and was de minimis for the Company relinquished 20% of the total Nexway shareholder votes associated with its investment, which reduced the Company’s voting interest in Nexway to 37.6%. As a result of the Company’s loss of control in Nexway, the Company deconsolidated Nexway as ofthree months ended March 31, ~~2020 as it no longer has a controlling financial interest.~~

~~fuboTV Inc.~~2020.

~~Notes to Condensed Consolidated Financial Statements~~

~~The deconsolidation of Nexway resulted in a loss of approximately $11.9 million calculated as follows (in thousands):~~

Cash $ 5,776
Accounts receivable 9,831
Inventory 50
Prepaid expenses 164
Goodwill 51,168
Property and equipment, net 380
Right-of-use assets 3,594
Total assets $ 70,963
Less:
Accounts payable 34,262
Accrued expenses 15,788
Lease liability 3,594
Deferred income taxes 1,161
Other liabilities 40
Total liabilities $ 54,845
Non-controlling interest 2,595
Foreign currency translation adjustment (770 )
Loss before fair value – investment in Nexway 14,293
Less: fair value of shares owned by the Company 2,374
Loss on deconsolidation of Nexway $ 11,919

As of June 30, 2020, the Company’s voting interest in Nexway was further diluted to 31.2% as a result of an additional financing which the Company did not participate in. The fair value of the Nexway shares owned by the Company as of June 30, 2020 is approximately $5.0 million, calculated as follows (dollars in thousands, except per share value):

Price per share Euros € 10.90
Exchange rate 1.123
Price per share USD $ 12.24
Nexway shares held by the Company 407,550
Fair value - investment in Nexway $ 4,988
~~As of June 30, 2020, the Company committed to a plan to sell its investment in FaceBank AG~~Note 7 - Intangible Assets and Nexway and expects the sale of these investments to be completed within one year and to recognize a gain on sale. The long-lived assets which consist of the investments, financial assets and goodwill and a loan payable are classified as held for sale. These assets and liabilities are carried at the lower of carrying value or fair value less costs to sell and no additional depreciation is being recognized. As of June 30, 2020, the carrying amounts totaled ($20.6) million. The Company has determined this disposition did not constitute a strategic shift of the Company’s operations.
~~The following are assets and liabilities held of sales (in thousands):~~
June 30,
2020

Investment in Nexway $ 4,988
Financial assets 1,965
Goodwill 28,541

Total assets $ 35,494

Loan payable $ 56,137

Total liabilities $ 56,137

Net carrying amount $ (20,643 )
8.Goodwill ~~Panda Interests~~
In March 2019, the Company entered into an agreement to finance and co-produce Broadway Asia’s theatrical production of DreamWorks’ Kung Fu Panda Spectacular Live at the Venetian Theatre in Macau (“Macau Show”). The Company determined the fair value of the profits interest sold to certain investors to be approximately $1.8 million as of the date of this transaction and $2.1 million and $2.0 million as of June 30, 2020 and December 31, 2019, respectively.
~~The table below summarizes the Company’s profits interest since the date of the transaction (in thousands except for unit and per unit information):~~
19
Panda units granted 26.2
Fair value per unit on grant date $ 67,690

Grant date fair value $ 1,773
Change in fair value of Panda interests 198

Fair value at December 31, 2019 $ 1,971
Change in fair value of Panda interests —

Fair value at March 31, 2020 $ 1,971
Change in fair value of Panda interests 148

Fair value at June 30, 2020 $ 2,119
20
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~

9. ~~Intangible Assets and Goodwill~~
Intangible Assets

The table below summarizes the Company’s intangible assets at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (in thousands):

Useful Weighted Average June 30, 2020
Lives (Years) Remaining Life (Years) Intangible Assets Accumulated Amortization Net Balance
Human animation technologies 7 5.1 $ 123,436 (33,463 ) $ 89,973
Trademark and trade names 7 5.1 7,746 (2,102 ) 5,644
Animation and visual effects technologies 7 5.1 6,016 (1,633 ) 4,383
Digital asset library 5-7 4.9 7,536 (1,897 ) 5,639
Intellectual Property 7 5.1 828 (225 ) 603
Customer relationships 2 1.8 23,678 (2,960 ) 20,718
fuboTV Tradename 9 8.8 38,197 (1,061 ) 37,136
Software and technology 9 8.8 181,737 (5,048 ) 176,689
Total $ 389,174 $ (48,389 ) $ 340,785
March 31, 2021
Useful Lives
(Years) Weighted Average Remaining Life (Years) Intangible Assets Accumulated Amortization Net Balance
Customer relationships 2 1.0 $ 23,678 (11,839 ) $ 11,839
fuboTV tradename 9 8.0 38,197 (4,244 ) 33,953
Software and technology 9 8.0 181,782 (20,198 ) 161,584
Total $ 243,657 $ (36,281 ) $ 207,376

December 31, 2019
Useful Lives (Years) Weighted Average Remaining Life (Years) Intangible Assets
Intangible
Asset Impairment
Accumulated Amortization Net Balance
Human animation technologies 7 6 $123,436 $ — $ (24,646 ) $ 98,790
Trademark and trade names 7 6 9,432 (1,686 ) (1,549 ) 6,197
Animation and visual effects technologies 7 6 6,016 — (1,203 ) 4,813
Digital asset library 5-7 5.5 7,505 — (1,251 ) 6,254
Intellectual Property 7 6 3,258 (2,430 ) (236 ) 592
Customer relationships 11 11 4,482 (4,482 ) — —
Total $154,129 $ (8,598 ) $ (28,885 ) $ 116,646
21
December 31, 2020
Useful Lives
(Years) Weighted Average Remaining Life (Years) Intangible Assets Accumulated Amortization Net Balance
Customer relationships 2 1.5 23,678 (8,880 ) 14,798
fuboTV tradename 9 8.5 38,197 (3,183 ) 35,014
Software and technology 9 8.5 181,782 (15,145 ) 166,637
Total $ 243,657 $ (27,208 ) $ 216,449

~~fuboTV Inc.~~
~~Notes~~The intangible assets are being amortized over their respective original useful lives, which range from two to ~~Condensed Consolidated Financial Statements~~
nine years. The Company recorded amortization expense related to the above intangible assets of ~~$14.3~~approximately $9.1 million and $5.2 million ~~during~~for the three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $19.5 million and $10.3 million during the six months ended June 30, 2020 and 2019,~~ respectively.

The estimated future amortization expense associated with intangible assets is as follows (in thousands):

Future
Amortization
Future Amortization
2020 $ 28,572
2021 57,144 $ 27,218
2022 48,266 27,412
2023 45,306 24,452
2024 45,233 24,437
2025 24,437
Thereafter 116,264 79,420
Total $ 340,785 $ 207,376

11
fuboTV Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Goodwill

The following table is a summary of the changes to goodwill for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 (in thousands):

Balance – December 31, 2019 $ 227,763
Deconsolidation of Nexway (51,168 )
Balance – March 31, 2020 $ 176,595
Acquisition of fuboTV Pre-Merger 562,908
Less: transfer to asset held for sale
(28,541
)
Balance – June 30, 2020 $ 710,962
~~10.~~ ~~Accounts Payable and~~ ~~Accrued Expenses and Other Current Liabilities~~
Balance - December 31, 2020 $ 478,406
Vigtory acquisition 10,683
Balance - March 31, 2021 $ 489,089

As of December 31, 2020, goodwill includes an accumulated impairment charge of $148.1 million for the Facebank reporting unit which represented all of the goodwill of that reporting unit.
Note 8 - Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses ~~and other current liabilities~~ are presented below (in thousands):

June 30, 2020 December 31, 2019 March 31, 2021 December 31, 2020

Suppliers — $ 37,508
Affiliate fees 61,883 — $ 105,292 $ 102,914
Broadcasting and transmission 17,960 — 9,058 13,297
Selling and marketing 5,735 — 7,829 13,347
Payroll taxes (in arrears) 1,308 1,308
Accrued compensation 1,553 3,649 1,753 2,552
Legal and professional fees 3,379 3,936 5,071 4,582
Accrued litigation loss 524 524
Taxes (including value added) 8,118 5,953 16,400 13,542
Interest Payable 2,035 -
Subscriber related 2,694 — 1,724 1,937
Other 6,250 3,897 4,213 5,382
Total 109,404 $ 56,775 $ 153,375 $ 157,553

22
Note 9 - Income Taxes
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~11.~~ ~~Income Taxes~~
During the three and six months ended June 30, 2020, the Company recorded a deferred tax liability of $65.6 million associated with the difference in book and tax basis, including incremental differences created from the preliminary purchase price allocation and acquired net operating losses, in connection with the acquisition of intangible assets of fuboTV Pre-Merger (See Note 4). The Company recorded income tax benefits primarily associated with the ~~amortization~~net reduction of ~~intangible~~the valuation allowance recorded against deferred tax assets of ~~$3.5~~$0.5 million and $1.0 million during the three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $4.5 million and $2.2 million during the six months ended June 30, 2020 and 2019,~~ respectively. ~~The Company’s provision for income taxes consists of state and foreign income taxes and is immaterial in all periods presented.~~

The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all the deferred tax assets will not be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, loss ~~carryback~~carrybacks and tax-planning strategies. Generally, more weight is given to objectively verifiable evidence, such as the cumulative ~~loss~~losses in recent years, as a significant piece of negative evidence to overcome. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company continued to maintain that ~~the realization~~a portion of its deferred tax assets ~~has~~do not ~~achieved a~~meet the more likely than not ~~threshold therefore,~~realization threshold. Therefore, the net deferred tax assets have been ~~fully~~partially offset by a valuation allowance. ~~The following is a rollforward of the Company’s deferred tax liability from January 1, 2020 to June 30, 2020 (in thousands):~~

Balance – December 31, 2019 $ 30,879
Income tax benefit (associated with the amortization of intangible assets) (1,038 )
Deconsolidation of Nexway (1,162 )
Balance – March 31, 2020 28,679
Acquisition of fuboTV Pre-Merger 65,613
Income tax benefit (associated with the amortization of intangible assets) (3,498 )
Balance – June 30, 2020 $ 90,794
12

~~12.~~ ~~Related Parties~~

~~Accounts~~
fuboTV Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 10 - Notes Payable, Short-Term Borrowing, and Convertible Notes
Notes payable and ~~accrued expenses due to related parties~~long-term borrowings as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 consist of the following (in thousands):

March 31, December 31,
Note Stated Interest Rate 2021 2020
2026 Convertible Notes 3.25% $ 304,344 $ -
Senior secured loan LIBOR plus 5.25% per annum 17,736 19,556
Note payable 10.0% 4,683 4,558
Paycheck Protection Program Loan 1.0% - 4,699
Other 4.0% 35 35
$ 326,798 $ 28,848
2026 Convertible Notes
On February 2, 2021, the Company issued $402.5 million of convertible notes (“2026 Convertible Notes”) dated February 2, 2021. The net proceeds from this offering were approximately $389.9 million, after deducting a discount and estimated offering expenses of approximately $12.6 million The 2026 Convertible Notes are senior unsecured obligations of the Company, bear interest from February 2, 2021 at a rate of 3.25% per annum, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2021 and will mature on February 15, 2026, unless earlier repurchased, redeemed or converted.
June 30, 2020 December 31, 2019
Affiliate fees $ 59,651 $ —
Alexander Bafer, Executive Chairman 256 $ 20
John Textor, Chief Executive Officer and affiliated companies 264 592
Other 9 53
Total $ 60,180 $ 665
The initial equivalent conversion price of the 2026 Convertible Notes was $57.78 per share of the Company’s common stock. Holders may convert their 2026 Convertible Notes on or after November 15, 2025 until the close of business on the second business day preceding the maturity date or prior to November 15, 2025 under certain circumstances including:
(i) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ended on March 31, 2021, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
(ii) during the five business day period after any five consecutive trading day period in which the trading price for each trading day of such five consecutive trading day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;
(iii) if the Company calls any or all of the 2026 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or
(iv) upon the occurrence of specified corporate events.

The Company has entered into affiliate distribution agreements with CBS Corporation and related entities, New Univision Enterprises, LLC, AMC Network Ventures, LLC, Viacom International, Inc. and Discovery, Inc. and related entities which are holdersmay also redeem all or any portion of the 2026 Convertible Notes after February 20, 2024 if the last reported sale price of the Company’s ~~convertible preferred stock. AMC Networks Ventures, LLC is also~~common stock has been at least 130% of the ~~lender~~conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Upon conversion, the Company can elect to deliver cash or shares or a combination of cash or shares.
The Company accounted for the 2026 Convertible Notes using a cash conversion model. In accordance with ASC 470-20, the Company used an effective interest rate of 8.67% to estimate the fair value of the debt instrument, excluding the equity conversion feature, and recognized a debt discount of $90.9 million (representing the difference between the fair value and the net proceeds) with a corresponding increase to additional paid in capital. The underwriting discount and estimated offering expenses totaling $12.6 million were allocated between the debt and equity issuance costs in proportion to the ~~senior secured loan (see Note 13).~~allocation of the liability and equity components of the 2026 Convertible Notes. Accordingly, equity issuance costs of $2.8 million were recorded as an offset to additional paid-in capital and total debt issuance costs of $9.7 million were recorded on the issuance date and are reflected in the consolidated balance sheet as a direct deduction from the carrying value of the associated debt liability. The ~~accrued fees payable under the affiliate distribution agreements~~debt discount and debt issuance costs are ~~classified~~being amortized through February 15, 2026 as ~~accounts payables – due to related parties and accrued expenses – due to related parties in~~amortization of debt discount on the accompanying condensed consolidated balance sheet. The aggregate affiliate distribution fees recorded to subscriber related expenses for related parties were $23.0 million and $0 for the three and six months ended June 30, 2020, respectively, and $0 for the three and six months ended June 30,2019, respectively.
~~On July 31, 2020, Alexander Bafer resigned as a member~~statement of ~~the Company’s Board of Directors and as an executive officer of the Company. The amounts due to Mr. Bafer represent an unsecured, non-interest-bearing loan to the Company which is payable on demand.~~
On July 31, 2020, John Textor resigned as a member of the Board of Directors of the Company. Mr. Textor will continue as Head of Studio, which the Company has determined is not an executive officer position. The amounts due to Mr. Textor represent an unpaid compensation liability assumed in the acquisition of EAI.
~~The amounts due to other related parties also represent financing obligations assumed in the acquisition of EAI.~~
During the year ended December 31, 2019, the Company received a $300,000 advance (the “FaceBank Advance”) from FaceBank, Inc., a development stage company controlled by Mr. Textor. Mr. Textor is our current Head of Studio and, at the time of the transaction, was our Chief Executive Officer. During the quarter ended June 30, 2020, the Company repaid the FaceBank Advance in full to FaceBank, Inc. No further amounts are due and payable by the Company under the FaceBank Advance.operations.

2313

fuboTV Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
~~Notes Payable – Related Parties~~
On August 8, 2018, the Company assumed a $172,000 note payable due to a relative of the then-Chief Executive Officer, John Textor. The note has three-month roll-over provision and different maturity and repayment amounts if not fully paid by its due date and bears interest at 18% per annum. The Company has accrued default interest for additional liability in excess of the principal amount. The note was in default as of June 30, 2020. Accrued interest and penalties as of June 30, 2020 and December 31, 2019 related to this note was $0.5 million and $0.3 million, respectively, and were recognized as note payable – related parties on the accompanying condensed consolidated balance sheet. On August 3, 2020, the maturity date was extended to December 31, 2020 and is no longer in default.
24
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~13.~~ ~~Notes Payable~~

Senior Secured Loan

In April 2018, fuboTV ~~pre-Merger~~Pre-Merger entered into a senior secured term loan with AMC Networks Ventures, LLC (the “Term Loan”) with a principal amount of $25.0 million, bearing interest equal to LIBOR (London Interbank Offered Rate) plus 5.25% per annum and with scheduled principal payments beginning in 2020. The Company ~~recorded this loan at its fair value of $23.8 million in connection with its acquisition of fuboTV Pre-Merger on April 1, 2020. The Company has~~ made principal repayments of ~~$1.3~~$1.9 million during the three months ended ~~June 30, 2020. The~~March 31, 2021. As of March 31, 2021, the outstanding balance net of deferred financing costs of the Term Loan was approximately $17.7 million and is ~~$22.5 million as of June 30, 2020.~~included in short-term borrowings on the accompanying condensed consolidated balance sheet.

The Company repaid the Term Loan ~~matures~~in full on ~~April 6, 2023, has certain financial covenants and requires the Company to maintain a certain minimum subscriber level. The Company was in compliance with all covenants at June 30, 2020.~~May 7, 2021.

~~Evolution AI Corporation~~Note payable
The Company has recognized, through the ~~accounting~~ consolidation of ~~EAI,~~its subsidiary Evolution AI Corporation, a $2.7 million note payable bearing interest at the rate of 10% per annum that was due on October 1, 2018 (“~~EAI~~CAM Digital Note”). The cumulative accrued interest on the ~~EAI~~CAM Digital Note amounts to ~~$1.6~~$1.8 million. The ~~EAI~~CAM Digital Note is currently in a default condition due to non-payment of principal and interest. The ~~EAI~~CAM Digital Note relates to the acquisition of technology from parties who, as a result of the acquisition of EAI, own 15,000,000 shares of the Company’s common stock (after the conversion of 1,000,0000 shares of Series X Convertible Preferred Stock during the year ended December 31, 2019). The ~~holders of the EAI~~CAM Digital Note ~~have agreed not to declare the EAI Note~~is currently in default and ~~to forbear from exercising remedies which would otherwise be available in~~ the ~~event of a default, while the EAI Note continues to accrue interest. The~~ Company is ~~currently~~ in negotiation with such holders to resolve the ~~matter and the~~matter. The outstanding balance as of ~~June 30, 2020,~~March 31, 2021, including interest and penalties, is ~~$4.3~~$4.7 million.
~~FBNK Finance SarL~~
~~On February 17, 2020, FBNK Finance issued EUR 50.0~~ The balance of $4.7 million ~~of bonds (or $56.1 million as of June 30, 2020). There were 5,000~~is included in notes with a nominal value EUR 10,000 per note. The bonds were issued at par with 100% redemption price. The maturity date of the bonds is February 15, 2023 and the bonds have a 4.5% annual fixed rate of interest. Interest is payable ~~semi-annually~~ on August 15 and February 15. The majority of the proceeds was used for the redemption of the bonds issued by SAH, HFC and Nexway SAS. The bonds are unconditional and unsubordinated obligations of the FBNK Finance. As part of this transaction, the Company recorded a $11.1 million loss on extinguishment during the three months ended March 31, 2020 as component of other income/(expense) in loss on issuances of notes, bonds and warrants. During the three months ended June 30, 2020, the Company recorded a $1.0 foreign exchange loss upon remeasurement to USD.
25
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~Credit and Security Agreement~~
As described in Note 1, on March 11, 2020, the Company and HLEEF entered into the Credit Facility with HLEEF. The Credit Facility is secured by substantially all the assets of the Company. As of June 30, 2020, there were no amounts outstanding under the Credit Facility.
The Credit Facility contains customary affirmative and negative covenants, including restrictions on the ability of the Company to incur indebtedness in excess of $50.0 million, subject to certain exceptions, to make loans in excess of $250,000 to directors or officers of the Company or to any subsidiary other than fuboTV Sub, and to declare and pay any distributions, subject to certain exceptions. The Credit Facility also contains customary events of default that include, among other things, certain payment defaults, cross defaults to other material indebtedness, covenant defaults, change of control defaults, judgment defaults, and bankruptcy and insolvency defaults. If an event of default exists, the lenders may require the immediate payment of all obligations under the Credit Facility, and may exercise certain other rights and remedies provided for under the Credit Facility, the HLEEF Security Agreement, the other loan documents and applicable law.
~~On July 8, 2020, this Credit Agreement was terminated. Refer to Subsequent Events footnote for details surrounding this Termination and Release Agreement.~~
~~Note Purchase Agreement~~
As described in Note 1, on March 19, 2020, the Company and the other parties thereto entered into the Note Purchase Agreement, pursuant to which the Company sold to FB Loan the Senior Notes. On April 2, 2020, fuboTV and Sports Rights Management, LLC, a Delaware limited liability company (“SRM”), also joined the Note Purchase Agreement as borrowers (fuboTV Sub, SRM and the Initial Borrower, collectively, the “Borrower”). In connection with the Company’s acquisition of fuboTV Pre-Merger, the proceeds of $7.4 million, net of an original issue discount of $2.7 million, were received directly by fuboTV Pre-Merger.
Each Borrower’s obligations under the Senior Notes are secured by substantially all of the assets of each such Borrower pursuant to a Security Agreement, dated as of March 19, 2020, by and among Borrower and FB Loan (the “Security Agreement”).
The Note Purchase Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Borrower and its subsidiaries to, among other things, incur debt, grant liens, make certain restricted payments, make certain loans and other investments, undertake certain fundamental changes, enter into restrictive agreements, dispose of assets, and enter into transactions with affiliates, in each case, subject to limitations and exceptions set forth in the Note Purchase Agreement. The Note Purchase Agreement also contains customary events of default that include, among other things, certain payment defaults, cross defaults to other material obligations, covenant defaults, change of control defaults, judgment defaults, and bankruptcy and insolvency defaults. If an event of default exists, the lenders may require the immediate payment of all obligations under the Note Purchase Agreement, and may exercise certain other rights and remedies provided for under the Note Purchase Agreement, the Security Agreement, the other loan documents and applicable law. The Company was in compliance with all covenants at June 30, 2020.
Interest on the Senior Notes shall accrue until full and final repayment of the principal amount of the Senior Note at a rate of 17.39% per annum. On the first business day of each calendar month in which the Senior Note is outstanding, beginning on April 1, 2020, Borrower shall pay in arrears in cash to FB Loan accrued interest on the outstanding principal amount of the Senior Note. The maturity date of the Senior Notes is the earlier to occur of (i) July 8, 2020 and (ii) the date the Borrower receives the proceeds of any financing. The Borrower may prepay or redeem the Senior Note in whole or in part without penalty or premium.
In connection with the Note Purchase Agreement, the Company issued FB Loan a warrant to purchase 3,269,231 shares of its common stock at an exercise price of $5.00 per share (the “FB Loan Warrant”) and 900,000 shares of its common stock. The fair value of the warrant on the Senior Notes issuance date was approximately $15.6 million and is recorded as a warrant liability in the accompanying condensed consolidated balance sheet with subsequent changes in fair value recognized in earnings each reporting period (see Note 14). The fair value of the 900,000 common stock issued was based upon the closing price of the Company’s common stock as of March 19, 2020 (or $8.15 per share or $7.3 million). Since the fair value of the warrants and common stock exceeded the principal balance of the Senior Notes, the Company recorded a loss on issuance of the Senior Notes totaling $12.9 million and is reflected in the accompanying condensed consolidated statement of operations.
26
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
The 900,000 shares were valued at $8.15 per share at March 19, 2020 and $7.5 million set forth on the balance sheet for shares settled payable for note payable reflects the fair value of 900,000 shares to be issued at $8.35 per share as of March 31, 2020. On April 28, 2020, these shares were issued at $10.00 per share. The Company recorded change in fair value of shares settled payable of $1.5 million and $1.7 million during the three and six months ended June 30, 2020, respectively.
~~The carrying value of the Senior Notes as of June 30, 2020 is comprised of the following (in thousands):~~
June 30, 2020
Principal value of Senior Note $ 10,050
Original issue discount (2,650 )
Discount resulting from allocation of proceeds to warrant liability (7,400 )
Amortization of discount 9,183
Principal repayment (7,500 )
Net carrying value of Senior Note $ 1,683
Pursuant to the Note Purchase Agreement, the Borrower agreed, among other things that (i) the Company shall file a registration statement with the Commission regarding the purchase and sale of 900,000 shares of the Company’s common stock issued to FB Loan in connection with the Note Purchase Agreement (the “Shares”) and any shares of capital stock issuable upon exercise of the FB Loan Warrant (the “Warrant Shares)”); and (ii) the Company shall have filed an application to list the Company’s Common Stock for trading on the NASDAQ exchange, on or before the date that is thirty (30) days following the closing date of the Note Purchase Agreement. Refer to the ~~Amendments to the Note Purchase Agreements~~ ~~section below for further details.~~sheet.

~~Amendments to the Note Purchase Agreement~~Paycheck Protection Program Loan

On April 21, 2020, the Company and the other parties to the Note Purchase Agreement entered into an Amendment to the Note Purchase Agreement to (i) extend the deadline for registration of the resale of the Shares and the Warrant Shares to May 25, 2020 and (ii) provide that in lieu of the obligation under the Note Purchase Agreement to apply to list on NASDAQ within thirty (30) days of March 19, 2020, the Company shall have initiated the process to list its capital stock on a national exchange on or before the date that is thirty (30) days following March 19, 2020. The Company has initiated this process.
~~Subsequently, on May 28, 2020, the Company and the other parties to the Note Purchase Agreement~~ entered into a ~~Consent and Second Amendment to~~Promissory Note (the “PPP Note”) with JPMorgan Chase Bank, N.A. as the ~~Note Purchase Agreement~~lender (the ~~“Second Amendment”~~“Lender”), pursuant to which ~~among other things, FB Loan~~the Lender agreed to ~~extend the deadline for registration for of the Shares and the Warrant Shares for resale~~make a loan to ~~July 1, 2020. In addition:~~
~~(i)~~ ~~FB Loan consented to the May 11, 2020 sale by the Company of capital stock for aggregate consideration in the amount of $7.5 million; and~~
~~(ii)~~ the provision requiring that following receipt by any loan party or any subsidiary of proceeds of any financing, the Borrower must prepay the Senior Note in an amount equal to 100% of the cash proceeds of such financing, was removed.
~~Further,~~ ~~on July 1, 2020,~~ the Company and the other parties to the Note Purchase Agreement entered into a Third Amendment to Note Purchase Agreement (the “Third Amendment”), pursuant to which (i) the deadline for registration of the Shares and the Warrant Shares for resale was extended to July 8, 2020 and (ii) the deadline for the redemption of the Senior Notes by the Borrower was amended to be the earlier to occur of (y) July 8, 2020 and (z) the date the Borrower receives the proceeds of any financing.
Finally, on August 3, 2020, pursuant to the Fourth Amendment to the Note Purchase Agreement (the “Fourth Amendment”), the Company agreed (i) to file a registration statement on Form S-1 (the “Registration Statement”) prior to August 7, 2020 that shall include the Shares, (ii) that within 91 days after the effective date of the Registration Statement, the Company shall file a registration statement with the Commission registering the Shares and the Warrant Shares, and (iii) that the Company shall have been approved to list its capital stock on a national exchange prior to the effective date of the Registration Statement.
~~The Company made a $7.5 million payment on the Note Purchase Agreement on May 28, 2020 and paid the remaining balance of $2.6 million and all accrued interest on July 3, 2020.~~
27
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~Joinder Agreement and Guaranty Agreement~~
On April 30, 2020, fuboTV Sub and SRM entered into a joinder agreement (the “Joinder Agreement”) in favor of FB Loan in connection with the Note Purchase Agreement. The Joinder Agreement is effective as of April 2, 2020.
Pursuant to the Joinder Agreement, (a) fuboTV Sub joined the Note Purchase Agreement, became an issuer of notes and a borrower thereunder, assumed all obligations of the Borrower in connection therewith, and granted a lien on substantially all of its assets to secure its obligations under the Note Purchase Agreement and any notes issued pursuant thereto and (b) SRM guaranteed the obligations of the Borrower and fuboTV Sub under the Note Purchase Agreement and any notes issued pursuant thereto and granted a security interest in substantially all of its assets to secure its guaranty obligations.
On April 30, 2020, in connection with the Joinder Agreement, SRM entered into a guaranty agreement (the “Guaranty Agreement”) in favor of FB Loan, pursuant to which SRM guaranteed the obligations of Borrower under fuboTV Sub under the Note Purchase Agreement. The Guaranty Agreement is effective as of April 2, 2020.
~~Paycheck Protection Program Loan~~
~~On April 21, 2020, the Company received a loan in the amount of $4.7 million from JPMorgan Chase Bank, N.A. (the “Loan”), pursuant to~~ the Paycheck Protection Program (the ~~“PPP”~~“PPP Loan”) ~~administered~~offered by the ~~United States~~U.S. Small Business Administration ~~(the “SBA”). The PPP is part~~in a principal amount of $4.7 million pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (the ~~“Cares~~“CARES Act”)~~, which provides for forgiveness of up to the full principal amount and accrued interest of qualifying loans guaranteed under the PPP.~~.

The Loan was granted under a note payable (the “Note”) dated April 21, 2020 issued by the Company. The Note matures on April 21, 2022 and bears interest at a rate of 0.98% per annum. Principal and accrued interest are payable monthly in equal installments through the maturity date, commencing on November 21, 2020, unless forgiven as described below. The Note may be prepaid at any time prior to maturity with no prepayment penalties.PPP Loan proceeds ~~may be used only to retain workers~~were available for payroll costs, including salaries, commissions, and ~~maintain payroll or make mortgage payments, lease payments,~~similar compensation, group health care benefits, paid leaves, rent, utilities, and ~~utility payments.~~interest on certain other outstanding debt.

~~Forgiveness~~The Company repaid the outstanding balance of the Loan is only available for principal that is used for the limited purposes that qualify for forgiveness under SBA requirements. To obtain forgiveness, the Company must request it, provide documentation in accordance with the SBA requirements, and certify that the amounts requested to be forgiven qualify under those requirements. There is no guarantee that the Loan will be forgiven by the SBA and therefore the Company has recorded the $4.7 million ~~as a loan~~ on ~~the June 30, 2020 condensed consolidated balance sheet. Of this amount, $1.9 million has been recorded as a current liability to reflect the amount due within twelve months from the balance sheet.~~February 26, 2021.
Other

~~Revenue Participation Agreement~~
~~On May 15, 2020, the Company entered into a revenue participation agreement with Fundigo, LLC for $10.0 million (the “Purchase Price”).~~ The Company ~~received net proceeds~~assumed, through the consolidation of ~~$9.5 million, net of an original issue discount of $0.5 million, in exchange for participation in all~~its subsidiary EAI, a $30,000 note payable due to a relative of the ~~Company’s future accounts, contract rights,~~then Chief Executive Officer, John Textor bearing interest at the rate of 4% per annum. As of March 31, 2021, the principal balance and other obligations arising from or relating to the payment of monies from the Company’s customers and/or third party payors (the “Revenues”), until an amount equal to 145% of the Purchase Price, or $14.5 million (the “Revenue Purchased Amount”). The repayment amount is reduced under the following circumstances.
(i) If the Company pays $12.0 million of the Revenue Purchased Amount to Fundigo LLC before June 15, 2020, such payments shall constitute payment in full of the Revenue Purchased Amounts and no additional debits will be made.
(ii) If the Company pays $13.0 million of the Revenue Purchased Amount to Fundigo LLC before July 4, 2020, such payments shall constitute payment in full of the Revenue Purchased Amounts and no additional debits will be made.accrued interest totaled approximately $35,000.

2814

fuboTV Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 11 - Fair Value Measurements

~~This Agreement shall continue until Fundigo, LLC receives~~ Certain of the full Revenue Purchased Amount, or earlier if terminated pursuant to any provision of the agreement. The Company accounted for this agreement as a loan and had an outstanding principal balance of $9.1 million as of June 30, 2020. Interest expense incurred on the loan was $2.7 million for the three months ending June 30, 2020. All outstanding amounts were repaid on July 6, 2020.
~~Century Venture~~
On May 15, 2020, the Company entered into a loan agreement (the “Loan”) with Century Venture, SA, receiving proceeds of $1.6 million to use for working capital and general corporate purposes. The Loan will bear interest at a rate of 8% per annum, payable in arrears on the 15^th day of each month. In the event the Company fails to make a payment within ten (10) days after the due date, the Company shall pay interest on any overdue payment at the highest rate allowed by applicable law.
All remaining unpaid principal together with interest accrued and unpaid shall be due and payable upon the earlier of (a) completion of any debt or equity financing of the Company, which results in proceeds of at least $50 million, or (b) May 14, 2021. The entire $1.6 million remained outstanding as of June 30, 2020 and interest expense incurred on the loan for the three months ended June 30, 2020 was immaterial.
~~14.~~ ~~Fair Value Measurements~~
The Company holds investments in equity securities and limited partnership interests, which are accounted for at fair value and classified within financial assets at fair value on the condensed consolidated balance sheet, with changes in fair value recognized as investment gain / loss in the condensed consolidated statements of operations. The Company also has an investment in Nexway common stock that is publicly traded on the Frankfurt Exchange. Additionally, the Company’s ~~convertible notes, derivatives and~~ warrants ~~were~~are classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other ~~income/expense~~income (expense) in the condensed consolidated statements of operations.

The following table classifies the Company’s ~~assets and~~ liabilities measured at fair value on a recurring basis into the fair value hierarchy as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (in thousands):

June 30, 2020
Total Level 1 Level 2 Level 3

Financial Liabilities at Fair Value:
Convertible notes $ 3,661 $ — $ — $ 3,661
Profit share liability 2,119 $ — — 2,119
Derivative liability 163 — — 163
Warrant liability – subsidiary 21 — — 21
Warrant liabilities 40,617 — — 40,617
Total $ 46,581 $ — $ — $ 46,581
Fair valued measured at March 31, 2021
Quoted prices in active markets
(Level 1) Significant other observable inputs
(Level 2) Significant unobservable inputs
(Level 3) Total
Financial liabilities at fair value:
Warrant liabilities $ - $ - $ 8,030 $ 8,030
Total financial liabilities at fair value $ - $ - $ 8,030 $ 8,030

29
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
December 31, 2019
Total Level 1 Level 2 Level 3

Financial Assets at Fair Value:
Financial assets at fair value $ 1,965 $ — $ 1,965 $ —
Total $ 1,965 $ — $ 1,965 $ —

Financial Liabilities at Fair Value:
Convertible notes $ 1,203 $ — $ — $ 1,203
Profit share liability 1,971 — — 1,971
Derivative liability 376 — — 376
Warrant liability - subsidiary 24 — — 24
Total $ 3,574 $ — $ — $ 3,574
Fair valued measured at December 31, 2020
Quoted prices in active markets
(Level 1) Significant other observable inputs
(Level 2) Significant unobservable inputs
(Level 3) Total
Financial liabilities at fair value:
Warrant liabilities $ - $ - $ 22,686 $ 22,686
Total financial liabilities at fair value $ - $ - $ 22,686 $ 22,686

~~Derivative Financial Instruments~~Warrant Liabilities

The following table presents changes in Level 3 liabilities measured at fair value (in thousands) for the three ~~and six~~ months ended ~~June 30, 2020.~~March 31, 2021. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category.

Convertible Notes Warrant Liability - Subsidiary Profits Share Liability Warrant Liabilities Derivative Liability
Fair value at December 31, 2019 $ 1,203 $ 24 $ 1,971 $ — $ 376
Change in fair value (200 ) 15 — 366 (97 )
Additions 689 — — 15,621 172
Redemption — — — — (62 )
Fair value at March 31, 2020 $ 1,692 $ 39 $ 1,971 $ 15,987 $ 389
Change in fair value (925 ) (18 ) 148 (4,966 ) (23 )
Additions 2,894 — — 29,596 —
Redemption — — — — (203 )
Fair value at June 30, 2020 $ 3,661 $ 21 $ 2,119 $ 40,617 $ 163
30
Warrant liabilities
Fair value at December 31, 2020 $ 22,686
Change in fair value $ 585
Redemption $ (15,241 )
Fair value at March 31, 2021 $ 8,030

~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~Warrant Liability - Subsidiary~~ - The Company assumed liability for a warrant issued by PEC that expires on January 28, 2023. The change in fair value of the subsidiary warrant liability is reported as a component of other income/(expense) in the condensed consolidated statement of operations. The Company used a ~~Monte Carlo simulation~~Black-Scholes model to estimate the fair value of the warrant ~~liability with the following assumptions~~liabilities at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020 using the following inputs:

June 30,
2020 December 31,
2019
Exercise price $ 0.75 $ 0.75
Stock price – subsidiary $ 0.05 $ 0.02
Fair value of stock price $ — $ —
Risk free rate 0.17 % 1.62 %
Contractual term (years) 2.58 3.08
Expected dividend yield — % — %
Expected volatility 69.2 % 83.7 %
Number of subsidiary warrants outstanding 48,904,037 48,904,037
In arriving at the fair value of stock price as of June 30, 2020 and December 31, 2019, no discount was applied to the trading price of the PEC stock, as a result of illiquidity in the volumes being traded on the OTC markets. Risk-free interest rate was based on rates established by the Federal Reserve Bank. The volatility rate was based on stock prices of comparable companies.
~~Profit Share Liability~~ - The fair value of the profits interest sold related to the Panda investment was determined using an expected cash flow analysis. The change in fair value of profit share liability of $0.1 million for the three and six months ended June 30, 2020 is reported as a component of other income/(expense) in the condensed consolidated statement of operations.
~~Warrant Liabilities~~
~~FB Loan Warrant~~
In connection with its Note Purchase Agreement (see Note 13), the Company issued the FB Loan Warrant and utilized the Black-Scholes pricing model. Absent the Company’s sequencing policy as disclosed in the Company’s Annual Report on Form 10-K/A filed with the SEC on August 10, 2020, the Company would have recorded these warrants as equity classified. The warrant liability was recorded at the date of grant at fair value. Subsequent changes in fair value for the three and six months ended June 30, 2020 was ($5.5) million and ($5.1) million, respectively and was recorded as other expense in the condensed consolidated statement of operations.
~~The significant assumptions used in the valuation are as follows:~~
June 30, 2020
Fair value of underlying common shares $ 10.45
Exercise price $ 5.00
Expected dividend yield — %
Expected volatility 50.5 %
Risk free rate 0.17 %
Expected term (years) 4.72
~~Purchase Agreements with Investors~~
Between May 11, 2020 and June 8, 2020, the Company entered into Purchase Agreements with certain investors (the “Investors”), pursuant to which the Company sold an aggregate of 3,735,922 shares (the “Purchased Shares”) of the Company’s common stock and issued 3,735,922 warrants to the Investors. See Note 17.
March 31, 2021 December 31, 2020
Fair value of underlying common shares $ 22.12 $ 28.00
Exercise price $ 9.25 $ 9.25
Expected dividend yield — % %
Expected volatility 67.5% - 68.9 % 73.9% - 75.1 %
Weighted average expected volatility 67.93 % 74.35 %
Risk-free interest rate 0.07% - 0.07 % 0.10% - 0.11 %
Weighted average risk-free interest rate 0.07 % 0.11 %
Expected term (years) 0.9-1.0 1.14 - 1.24
Weighted average expected term (years) 0.90 1.19

3115

fuboTV Inc.
Notes to the Condensed Consolidated Financial Statements
The warrant liability was recorded at the date of grant at fair value using a Monte Carlo simulation model. Subsequent changes in fair value for the three and six months ended June 30, 2020 were $10.4 million and was recorded as other income in the condensed consolidated statement of operations. The Company used a Monte Carlo simulation model to estimate the fair value of the warrant liability at June 30, 2020:
June 30, 2020
Fair value of underlying common shares $ 10.45
Exercise price $ 7.00
Expected dividend yield — %
Expected volatility 68.9 – 70.2 %
Risk free rate 0.16 %
Expected term (years) 1.37 – 1.44
~~ARETE Wealth Management~~
On May 25, 2020, the Company issued to ARETE Wealth Management a warrant to purchase 275,000 shares of the Company’s common stock for investment services. Absent the Company’s sequencing policy as disclosed in the Company’s Annual Report on Form 10-K/A filed with the SEC on August 10, 2020, the Company would have recorded these warrants as equity classified. The warrant liability was recorded at the date of grant at fair value. Subsequent changes in fair value for the three and six months ended June 30, 2020 was $0.4 million and was recorded as other income in the condensed consolidated statement of operations.
~~The significant assumptions used in the valuation are as follows:~~
June 30, 2020
Fair value of underlying common shares $ 10.45
Exercise price $ 5.00
Expected dividend yield — %
Expected volatility 50.4 %
Risk free rate 0.28 %
Expected term (years) 4.9
~~Derivative Liability~~ – The Series D Convertible Preferred Stock (the “Series D Preferred Stock”) contains a contingent put option and, accordingly, the Company considered it to be a liability and accounted for it at fair value using Level 3 inputs. Subsequent changes in fair value for the three and six months ended June 30, 2020 was $23,000 and $0.1 million and was recorded as other income in the condensed consolidated statement of operations. The Company determined the fair value of this liability using the Monte Carlo simulation model with the following inputs:
June 30,
2020 December 31,
2019
Stock price $ 10.45 $ 8.91 – 9.03
Fixed conversion price $ 0.25 $ 0.25
Risk free rate 0.16 % 1.6 %
Contractual term (years) 1.0 – 1.2 1.2 – 1.5
Expected dividend yield 8.0 % 8.0 %
Expected volatility 72.3% - 76.3 % 89.2% - 90.4 %
32
~~fuboTV Inc.~~
(Unaudited)

~~Notes to Condensed Consolidated Financial Statements~~
Note 12 - Stockholders’ Equity
~~15.~~ ~~Convertible Notes Payable~~
At June 30, 2020 and December 31, 2019, the carrying amounts of the convertible notes including the remaining principal balance plus the fair value of the derivative liabilities associated with the variable share settlement feature and unamortized discounts is as follows (in thousands):
Issuance Date Stated Interest Rate Maturity Date Principal Unamortized Discount Variable Share Settlement Feature at Fair Value Carrying amount
Convertible notes
GS Capital Partners (5) 1/17/2020 10 % 1/17/2021 150 (82 ) 196 264
EMA Financial, LLC (6) 2/6/2020 10 % 11/6/2020 125 (59 ) 187 253
Adar Alef, LLC (7) 2/10/2020 12 % 2/10/2021 150 (92 ) 196 254
BHP Capital (8) 3/24/2020 10 % 3/24/2020 100 (71 ) 90 119
Jefferson Street Capital, LLC (9) 3/24/2020 10 % 3/24/2020 100 (71 ) 90 119
Auctus Fund (10) 4/1/2020 10 % 3/30/2021 1,100 (825 ) 1,663 1,938
Eagle Equities (11) 4/2/2020 10 % 3/31/2021 275 (207 ) 351 419
Platinum Point (12) 4/2/2020 10 % 3/31/2021 103 (69 ) 92 126
Platinum Point (13) 4/2/2020 10 % 4/20/2021 420 (340 ) 381 461
EMA Financial, LLC (14) 5/5/2020 10 % 5/5/2020 250 (211 ) 415 454
Balance at June 30, 2020 $ 2,773 $ (2,027 ) $ 3,661 $ 4,407

Issuance
Date
Stated
Interest
Rate
Maturity
Date
Principal Unamortized
Discount
Variable
Share
Settlement
Feature at
Fair Value
Carrying
amount
Convertible notes
Adar Bays - Alef (1) 7/30/2019 10 % 7/30/2020 $ 275 $ (159 ) $ 379 $ 495
JSJ Investments (2) 12/6/2019 10 % 12/6/2020 255 (238 ) 422 439
Eagle Equities (3) 12/12/2019 12 % 12/12/2020 210 (199 ) 285 296
BHP Capital (4) 12/20/2019 10 % 12/20/2020 125 (114 ) 117 128

Balance at December 31, 2019 $ 865 $ (710 ) $ 1,203 $ 1,358
The derivative liabilities results from the variable share settlement provision featured within the convertible notes issued by the Company. The fair value of the derivative liabilities was estimated using the Monte Carlo simulation model on the dates that the notes were issued and were subsequently revalued at June 30, 2020 and December 31, 2019, with the following weighted average assumptions:
June 30, 2020 December 31, 2019

Stock Price $ 7.00 – 12.10 $ 8.91 – 10.15
Risk Free Interest Rate 0.13 – 0.19 % 1.52 – 1.60 %
Expected life (years) 0.08 – 1.00 0.58 – 1.00
Expected dividend yield — % — %
Expected volatility 73.5 – 79.9 % 90.0 – 95.3 %

Fair Value - Note Variable Share Settlement Feature (in thousands) $ 3,661 $ 1,203
33
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(1)~~ On July 30, 2019, the Company issued a convertible promissory note to Adar Alef, LLC in the amount of $275,000. The note accrues interest at a rate of 12% per annum and matures on July 30, 2020. The note is not convertible until the six month anniversary of the note, at which time if the note has not already been repaid by the Company, the note holder shall be entitled to convert all or part of the note into shares of the Company’s common stock, at a price per share equal to 53% of the lowest trading price of the common stock for the twenty prior trading days upon which the conversion notice is received by the Company.
~~On January 20, 2020, the Company repaid the principal balance of $275,000 and accrued interest of approximately $16,000.~~
~~(2)~~
On December 6, 2019, the Company issued a convertible promissory note to JSJ Investments with a principal balance of $255,000. The Company received net proceeds of $250,000. The note matures on December 6, 2020 and bears interest at 10% per annum. The Company may prepay this note and unpaid interest on or prior to July 3, 2020. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 47% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.
~~On June 2, 2020, the Company repaid the principal balance of $255,000 and accrued interest of approximately $12,000.~~
~~(3)~~
On December 12, 2019, the Company issued a convertible promissory note to Eagle Equities, LLC with a principal balance of $210,000. The Company received net proceeds of $200,000. The note matures on December 12, 2020 and bears interest at 12% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock, at any time after the six month anniversary of the note, at a rate of 53% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.
~~On June 10, 2020, the Company repaid the principal balance of $210,000 and accrued interest of approximately $13,000.~~
~~(4)~~
On December 20, 2019, the Company issued a convertible promissory note to BHP Capital NY Inc. with a principal balance of $125,000. The Company received net proceeds of $122,500. The note matures on December 20, 2020 and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 61% multiplied by the lowest trading price during the previous fifteen (15) day trading period ending on the latest complete trading day prior to the conversion date. In connection with the promissory note, the Company issued 5,000 shares of its restricted common stock with a fair value of approximately $47,000. The Company had the option to buy back the shares 180 days from the issue date, for a one-time payment of $8.00 per share. This option was not exercised and has expired as of June 30, 2020.
~~On June 17, 2020, the Company repaid the principal balance of $125,000 and accrued interest of approximately $6,000.~~
~~(5)~~ On January 17, 2020, the Company issued a convertible promissory note to GS Capital Partners, LLC. with a principal balance of $150,000. The note matures on January 17, 2021 and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 53% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.
~~On July 15, 2020, the Company repaid the principal balance of $150,000 and accrued interest of approximately $7,000.~~
~~(6)~~ On February 6, 2020, the Company issued a convertible promissory note to EMA Financial, LLC. with a principal balance of $125,000. The note matures on November 6, 2020 and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock equal to the lower of (i) the lowest closing price of the common stock during the preceding twenty (20) day trading period ending on the latest trading day prior to the note issuance date or (ii) at a rate of 50% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.
~~(7)~~ On February 10, 2020, the Company issued a convertible promissory note to Adar Alef, LLC. with a principal balance of $150,000. The note matures on February 10, 2021 and bears interest at 12% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 53% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.
34
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(8)~~ On March 24, 2020, the Company issued a convertible promissory note to BHP Capital NY Inc. with a principal balance of $100,000. The note matures on demand and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 61% multiplied by the lowest trading price during the previous fifteen (15) day trading period ending on the latest complete trading day prior to the conversion date.
~~(9)~~ On March 24, 2020, the Company issued a convertible promissory note to Jefferson Street Capital, LLC. with a principal balance of $100,000. The note matures on demand and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 61% multiplied by the lowest trading price during the previous fifteen (15) day trading period ending on the latest complete trading day prior to the conversion date.
~~(10)~~ On April 1, 2020, the Company issued a convertible promissory note to Auctus Fund, LLC. with a principal balance of $1.1 million. The note matures on March 30, 2021 and bears interest at 10% per annum. The note and any accrued interest may be converted into shares of the Company’s common stock at a rate of 50% multiplied by the lowest trading price during the previous thirty (30) day trading period ending on the latest complete trading day prior to the conversion date. In connection with this convertible promissory note, the Company issued 142,118 warrants and 30,000 shares of common stock. See Note 17.
~~(11)~~ On April 2, 2020, the Company issued a convertible promissory note to Eagle Equities, LLC. with a principal balance of $275,000. The note matures on March 31, 2021 and bears interest at 10% per annum. The note and any accrued interest may be converted into shares of the Company’s common stock at a rate of 53% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.
~~(12)~~ On April 2, 2020, the Company issued a convertible promissory note to Platinum Point Capital, LLC. with a principal balance of $103,000. The note matures on March 31, 2021 and bears interest at 10% per annum. The note and any accrued interest may be converted into shares of the Company’s common stock at a rate of 61% multiplied by the lowest trading price during the previous fifteen (15) day trading period ending on the latest complete trading day prior to the conversion date.
~~(13)~~ On April 23, 2020, the Company issued a convertible promissory note to Platinum Point Capital, LLC. with a principal balance of $420,000. The note matures on April 20, 2021 and bears interest at 10% per annum. The note and any accrued interest may be converted into shares of the Company’s common stock at a rate of 61% multiplied by the lowest trading price during the previous fifteen (15) day trading period ending on the latest complete trading day prior to the conversion date. In connection with this convertible promissory note, the Company issued 55,172 warrants and 25,000 shares of common stock. See Note 17.
~~(14)~~ On May 11, 2020, the Company issued a convertible promissory note to EMA Financial, LLC. with a principal balance of $250,000. The note matures on May 5, 2021 and bears interest at 10% per annum. The note and any accrued interest may be converted into shares of the Company’s common stock equal to the lower of (i) the lowest closing price of the common stock during the preceding twenty (20) day trading period ending on the latest trading day prior to the note issuance date or (ii) at a rate of 50% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.
In addition to the above convertible promissory notes, on January 29, 2020, the Company issued a convertible promissory note to Auctus Fund, LLC. with a principal balance of $275,000. The note matures on November 29, 2020 and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 50% multiplied by the lowest trading price during the previous twenty five (25) day trading period ending on the latest complete trading day prior to the conversion date. On March 19, 2020, the Company repaid in full the principal balance and interest of approximately $4,000.
35
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~16.~~ ~~Temporary Equity~~

Conversion of Series ~~D Convertible~~AA Preferred Stock

~~On March 6, 2020, the Company (i) entered into a stock purchase agreement to issue 203,000~~In January and February 2021, 9,807,367 shares of ~~its Series D Preferred Stock, for proceeds of $203,000 and (ii) redeemed the 203,000 shares of Series D Preferred Stock previously issued on September 6, 2019.~~
On June 16, 2020, the Company redeemed 253,000 shares of its Series D Preferred Stock previously issued on December 19, 2019 in exchange for $339,174. As a result, the total number of shares of Series D Preferred Stock outstanding as of June 30, 2020 was 203,000.
~~The following table summarizes the Company’s Series D Preferred Stock activities for the three and six months ended June 30, 2020 (dollars in thousands):~~
Series D Preferred Stock
Shares Amount
Total temporary equity as of December 31, 2019 461,839 $ 462
Issuance of Series D convertible preferred stock for cash 203,000 203
Offering cost related to issuance of Series D convertible preferred stock — (3 )
Deemed dividends related to immediate accretion of offering cost — 3
Accrued Series D preferred stock dividends 8,868 9
Bifurcated redemption feature of Series D convertible preferred stock — (171 )
Deemed dividends related to immediate accretion of bifurcated redemption feature of Series D convertible preferred stock — 171
Redemption of Series D preferred stock (including accrued dividends) (210,831 ) (211 )
Total temporary equity as of March 31, 2020 462,876 $ 463
Accrued Series D preferred stock dividends 8,330 8
Redemption of Series D preferred stock (including accrued dividends) (263,037 ) (263 )
Total temporary equity as of June 30, 2020 208,169 $ 208
~~The redemption of the 203,000 shares of Series D Preferred Stock (previously issued on September 6, 2019) on March 6, 2020 occurred as follows (amounts in thousands except share and per share values):~~
Series D preferred stock issued 203,000
Per share value $ 1.00
Series D preferred stock value $ 203
Accrued dividends $ 8
Total Series D preferred stock $ 211
Redemption percentage $ 1.29
Total redemption $ 272
36
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~The redemption of the 253,000 shares of Series D Preferred Stock (previously issued on December 19, 2019) on June 16, 2020 occurred as follows (amounts in thousands except share and per share values):~~
Series D preferred stock issued 253,000
Per share value $ 1.00
Series D preferred stock value $ 253
Accrued dividends $ 10
Total Series D preferred stock value $ 263
Redemption percentage 1.29 %
Total redemption $ 339
Holders of shares of the Series D Preferred Stock are entitled to receive, cumulative cash dividends at the rate of 8% on $1.00 per share of the Series D Preferred Stock per annum (equivalent to $0.08 per annum per share), subject to adjustment. The dividends are payable solely upon redemption, liquidation or conversion. The Company recorded approximately $5,000 accrued dividend as of June 30, 2020.
The Series D Preferred Stock is being classified as temporary equity because it has redemption features that are outside of the Company’s control upon certain triggering events, such as a Market Event. A “Market Event” is defined as any trading day during the period which shares of the Series D Preferred Stock are issued and outstanding, where the trading price for such date is less than $0.35. In the event of a Market Event, the Series D Preferred Stock shall be subject to mandatory redemption and the stated value shall immediately be increased to $1.29 per share of Series D Preferred Stock. The Market Event is considered to be outside the control of the Company, resulting in classification of the Series D Preferred Stock as temporary equity.
The initial discounted carrying value resulted in recognition of a bifurcated redemption feature of $0.2 million, further reducing the initial carrying value of the shares of Series D Preferred Stock. The discount to the aggregate stated value of the shares of Series A Convertible Preferred Stock, resulting from recognition of the bifurcated redemption feature was immediately accreted as a reduction of additional paid-in capital and an increase in the carrying value of the Series D Shares. The accretion is presented in the condensed consolidated statement of operations as a deemed dividend, increasing net loss to arrive at net loss attributable to common stockholders.
~~17.~~ ~~Stockholders’ Equity/ (Deficit)~~
~~Preferred Stock Designations~~
On March 20, 2020, FaceBank Pre-Merger amended its Articles of Incorporation to withdraw, cancel and terminate the previously-filed (i) Certificate of Designation of with respect to 5,000,000 shares of its Series A Preferred Stock, par value $0.0001 per share, (ii) Certificate of Designation with respect to 1,000,000 shares of its Series B Preferred Stock, par value $0.0001 per share, (iii) Certificate of Designation with respect to 41,000,000 shares of its Series C Preferred Stock, par value $0.0001 per share and (iv) Certificate of Designation with respect to 1,000,000 shares of its Series X Preferred Stock, par value $0.0001 per share. Upon the withdrawal, cancelation and termination of such designations, all shares previously designated as Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series X Preferred Stock were returned to the status of authorized but undesignated shares of the Company’s Preferred Stock, par value $0.0001 per share.
On March 20, 2020, in connection with the Merger, FaceBank Pre-Merger filed an amendment to its Articles of Incorporation to designate 35,800,000 of its authorized preferred stock as “Series AA Convertible Preferred Stock” pursuant to a Certificate of Designation of Series AA Convertible Preferred Stock (the “Series AA Preferred Stock Certificate of Designation”). The Series AA Convertible Preferred Stock (the “Series AA Preferred Stock”) has no liquidation preference. The Series AA Preferred Stock ~~is entitled~~converted into 19,614,734 shares of common stock. On March 1, 2021, we consummated an offer to ~~receive dividends and other distributions as and when paid on~~exchange the ~~Common~~remaining outstanding shares of Series AA Preferred Stock ~~on an as converted basis. Each~~for two shares of our common stock per share of Series AA Preferred Stock ~~is initially convertible into two~~(the “Exchange Offer”). As a result of the Exchange Offer, 13,412,246 shares of Common Stock, subject to adjustment as provided in the Series AA Preferred Stock Certificate of Designation and shall only be convertible immediately following the sale of such shares on an arms’-length basis either pursuant to an exemption from registration under Rule 144 promulgated under the Securities Act or pursuant to an effective registration statement under the Securities Act. Each share of Series AA Preferred Stock, ~~shall have 0.8 votes per share (the “Voting Rate”) on any matter submitted to the holders~~representing 100% of the ~~Common Stock for a vote and shall vote together with the Common Stock on such matters for as long as the~~outstanding shares of Series AA Preferred Stock, ~~is outstanding. The Voting Rate shall be subject to adjustment in the event~~were exchanged for 26,824,492 shares of stock splits, stock combinations, recapitalizations reclassifications, extraordinary distributions and similar events. There are 4,912,069 shares reserved for issuance to certain shareholders of fuboTV Pre-Merger in connection with the Merger.
37
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~Common Stock Activity~~our common stock.

Issuance of ~~Common Stock for Cash~~treasury stock

~~The~~On February 26, 2021, the Company ~~raised approximately $2.3 million through issuances of an aggregate of 795,593~~issued 623,068 shares of its common stock in ~~private placement transactions during~~connection with the ~~three months ended March 31, 2020 with investors.~~Vigtory Acquisition.
The Company raised approximately $0.5 million through issuances of an aggregate of 170,391 shares of its common stock in private placement transactions during the three months ended June 30, 2020 with investors.
~~Issuance of Common Stock and Warrants for Cash~~Stock-based compensation
Between May 11, 2020 and June 8, 2020, the Company entered into Purchase Agreements Investors, pursuant to which the Company sold an aggregate of 3,735,922 shares of the Company’s common stock at a purchase price of $7.00 per share and issued warrants to the Investors covering a total of 3,735,922 shares of the Company’s common stock for an aggregate purchase price of $26.1 million.
~~Issuance of Common Stock Related to PEC Acquisition~~
During the three and six months ended June 30, 2020, the Company has issued 1,201,749 and 4,928,829 shares of its common stock in exchange for 14,222,975 and 17,950,055 shares of its subsidiary PEC, respectively. The interests exchange in PEC were previously recorded within noncontrolling interests and the transactions were accounted for as a reduction of $0.9 million and $2.0 million of noncontrolling interests for the carrying value of those noncontrolling interests at the date of exchange with an offsetting increase in Additional paid-in capital, during the three and six months ended June 30, 2020.
~~Issuance of Common Stock for Services Rendered~~
On January 1, 2020, the Company entered into the first amendment to a joint business development agreement and issued 200,000 shares of its restricted common stock with a fair value of $1.8 million in exchange for business development services.
During the three months ended March 31, ~~2020, the Company issued 275,000 shares of its common stock with a fair value of $2.3 million in exchange for consulting services.~~
~~During the three months ended~~2021 and March 31, 2020 the Company issued 62,500 shares of its common stock with a fair value of approximately $0.6 million in exchange for services rendered in connection with the Company’s amended Digital Likeness Development Agreement by and among Floyd Mayweather, the Company and FaceBank, Inc., effectiverecognized stock-based compensation expense as ~~of July 31, 2019, as amended (the “Mayweather Agreement”).~~follows:

~~During the three months ended March 31, 2020, the Company issued 2,500 shares of its common stock with a fair value of $26,000 in exchange for consulting services.~~
For the Three Months Ended March 31,
2021 2020
Subscriber related $ 14 $ -
Sales and marketing 713 -
Technology and development 2,070 -
General and administrative 6,577 9,061
$ 9,374 $ 9,061

~~During the three months ended June 30, 2020, the Company issued 343,789 shares of its common stock with a fair value of $3.1 million in exchange for consulting services.~~
~~Issuance of Common Stock for Employee Compensation~~
~~On February 20, 2020, the Company issued 300,000 shares of its common stock to an officer of the Company at a fair value of $2.7 million, or $9.00 per share.~~
~~During the three months ended March 31, 2020, the Company issued 200,000 shares of its common stock with a fair value of $1.6 million as compensation to service providers for services rendered.~~
38
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~The Company did not issue any common stock for employee compensation during the three months ended June 30, 2020.~~
~~Issuance of Common Stock in Connection with Convertible Notes~~
During the three and six months ended June 30, 2020, the Company issued 25,000 and 62,500 shares of its common stock with a fair value of approximately $0.2 million and $0.3 million, respectively, in connection with the issuance of convertible notes.
~~Equity Compensation Plan Information~~
The Company’s 2014 Equity Incentive Stock Plan (the “2014 Plan”) provides for the issuance of up to 16,667 incentive stock options and nonqualified stock options to the Company’s employees, officers, directors, and certain consultants. The 2014 Plan is administered by the Company’s Board and has a term of 10 years.
Contemporaneous with the closing of the Merger, the Company assumed 8,051,098 stock options issued and outstanding under the fuboTV Pre-Merger 2015 Equity Incentive Plan (the “2015 Plan”) with a weighted-average exercise price of $1.32 per share. From the Effective Time, such options may be exercised for shares of our common stock under the terms of the 2015 Plan.
On April 1, 2020, the Company approved the establishment of the Company’s 2020 Equity Incentive Plan (the “Plan”). The Company created an incentive option pool of 12,116,646 shares of the Company’s Common Stock under the Plan.
~~On May 21, 2020, we established our Outside Director Compensation Policy to set forth guidelines for the compensation of our non-employee directors for their service on our Board of Directors.~~
Options

The Company provides stock-based compensation to employees, directors, and consultants under the Company’s 2020 Equity Incentive Plan. The fair value of ~~the Company’s common~~each stock ~~was based upon the publicly quoted price~~option grant is estimated on the date of grant using the Black-Scholes option pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The risk-free interest rate is determined by referencing the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the ~~final approval of the awards was obtained. The~~ Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable ~~future so therefore the expected dividend yield is 0%.~~future. The expected term ~~for stock~~of options ~~granted with service conditions~~ represents the ~~average~~ period that the ~~stock options~~Company’s stock-based awards are expected to ~~remain~~be outstanding and is based on 10 years. The Company obtained the risk-free interest rate from publicly available data published by the Federal Reserve. The Company uses a methodology in estimating its volatility percentage from a computation that was based on a comparison of average volatility rates of similar companies to a computation based on the ~~standard deviation of~~simplified method, which is the ~~Company’s own underlying stock price’s daily logarithmic returns. Due~~half-life from vesting to the ~~changes in~~end of its contractual term. The simplified method was used because the Company ~~subsequent~~does not have sufficient historical exercise data to ~~the Merger, the Company changed its peer group~~provide a reasonable basis for ~~estimating~~an estimate of expected ~~volatility.~~term.

~~During~~The following was used in determining the ~~three months ended March 31, 2020, 280,000 options were granted outside~~fair value of ~~the Plan, and there were no~~stock options granted during the three months ended March 31, ~~2019. There were no options granted outside of the Plan in the three~~2021 and ~~six months ended June 30, 2020.~~2020:

39
For the Three Months Ended March 31,
2021 2020
Dividend yield 0 % 0 %
Expected price volatility 44.85 % 52.28 %
Risk-free interest rate 0.73 % 1.49 %
Expected term (years) 6.1 2.5

~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~Employees~~
~~The following reflects~~A summary of stock option activity for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 is as follows (in thousands, except share and per share amounts):

Number of Shares Weighted Average
Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life
(in years)
Outstanding as of December 31, 2019 16,667 $ 28.20 $ — 8.1
Options assumed from Merger 8,051,098 $ 1.31
Granted 5,747,039 $ 8.51
Forfeited or expired (359,331 ) $ 0.75
Outstanding as of June 30, 2020 13,445,473 $ 4.44 $ 81,360 8.3
Options vested and exercisable as of June 30, 2020 5,442,709 $ 4.43 $ 81,378 6.9
Number of Shares Weighted Average
Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life
(in years)
Outstanding as of December 31, 2020 13,450,565 $ 5.45 $ 303,036 8.1
Granted 62,599 $ 21.14
Exercised (1,011,954 ) $ 0.76
Forfeited or expired (290,724 ) $ 4.15
Outstanding as of March 31, 2021 12,210,486 $ 5.95 $ 197,917 8.0

Options vested and exercisable as of March 31, 2021 5,119,688 $ 3.18 $ 96,994 3.8
16

~~There~~
fuboTV Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The outstanding stock options as of December 31, 2020 were ~~no employee options granted, forfeited or expired~~adjusted from the previously reported amount in the ~~three months ended March~~Annual Report to exclude certain option grants subject to discretionary performance conditions for which a grant date had not occurred as of December 31, 2020.

~~Total~~As of March 31, 2021, the unrecognized stock-based compensation ~~cost~~expense related to unvested options ~~not yet recognized~~ was approximately ~~$38.0~~$38.7 million ~~and $0 as of June 30, 2020 and December 31, 2019, respectively. The weighted average period over which this compensation cost related~~ to ~~unvested employee options will~~ be recognized ~~is 2.7 and 0 years as~~over a period of ~~June 30, 2020 and December 31, 2019, respectively.~~2.8 years.

The weighted average grant-date fair value of options granted during the three and six months ended June 30, 2020 was $4.20. No options were exercised during the three and six months ended June 30, 2020. The aggregate fair value of options vested during the three months and six months ended June 30, 2020 was $1.3 million. There was no stock-based compensation recognized during the six months ended June 30, 2019.
~~Market and Service Condition Based Options~~
In the three and six months ended June 30, 2020, 3,078,297 options were granted that vest on the earlier of each anniversary of the grant date or based on the achievement of pre-established parameters relating to the performance of the Company’s stock price (not included in table above).
Compensation expense is based on the estimated value of the awards on the grant date, and is recognized over the period from the grant date through the expected vest dates of each vesting condition, both of which were estimated based on a Monte Carlo simulation model applying the following key assumptions as of the grant date:
~~Dividend yield~~ — %
~~Expected volatility~~ ~~76.0 – 88.1~~ %
~~Risk free rate~~ ~~0.24 – 0.30~~ %
~~Derived service period~~ ~~1.59 – 1.91~~
Non-employees

During the three months ended March 31, 2020, ~~in connection with the Mayweather Agreement,~~ the Company granted options to purchase 280,000 shares of the Company’s common stock at an exercise price of $7.20 per share. This option has a fair value of $1,031,000, a five-year term and expires on December 21, 2024. These options were immediately vested as of the grant date.
~~As part~~ During the three months ended March 31, 2021, 80,000 options were exercised in exchange for 71,010 shares of the ~~Merger,~~Company’s common stock. These options are not included in the ~~Company also assumed 343,047 options granted to non-employees with a weighted average exercise price of $0.23 (included in~~ table ~~above). Total compensation cost related to unvested non-employee options is immaterial as of June 30, 2020.~~
40
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~above.

There were no options granted to non-employees in the three months ended ~~June 30, 2020.~~March 31, 2021.
Market and Service Condition Based Stock Options
A summary of activity under the Plan for market and service-based stock options for the three months ended March 31, 2021 is as follows (in thousands, except share and per share amounts):
Number of Shares Weighted Average
Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life
(in years)
Outstanding as of December 31, 2020 3,078,297 $ 9.69 $ 56,351 6.3
Outstanding as of March 31, 2021 3,078,297 $ 9.69 $ 38,250 6.1

Options vested and exercisable as of March 31, 2021 3,078,297 $ 9.69 $ 38,250 6.1
Restricted Stock Units
A summary of the Company’s restricted stock unit activity during the three months ended March 31, 2021 is as follows:
Number of Shares Weighted Average Grant-Date
Fair Value
Unvested at December 31, 2020 85,000 $ 25.26
Granted 1,046,543 $ 33.02
Unvested at March 31, 2021 1,131,543 $ 32.44
During the three months ended March 31, 2021, the Company recognized $1.8 million of stock-based compensation expense, and as of March 31, 2021, unrecognized stock-based compensation related to restricted stock units totaled $34.7 million. As of March 31, 2021, the restricted stock units have an aggregate intrinsic value of approximately $25.0 million and the weighted average remaining contractual term is 3.7 years.
17
fuboTV Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Warrants

A summary of the Company’s outstanding warrants as of ~~June 30, 2020~~March 31, 2021 are presented below (in thousands, except share and per share amounts):

Number of Warrants Weighted Average
Exercise Price Total Intrinsic Value
Outstanding as of December 31, 2019 200,007 $ 12.15 $ —
Issued 7,477,443 $ 6.08 $ 32,670
Expired (200,000 ) $ — $ —
Outstanding as of June 30, 2020 7,477,450 $ 6.10 $ 32,670
Warrants exercisable as of June 30, 2020 7,477,450 $ 6.10 $ 32,670
Number of Warrants Weighted Average
Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life
(in years)
Outstanding as of December 31, 2020 2,535,528 $ 8.22 $ 50,560 1.0
Exercised (713,257 ) $ 8.83 $ - -
Outstanding as of March 31, 2021 1,822,271 $ 7.98 $ 26,171 0.7

Warrants exercisable as of March 31, 2021 1,822,271 $ 7.98 $ 26,171 0.7

~~On March 19, 2020, in connection with its~~ Note ~~Purchase Agreement (see Note 13), the Company issued the FB Loan Warrant, a warrant to purchase 3,269,231 shares of its common stock with a fair value of $15.6 million.~~13 - Commitments and Contingencies

~~On April 1, 2020, the Company issued 142,118 warrants in connection with a $1.1 million convertible note. The exercise price is $7.74 with a 5-year term.~~Leases

~~On April 23, 2020,~~The components of lease expense were as follows:
For the Three Months Ended
March 31, 2021 March 31, 2020
Operating leases
Operating lease cost $ 312 $ 98
Variable lease cost - 73
Operating lease expense 312 171
Short-term lease rent expense - -
Total rent expense $ 312 $ 171
Supplemental cash flow information related to leases were as follows:
For the Three Months Ended
March 31, 2021 March 31, 2020

Operating cash flows from operating leases $ 305 $ 75
Right of use assets exchanged for operating lease liabilities $ - $ 125
Weighted average remaining lease term - operating leases 6.2 0.4
Weighted average remaining discount rate - operating leases 5.4 % 0.8 %
18
fuboTV Inc.
Notes to the ~~Company issued 55,172 warrants in connection with a $0.4 million convertible note. The exercise price is $9.00 with a 3-year term.~~Condensed Consolidated Financial Statements
(Unaudited)

~~Between May 11, 2020 and June 8, 2020,~~As of March 31, 2021, future minimum payments for the ~~Company issued 3,735,922 warrants in connection with Purchase Agreements with Investors with an exercise price of $7.00 with a 1.5-year term.~~operating leases are as follows:

~~On May 25, 2020, the Company issued to ARETE Wealth Management a warrant to purchase 275,000 shares of the Company’s common stock with an initial exercise price of $5.00 per share.~~
Year Ended December 31, 2021 $ 725
Year Ended December 31, 2022 778
Year Ended December 31, 2023 805
Year Ended December 31, 2024 805
Year Ended December 31, 2025 805
Thereafter 1,305
Total 5,223
Less present value discount (808 )
Operating lease liabilities $ 4,415

~~18.~~ ~~Leases~~

On February ~~14, 2019,~~23, 2021, the Company entered into a lease agreement (the “Lease”) for ~~offices in Jupiter, Florida.~~approximately 55,042 rentable square feet located at 1290 Avenue of the Americas, New York, New York 10104. The Lease will replace the lease ~~has an initial~~for the Company’s existing New York headquarters. The Lease term ~~of 18 months commencing March~~is twelve years and will commence on October 1, ~~2019 until August 31, 2020 with a base~~2021. The annual fixed rent ~~of $89,000.~~ under the Lease will be:
● $4,128,150 for the first four years;
● $4,403,360 for years five through eight;
● $4,678,570 for years nine through twelve.
The Company has an option to extend the lease for another year until August 31, 2021 for annual rent of $95,000 and a second option for an extension until August 31, 2022 for annual rent of $98,000. The Company recorded the lease obligations in accordance with ASC 842.
As part of the acquisition of Nexway on September 19, 2019, the Company recognized right of use assets of $3.6 million and lease liabilities of $3.6 million associated with an operating lease obtained in the acquisition. At December 31, 2019, the Company had operating lease liabilities of $3.5 million and right of use assets of $3.5 million recorded in the consolidated balance sheet. At March 31, 2020, the Company deconsolidated its investment in Nexway and accordingly, reduced its operating lease liabilities and right of use assets to $0.
As part of the acquisition of fuboTV Pre-Merger on April 1, 2020, the Company recognized right of use assets and lease liabilities of $5.2 million for three operating leases. fuboTV Pre-Merger had entered into a lease agreement in April 2017 for approximately 10,000 square feet of office space in New York, NY. The lease commenced in April 2017 and the initial term of the ~~lease is for a period of ten years with an option to renew~~Lease for an additional five ~~years. The renewal option~~years, at a fixed annual rate that is ~~not considered in~~ the ~~remaining lease~~fair market rent as of the beginning of the extension term as agreed to by the Company is not reasonably certain that it will exercise such option. On January 30, 2018, the Company amended their lease agreement to add approximately 6,600 square feet of office space. The lease term commenced in February 2018 and is effective through March 2021.
41
~~fuboTV Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~In February 2020, fuboTV Pre-Merger entered into~~parties or determined by a sublease with Welltower, Inc. to lease approximately 6,300 square feet of office space in New York, NY. The lease commenced in March 2020 and is effective through July 30, 2021. The annual rent for the space is $455,000.neutral arbitration process.
~~The following summarizes quantitative information about the Company’s operating leases (amounts in thousands, except lease term and discount rate):~~

For the Three Months
Ended
June 30, 2020

For the Six Months
Ended
June 30, 2020

Operating leases
Operating lease cost $ 312 $ 410
Variable lease cost 3 76

Operating lease expense $ 315 $ 486
Short-term lease rent expense 166 166

Total rent expense $ 481 $ 652

Weighted-average remaining lease term – operating leases 6.6 6.6
Weighted-average discount rate – operating leases 5.3 % 5.3 %

For the Three Months
Ended
June 30, 2019

For the Six Months
Ended
June 30, 2019

Operating leases
Operating lease cost $ 23 $ 30
Variable lease cost 15 20

Operating lease expense $ 38 $ 50
Short-term lease rent expense — —

Total rent expense $ 38 $ 50

Weighted-average remaining lease term – operating leases 1.2 1.2
Weighted-average discount rate – operating leases 10.0 % 10.0 %

19.
Contingencies
~~Commitments and Contingencies~~
The Company may be involved in certain legal proceedings that arise from time to time in the ordinary course of its business. When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the financial statements taken as a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can reasonably be made. Legal expenses associated with any contingency are expensed as incurred.

~~In connection~~Legal Proceedings
The Company is and may in the future be involved in various legal proceedings arising from the normal course of business activities. Although the results of litigation and claims cannot be predicted with ~~closed litigation on two separate matters that resulted in judgments against PEC, a majority interest of which was subsequently purchased by~~certainty, currently, the Company ~~we have accrued $0.5 million which remains~~believes that the likelihood of any material adverse impact on the ~~balance sheet~~Company’s consolidated results of operations, cash flows or our financial position for any such litigation or claims is remote. Regardless of the outcome, litigation can have an adverse impact on the Company because of the costs to defend lawsuits, diversion of management resources and other factors.
Said-Ibrahim v. fuboTV Inc., David Gandler, Edgar M. Bronfman Jr., & Simone Nardi, Case No. 21-cv-01412 (S.D.N.Y) & Lee v. fuboTV, Inc., David Gandler, Edgar M. Bronfman Jr., & Simone Nardi, Case No. 21-cv-01641 (S.D.N.Y.) (consolidated as In re fuboTV Inc. Securities Litigation, No. 21-cv-01412 (S.D.N.Y.))
On February 17, 2021, putative shareholders Wafa Said-Ibrahim and Adhid Ibrahim filed a ~~liability at June 30, 2020~~class action lawsuit against the Company, co-founder and ~~December 31, 2019.~~CEO David Gandler, Executive Chairman Edgar M. Bronfman Jr., and CFO Simone Nardi (collectively, the “Class Action Defendants”). Plaintiffs allege that Class Action Defendants violated federal securities laws by disseminating false and misleading statements regarding the Company’s financial health and operating condition, including the Company’s ability to grow subscription levels, future profitability, seasonality factors, cost escalations, ability to generate advertising revenue, valuation, and prospects of entering the online sports wagering market. The ~~Company, on behalf~~Plaintiffs allege that Class Action Defendants violated Section 10(b) of ~~its subsidiary, is in settlement discussions with~~ the ~~parties.~~Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, as well as Section 20(a) of the Exchange Act, and seek damages and other relief.

4219

fuboTV Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Plaintiffs seek to pursue this claim on behalf of themselves as well as all other persons who purchased or otherwise acquired Company securities publicly traded on the New York Stock Exchange (“NYSE”) between March 23, 2020 and January 4, 2021, inclusive, and who were allegedly damaged thereby. On February 24, 2021, putative shareholder Steven Lee filed a nearly identical class action lawsuit against the same Defendants.
On April 19, 2021, putative shareholder Nordine Aamchoune filed a motion to consolidate the two lawsuits and be appointed lead plaintiff. On April 29, 2021, pursuant to the Private Securities Litigation Reform Act of 1995, the Court consolidated the two lawsuits and appointed Mr. Aamchoune as lead plaintiff. Mr. Aamchoune will now file an amended, consolidated complaint, and the Class Action Defendants will file a motion to dismiss the complaint.
The Company believes the claims alleged in both lawsuits are without merit and intends to vigorously defend these litigations.

On August 27, 2018, plaintiff Scott Meide filed a complaint in the United States District Court for the Middle District of Florida, Jacksonville Division against PEC, now one of our majority-owned subsidiaries, naming its former officers, among others, as defendants. The plaintiff’s claims are based on three investments: (i) the purchase of 750,000 restricted shares from PEC for the amount of $300,000 on July 18, 2014; (ii) the purchase of 800,000 shares of PEC from defendant Gregory Centineo in July 2015; and (iii) an investment in Evolution AI Corporation in 2018 in the amount of $75,000. Until recently, Mr. Meide was proceeding ~~pro se~~Rosenfeld v. Edgar Bronfman Jr., Henry Ahn, Ignacio Figueras, Daniel Leff, Laura Onopchenko, David Gandler, Par-Jorgen Parson, & Simone Nardi, Case No. 21-cv-01953 (S.D.N.Y.). Although he has pled multiple claims, the crux of Mr. Meide’s claim, at least as pled in the Second Amended Complaint, which is the operative complaint, is that he was fraudulently induced into making all three investments. The complaint contains a claim for federal securities fraud which forms the only basis for federal jurisdiction. All of the defendants have moved to dismiss the Second Amended Complaint on various grounds, including, but not limited to, the ground that the plaintiff Mr. Meide lacks standing to bring the claims since the purchases of securities were made by Jacksonville Injury Center, LLC, rather than Mr. Meide in his individual capacity.

On ~~June 29, 2020,~~March 5, 2021, putative shareholder Robert Rosenfeld filed a derivative lawsuit against the Company and certain Company directors and officers, including Edgar Bronfman Jr., Henry Ahn, Ignacio Figueras, Daniel Leff, Laura Onopchenko, David Gandler, Par-Jorgen Parson, and Simone Nardi (collectively, the “Derivative Defendants”). Plaintiff’s complaint closely tracks the allegations in the Securities Class Action and alleges that the Derivative Defendants violated Sections 10(b) and 21D of the Securities Exchange Act of 1934, breached their fiduciary duties, and committed corporate waste.
Plaintiff seeks to prosecute the action on behalf of the Company, and seeks, among other relief, an ~~attorney entered~~order directing Derivative Defendants to take all necessary actions to reform and improve the Company’s corporate governance, risk management, and internal operating procedures to comply with applicable laws, and an ~~appearance~~award of damages to the Company for ~~Mr. Meide and~~the harm suffered as a result of the alleged wrongful conduct.
The Derivative Defendants filed ~~(i)~~ a motion to ~~substitute Jacksonville Injury Center, LLC as~~dismiss the ~~plaintiff~~complaint on April 21, 2021. Plaintiff’s opposition is due on May 12, 2021, and ~~(ii) a motion for leave to file an amended complaint. All of~~ the defendants have filed oppositions to the motion to substitute and motion for leave to amend. The proposed new complaint continues to allege fraud, but also purports to plead a shareholder derivative lawsuit in connection with a claim of an improper transfer of assets to the Company. The new proposed complaint also names the Company as a new defendant. Discovery in the matter has been stayed since July of 2019. The matterDerivative Defendants’ reply is ~~set for trial in September of 2020, but we do not expect the trial to go forward given the pending motions to dismiss and stay of discovery.~~due on May 19, 2021.

The ~~Company’s subsidiaries and affiliates plan to reaffirm their motions to dismiss and the~~ Company believes ~~Mr. Meide’s final amended complaint will also be dismissed. The Company plans~~these claims are without merit and intends to vigorously defend this litigation.
Andrew Kriss and Eric Lerner vs. FaceBank Group, Inc. et. al. (Index No. 605474/20 Supreme Court of the ~~ask the court for an award~~State of ~~sanctions and attorney fees in connection with Mr. Meide’s filing of a frivolous lawsuit.~~New York.

On June 8, 2020, Andrew Kriss and Eric Lerner ~~(the “Plaintiffs”)~~ filed a Summons with Notice in the Supreme Court of the State of New York, Nassau County naming as defendants ~~FaceBank Group, Inc.,~~the Company, PEC, John Textor and Frank Patterson, among ~~others (Index No. 605474/20). The Notice lists~~others. On November 12, 2020, plaintiffs filed a Complaint, which asserts claims for breach of express contract and implied duties, fraud ~~aiding and abetting fraud, fraud~~ in the inducement, ~~fraudulent misrepresentation, fraudulent concealment, fraudulent conveyance,~~ unjust enrichment, ~~and~~conversion, declaratory relief, fraud, and ~~states that the~~fraudulent conveyance. The claims arise from an alleged relationship between Plaintiffs and defendant PEC. Plaintiffs seek monetary damages in an amount to be proven at trial, but not less than six million dollars ($6,000,000). The Company believes the claims are without merit and intends to vigorously defend this litigation and on ~~the breach of contract claim with interest from the date of the alleged breach on September 9, 2014. As of August 13, 2020,~~January 19, 2021, the Company ~~had not~~filed a motion to dismiss all claims asserted against it. That motion has been ~~served.~~
~~20.~~ ~~Supplemental Cash Flow Information~~
Six Months Ended June 30
(in thousands) 2020 2019

Supplemental disclosure of cash flow information
Interest paid $ 4,110 $ —
Income tax paid $ — $ —

Non cash financing and investing activities
Issuance of convertible preferred stock for Merger $ 566,124 $ —
Reclass of shares settled liability for intangible asset to stock-based compensation $ 1,000 $ —
Issuance of common stock – subsidiary share exchange $ 2,042 $ —
Reclass of shares settled liability to additional paid-in capital for issuance of common stock $
9,054

Lender advanced loan proceeds direct to fuboTV $ 7,579 $ —
Accrued Series D Preferred Stock dividends $ 17 $ —
Deemed dividend related to immediate accretion of redemption feature of convertible preferred stock settlement of liability $ 171 $ —
Common stock issued for lease settlement $ — $ 130
Right-of-use assets exchanged for operating lease liabilities $
5,395
$
—

~~21.~~ ~~Subsequent Events~~
~~Issuance of Common Stock~~fully submitted and ~~Warrants for Cash~~
~~On July 2, 2020,~~is pending resolution by the Company entered into a Purchase Agreement with Credit Suisse Capital LLC, pursuant to which the Company sold 2,162,163 shares of the Company’s common stock at a purchase price of $9.25 per share for an aggregate purchase price of $20.0 million.
~~On July 29, 2020, the Company issued 6,630,012 shares of the Company’s Series AA Convertible Preferred stock to an affiliate distributor.~~court.

~~Termination of Credit Agreement~~Note 14 – Subsequent Events
On ~~July 8, 2020,~~May 7, 2021, the Company ~~entered into a Termination and Release Agreement with HLEE Finance to terminate~~repaid the ~~Credit Agreement. The Company did not draw down on the Credit Agreement during its term.~~
~~Share Purchase Agreement~~
On July 10, 2020, we entered into a Share Purchase Agreement (the “SPA”) with C2A2 Corp. AG Ltd. and Aston Fallen (the “Purchaser”). Pursuant to the terms of the SPA, the Purchaser agreed to acquire all of the 1,000 shares of Facebank AG common stock, held by the Company. The transaction closed on July 10, 2020 and the Company redeemed an aggregate of 3,633,114 shares of the Company’s common stock at a redemption price of $0.0001 per shareTerm Loan in exchange for 4,833,114 new shares of Company common stock at a sale price of $0.0001 per share, resulting in a net issuance of 1,200,000 new shares of the Company’s common stock. The Company expects to recognize a gain of approximately $8.3 million on this transaction during the third quarter.
~~Credit Agreement~~
On July 16, 2020, we entered into a Credit Agreement (the “Access Road Credit Agreement”) with Access Road Capital LLC (the “Lender”). Pursuant to the terms of the Access Road Credit Agreement, the Lender extended a term loan (the “Loan”) to us with a principal amount of $10.0 million. The Loan bears interest at a fixed rate of 13.0% per annum and matures on July 16, 2023.full.

4320

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis by our management of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form ~~10-K/A~~10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the ~~year ended December 31, 2019, as filed with~~sections titled “Forward-Looking Statements” and “Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the ~~Securities~~results described in or implied by the forward-looking statements contained in the following discussion and ~~Exchange Commission (the “SEC”) on August 10, 2020 (the “Annual Report”).~~analysis. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

The results of our operations for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 are not readily comparable against the results of our operations infor the ~~comparable prior year~~ three ~~and six month period~~months ended ~~June 30, 2019~~March 31, 2020 as a result of our acquisitions of fuboTV Pre-Merger (as defined below) and Facebank AG, and our acquisition of and then deconsolidation of Nexway AG and its subsidiaries.

~~Incorporation~~Overview
Our business model is “come for the sports, stay for the entertainment.”
First, we leverage sporting events to acquire subscribers at lower acquisition costs, given the built-in demand for sports. We then leverage our technology and data to drive higher engagement and induce retentive behaviors such as favoriting channels, recording shows, and increasing discovery through our proprietary machine learning recommendations engine. Next, we look to monetize our growing base of highly engaged subscribers by driving higher average revenue per user (“ARPU”).
We believe our expected expansion into wagering and interactivity is core to this model. We believe free-to-play predictive games enhance the sports streaming experience - while also providing a bridge between video and our contemplated sportsbook. We expect the integration of gaming with our expansive live sports coverage will create a flywheel that lifts engagement and retention, expands advertising revenue through increased viewership, and creates additional opportunities for Attachment sales.
We drive our business model with three core strategies:
● Grow our paid subscriber base
● Optimize engagement and retention
● Increase monetization.
COVID-19 Update

~~fuboTV Inc. (“fuboTV” or~~The widespread global impact from the ~~“Company”) was incorporated under the laws~~outbreak and spread of the ~~State~~COVID-19 pandemic continued throughout 2020. We took precautionary measures to protect the health and safety of ~~Florida~~our employees and slow down the spread of the virus by transitioning our workforce to remote working as we closed our offices.
The global spread of COVID-19 and the various attempts to contain it created significant volatility, uncertainty, and economic disruption in ~~February 2009 under~~2020. The impact of the ~~name York Entertainment, Inc. The Company changed its name to FaceBank Group, Inc.~~COVID-19 pandemic on ~~September 30, 2019. On August 10,~~our operations began towards the end of the first quarter of 2020, impacting advertising markets and the availability of live sport events, as numerous professional and college sports leagues cancelled or altered seasons and events.
During 2020, the ~~Company changed its name~~ongoing COVID-19 pandemic continued to ~~fuboTV Inc. (the “Name Change”)~~accelerate the shift of TV viewing away from traditional pay TV to streaming TV and asthe on-going shift of ~~May 1,~~advertising budgets away from traditional linear TV into streaming offering. While in 2020 we experienced an increase in TV streaming and our overall business was largely unaffected by the Company’s trading symbol was changed to “FUBO.” The Company has filed a Notice of Corporate Action (the “Action”) with FINRA regarding the Name Change. The Action is pending FINRA approval at this time.COVID-19 pandemic there can be no assurance that these positive trends will continue during 2021 and beyond.
Incorporation

Unless the context otherwise requires, “fuboTV,” “we,” “us,” “our,” and the “Company” refers to fuboTV and its subsidiaries on a consolidated basis, and “fuboTV Pre-Merger” refers to fuboTV Inc., a Delaware corporation, prior to the Merger, and “fuboTV Sub” refers to fuboTV Inc., a Delaware corporation, and the Company’s wholly-owned subsidiary following the Merger. “FaceBank Pre-Merger” refers to FaceBank Group, Inc. prior to the Merger and its subsidiaries prior to the closing of the Merger.

21
Merger with fuboTV ~~Inc~~ Pre-Merger
On April 1, 2020, fuboTV Acquisition Corp., a Delaware corporation and our wholly-owned subsidiary (“Merger Sub”) merged with and into fuboTV ~~Pre-Merger,~~Sub, whereby fuboTV ~~Pre-Merger~~Sub continued as the surviving corporation and became our wholly-owned subsidiary pursuant to the terms of the Agreement and Plan of Merger and Reorganization dated as of March 19, 2020, by and among us, Merger Sub and fuboTV ~~Pre-Merger~~Sub (the “Merger Agreement”). Following the Merger, we changed our name from “FaceBank Group, Inc.” to “fuboTV Inc.,” and ~~such transaction,~~we changed the ~~“Merger”).~~name of fuboTV Sub to “fuboTV Media, Inc.” The combined company operates under the name “fuboTV,” and our trading symbol is “FUBO.”

In accordance with the terms of the Merger Agreement, at the effective time of the Merger, ~~(the “Effective Time”),~~ all of the capital stock of fuboTV ~~Pre-Merger~~Sub was converted into the right to receive shares of our ~~newly-created~~newly created class of Series AA ~~Convertible Preferred Stock,~~convertible preferred stock, par value $0.0001 per share (the “Series AA Preferred Stock”). Each share of Series AA Preferred Stock iswas entitled to 0.8 votes per share and ~~shall only be~~was convertible ~~immediately~~into two (2) shares of our common stock following the sale of such ~~shares~~share of Series AA Preferred Stock on an arms’-length basis either pursuant to ~~an exemption from registration under~~ Rule 144 ~~promulgated~~ under the Securities Act or pursuant to an effective registration statement under the Securities Act. ~~Until the time we are able to uplist to a national securities exchange, the~~In January and February 2021, 9,807,367 shares of Series AA Preferred Stock ~~benefits from certain protective provisions that would require us to obtain the approval of a majority of the~~converted into 19,614,734 shares of common stock. On March 1, 2021, we consummated an offer to exchange the remaining outstanding shares of Series AA Preferred Stock ~~voting as a separate class, before undertaking certain matters.~~
~~Prior to the~~ ~~Merger, the Company was, and after the Merger continues to be, a character-based virtual entertainment company, and a leading developer~~for two shares of digital human likeness for celebrities and consumers, focused on applications in traditional entertainment, sports entertainment, live events, social networking, mixed reality (AR/VR) and artificial intelligence.our common stock per share of Series AA Preferred Stock (the “Exchange Offer”). As a result of the ~~Merger, fuboTV~~Exchange Offer, 13,412,246 shares of Series AA Preferred Stock, representing 100% of the outstanding shares of Series AA Preferred Stock, were exchanged for 26,824,492 shares of our common stock.
Unless otherwise stated, 2020 financial statements and metrics include FaceBank Pre-Merger from January 1 through March 31.
Nature of Business
The Company is a leading live TV streaming platform for sports, news, and ~~entertainment, became a wholly-owned subsidiary of the Company.~~
In connection with the Merger, on March 11, 2020, the Company and HLEE Finance S.a r.l. (“HLEE”) entered into a Credit Agreement, dated as of March 11, 2020, pursuant to which HLEE provided the Company with a $100.0 million revolving line of credit (the “Credit Facility”). The Credit Facility is secured by substantially all the assets of the Company. On July 8, 2020, the Company entered into a Termination and Release Agreement with HLEE Finance to terminate the Credit Agreement. The Company did not draw down on the Credit Agreement during its term. See Notes Payable footnote for more information about the Credit Facility.
44
On March 19, 2020, FaceBank Pre-Merger, Merger Sub, Evolution AI Corporation (“EAI”) and Pulse Evolution Corporation (“PEC” and collectively with EAI, Merger Sub and FaceBank Pre-Merger, the “Initial Borrower”) and FB Loan Series I, LLC (“FB Loan”) entered into a Note Purchase Agreement (the “Note Purchase Agreement”), pursuant to which the Initial Borrower sold to FB Loan senior secured promissory notes in an aggregate principal amount of $10.1 million (the “Senior Notes”). The Company received proceeds of $7.4 million, net of an original issue discount of $2.7 million. In connection with the FB Loan, FaceBank Pre-Merger, fuboTV Pre-Merger and certain of their respective subsidiaries granted a lien on substantially of their assets to secure the obligations under the Senior Notes. The Company made a $7.5 million payment on the Note Purchase Agreement on May 28, 2020 and paid the remaining balance of $2.6 million on July 3, 2020.
Prior to the Merger, fuboTV Pre-Merger and its subsidiaries were party to a Credit and Guaranty Agreement, dated as of April 6, 2018 (the “AMC Agreement”), with AMC Networks Ventures LLC as lender, administrative agent and collateral agent (“AMC Networks Ventures”). fuboTV Pre-Merger previously granted AMC Networks Ventures a lien on substantially all of its assets to secure its obligations thereunder. The AMC Agreement survived the Merger and, as of the Effective Time, there was $23.8 million outstanding under the AMC Agreement. In connection with the Merger, the Company guaranteed the obligations of fuboTV Pre-Merger under the AMC Agreement on an unsecured basis. The liens of AMC Networks Ventures on the assets of fuboTV Pre-Merger are senior to the liens in favor of FB Loan and the Company securing the Senior Notes.
~~Nature of Business~~
The Company is a leading digital entertainment company, combining fuboTV Pre-Merger’s direct-to-consumer live TV streaming, or vMVPD, platform with FaceBank Pre-Merger’s technology-driven IP in sports, movies and live performances. We expect that this business combination will create a content delivery platform for traditional and future-form IP. We plan to leverage FaceBank Pre-Merger’s IP sharing relationships with leading celebrities and other digital technologies to enhance its already robust sports and entertainment offerings.
Since the Merger, while we continue our previous business operations, we are principally focused on offering consumers a leading live TV streaming platform for sports, news and entertainment through fuboTV.entertainment. The Company’s revenues are almost entirely derived from the sale of subscription services and the sale of advertisements in the United States, though the Company has started to assess expansion opportunities into international markets, with operations in Canada and ~~the launch in late 2018 of its first ex-North America offering of streaming entertainment, to consumers in~~ Spain.

Our subscription-based services are offered to consumers who can sign-up for accounts at https://fubo.tv, through which we provide basic plans with the flexibility for consumers to purchase the add-ons and features best suited for them. Besides the website, consumers can also sign-up via some TV-connected devices. ~~The fuboTV~~Our platform provides, what we believe to be, a superior viewer experience, with a broad suite of unique features and personalization ~~tools~~capabilities such as multi-channel viewing capabilities, favorites lists and a dynamic recommendation engine as well as 4K streaming and Cloud DVR offerings.

~~Corporate Information~~Restatement of Financial Statements

~~Our headquarters are located at 1330 Avenue~~In connection with the preparation of the ~~Americas, New York, NY 10019,~~Company’s condensed consolidated interim financial statements as of and for the quarter ended March 31, 2020, the Company identified an error in the accounting for goodwill relating to the Company’s acquisitions of Nexway AG and Facebank AG. In connection with these acquisitions, goodwill was impaired. Upon further evaluation, the Company determined that goodwill amounting to $79.7 million should not have been impaired. Accordingly, the Company should have allocated $51.2 million towards the loss on deconsolidation of Nexway AG during the three months ended March 31, 2020, which would have resulted in a loss on deconsolidation of Nexway AG of $11.9 million. The financial statement misstatements did not impact cash flows from operations, investing, or financing activities in the Company’s consolidated statements of cash flows for any period previously presented.
As a result, we were required to restate certain financial statements in our ~~telephone number is (212) 672-0055. You can access~~Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and our websites, including historical financial information pertaining to fuboTV Pre-Merger, at https://fubo.tv, https://ir.fubo.tv, https://facebankgroup.com and https://ir.facebankgroup.com. Information contained on our websites is not part of this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020.
Seasonality
We generate significantly higher levels of revenue and subscriber additions in the third and fourth quarters of the year. This seasonality is ~~not incorporated~~driven primarily by ~~reference in this Quarterly Report on Form 10-Q.~~sports leagues, specifically the National Football League, which has a shorter partial-year season.

Components of Results of Operations

Revenues, net

~~Subscription~~Subscriptions

~~Subscription revenues~~ Subscriptions consist primarily of subscription plans sold through the Company’s website and third-party app stores.
45
Advertisements

Advertisement ~~revenue consist~~consists primarily of fees charged to advertisers who want to display ads (‘(“impressions”) within the streamed content.
22

Software licenses, net

Software license revenue consists of revenue generated from the sale of software licenses at one of our subsidiaries, Nexway eCommerce Solutions. As a result of the sale of Nexway AG in July 2020, the Company no longer generates revenue from software licenses.

Other

Other revenue consists of a contract to sub-license rights to broadcast certain international sporting events to a third party.

Subscriber Related Expenses

Subscriber related expenses consist primarily of affiliate distribution rights and other distribution costs related to content streaming.

Broadcasting and Transmission

Broadcasting and transmission expenses consist primarily of the cost to acquire a signal, transcode, store, and retransmit it to the subscribers.

Sales and Marketing

Sales and marketing expenses consist primarily of payroll and related costs, benefits, rent and utilities, stock-based compensation, agency costs, advertising campaigns and branding initiatives.

Technology and Development

Technology and development expenses consist primarily of payroll and related costs, benefits, rent and utilities, stock-based compensation, technical services, software expenses, and hosting expenses.

General and Administrative

General and administrative expenses consist primarily of payroll and related costs, benefits, rent and utilities, stock-based compensation, corporate insurance, office expenses, professional fees, as well as travel, meals, and entertainment costs.

Depreciation and amortization

Depreciation and amortization expense includes depreciation of fixed assets and amortization of finite-lived intangible assets.

Other ~~income/~~income (expense)

Other ~~income/~~income (expense) primarily consists of issuance gains/losses and the change in fair value of financial instruments, interest expense and financing costs on our outstanding borrowings ~~unrealized gains/losses on equity method investments,~~ and the loss recorded on the deconsolidation of a subsidiary.
46

Income tax benefit

The ~~Company’s deferred tax liability and~~ income tax benefit ~~relates to our amortizable of finite-lived intangible assets.~~is driven by the change in deferred tax assets and liabilities and resulting change in valuation allowance.
23

Results of Operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in thousands):

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Revenues, net
Subscriptions $ 39,511 $ — $ 39,511 $ —
Advertisements 4,323 — 4,323 $ —
Software licenses, net — — 7,295 $ —
Other 338 — 338 —

Total Revenues $ 44,172 $ — $ 51,467 $ —

Operating expenses:
Subscriber related expenses 53,087 — 53,087 —
Broadcasting and transmission 9,492 — 9,492 —
Sales and marketing 7,577
111
11,256 324
Technology and development 9,551 — 9,551 —
General and administrative 17,338
693
33,862 1,517
Depreciation and amortization 14,417 5,158 19,637 10,316

Total operating expenses 111,462 5,962 136,885 12,157

Operating loss
(67,290
) (5,962 ) (85,418 ) (12,157 )

Other income (expense):
Interest expense and financing costs
(13,325
) (454 ) (15,906 ) (900 )
Loss on deconsolidation of Nexway — — (11,919 ) —
Loss on issuance of notes, bonds and warrants (26,753 ) — (50,806 ) —
Change in fair value of warrant liability 4,966 — 4,600 —
Change in fair value of subsidiary warranty liability 18 1,124
3
3,601
Change in fair value of shares settled liability
(1,485
) —
(1,665
) —
Change in fair value of derivative liability (823 ) 890 (526 ) 1,018
Change in fair value of Panda interests (148 ) — (148 ) —
Unrealized gain on equity method investment 2,614 — 2,614 —
Other expense (1,010 ) — (1,446 ) —

Total other income (expense) (35,946 ) 1,560 (75,199 ) 3,719

Loss before income taxes (103,236 ) (4,402 )
(160,617
) (8,438 )
Income tax benefit 3,481 1,037 4,519 2,206

Net loss $ (99,755 ) $ (3,365 ) $ (156,098 ) $ (6,232 )
~~Subsequent to June 30,~~On August 15, 2019 and September 16, 2019, the Company acquired Facebank AG and Nexway, respectively and on April 1, 2020 the Company acquired fuboTV Pre-Merger. The results of our operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 include the results of operations of ~~those entities~~Facebank AG and ~~also~~Nexway, which were disposed of in July 2020. The results of our operations for the three months ended March 31, 2020 do not include the ~~effects~~results of ~~the deconsolidation~~operations of ~~Nexway as of March 31, 2020.~~fuboTV. Because of this, the results of operations for the three ~~and six months~~ ended ~~June 30, 2020~~March 31, 2021 are not comparable to the results of operations for the three ~~and six~~ months ended ~~June 30, 2019.~~March 31, 2020.
For the Three Months Ended
March 31,
2021 2020
Revenues
Subscriptions $ 107,114 $ -
Advertisements 12,606 -
Other - 7,295
Total revenues 119,720 7,295
Operating expenses
Subscriber related expenses 113,307 -
Broadcasting and transmission 10,551 -
Sales and marketing 22,143 -
Technology and development 11,438 -
General and administrative 18,154 20,203
Depreciation and amortization 9,209 5,220
Total operating expenses 184,802 25,423
Operating loss (65,082 ) (18,128 )

Other income (expense)
Interest expense and financing costs (2,454 ) (2,581 )
Amortization of debt discount (2,512 ) -
Loss on issuance of notes, bonds and warrants - (24,053 )
Loss on deconsolidation of Nexway - (11,919 )
Change in fair value of warrant liabilities (585 ) (366 )
Change in fair value of subsidiary warrant liabilities - (15 )
Change in fair value of shares settled liability - (180 )
Change in fair value of derivative liability - 297
Other income (18 ) (436 )
Total other expense (5,569 ) (39,253 )
Loss before income taxes (70,651 ) (57,381 )
Income tax benefit 465 1,038
Net loss $ (70,186 ) $ (56,343 )

Revenue, net

~~Three Months Ended June 30, 2020 and 2019~~
During the three months ended ~~June 30, 2020,~~March 31, 2021, we recognized revenues of ~~$44.2~~$119.7 million, primarily related to ~~$39.5~~$107.1 million of subscription revenue ~~$4.3~~and $12.6 million of advertising ~~revenue and $0.3 million in other~~ revenue. These revenues were generated entirely by fuboTV post-Merger ~~which occurred on April 1, 2020~~ and there are no comparable results in the prior year. During the three months ended March 31, 2020, we recognized $7.3 million of software license revenue from our subsidiary Nexway, which was sold in July 2020.
4724

~~Six Months Ended June 30, 2020 and 2019~~
During the six months ended June 30, 2020, we recognized revenues of $51.5 million, primarily related to $39.5 million of subscription revenue and $4.3 million of advertising revenue in connection with the second quarter acquisition of fuboTV Pre-Merger. These revenues were generated entirely by fuboTV post-Merger which occurred on April 1, 2020 and there are no comparable results in the prior year. In addition, we generated $7.3 million related to the sale of software licenses from our acquisition of Facebank AG.
Subscriber related expenses

~~Three and Six Months Ended June 30, 2020 and 2019~~
During the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021, we recognized subscriber related expenses of ~~$53.1~~$113.3 million, primarily due to affiliate distribution rights and other distribution costs in connection with the streaming revenue generated from the ~~Merger on April 1, 2020.~~fuboTV business. There are no comparable results in the prior year.

~~There were no subscriber related expenses recognized during the three and six months ended June 30, 2019.~~
Broadcasting and transmission

~~Three and Six Months Ended June 30, 2020 and 2019~~
During the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021, we recognized broadcasting and transmission expenses of ~~$9.5~~$10.6 million primarily related to transmissions of our services in connection with the streaming revenue generated from the ~~Merger on April 1, 2020.~~fuboTV business. There are no comparable results in the prior year.

~~There were no broadcasting and transmission expenses recognized during the three and six months ended June 30, 2019.~~
Sales and marketing

~~Three Months Ended June 30, 2020 and 2019~~
During the three months ended ~~June 30, 2020,~~March 31, 2021, we recognized sales and marketing expenses of ~~$7.6~~$22.1 million as compared to $0.1 million during the three months ended June 30, 2019. The increase in sales and marketing expenses were incurred to acquire new customers to our streaming platform after the Merger on April 1, 2020.
~~Six Months Ended June 30, 2020 and 2019~~
During the six months ended June 30, 2020, we recognized sales and marketing expenses of $11.3 million as compared to $0.3 million during the six months ended June 30, 2019. The increase of $11.0 million is primarily related to ~~the $7.5 million of sales and~~ marketing expenses incurred to acquire new customers to our streaming ~~platform after~~platform. There are no comparable results in the Merger on April 1, 2020. The remaining increase in sales and marketing expenses were related to the costs incurred to acquire new customers of Nexway resulting from our 2019 acquisitions of Facebank AG and Nexway.prior year.

Technology and development

~~Three and Six Months Ended June 30, 2020 and 2019~~
During the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021, we recognized technology and development expenses of ~~$9.6~~$11.4 million ~~in connection with~~primarily related to our streaming platform and the development of ~~our streaming platform after~~enhancements to the ~~Merger on April 1, 2020.~~platform. There are no comparable results in the prior year.

~~There were no technology and development expenses recognized during the three and six months ended June 30, 2019.~~
General and Administrative

~~Three Months Ended June 30, 2020 and 2019~~
During the three months ended ~~June 30, 2020,~~March 31, 2021, general and administrative expenses totaled ~~$17.3~~$18.2 million, compared to ~~$0.7~~$20.2 million for the three months ended ~~June 30, 2019.~~March 31, 2021. The ~~increase~~decrease of ~~$16.6~~$2.0 million was primarily related to ~~$8.4~~a reduction of $9.2 million of ~~incremental general~~expenses related to Nexway, which was sold in July 2020 and ~~administrative~~decrease of $2.5 million of stock-based compensation partially offset by an increase of $6.9 million in expenses ~~as a result of~~related to the acquisition of fuboTV Pre-Merger and ~~$6.8~~a $2.8 million ofincrease in professional ~~services due to additional financing and acquisition activities.~~
48
~~Six Months Ended June 30, 2020 and 2019~~
During the six months ended June 30, 2020, general and administrative expenses totaled $33.9 million, compared to $1.5 million for the six months ended June 30, 2019. The increase of $32.4 million was primarily related to $9.2 million compensation expenses and $6.2 million other general and administrative expenses resulting from our 2019 acquisitions of Facebank AG and Nexway. In addition, we incurred an additional $8.4 million of incremental general and administrative expenses as a result of the acquisition of fuboTV Pre-Merger and $6.8 million of professional services due to additional financing and acquisition activities.fees.

Depreciation and amortization

~~Three Months Ended June 30, 2020 and 2019~~
During the three months ended ~~June 30, 2020,~~March 31, 2021, we recognized depreciation and amortization expenses of ~~$14.4~~$9.2 million compared to $5.2 million during the three months ended ~~June 30, 2019.~~March 31, 2020. The increase of ~~$9.2~~$4.0 million is primarily related to ~~the~~$9.2 million of amortization expenses recognized on the intangible assets acquired as part of the Merger on April 1, 2020, offset by a reduction of ~~$9.1 million.~~
~~Six Months Ended June 30, 2020 and 2019~~
~~During the six months ended June 30, 2020, we recognized depreciation and amortization expenses of $19.6~~$5.2 million ~~compared to $10.3 million during the six months ended June 30, 2019. The increase of $9.3 million is primarily related to $9.1~~ of amortization expense ~~recorded for the~~related to intangible assets ~~acquired~~of FaceBank Pre-Merger that were written off in ~~connection with~~ the ~~Merger on April 1,~~third and fourth quarters of 2020.

Other Income (Expense)

~~Three Months Ended June 30, 2020 and 2019~~
During the three months ended ~~June 30, 2020,~~March 31, 2021, we recognized ~~$35.9~~$5.6 million of other expense, ~~(net),~~ compared to ~~$1.6~~$39.3 million of other ~~income~~expense (net) during the three months ended ~~June 30, 2019.~~March 31, 2020. The ~~$35.9~~decrease of $33.7 million ~~of other expense (net) recognized during the three months ended June 30, 2020~~ was primarily related to a $26.8 million loss on the issuance of warrants and $13.3 million of interest expense on our outstanding borrowings. These expenses were partially offset by a $5.0 million gain in the fair value of warrant liabilities and $2.6 million unrealized gain on our equity method investment in Nexway. For the three months ended June 30, 2019, we recognized $1.6 million of other income (net) primarily related to $2.0 million of gains from the change in fair value of financial instruments, offset by $0.4 million of interest expense on our outstanding borrowings. The increase in other expenses are primarily due to the new financings which resulted in loss on issuances of financial instruments, and additional interest expenses incurred on outstanding borrowings.
~~Six Months Ended June 30, 2020 and 2019~~
During the six months ended June 30, 2020, we recognized $75.2 million of other expense (net), compared to $3.7 million of other income (net) during the six months ended June 30, 2019. The $75.2 million of other expense (net) recognized during the six months ended June 30, 2020 was primarily related to a $50.8$24.1 million loss on issuance of ~~convertible notes, bonds~~stock and warrants ~~a $15.9 million of interest expense on our outstanding borrowings,~~in 2020 and an $11.9 million loss on the deconsolidation of ~~Nexway. These expenses were partially~~Nexway offset by a $4.6 million gain in the fair value of warrant liabilities and $2.6 million unrealized gain on our equity method investment in Nexway. For the six months ended June 30, 2019, we recognized $3.7 million of other income (net) related to a $3.6 million gain in fair value of subsidiary warrant liability and $1.0 million gain in the fair value of derivative liabilities, partially offset by $0.9 million of interest expense. Thean increase in ~~other expenses are primarily due new financings which resulted in loss on issuances~~amortization of ~~financial instruments, additional interest expenses incurred on outstanding borrowings and the loss on the deconsolidation~~debt discount of ~~Nexway.~~$2.5 million.

25
Income tax benefit

~~Three Months Ended June 30, 2020 and 2019~~
During the three months ended ~~June 30, 2020,~~March 31, 2021, we recognized an income tax benefit of ~~$3.5~~$0.5 million, compared to $1.0 million during the three months ended ~~June 30, 2019.~~March 31, 2020. The ~~increase~~decrease in the income tax ~~benefits~~benefit relates to tax impacts associated with the acquisition of fuboTV Pre-Merger as its tax attributes and operating results were not included in the prior quarter results.
Key Metrics & Non-GAAP Measures
Certain measures used in this Quarterly Report on Form 10-Q, including Average Revenue Per User (“ARPU”), Average Cost Per User (“ACPU”) and Adjusted Contribution Margin (“ACM”) are non-GAAP financial measures. We believe ARPU, ACPU and Adjusted Contribution Margin are useful financial measures for ~~the three months ended June 30, 2020 was~~investors as they are supplemental measures used by management in evaluating our core operating performance. Our non-GAAP financial measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP. There are a number of limitations related to the ~~amortization~~use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, these non-GAAP financial measures are not a substitute for GAAP revenue. Second, these non-GAAP financial measures may not provide information directly comparable to measures provided by other companies in our industry, as those other companies may calculate their non-GAAP financial measures differently.
The following tables reconcile the ~~deferred tax liability established in connection with~~most directly comparable GAAP financial measure to the ~~Merger~~non-GAAP financial measure.
Note that unless otherwise stated, 2020 metrics below represent pro-forma fuboTV Pre-Merger.
Paid Subscribers
We believe the number of paid subscribers is a relevant measure to gauge the size of our user base. Paid subscribers are total subscribers that have completed registration with fuboTV, ~~Pre-Merger~~have activated a payment method (only reflects one paying user per plan), from which fuboTV has collected payment in the month ending the relevant period. Users who are on ~~April 1, 2020.~~a free (trial) period are not included in this metric.

Content Hours
We believe the number of Content Hours streamed on our platform is a relevant measure to gauge user engagement. Content Hours is defined as the sum of total hours of content watched on the fuboTV platform for a given period.
Non-GAAP Monthly Average Revenue Per User (“ARPU”)
We believe Non-GAAP Monthly Average Revenue Per User (“ARPU”) is a relevant measure to gauge the revenue received per subscriber on a monthly basis. ARPU is defined as total subscriber revenue collected in the period, also known as Platform Bookings (subscriber and advertising revenues excluding other revenues) divided by the average daily paid subscribers in such period divided by the number of months in the period.
Non-GAAP Monthly Average Cost Per User (“ACPU”)
We believe Non-GAAP Monthly Average Cost Per User (“ACPU”) is a relevant measure to gauge our variable expenses per subscriber. ACPU reflects Variable COGS per user, defined as subscriber related expenses less minimum guarantees expensed, payment processing for deferred revenue, IAB fees for deferred revenue and other subscriber related expenses in a given period, divided by the average daily subscribers in the period, divided by the number of months in the period.
Non-GAAP Adjusted Contribution Margin (“ACM”)
We believe Non-GAAP Adjusted Contribution Margin (“ACM”) is a relevant metric to gauge our per-subscriber profitability. ACM is calculated by subtracting ACPU from ARPU and dividing the result by ARPU.
4926

~~Six Months Ended June 30, 2020 and 2019~~Reconciliation of Certain GAAP to Non-GAAP Metrics

~~During the six months ended June 30, 2020, we recognized an income tax benefit~~Reconciliation of ~~$4.5 million, compared~~Revenue to ~~$2.2 million during the six months ended June 30, 2019. The increase for the six months ended June 30, 2020 was related~~Non-GAAP Platform Bookings and Reconciliation of Subscriber Related Expenses to ~~the amortization of the deferred tax liability established in connection with the Merger with fuboTV Pre-Merger on April 1, 2020.~~Non-GAAP Variable COGS and Adjusted Contribution Margin (in thousands except average subscriber and average per user amounts)
Three Months Ended
March 31, 2021 March 31, 2020
Pro-forma Combined fuboTV Pre-Merger and Facebank Pre-Merger excluding Facebank AG and Nexway AG
Revenue (GAAP) $ 119,720 $ 51,047
Add (subtract):

Other revenue - (537 )
Prior period subscriber deferred revenue (17,344 ) (9,377 )
Current period subscriber deferred revenue 20,118 8,066
Non-GAAP Platform Bookings 122,494 49,199
Divide:
Average subscribers 590,961 302,788
Months in period 3 3
Non-GAAP Monthly Average Revenue per User (Monthly ARPU) $ 69.09 $ 54.16

Subscriber Related Expenses (GAAP) $ 113,307 $ 58,000
Add (Subtract):
Payment processing for deferred revenue (current period) (64 ) 161
In-app billing Fees for deferred revenue (current period) 6 41
Content credits 4,843 -
Minimum guarantees expensed (405 ) (9,567 )
Payment processing for deferred revenue (prior period) 53 (206 )
In-app billing fees for deferred revenue (prior period) 13 (53 )
Other subscriber related expenses (1,691 ) (629 )
Non-GAAP Variable COGS 116,062 47,747
Divide:
Average subscribers 590,961 302,788
Months in period 3 3
Non-GAAP Monthly Average Cost per User (Monthly ACPU) $ 65.47 $ 52.56

Non-GAAP Monthly Average Revenue per User (Monthly ARPU)

69.09

54.16

Subtract:
Non-GAAP Monthly Average Cost per User (Monthly ACPU)

65.47

52.56
Divide:
Non-GAAP Monthly Average Revenue per user (Monthly ARPU)
69.09

54.16

Non-GAAP Adjusted Contribution Margin 5.3 % 3.0 %
Liquidity and ~~Going Concern~~Capital Resources

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that ~~the Company~~we will continue as a going concern, which contemplates the continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

~~The Company~~Our primary sources of cash are receipts from subscribers and advertising revenue as well as proceeds from equity and debt financings. Our primary uses of cash are content and programming license fees, operating expenses, including payroll-related, marketing, technology and professional fees, and expenses related to the launch and operations of our wagering business. We successfully raised $389.9 million, net of offering expenses, through the sale of 3.25% senior convertible notes in February 2021. As of March 31, 2021, we had cash ~~and~~of $459.5 million. We believe our existing cash ~~equivalents of $7.4 million, a working capital deficiency of $258.3 million and an accumulated deficit of $210.5 million as at June 30, 2020. The Company incurred a $156.1 million net loss for~~will provide us with the six months ended June 30, 2020. The Company expects to continue incurring losses in the foreseeable future and will need to raise additional capital to fund its operations, meet its obligations in the ordinary course of business and execute its longer-term business plan. These factors raise substantial doubt about the Company’s abilitynecessary liquidity to continue as a going concern ~~within one year from~~for at least the date that those financial statements are issued. The condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.next twelve months.

~~The Company’s~~Our future capital requirements and the adequacy of ~~its~~our available funds will depend on many factors, including ~~its~~our ability to successfully attract and retain subscribers, develop new technologies that can compete in a rapidly changing market with many competitors and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement ~~its~~our product and service offerings.

Management believes that the Company has access to capital resources through potential issuances of debt and equity securities. The ability of the Company to continue as a going concern is dependent on the Company’s ability to execute its strategy and raise additional funds. Management is currently seeking additional funds, primarily through the issuance of equity securities for cash, to operate its business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in the case of an equity financing. In addition to the foregoing, based on ~~the Company’s~~our current assessment, ~~the Company does~~we do not expect any material impact on ~~its~~our long-term development timeline and ~~its~~our liquidity due to the worldwide ~~spread of a novel strain of coronavirus~~COVID-19 pandemic (“~~COVID 19”~~COVID-19”). However, ~~the Company is~~we are continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented to combat the ~~virus~~pandemic throughout the world. Given the daily evolution of the COVID-19 outbreak and the global response to curb its spread, COVID-19 may affect ~~the Company’s~~our results of operations, financial condition, or liquidity.See Note 10 for further discussion regarding our outstanding indebtedness.

Cash Flows (in thousands)

Six Months Ended June 30, Three Months Ended March 31,
2020 2019 2021 2020
Net cash used in operating activities (42,314 ) (1,548 ) (53,867 ) (7,478 )
Net cash used in investing activities
(697
) (374 ) (2,379 ) (2,421 )
Net cash provided by financing activities
44,073
2,042 384,960 2,356
Net increase in cash and cash equivalents
1,062
120
Net increase (decrease) in cash, cash equivalents and restricted cash 328,714 (7,543 )

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Operating Activities

For the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, net cash used in operating activities was ~~$42.3~~$53.9 million, which consisted of our net loss of ~~$156.1~~$70.2 million, adjusted for non-cash movements of ~~$102.0~~$21.6 million. The non-cash movements included ~~$50.8 million of losses on issuance of convertible notes, bonds and warrants, $19.6~~$9.2 million of depreciation and amortization expenses primarily related to intangible assets, ~~$17.8~~$9.4 million of stock-based compensation, ~~$11.0~~$2.5 million of amortization of debt discount and $0.6 million of change in fair value warrant liabilities partially offset by $0.5 million of deferred income tax benefit. Changes in operating assets and liabilities resulted in cash outflows of approximately $5.3 million, primarily due to an increase in accounts receivable and prepaid expenses and other current and long-term assts of $2.9 million, a net decrease in accounts payable, accrued expenses and other current and long-term liabilities of $5.1 million due to timing of payments and an increase in deferred revenue of $2.8 million.
For the three months ended March 31, 2020, net cash used in operating activities was $7.5 million, which consisted of our net loss of $56.3 million, adjusted for non-cash movements of $47.9 million. The non-cash movements included $24.1 million of loss on issuance of common stock and warrants, $9.1 million of stock-based compensation, $8.6 million loss on the deconsolidation of Nexway, $5.2 million of depreciation and amortization expenses primarily related to intangible assets and $1.7 million of amortization of debt discounts, ~~$8.6 million loss on deconsolidation of Nexway~~ partially offset by ~~$4.6 million of change in fair value of warrant liability and $4.5~~$1.0 million of deferred income tax benefits. Changes in operating assets and liabilities resulted in cash inflows of approximately ~~$11.8~~$0.9 million, primarily ~~due to~~consisted of a net increase in accounts payable and accrued expenses and other current and long-term liabilities of ~~$11.7 million due to timing of payments.~~
For the six months ended June 30, 2019, net cash used in operating activities was $1.5 million, which consisted of our net loss of $6.2 million, adjusted for non-cash movements of $4.3 million. The non-cash movements included $10.3 million of depreciation and amortization expenses primarily related to intangible assets, $0.5 million of amortization of debt discounts and $0.3 million of accrued interest expense related to our notes payable, partially offset by $4.6 million related to the change in fair value of our financial instruments and $2.2 million of deferred income tax benefits. Changes in operating assets and liabilities resulted in cash inflows of approximately $0.4 million, primarily consisted of increases in accounts payable and accrued expenses of $0.5$0.9 million due to timing of payments.

Investing Activities

For the ~~six~~three months ended ~~June 30,~~March 31, 2021, net cash used in investing activities was $2.4 million, which consisted of a $1.7 million for merger and acquisition activity and $0.6 million of capital expenditures.
For the three months ended March 31, 2020, net cash used in investing activities was ~~$0.7~~$2.4 million ~~which consisted~~consisting solely of ~~a $10.0 million~~an advance made to fuboTV ~~Pre-Merger, offset by net cash paid of $9.4 million for the acquisition of fuboTV Pre-Merger and $0.1 million of capital expenditures.~~
For the six months ended June 30, 2019, net cash used in investing activities was $0.4 million, which primarily consisted of our $1.0 million payment for our investment in Panda Productions (HK) Limited (“Panda”), offset by $0.7 million received from accredited investors for an interest in Panda.Pre-Merger.

Financing Activities

For the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, net cash provided by financing activities was ~~$44.1~~$385.0 million. The net cash provided is primarily related to ~~$28.9 million of proceeds received from the sale of our common stock, $23.6 million of proceeds received in connection with short-term and long-term borrowings and $3.0~~$389.9 million of proceeds received from the issuance of senior convertible ~~notes.~~notes, and $1.6 million of proceeds received from the exercise of stock options and warrants. These proceeds were ~~partially~~ offset by repayments of ~~$7.5~~$6.6 million in connection with the Note Purchase Agreement, $1.3 million in connection with our loan with AMC Networks Ventures, LLC, $1.1 million in connection with convertible notes and $0.9 million in connection with our Revenue Participation Agreement.of outstanding debt.

For the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, net cash provided by financing activities was ~~$2.0~~$2.4 million. The net cash provided is primarily related to ~~$2.2~~$2.3 million of proceeds received from the sale of our common stock and warrants and ~~0.4~~$0.9 million from the issuance of ~~proceeds from related parties. These proceeds were~~convertible notes partially offset by ~~repayments of~~ $0.5 million repayment of ~~our~~ convertible ~~notes.~~notes and the redemption of Series D preferred stock of $0.3 million.

Off-Balance Sheet Arrangements

As of ~~June 30, 2020,~~March 31, 2021, there were no off-balance sheet arrangements.

Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of ~~America.~~America (“GAAP” or “U.S. GAAP”). The preparation of these condensed consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include, ~~revenue recognition,~~but are not limited to, allocating the fair value of purchase consideration issued in business acquisitions, ~~investments, depreciable lives~~recoverability of ~~property and equipment, analysis of impairments of recorded~~ goodwill and ~~other long-term~~intangible assets, ~~accruals for potential liabilities, assumptions made in valuing derivative liabilities, assumptions made when estimating the fair value~~valuation of warrants, convertible notes, and equity instruments ~~issued in share-based payment arrangements~~ and ~~deferred~~accounting for income taxes, ~~and related~~including the valuation ~~allowance.~~allowance on deferred tax assets.
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There have been no material changes to our critical accounting policies from those disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Annual Report.

~~Revenue from Customers~~
~~We recognize revenue from contracts with customers under ASC 606,~~ ~~Revenue from Contracts with Customers~~ ~~(the~~
“revenue standard”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service.
~~The following five steps are applied to achieve that core principle:~~
~~Step 1: Identify the contract with the customer~~
~~Step 2: Identify the performance obligations in the contract~~
~~Step 3: Determine the transaction price~~
~~Step 4: Allocate the transaction price to the performance obligations in the contract~~
~~Step 5: Recognize revenue when the company satisfies a performance obligation~~
Subscription revenue is recognized at a point in time when we satisfy a performance obligation by transferring control of the promised services to the customers. Advertising revenue is recognized at a point in time when we satisfy a performance obligation by transferring control of the promised services to the advertiser, which generally is when the advertisement has been displayed.
Recently Issued Accounting Pronouncements

See Note 3, “Summary of Significant Accounting Policies” in the accompanying unaudited condensed consolidated financial statements for a discussion of ~~recent~~recently issued accounting policies.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision of and with the participation of our management, including the Company’s Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~June 30, 2020.~~March 31, 2021. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2021, because of the material weaknesses in our internal control over financial reporting described below and in our amended Annual Report on Form ~~10-K/A for the year ended December 31, 2019, as~~10-K filed with the SEC on ~~August 10, 2020,~~March 29, 2021, our disclosure controls and procedures were not effective.
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~~Changes in Internal Control over Financial Reporting~~Material Weaknesses
For the fiscal year ended December 31, ~~2019,~~2020, we have identified material weaknesses in our internal control over financial ~~reporting.~~ reporting with respect to the accounting for non-routine transactions, including business combinations as described below:

● The Company did not have appropriately designed internal controls in place at the time the Merger was consummated on April 1, 2020 with respect to the accounting for the business combination and the allocation of consideration to the acquired assets and assumed liabilities, including deferred income taxes.
● The Company’s internal controls over the review of accounting considerations for non-routine transactions and events was not appropriately designed with respect to the timing and consistency of performance.
~~Subsequent~~
Notwithstanding such material weaknesses in internal control over financial reporting, our management concluded that our consolidated financial statements in this Quarterly Report on Form 10-Q present fairly, in all material respects, the company’s financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S. GAAP.
Management’s Remediation Plan
In February 2021, the Company consummated the acquisition of a sports betting and interactive gaming company. Management took steps to address the internal control deficiencies that contributed to the ~~Merger,~~foregoing material weaknesses, including:
● Extensive financial and legal due diligence performed by various members of the Company and outside legal counsel. Board of Directors reviewed the strategic business case and formally approved the transaction;
● Key model assumptions were supported by detailed documentation of the reasonableness of the assumptions used;
● Evaluated the competency of the valuation specialist engaged to determine the fair value of specific accounts on the opening balance sheet;
● Existence and completeness of assets acquired and liabilities assumed as of the closing date were determined through specific procedures;
● Comprehensive technical accounting memo was prepared that documents the applicable accounting for business combinations; and
● The income tax impact of the acquisition was assessed and documented.
In addition, during 2019, we identified additional material weaknesses in our internal control over financial reporting relating to the ~~Company has taken~~inappropriate application of U.S. GAAP. During 2020, management took steps to address the internal control deficiencies that contributed to the material weaknesses, including:

● ~~transitioning~~Transitioned responsibility over the accounting function to the finance personnel of fuboTV Pre-Merger, including individuals with prior experience working for finance departments of public companies;

● ~~hiring~~Hired additional experienced finance and accounting personnel with technical accounting experience, supplemented by third-party resources;

● ~~documenting~~Documented and formally ~~assessing~~assessed our accounting and financial reporting policies and procedures, and ~~implementing~~implemented segregation of duties in key functions;

● ~~assessing~~Assessed significant accounting transactions and other technical accounting and financial reporting issues, ~~preparing~~prepared accounting memoranda addressing these issues and ~~maintaining~~maintain these memoranda in our corporate records timely;

● ~~improving~~Improved the compilation processes, documentation, and monitoring of our critical accounting estimates; and

● ~~implementing~~Implemented processes for creating an effective and timely close process.
●
Engaged a third-party provider to perform internal audit services, including assessing and improving our internal controls for compliance with the Sarbanes-Oxley Act.
We continue to implement the remediation plans for the aforementioned material weaknesses, including:
● We will continue to hire additional accounting personnel with appropriate GAAP technical accounting expertise, as necessary;
● We designed additional controls around identification, documentation, and application of technical accounting guidance with particular emphasis on complex and non-routine transactions. These controls include the implementation of additional supervision and review activities by qualified personnel, and the adoption of additional policies and procedures related to accounting and financial reporting;
● We implemented specific procedures in the review of tax accounting, designed to enhance our income tax controls; and
● We continue to work with the third-party provider to strengthen our internal controls for compliance with the Sarbanes-Oxley Act.

~~The implementation of these~~We are committed to making further progress in our remediation efforts during 2021; however, if our remedial measures ~~is ongoing and will require validation and testing of~~are insufficient to address the ~~design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. In addition, The COVID-19 pandemic could negatively affect~~material weaknesses, or if one or more additional material weaknesses in our internal controls over financial reporting ~~including our ongoing process of remediating the material weakness in our disclosure control and procedures, as a portion of our workforce is required to work from home and standard processes~~ are ~~disrupted. New processes, procedures, and controls which may increase the overall inherent risk in the business,~~discovered, we may be required to ~~ensure an effective control environment.~~ take additional remedial measures from our plan as disclosed above.

Changes in Internal Control over Financial Reporting
Except as described above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are, and may in the future, be involved in various legal proceedings arising from the normal course of business activities. Although the results of litigation and claims cannot be predicted with certainty, currently, ~~in our opinion,~~the Company believes that the likelihood of any material adverse impact on ~~our~~the Company’s consolidated results of operations, cash flows or our financial position for any such litigation or claims is ~~deemed to be~~ remote. Regardless of the outcome, litigation can have an adverse impact on usthe Company because of ~~defense~~the costs to defend lawsuits, diversion of management resources and other factors.

~~Scott Meide vs. Pulse Evolution Corporation et. al.~~
On August 27, 2018, plaintiff Scott Meide filed a complaint in the United States District Court for the Middle District of Florida, Jacksonville Division against PEC, now one of our majority-owned subsidiaries, naming its former officers, among others,Said-Ibrahim v. fuboTV Inc., David Gandler, Edgar M. Bronfman Jr., & Simone Nardi, Case No. 21-cv-01412 (S.D.N.Y) & Lee v. fuboTV, Inc., David Gandler, Edgar M. Bronfman Jr., & Simone Nardi, Case No. 21-cv-01641 (S.D.N.Y.) (consolidated as defendants. The plaintiff’s claims are based on three investments: (i) the purchase of 750,000 restricted shares from PEC for the amount of $300,000 on July 18, 2014; (ii) the purchase of 800,000 shares of PEC from defendant Gregory Centineo in July 2015; and (iii) an investment in Evolution AI Corporation in 2018 in the amount of $75,000. Until recently, Mr. Meide was proceeding ~~pro se~~In re fuboTV Inc. Securities Litigation, No. 21-cv-01412 (S.D.N.Y.)). Although he has pled multiple claims, the crux of Mr. Meide’s claim, at least as pled in the Second Amended Complaint, which is the operative complaint, is that he was fraudulently induced into making all three investments. The complaint contains a claim for federal securities fraud which forms the only basis for federal jurisdiction. All of the defendants have moved to dismiss the Second Amended Complaint on various grounds, including, but not limited to, the ground that the plaintiff Mr. Meide lacks standing to bring the claims since the purchases of securities were made by Jacksonville Injury Center, LLC, rather than Mr. Meide in his individual capacity.

On ~~June 29,~~February 17, 2021, putative shareholders Wafa Said-Ibrahim and Adhid Ibrahim filed a class action lawsuit against the Company, co-founder and CEO David Gandler, Executive Chairman Edgar M. Bronfman Jr., and CFO Simone Nardi (collectively, the “Class Action Defendants”). Plaintiffs allege that Class Action Defendants violated federal securities laws by disseminating false and misleading statements regarding the Company’s financial health and operating condition, including the Company’s ability to grow subscription levels, future profitability, seasonality factors, cost escalations, ability to generate advertising revenue, valuation, and prospects of entering the online sports wagering market. The Plaintiffs allege that Class Action Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, as well as Section 20(a) of the Exchange Act, and seek damages and other relief.
Plaintiffs seek to pursue this claim on behalf of themselves as well as all other persons who purchased or otherwise acquired Company securities publicly traded on the NYSE between March 23, 2020 ~~an attorney entered an appearance for Mr. Meide~~ and January 4, 2021, inclusive, and who were allegedly damaged thereby. On February 24, 2021, putative shareholder Steven Lee filed ~~(i)~~a nearly identical class action lawsuit against the same Defendants.
On April 19, 2021, putative shareholder Nordine Aamchoune filed a motion to ~~substitute Jacksonville Injury Center, LLC~~consolidate the two lawsuits and be appointed lead plaintiff. On April 29, 2021, pursuant to the Private Securities Litigation Reform Act of 1995, the Court consolidated the two lawsuits and appointed Mr. Aamchoune as ~~the plaintiff and (ii) a motion for leave to~~lead plaintiff. Mr. Aamchoune will now file an amended, consolidated complaint, and the Class Action Defendants will file a motion to dismiss the complaint. ~~All~~
Pursuant to the Private Securities Litigation Reform Act of 1995, any member of the ~~defendants have filed oppositions~~purported class who wishes to serve as lead plaintiff must file a motion by April 19, 2021. The court likely also will consolidate the two lawsuits (and any other future lawsuits that assert substantially the same claims). After the court decides a consolidation motion, he will appoint a lead plaintiff and lead counsel as soon as practicable thereafter. The lead plaintiff then will file an amended, consolidated complaint, and Defendants will file a motion to ~~substitute and motion for leave to amend.~~ dismiss the complaint.
The ~~proposed new complaint continues to allege fraud, but also purports to plead a shareholder derivative lawsuit~~Company believes the claims alleged in connection with a claim of an improper transfer of assets to the Company. The new proposed complaint also names the Company as a new defendant. Discovery in the matter has been stayed since July of 2019. The matter is set for trial in September of 2020, but we do not expect the trial to go forward given the pending motions to dismiss and stay of discovery. We believe the lawsuit has noboth lawsuits are without merit and ~~we intend~~intends to vigorously defend ~~our position.~~these litigations.
Rosenfeld v. Edgar Bronfman Jr., Henry Ahn, Ignacio Figueras, Daniel Leff, Laura Onopchenko, David Gandler, Par-Jorgen Parson, & Simone Nardi, Case No. 21-cv-01953 (S.D.N.Y.)
On March 5, 2021, putative shareholder Robert Rosenfeld filed a derivative lawsuit against the Company and certain Company directors and officers, including Edgar Bronfman Jr., Henry Ahn, Ignacio Figueras, Daniel Leff, Laura Onopchenko, David Gandler, Par-Jorgen Parson, and Simone Nardi (collectively, the “Derivative Defendants”). Plaintiff’s complaint closely tracks the allegations in the Securities Class Action and alleges that the Derivative Defendants violated Sections 10(b) and 21D of the Securities Exchange Act of 1934, breached their fiduciary duties, and committed corporate waste.
Plaintiff seeks to prosecute the action on behalf of the Company, and seeks, among other relief, an order directing Derivative Defendants to take all necessary actions to reform and improve the Company’s corporate governance, risk management, and internal operating procedures to comply with applicable laws, and an award of damages to the Company for the harm suffered as a result of the alleged wrongful conduct.
The Derivative Defendants filed a motion to dismiss the complaint on April 21, 2021. Plaintiff’s opposition is due on May 12, 2021, and the Derivative Defendants’ reply is due on May 19, 2021.
The Company believes these claims are without merit and intends to vigorously defend this litigation.

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Andrew Kriss and Eric Lerner vs. FaceBank Group, Inc. et. al. (Index No. 605474/20 Supreme Court of the State of New York.

On June 8, 2020, Andrew Kriss and Eric Lerner ~~(the “Plaintiffs”)~~ filed a Summons with Notice in the Supreme Court of the State of New York, Nassau County naming as defendants ~~FaceBank Group, Inc.,~~the Company, PEC, John Textor and Frank Patterson, among ~~others (Index No. 605474/20). The Notice lists~~others. On November 12, 2020, plaintiffs filed a Complaint, which asserts claims for breach of express contract and implied duties, fraud ~~aiding and abetting fraud, fraud~~ in the inducement, ~~fraudulent misrepresentation, fraudulent concealment, fraudulent conveyance,~~ unjust enrichment, ~~and~~conversion, declaratory relief, fraud, and ~~states that the~~fraudulent conveyance. The claims arise from an alleged relationship between Plaintiffs and defendant PEC. Plaintiffs seek monetary damages in an amount to be proven at trial, but not less than six million dollars ($6,000,000). The Company believes the claims are without merit and intends to vigorously defend this litigation and on ~~the breach of contract claim with interest from the date of the alleged breach on September 9, 2014. As of August 13, 2020,~~January 19, 2021, the Company ~~had not~~filed a motion to dismiss all claims asserted against it. That motion has been ~~served.~~fully submitted and is pending resolution by the court.

Item 1A. Risk Factors

On April 1, 2020, we consummated the acquisition of fuboTV Inc., a Delaware corporation by the merger of fuboTV Acquisition Corp., our wholly-owned subsidiary, with and into fuboTV Inc., a Delaware corporation which we refer to as the “Merger.” In this Item 1A, unless the context otherwise requires, “we,” “us,” “our,” and the “Company” refers to the combined company post-Merger – fuboTV Inc., or fuboTV, and its subsidiaries, including fuboTV Sub. “FaceBank Pre-Merger” refers to FaceBank Group, Inc. ~~prior to the Merger~~ and its subsidiaries prior to ~~the closing of~~ the Merger and “fuboTV Pre-Merger” refers to fuboTV Inc., a ~~Delaware~~Florida corporation and its subsidiaries prior to the Merger.
You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our business, financial condition, results of operations, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. If any of the risks actually occur, our business, financial condition, results of operations, and prospects could be adversely affected. In that event, the market price of our common stock could decline, and you could lose part or all of your investment.
This Quarterly Report also contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below.
Risk Factors Summary
Material risks that may affect our business, operating results and financial condition include, but are not limited to, the following:
● Our actual operating results may differ significantly from our guidance.
● We may require additional capital to meet our financial obligations and support planned business growth, and this capital might not be available on acceptable terms or at all.
● We have incurred operating losses in the past, expect to incur operating losses in the future and may never achieve or maintain profitability.
● Our revenue and gross profit are subject to seasonality, and if subscriber behavior during certain seasons falls below our expectations, our business may be harmed.
● Our operating results may fluctuate, which makes our results difficult to predict.
● If our efforts to attract and retain subscribers are not successful, our business will be adversely affected. Our agreements with distribution partners contain parity obligations which limit our ability to pursue unique partnerships.
● If content providers refuse to license streaming content or other rights upon terms acceptable to us, our business could be adversely affected.
● Our content providers impose a number of restrictions on how we distribute and market our products and services, which can adversely affect our business.
● We rely upon Google Cloud Platform and Amazon Web Services to operate certain aspects of our service, and any disruption of or interference with our use of Google Cloud Platform and/or Amazon Web Services would impact our operations and our business would be adversely impacted.
● If we fail to comply with the reporting obligations of the Exchange Act, our business, financial condition, and results of operations, and investors’ confidence in us, could be materially and adversely affected.
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● Our key metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may seriously harm and negatively affect our reputation and our business.
● TV streaming is highly competitive and many companies, including large technology and entertainment companies, TV brands, and service operators, are actively focusing on this industry. If we fail to differentiate ourselves and compete successfully with these companies, it will be difficult for us to attract or retain subscribers and our business will be harmed.
● The gaming industry is heavily regulated and our failure to obtain or maintain applicable licensure or approvals, or otherwise comply with applicable requirements, could be disruptive to our business and could adversely affect our operations.
● Our products and services related to sports betting will cause our business to become subject to a variety of related U.S. and foreign laws, many of which are unsettled and still developing, and which could subject us to claims or otherwise harm our business. The violation of any such laws, any adverse change in any such laws or their interpretation, or the regulatory climate applicable to these contemplated products and services, or changes in tax rules and regulations or interpretation thereof related to these contemplated products and services, could adversely impact our ability to operate our business as we seek to operate in the future, and could have a material adverse effect on our financial condition and results of operations.
● Our anticipated participation in the sports betting industry may expose us to risks to which we have not previously been exposed, including risks related to trading, liability management, pricing risk, payment processing, palpable errors, and reliance on third-party sports data providers for real-time and accurate data for sporting events, among others. We may experience lower than expected profitability and potentially significant losses as a result of a failure to determine accurately the odds in relation to any particular event and/or any failure of its sports risk management processes.
● If the technology we use in operating our business fails, is unavailable, or does not operate to expectations, our business and results of operation could be adversely impacted.
● Our shareholders will be subject to extensive governmental oversight, and if a shareholder is found unsuitable by a gaming authority, that shareholder may not be able to beneficially own, directly or indirectly, certain of our securities.
● If government regulations relating to the Internet or other areas of our business change, we may need to alter the manner in which we conduct our business and we may incur greater operating expenses.
● We are subject to a number of legal requirements and other obligations regarding privacy, security, and data protection, and any actual or perceived failure to comply with these requirements or obligations could have an adverse effect on our reputation, business, financial condition and operating results. Any significant interruptions, delays or discontinuations in service or disruptions in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks, could result in a loss or degradation of service, unauthorized disclosure of data, including subscriber and corporate information, or theft of intellectual property, including digital content assets, which could adversely impact our business.
● We are subject to taxation-related risks in multiple jurisdictions.
● We could be subject to claims or have liability based on defects with respect to certain historical corporate transactions that were not properly authorized or documented.
● Legal proceedings could cause us to incur unforeseen expenses and could occupy a significant amount of our management’s time and attention.
● The impact of worldwide economic conditions may adversely affect our business, operating results, and financial condition.
Risks Related to Our Financial Position and Capital Needs

We have incurred operating losses in the past, expect to incur operating losses in the future and may never achieve or maintain profitability.
We have incurred losses since inception. Our net loss for the three months ended March 31, 2021 was $70.2 million. If our revenue and gross profit do not grow at a greater rate than our operating expenses, we will not be able to achieve and maintain profitability. A number of our operating expenses, including expenses related to streaming content obligations, are fixed. If we are not able to either reduce these fixed obligations or other expenses or maintain or grow our revenue, our near-term operating losses may increase. Additionally, we may encounter unforeseen operating or legal expenses, difficulties, complications, delays and other factors that may result in losses in future periods. If our expenses exceed our revenue, we may never achieve or maintain profitability and our business may be harmed.

~~Our auditors have indicated that there is a substantial doubt about our ability to continue as a going concern.~~
To date, we have not been profitable and have incurred significant losses and cash flow deficits, and we anticipate that we will continue to report losses and negative cash flow. As a result of these net losses and cash flow deficits and other factors, our management has determined that there is a substantial doubt about our ability to continue as a going concern over the next twelve months.
Additionally, both FaceBank Pre-Merger’s current and former independent registered public accountants issued audit opinions – FaceBank Pre-Merger’s current accountants with respect to FaceBank Pre-Merger’s consolidated financial statements for the year ended December 31, 2019, and FaceBank Pre-Merger’s former firm with respect to FaceBank Pre-Merger’s consolidated financial statements for the year ended December 31, 2018 – indicating that there is substantial doubt about FaceBank Pre-Merger’s ability to continue as a going concern. FaceBank Pre-Merger’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Additionally, fuboTV Pre-Merger’s accountants with respect to fuboTV Pre-Merger’s consolidated financial statements for the year ended December 31, 2019 indicated there was substantial doubt about fuboTV Pre-Merger’s ability to continue as a going concern.
The reaction of investors to the inclusion of a going concern statement by FaceBank Pre-Merger’s independent registered public accountants and our management’s determination that we may be unable to continue as a going concern could materially adversely affect the price of our common stock. Our ability to continue as a going concern is dependent upon generating sufficient cash flow from operations and obtaining additional capital and financing. If our ability to generate cash flow from operations is delayed or reduced, including as a result of the effects of the COVID-19 pandemic, and if we are unable to raise additional funding from other sources, we may be unable to continue in business.
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We ~~will~~may require additional capital to meet our financial obligations and support planned business growth, and this capital might not be available on acceptable terms or at all.
We intend to continue to make significant investments to support planned business growth and may require additional funds to respond to business challenges, including the need to enhance our platform, improve our operating infrastructure or acquire complementary businesses, personnel and technologies. Accordingly, we ~~will~~may need to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our then existing shareholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing we secure could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we were to violate the restrictive covenants, we could incur penalties, increased expenses and an acceleration of the payment terms of our outstanding debt, which could in turn harm our business.

We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be harmed.
~~The restatement of our previously issued financial statements could expose us to risks that could materially adversely affect our financial position, results of operations and cash flows.~~
We have restated our previously-issued financial statements for the year ended December 31, 2019 and quarter ended March 31, 2020. These restatements, and the remediation efforts we intend to undertake could expose us to a number of risks that could materially adversely affect our financial position, results of operations and cash flows.
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TV streaming is highly competitive and many companies, including large technology companies, TV brands, and service operators, are actively focusing on this industry. If we fail to differentiate ourselves and compete successfully with these companies, it will be difficult for us to attract subscribers and our business will be harmed.
TV streaming is increasingly competitive and global. Our success depends in part on attracting and retaining subscribers on, and effective monetization of, our platform. To attract and retain subscribers, we need to be able to respond efficiently to changes in consumer tastes and preferences and continue to increase the type and number of content offerings. Effective monetization requires us to continue to update the features and functionality of our streaming platform for subscribers and advertisers.
Companies such as Netflix, Amazon.com, Dish Network, Apple Inc. and Google Inc. offer TV streaming products that compete with our platform. In many cases, these competitors have the financial resources to subsidize the cost of their streaming devices in order to promote their other products and services making it harder for us to acquire new subscribers and increase hours streamed. Some of these companies also promote their brands through traditional forms of advertising, such as TV commercials, as well as Internet advertising or website product placement, and have greater resources than us to devote to such efforts.
In addition, many TV brands, such as LG, Samsung Electronics Co., Ltd. and VIZIO, Inc., offer their own TV streaming solutions within their TVs. Other devices, such as Microsoft’s Xbox and Sony’s PlayStation game consoles and many DVD and Blu-ray players, also incorporate TV streaming functionality. Similarly, some service operators, such as Comcast and Cablevision, offer TV streaming applications as part of their cable service plans and can leverage their existing consumer bases, installation networks, broadband delivery networks and name recognition to gain traction in the TV streaming market.
We expect competition in TV streaming from the large technology companies and service operators described above, as well as new and growing companies, to increase in the future. This increased competition could result in pricing pressure, lower revenue and gross profit or the failure of our platform to gain or maintain broad market acceptance. To remain competitive, we need to continuously invest in product development and marketing. We may not have sufficient resources to continue to make the investments needed to maintain our competitive position. In addition, many of our competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical, sales, marketing and other resources than us, which provide them with advantages in developing, marketing or servicing new products and offerings. As a result, they may be able to respond more quickly to market demand, devote greater resources to the development, promotion and sales of their products or the distribution of their content, and influence market acceptance of their products better than we can. These competitors may also be able to adapt more quickly to new or emerging technologies or standards and may be able to deliver products and services at a lower cost. New entrants may enter the TV streaming market with unique service offerings or approaches to providing video. In addition, our competitors may enter into business combinations or alliances that strengthen their competitive positions. Increased competition could reduce our market share, revenue and operating margins, increase our operating costs, harm our competitive position and otherwise harm our business.
~~The long-term and fixed cost nature of certain of our content commitments may limit our operating flexibility and could adversely affect our liquidity and results of operations.~~
In connection with licensing streaming content, we typically enter into multi-year agreements with content providers. These agreements have sometimes required us to pay minimum license fees for content that are not tied to subscriber usage or the size of our subscriber base. Given the multiple-year duration and sometimes fixed cost nature of content commitments, if subscriber acquisition and retention do not meet our expectations, our margins may be adversely impacted, and we may not be in a position to make the minimum guarantee payments required under certain content licenses. We have already failed to make minimum guarantee payments to certain key programmers and may not be in a position to make similar payments in the future. If we do not make these payments, then we may lose access to such content, which in turn may further depress subscriber acquisition or retention, cause other programmers to exercise termination rights due to the content mix available through our service, or impact our ability to obtain content from other programmers. Payment terms for certain content commitments, such as content we directly produce, will typically require more up-front cash payments than other content licenses or arrangements whereby we do not fund the production of such content. Additionally, we are currently in breach under certain of our content provider agreements as a result of our unwillingness to make certain fixed fee payments required pursuant to such agreements. We are currently negotiating the terms of these agreements, and in particular, fixed fee payments required thereunder, but if we are unsuccessful in renegotiating these agreements or the payments required thereunder, our partners could terminate these agreements and require us to make these fixed fee payments in their entirety, which could adversely affect our business, results of operations and financial condition.
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To the extent subscriber and/or revenue growth do not meet our expectations, our liquidity and results of operations could be adversely affected as a result of content commitments and accelerated payment requirements of certain agreements. In addition, the long-term and fixed cost nature of certain of our content commitments may limit our flexibility in planning for, or reacting to changes in our business and the market segments in which we operate. If we license and/or produce content that is not favorably received by consumers in a territory, or is unable to be shown in a territory, acquisition and retention may be adversely impacted and given the long-term and fixed cost nature of certain of our content commitments, we may not be able to adjust our content offering quickly and our results of operation may be adversely impacted.

Our revenue and gross profit are subject to seasonality, and if subscriber behavior during certain seasons falls below our expectations, our business may be harmed.

Seasonal variations in subscriber and marketing behavior significantly affect our business. We have previously experienced, and expect to continue to experience, effects of seasonal trends in subscriber behavior due to the seasonal nature of sports. Additionally, increased ~~Internet~~internet usage and sales of streaming service subscriptions during the fourth quarter of each calendar year affect our business. We also may experience higher advertising sales during the fourth quarter of each calendar year due to greater advertiser demand during the holiday season, but also incur greater marketing expenses as we attempt to attract new subscribers to our platform. In addition, expenditures by advertisers tend to be cyclical and are often discretionary in nature, reflecting overall economic conditions, the economic prospects of specific advertisers or industries, budgeting constraints and buying patterns, and a variety of other factors, many of which are outside our control.

Given the seasonal nature of our subscriptions, accurate forecasting is critical to our operations. We anticipate that this seasonal impact on revenue and gross profit is likely to continue, and any shortfall in expected revenue due to macroeconomic conditions, a decline in the effectiveness of our promotional activities, actions by our competitors, or for any other reason, would cause our results of operations to suffer significantly. A substantial portion of our expenses are personnel-related and include salaries, stock-based compensation and benefits that are not seasonal in nature. Accordingly, in the event of a revenue shortfall, we would be unable to mitigate the negative impact on margins, at least in the short term, and our business would be harmed.
~~The recent COVID-19 pandemic and the global attempt to contain it may harm our industry, business, results of operations and ability to raise additional capital.~~
The global spread of COVID-19 and the various attempts to contain it have created significant volatility, uncertainty and economic disruption. In response to government mandates, health care advisories and employee concerns, we have altered certain aspects of our operations. Our workforce has had to spend a significant amount of time working from home, which may impact their productivity. Travel has been severely curtailed, and virtually all professional and college sports leagues have cancelled or altered seasons and events. Such limitations caused by the pandemic have also resulted in us seeking previous extensions for our current and periodic filings with the SEC. As a result, our broadcasting partners had and are having to substitute other content in the place of previously scheduled live sporting events. While professional sports are returning in the United States, there is no guarantee that those seasons continue uninterrupted or at all. The potential further delay or cancellation of professional and college sports may cause us to temporarily have less popular content available on our platform, which could negatively impact consumer demand for and subscription retention to our platform and our number of paid subscribers.
The full extent to which the COVID-19 pandemic and the various responses to it impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the actions of professional and college sports leagues; the availability and cost to access the capital markets; the effect on our subscribers and subscriber demand for and ability to pay for our platform; disruptions or restrictions on our employees’ ability to work and travel; and interruptions or restrictions related to the provision of streaming services over the internet, including impacts on content delivery networks and streaming quality. During the COVID-19 pandemic, we may not be able to provide the same level of customer service that our subscribers are used to, which could negatively impact their perception of our platform resulting in an increase in cancellations. If we need to access the capital markets, there can be no assurance that financing may be available on attractive terms, if at all. We will continue to actively monitor the issues raised by the COVID-19 pandemic and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, subscribers and shareholders. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our subscribers, or on our financial results.
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~~If we fail to obtain or maintain popular content, we may fail to retain existing subscribers and attract new subscribers.~~
We have invested a significant amount of time to cultivate relationships with our content providers; however, such relationships may not continue to grow or yield further financial results. We currently have over 240 streaming channels on our platform in the United States, and we must continuously maintain existing relationships and identify and establish new relationships with content providers to provide popular content. In order to remain competitive, we must consistently meet user demand for popular streaming channels and content. If we are not successful in maintaining channels on our platform that attract and retain a significant number of subscribers, or if we are not able to do so in a cost-effective manner, our business will be harmed.
~~If our efforts to attract and retain subscribers are not successful, our business will be adversely affected.~~
We have experienced significant subscriber growth over the past several years. Our ability to continue to attract subscribers will depend in part on our ability to consistently provide our subscribers with compelling content choices and effectively market our platform. Furthermore, the relative service levels, content offerings, pricing and related features of our competitors may adversely impact our ability to attract and retain subscribers. In addition, many of our subscribers rejoin our platform or originate from word-of-mouth advertising from existing subscribers. If our efforts to satisfy our existing subscribers are not successful, we may not be able to attract subscribers, and as a result, our ability to maintain and/or grow our business will be adversely affected. If consumers perceive a reduction in the value of our platform because, for example, we introduce new or adjust existing features, adjust pricing or platform offerings, or change the mix of content in a manner that is not favorably received by them, we may not be able to attract and retain subscribers. Subscribers cancel their subscription for many reasons, including due to a perception that they do not use the platform sufficiently, the need to cut household expenses, availability of content is unsatisfactory, competitive services provide a better value or experience and customer service issues are not satisfactorily resolved. We must continually add new subscriptions both to replace canceled subscriptions and to grow our business beyond our current subscription base. While we permit multiple subscribers within the same household to share a single account for non-commercial purposes, if account sharing is abused, our ability to add new subscribers may be hindered and our results of operations may be adversely impacted. If we do not grow as expected, given, in particular, that our content costs are largely fixed in nature and contracted over several years, we may not be able to adjust our expenditures or increase our (per subscriber) revenues commensurate with the lowered growth rate such that our margins, liquidity and results of operation may be adversely impacted. If we are unable to successfully compete with current and new competitors in both retaining our existing subscribers and attracting new subscribers, our business will be adversely affected. Further, if excessive numbers of subscribers cancel our service, we may be required to incur significantly higher marketing expenditures than we currently anticipate replacing these subscribers with new subscribers.
~~Our agreements with distribution partners contain parity obligations which limit our ability to pursue unique partnerships.~~
Our agreements with distribution partners contain obligations which require us to offer them the same technical features, content, pricing and packages that we make available to our other distribution partners and also require us to provide parity in the marketing of the availability of our application across our distribution partners. These parity obligations may limit our ability to pursue technological innovation or partnerships with individual distribution partners and may limit our capacity to negotiate favourable transactions with different partners or otherwise provide improved products and services. As our technical feature developments progress at varying speeds and at different times with different distribution partners, we currently offer some enhanced technical features on distribution platforms that we do not make available on other distribution platforms, which limits the quality and uniformity of our offering to all consumers across our distribution platforms. In addition, delays in technical developments across our distribution partners puts us at risk of breaching our parity obligations with such distribution platforms, which threatens the certainty of our agreements with distribution partners.
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~~If we are unable to maintain an adequate supply of ad inventory on our platform, our business may be harmed.~~
We may fail to attract content providers that generate sufficient ad content hours on our platform and continue to grow our video ad inventory. Our business model depends on our ability to grow video ad inventory on our platform and sell it to advertisers. We grow ad inventory by adding and retaining content providers on our platform with ad-supported channels that we can monetize. The amount, quality and cost of inventory available to us can change at any time. If we are unable to grow and maintain a sufficient supply of quality video advertising inventory at reasonable costs to keep up with demand, our business may be harmed.
We operate in a highly competitive industry and we compete for advertising revenue with other Internet streaming platforms and services, as well as traditional media, such as radio, broadcast, cable and satellite TV and satellite and Internet radio. We may not be successful in maintaining or improving our fill-rates or cost per mille (“CPMs”).
Our competitors offer content and other advertising mediums that may be more attractive to advertisers than our TV streaming platform. These competitors are often very large and have more advertising experience and financial resources than we do, which may adversely affect our ability to compete for advertisers and may result in lower revenue and gross profit from advertising. If we are unable to increase our advertising revenue by, among other things, continuing to improve our platform’s data capabilities to further optimize and measure advertisers’ campaigns, increase our advertising inventory and expand our advertising sales team and programmatic capabilities, our business and our growth prospects may be harmed. We may not be able to compete effectively or adapt to any such changes or trends, which would harm our ability to grow our advertising revenue and harm our business.
~~If the advertisements on our platform are not relevant or not engaging to our subscribers, our growth in active accounts and hours streamed may be adversely impacted.~~
We have made, and are continuing to make, investments to enable advertisers to deliver relevant advertising content to subscribers on our platform. Existing and prospective advertisers may not be successful in serving ads that lead to and maintain user engagement. Those ads may seem irrelevant, repetitive or overly targeted and intrusive. We are continuously seeking to balance the objectives of our subscribers and advertisers with our desire to provide an optimal user experience, but we may not be successful in achieving a balance that continues to attract and retain subscribers and advertisers. If we do not introduce relevant advertisements or such advertisements are overly intrusive and impede the use of our TV streaming platform, our subscribers may stop using our platform which will harm our business.
We may not be successful at expanding our content to areas outside our current content offering and even if we are able to expand into other content areas and sustain such expansion, we may not be successful in overcoming our reputation as primarily a live sports streaming service.
We currently have a reputation as primarily a live sports streaming service. We are making efforts to expand our content offerings outside live sports streaming, and currently offer a wide selection of news and entertainment content. However, we may not be successful at expanding our content to areas outside our current content offering, or maintaining content from our current content offering, and even if we are able to expand into other content areas and sustain such expansion, we may not be successful in overcoming our reputation as primarily a live sports streaming service.
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~~Integrating the business of fuboTV Pre-Merger and FaceBank Pre-Merger may be more difficult, costly, or time-consuming than anticipated.~~
We are still in the process of integrating fuboTV Pre-Merger and FaceBank Pre-Merger. A successful integration of these businesses will depend substantially on our ability to consolidate operations, corporate cultures, systems and procedures and to eliminate redundancies and costs. We may not be able to combine our businesses without encountering difficulties, such as:
● ~~the loss of key employees;~~
● ~~disruption of operations and business;~~
● ~~inability to maintain and increase competitive presence;~~
● ~~possible inconsistencies in standards, control procedures and policies;~~
● ~~unexpected problems with costs, operations, personnel and technology; and/or~~
● ~~problems with the assimilation of new operations, sites or personnel, which could divert resources from regular operations.~~
Additionally, general market and economic conditions may inhibit our successful integration. Achieving the anticipated benefits of the Merger is subject to a number of uncertainties, including whether we integrate our businesses, including our organizational culture, operations, technologies, services and products, in an efficient and effective manner, and general competitive factors in the marketplace. Failure to achieve these anticipated benefits on the anticipated timeframe, or at all, could result in a reduction in the price of our shares as well as in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy and could materially and adversely affect our business, results of operations and financial condition. Additionally, we made fair value estimates of certain assets and liabilities in the Merger. Actual values of these assets and liabilities could differ from our estimates, which could result in our not achieving the anticipated benefits of the acquisition. Finally, any cost savings that are realized may be offset by losses in revenues or other charges to earnings.
~~We may be subject to fines or other penalties imposed by the Internal Revenue Service and other tax authorities.~~
We are currently delinquent in filing annual tax returns with the Internal Revenue Service and several states. FaceBank Pre-Merger has not filed its federal and state income tax returns for several years. We are in the process of working to remedy this issue by filing these delinquent tax returns. We may be subject to penalties and interest with the tax authorities because of the late tax returns. There can be no assurance that we remedy our delinquent filings sufficiently, and we may face penalties and fees which would adversely affect our operating results and investors’ confidence in our internal operations.
We could be required to collect additional sales and other similar taxes or be subject to other tax liabilities that may increase the costs our customers would have to pay for our subscriptions and adversely affect our operating results.
Sales and use, value-added, goods and services, and similar tax laws and rates are complicated and vary greatly by jurisdiction. There is significant uncertainty as to what constitutes sufficient nexus for a state or local jurisdiction to levy taxes, fees, and surcharges for sales made over the internet, as well as whether our subscriptions are subject to tax in various jurisdictions. The vast majority of states have considered or adopted laws that impose tax collection obligations on out-of-state companies. Additionally, the Supreme Court of the United States recently ruled in South Dakota v. Wayfair, Inc. et. al. (Wayfair) that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments may enforce laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. We have not always collected sales and other similar taxes in all jurisdictions in which we are required to, and we are working with our tax advisors to determine our collection obligations in each jurisdiction. We may be obligated to collect and remit sales tax in jurisdictions in which we have not collected and remitted sales tax. A successful assertion by one or more states requiring us to collect taxes where we historically have not or presently do not do so could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us and decrease our future sales, which could adversely affect our business and operating results.
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~~We are subject to taxation-related risks in multiple jurisdictions.~~
We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Significant judgment is required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis. While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be challenged by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.
Tax laws are being re-examined and evaluated globally. New laws and interpretations of the law are taken into account for financial statement purposes in the quarter or year that they become applicable. Tax authorities are increasingly scrutinizing the tax positions of companies. If U.S. or other foreign tax authorities change applicable tax laws, our overall liability could increase, and our business, financial condition or results of operations may be adversely impacted.

We might not be able to utilize a significant portion of our net operating loss carryforwards.

As of December 31, 2019, wefuboTV Pre-Merger had ~~available to us~~ federal net operating loss carryforwards of approximately $375.8 million, a portion of which will expire at various dates if not used ~~expire at various~~prior to such dates. Under legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act, as modified by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal net operating losses in tax years beginning after December 31, 2020 is limited. Other limitations may apply for state tax purposes.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards to offset its post-change income may be limited. We have ~~not determined whether we have~~ experienced ~~Section 382~~ ownership changes in the past, and therefore a portion of our net operating loss carryforwards ~~may be~~are subject to an annual limitation under Section 382 of the Code. In addition, we may experience ownership changes in the future as a result of subsequent changes in our stock ownership, including ~~this offering,~~as a result of conversions of the 2026 Convertible Notes, some of which may be outside of our control. A past or future ownership change that materially limits our ability to use our historical net operating loss and tax credit carryforwards may harm our future operating results by effectively increasing our future tax obligations.

If we fail to comply with the reporting obligations of the Exchange Act, our business, financial condition, and results of operations, and investors’ confidence in us, could be materially and adversely affected.
As a public company, we are required to comply with the periodic reporting obligations of the Exchange Act, including preparing annual reports, quarterly reports, and current reports. Our failure to prepare and disclose this information in a timely manner and meet our reporting obligations in their entirety could subject us to penalties under federal securities laws and regulations of the exchange we are listed on, expose us to lawsuits, and restrict our ability to access financing on favorable terms, or at all.
Prior to the Merger, fuboTV Pre-Merger was not a public company and FaceBank Pre-Merger had limited resources. Our management has faced significant challenges in consolidating the functions of fuboTV Pre-Merger and FaceBank Pre-Merger and their subsidiaries, including integrating their technologies, organizations, procedures, policies and operations. In connection with the Merger, we have been working to integrate certain operations of fuboTV Pre-Merger and FaceBank Pre-Merger, including, among other things, back-office operations, information technology and regulatory compliance.
We have been and expect to continue to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of sales and marketing and finance and accounting. Prior to such expansion, as a result of previously maintaining a limited legal, finance and accounting staff, we may later determine that certain related party transactions were not properly identified, reviewed and approved prior to us entering into them with such related parties.
As we seek to increase staffing levels to manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and our limited experience in managing such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert or stretch our management and business development resources in a way that we may not anticipate. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.
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Additionally, for our recent Exchange Act filings, we have relied on an order (the “Order”) issued by the SEC pursuant to Section 36 of the Exchange Act (Release No. 34-88465), permitting filing extensions to certain public companies based on the COVID-19 pandemic. We relied upon this permissible extension in good faith after analyzing, among other things, the fact that our books and records were not easily accessible, which resulted in delays in preparation and completion of our financial statements, and that the various governmental mandatory closures of businesses have precluded our personnel, particularly our senior accounting staff, from obtaining access to our subsidiaries’ books and records necessary to prepare our financial statements. Following this analysis, we believe that we satisfied all eligibility criteria to take advantage of these extensions. If it is later determined that we were ineligible to rely upon the Order for such extensions, our filings could be deemed to be late, which could have a material adverse effect on our ability to raise capital, which could have a material adverse effect on our business, results of operations, and financial condition.
We will need to improve our operational and financial systems to support our expected growth, increasingly complex business arrangements, and rules governing revenue and expense recognition, and any inability to do so could adversely affect our billing services and financial reporting.
We have increasingly complex business arrangements with our content publishers and licensees, and the rules that govern revenue and expense recognition in our business are increasingly complex. To manage the expected growth of our operations and increasing complexity, we will need to improve our operational and financial systems, procedures and controls and continue to increase systems automation to reduce reliance on manual operations. Any inability to do so will negatively affect our billing services and financial reporting. Our current and planned systems, procedures and controls may not be adequate to support our complex arrangements and the rules governing revenue and expense recognition for our future operations and expected growth. Delays or problems associated with any improvement or expansion of our operational and financial systems and controls could adversely affect our relationships with our subscribers, content publishers or licensees; cause harm to our reputation and brand; and could also result in errors in our financial and other reporting.
Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may seriously harm and negatively affect our reputation and our business.
We regularly review key metrics related to the operation of our business to evaluate growth trends, measure our performance, and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third party. While these numbers are based on what we believe to be reasonable estimates of our subscriber base for the applicable period of measurement, there are inherent challenges in measuring how our platform is used across large populations.
Errors or inaccuracies in our metrics or data could result in incorrect business decisions and inefficiencies. In addition, advertisers generally rely on third-party measurement services to calculate our metrics, and these third-party measurement services may not reflect our true audience. If advertisers, partners, or investors do not perceive our subscriber, geographic, or other demographic metrics to be accurate representations of our subscriber base, or if we discover material inaccuracies in our subscriber, geographic, or other demographic metrics, our reputation may be seriously harmed.
~~Non-compliance with the objective and subjective criteria for the Paycheck Protection Program loan could have a material adverse effect on our business.~~
On April 21, 2020, we availed ourselves of a PPP Loan from JPMorgan Chase Bank, N.A., in the aggregate amount of $4,699,240.00, pursuant to the Paycheck Protection Program under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The PPP Loan, which was in the form of a note dated April 21, 2020 issued by the Company, matures on April 21, 2022, and bears interest at a rate of 0.98% per annum, payable monthly commencing on November 21, 2020. The PPP Loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020 The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.
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On April 23, 2020, the Secretary of the U.S. Department of the Treasury stated that the SBA will perform a full review of any PPP Loan over $2.0 million before forgiving the loan. In order to apply for the PPP Loan, we were required to certify, among other things, that the current economic uncertainty made the PPP Loan request necessary to support our ongoing operations. We made this certification in good faith after analyzing, among other things, the maintenance of our entire workforce, notwithstanding certain “work-from-home” limitations. We also took into account our need for additional funding to continue operations, and our ability to currently access alternative forms of capital in the current market environment. Following this analysis, we believe that we satisfied all eligibility criteria for the PPP Loan, and that our receipt of the PPP Loan is consistent with the objectives of the PPP Loan of the CARES Act. If it is later determined that we were ineligible to receive the PPP Loan or determined that we did not comply with requirements after receiving the PPP Loan, we may be required to repay the PPP Loan in its entirety and/or be subject to additional penalties and adverse publicity, which could have a material adverse effect on our business, results of operations, and financial condition.
Our financial condition and results of operations could be adversely affected if we do not effectively manage our current or future debt.

~~In connection with the Merger,~~As of March 31, 2021, we ~~incurred approximately $33.80~~had $425.3 million of ~~additional~~outstanding indebtedness ~~from (i) the sale of senior secured promissory notes in an aggregate principal amount of $10.05 million to FB Loan Series I, LLC, or the Senior Notes, and (ii) our guarantee of~~on a consolidated basis which included approximately ~~$23.75~~$402.5 million of ~~existing~~convertible notes, $18.1 million of indebtedness ~~of fuboTV Pre-Merger under its existing senior secured credit facility with~~to AMC Networks Ventures LLC, ~~or the AMC Facility,~~ which is secured by a lien on substantially all of the assets of ~~the Company. Following the Merger, we have~~fuboTV Sub and has subsequently been repaid ~~the Senior Notes~~ in full ~~as of July 3, 2020. In addition, we have~~on May 7, 2021; and other notes outstanding ~~convertible promissory notes~~ with an aggregate principal ~~amount~~ of $2,773,000. To the extent not converted, we may be required to pay principal, interest, and any late fees to the holders of these notes. Furthermore, on July 16, 2020, Access Road Capital LLC made a term loan to us in the principal amount equal to $10,000,000, which is currently outstanding. We are currently conducting a review of our credit agreements to determine our ongoing compliance obligations under such agreements.approximately $4.7 million.

~~As a result of such transactions, we have a substantially greater amount of debt than we had maintained in the past,~~
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Our outstanding indebtedness, which could adversely affect our ability to take advantage of corporate opportunities and could adversely affect our business, financial condition, and results of operations. For example:

● our ability to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements, or other purposes may be limited, or financing may be unavailable;

● a substantial portion of our cash flows must be dedicated to the payment of principal and interest on our indebtedness and other obligations and will not be available for use in our business;

● lack of liquidity could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate;

● our debt obligations will make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations; and

● if we fail to make required debt payments or to comply with other covenants in our debt agreements, we would be in default under the terms of these agreements, which could permit our creditors to accelerate repayment of the debt and could cause cross-defaults under other debt agreements.
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If we incur any additional debt, the related risks that we and our subsidiaries face could intensify.
Finally, we may in the future be in non-compliance with the terms of certain of our other debt instruments. To the extent we are in non-compliance with the terms of such debt instruments, we may be required to make payments to the holders of such instruments, those holders may be entitled to the issuance of stock by us, and the holders of such stock may be entitled to registration or other investor rights.
Servicing our indebtedness will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial indebtedness.

Our ability to make scheduled payments of the principal and interest when due, or to refinance our borrowings under our debt agreements, will depend on our future performance and our ability to raise further equity financing, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to both (i) satisfy our existing and future obligations to our creditors and (ii) allow us to make necessary capital expenditures. If we are unable to generate such cash flow or raise further equity financing, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive. We may need or desire to refinance our existing indebtedness, and there can be no assurance that we will be able to refinance any of our indebtedness on commercially reasonable terms, if at all. Our ability to refinance the term loans or existing or future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our current or future debt agreements.
~~If TV streaming develops more slowly than we expect, our~~Our operating results ~~and growth prospects could be harmed. In addition,~~may fluctuate, which makes our ~~future growth depends in part on the growth of TV streaming advertising.~~results difficult to predict.

~~TV streaming is~~Our revenue and operating results could vary significantly from quarter-to-quarter and year-to-year because of a ~~relatively new and rapidly evolving industry, making our business and prospects difficult to evaluate. The growth and profitability~~variety of ~~this industry and the level~~factors, many of ~~demand and market acceptance for our platform~~which are ~~subject to a high degree of uncertainty.~~
We believe that the continued growth of streaming as an entertainment alternative will depend on the availability and growth of cost-effective broadband Internet access, the quality of broadband content delivery, the quality and reliability of new devices and technology, the cost for subscribers relative to other sources of content, as well as the quality and breadth of content that is delivered across streaming platforms. These technologies, products and content offerings continue to emerge and evolve. Subscribers, content publishers or advertisers may find TV streaming platforms to be less attractive than traditional TV, which would harm our business. In addition, many advertisers continue to devote a substantial portion of their advertising budgets to traditional advertising, such as TV, radio and print. The future growthoutside of our business depends in part on the growth of TV streaming advertising, and on advertisers increasing spend on such advertising. We cannot be certain that they will do so. If advertisers do not perceive meaningful benefits of TV streaming advertising, then this market may develop more slowly than we expect, which could adversely impactcontrol. As a result, comparing our operating results on a period-to-period basis may not be meaningful. In addition to other risk factors discussed herein, factors that may contribute to the variability of our quarterly and ~~our ability to grow~~annual results include:
● our ability to retain our current subscriber base and increase our number of subscribers;
● our ability to enter into new content deals or negotiate renewals with our content providers on terms that are favorable to us, or at all;
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● our ability to effectively manage our growth;
● our ability to attract and retain existing advertisers;
● the effects of increased competition in our business;
● our ability to keep pace with changes in technology and our competitors;
● interruptions in service, whether or not we are responsible for such interruptions, and any related impact on our reputation;
● our ability to pursue and appropriately time our entry into new geographic or content markets and, if pursued, our management of this expansion;
● costs associated with defending any litigation, including intellectual property infringement litigation;
● the impact of general economic conditions on our revenue and expenses; and
● changes in regulations affecting our business.
This variability makes it difficult to forecast our future results with precision and to assess accurately whether increases or decreases are likely to cause quarterly or annual results to exceed or fall short of previously issued guidance. While we assess our quarterly and annual guidance and update such guidance when we think it is appropriate, unanticipated future volatility can cause actual results to vary significantly from our guidance, even where that guidance reflects a range of possible results.
Risks Related to Our Relationships with Content Providers, Customers and Other Third Parties

~~Legal proceedings could cause us to incur unforeseen expenses~~The long-term nature of certain of our content commitments may limit our operating flexibility and could ~~occupy a significant amount of our management’s time and attention.~~
~~From time to time, we may be subject to litigation or claims that could negatively~~adversely affect our ~~business operations~~liquidity and financial position. We may face allegations or litigation related to our acquisitions, securities issuances or business practices. Litigation disputes could cause us to incur unforeseen expenses, result in content unavailability, and otherwise occupy a significant amountresults of our management’s time and attention, any of which could negatively affect our business operations and financial position. While the ultimate outcome of investigations, inquiries, information requests and related legal proceedings is difficult to predict, such matters can be expensive, time-consuming and distracting, and adverse resolutions or settlements of those matters may result in, among other things, modification of our business practices, reputational harm or costs and significant payments, any of which could negatively affect our business operations and financial position.
~~We could become subject to litigation regarding intellectual property rights that could be costly and harm our business.~~operations.

~~Third parties~~In connection with licensing streaming content, we typically enter into multi-year agreements with content providers. These agreements have ~~previously asserted,~~sometimes required us to pay minimum license fees for content that are not tied to subscriber usage or the size of our subscriber base. Given the multiple-year duration and sometimes fixed cost nature of content commitments, if subscriber acquisition and retention do not meet our expectations, our margins may ~~in the future assert, that~~be adversely impacted, and we ~~have infringed, misappropriated or otherwise violated their intellectual property rights. Plaintiffs that have no relevant product revenue~~ may not be ~~deterred by~~in a position to make the minimum guarantee payments required under certain content licenses. We have already failed to make minimum guarantee payments to certain key programmers and may not be in a position to make similar payments in the future. If we do not make these payments, then we may lose access to such content, which in turn may further depress subscriber acquisition or retention, cause other programmers to exercise termination rights due to the content mix available through our ~~own issued patents and pending patent applications in bringing intellectual property rights claims against us. The cost of patent litigation~~service, or other proceedings, even if resolved in our favor, could be substantial. Some of our competitors may be better able to sustain the costs of such litigation or proceedings because of their substantially greater financial resources. Patent litigation and other proceedings may also require significant management time and divert management from our business. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impairimpact our ability to ~~compete in the marketplace. The occurrence of any of the foregoing risks could harm our business.~~obtain content from other programmers.

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Payment terms for certain content commitments, such as content we directly produce, will typically require more up-front cash payments than other content licenses or arrangements whereby we do not fund the production of such content.

AsTo the extent subscriber and/or revenue growth do not meet our expectations, our liquidity and results of operations could be adversely affected as a result of ~~intellectual property infringement claims,~~content commitments and payment requirements of certain agreements. In addition, the long-term and fixed cost nature of certain of our commitments may limit our flexibility in planning for, or reacting to ~~avoid potential claims,~~changes in our business and the market segments in which we ~~have previously chosen~~operate. If we license and/or produce content that is not favorably received by consumers in a territory, or is unable to be shown in a territory, acquisition and retention may inbe adversely impacted and given the ~~future choose or be required to, seek licenses from third parties. These licenses~~long-term and fixed cost nature of certain of our content commitments, we may not be ~~available on commercially reasonable terms, or at all. Even if we are~~ able to ~~obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, with the potential for~~adjust our competitors to gain access to the same intellectual property. In addition, the rights that we secure under intellectual property licenses may not include rights to all of the intellectual property owned or controlled by the licensor, and the scope of the licenses granted to us may not include rights covering all of the products and services provided by uscontent offering quickly and our ~~licensees. Furthermore, an adverse outcome~~results of ~~a dispute~~operations may require us to pay damages, potentially including treble damages and attorneys’ fees, if we are found to have willfully infringed a party’s intellectual property; cease making, licensing or using technologies that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to redesign our solutions; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies, content or materials; and to indemnify our partners and other third parties. In addition, any lawsuits regarding intellectual property rights, regardless of their success, could be ~~expensive to resolve and would divert the time and attention of our management and technical personnel.~~adversely impacted.

If ~~our trademarks~~we fail to obtain or maintain popular content, we may fail to retain existing subscribers and other proprietary rights are not adequately protected to prevent use or appropriation by our competitors, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected.attract new subscribers.

We ~~rely and expect~~have invested a significant amount of time to cultivate relationships with our content providers; however, such relationships may not continue to ~~rely~~grow or yield further financial results. We must continuously maintain existing relationships and identify and establish new relationships with content providers to provide popular content. In order to remain competitive, we must consistently meet user demand for popular streaming channels and content. If we are not successful in maintaining channels on our platform that attract and retain a ~~combination~~significant number of ~~confidentiality and license agreements with our employees, consultants and third parties with whom~~subscribers, or if we have relationships, as well as trademark, copyright, patent and trade secret protection laws, to protect our proprietary rights. We may also seek to enforce our proprietary rights through court proceedings or other legal actions. We have filed and we expect to file from time to time for trademark and patent applications. Nevertheless, these applications mayare not be approved, third parties may challenge any copyrights, patents or trademarks issued to or held by us, third parties may knowingly or unknowingly infringe our intellectual property rights, and we may not be able to ~~prevent infringement or misappropriation without substantial expense to us. If the protection of~~do so in a cost-effective manner, our ~~intellectual property rights is inadequate to prevent use or misappropriation by third parties, the value of our brand, content, and other intangible assets may~~business will be ~~diminished.~~harmed.

Failure to protect our domain names could also adversely affect our reputation and brand and make it more difficult for subscribers to find our website and our service. We may be unable, without significant cost or at all, to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our trademarks and other proprietary rights.
~~Our use of open source software could impose limitations on our ability to commercialize our platform.~~
We incorporate open source software in our platform. From time to time, companies that incorporate open source software into their products have faced claims challenging the ownership of open source software and/or compliance with open source license terms. Therefore, we could be subject to suits by parties claiming ownership of what we believe to be open source software or noncompliance with open source licensing terms. Although we monitor our use of open source software, the terms of many open source software licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to sell subscriptions to our platform. In such event, we could be required to make our proprietary software generally available to third parties, including competitors, at no cost, to seek licenses from third parties in order to continue offering our platform, to re-engineer our platform or to discontinue our platform in the event re-engineering cannot be accomplished on a timely basis or at all, any of which could harm our business.
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If weour efforts to attract and retain subscribers are ~~unable to obtain necessary or desirable third-party technology licenses,~~not successful, our ~~ability to develop platform enhancements may~~business will be ~~impaired.~~adversely affected.

We ~~utilize commercially available off-the-shelf technology~~have experienced significant subscriber growth over the past several years. Our ability to continue to attract subscribers will depend in part on our ability to consistently provide our subscribers with compelling content choices and effectively market our platform. Furthermore, the relative service levels, content offerings, pricing and related features of our competitors may adversely impact our ability to attract and retain subscribers. In addition, many of our subscribers re-join our platform or originate from word-of-mouth referrals from existing subscribers. If our efforts to satisfy our existing subscribers are not successful, we may not be able to attract subscribers, and as a result, our ability to maintain and/or grow our business will be adversely affected. If consumers perceive a reduction in the development of our platform. As we continue to introduce new features or improvements to our platform, we may be required to license additional technologies from third parties. These third-party licenses may be unavailable to us on commercially reasonable terms, if at all. If we are unable to obtain necessary third-party licenses, we may be required to obtain substitute technologies with lower quality or performance standards, or at a greater cost, any of which could harm the competitivenessvalue of our platform ~~and our business.~~
~~We are subject to a number~~because, for example, we introduce new or adjust existing features, adjust pricing or platform offerings, or change the mix of legal requirements and other obligations regarding privacy, security, and data protection, and any failure to comply with these requirements or obligations could have an adverse effect on our reputation, business, financial condition and operating results.
Various federal and state laws and regulations govern the collection, use, retention, sharing and security of the data we receive from and about our subscribers and other individuals. The regulatory environment for the collection and use of data relating to individuals, including subscriber and other consumer data, by online service providers, content distributors, advertisers and publishers is unsettled in the United States and internationally. Privacy groups and government bodies, including the Federal Trade Commission, increasingly have scrutinized issues relating to the use, collection, storage, disclosure, and other processing of data, including data that is associated with personal identities or devices, and we expect such scrutiny to continue to increase. The U.S. federal and various state and foreign government bodies and agencies have adopted or are considering adopting laws and regulations limiting, or laws and regulations regarding the collection, distribution, use, disclosure, storage, and security of certain types of information. In addition to government regulation, self-regulatory standards and other industry standards may legally or contractually apply to us, be argued to apply to us, or we may elect to comply with such standards or to facilitate compliance with such standards by content publishers, advertisers, or others.
For example, the California Consumer Privacy Act, or CCPA, became operative on January 1, 2020. The CCPA requires covered companies to provide new disclosures to California consumers, and to afford such consumers new abilities to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase our compliance costs and potential liability. Further, a new privacy law, the California Privacy Rights Act, or the CPRA, recently was certified by the California Secretary of State to appear on the ballot for the November 3, 2020 election. If this initiative is approved by California voters, the CPRA would significantly modify the CCPA, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply.
Our use of data to deliver relevant advertising on our platform places us and our content publishers at risk for claims under a number of unsettled laws, including the Video Privacy Protection Act, or VPPA. Some content publishers have been engaged in litigation over alleged violations of the VPPA relating to activities on online platforms in connection with advertising provided by unrelated third parties. The Federal Trade Commission has also revised its rules implementing the Children’s Online Privacy Protection Act, or COPPA Rules, broadening the applicability of the COPPA Rules, including the types of information that are subject to these regulations, and could effectively apply to limit the information that we or our content publishers and advertisers collect and use through certain content publishers, the content of advertisements and in relation to certain channel partner content. We and our content publishers and advertisers could be at risk for violation or alleged violation of these and other laws, regulations, and other standards relating to privacy, data protection, and information security.
Internationally, virtually every jurisdiction in which we operate has established its own data security and privacy or data protection legal framework with which we must comply. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of data that identifies or may be used to identify or locate an individual. These laws and regulations often are more restrictive than those in the United States and are rapidly evolving. For example, the European Union, or EU, and its member states have laws and regulations requiring informed consent for the placement of cookies or other tracking technologies and the delivery of relevant advertisements. More generally, the EU General Data Protection Regulation, or the GDPR, which has been in effect since May 25, 2018, imposes stringent obligations relating to data protection and security and authorizes fines up to 4% of global annual revenue or €20 million, whichever is greater, for some violations. Some countries also are considering or have passed legislation requiring local storage and processing of data, or similar requirements, which could increase the cost and complexity of operating our platform.
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Complying with the GDPR, CCPA, and other laws, regulations, and other obligations relating to privacy, data protection, data localization or security may cause us to incur substantial operational costs or require us to modify our data handling practices. We also expect that there will continue to be new proposed laws and regulations concerning privacy, data protection and information security, and we cannot yet determine the impact such future laws, regulations and standards, or amendments to or re-interpretations of, existing laws and regulations, industry standards, or other obligations may have on our business. New laws and regulations, amendments to or re-interpretations of existing laws and regulations, industry standards, and contractual and other obligations may require us to incur additional costs and restrict our business operations.
Furthermore, the interpretation and application of laws, regulations, standards, contractual obligations and other obligations relating to privacy, data protection, and information security are uncertain, and these laws, standards, and contractual and other obligations may be interpreted and applied in a manner that is not favorably received by them, we may not be able to attract and retain subscribers. Subscribers cancel their subscription for many reasons, including due to a perception that they do not use the platform sufficiently, the need to cut household expenses, availability of content is unsatisfactory, competitive services provide a better value or ~~is alleged~~experience and customer service issues are not satisfactorily resolved. We must continually add new subscriptions both to ~~be, inconsistent with our data management~~replace cancelled subscriptions and processing practices, our policies or procedures, or the features of our platform. We may face claims or allegations that we are in violation of these laws, regulations, standards, or contractual or other obligations. We could be required to fundamentally change our business activities and practices or modify our platform or practices to address laws, regulations, or other obligations relating to privacy, data protection, or information security, or claims or allegations that we have failed to comply with any of the foregoing, which could have an adverse effect on our business. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new features could be limited.
Increased regulation of data collection, use and distribution practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws and regulations, all could increase our cost of compliance and operation, limit our ability to grow our business ~~or otherwise harm~~beyond our ~~business. Additionally,~~current subscription base. While we permit multiple subscribers within the ~~costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable~~same household to ~~the businesses of content publishers and advertisers may limit their use and adoption of, and reduce the overall demand~~share a single account for non-commercial purposes, if account sharing is abused, our ~~platform and advertising on our platform, and content publishers and advertisers~~ability to add new subscribers may be ~~at risk for violation~~hindered and our results of operations may be adversely impacted. If we do not grow as expected, given, in particular, that our content costs are largely fixed in nature and contracted over several years, we may not be able to adjust our expenditures or ~~alleged violation of laws, regulations, and other standards relating to privacy, data protection, and information security relating to their activities on~~increase our ~~platform. More generally, privacy, data protection, and information security concerns, whether or not valid, may inhibit market adoption of~~(per subscriber) revenues commensurate with the lowered growth rate such that our ~~platform, particularly in certain foreign countries.~~
Any inability to adequately address privacy, data protection or security-related concerns, even if unfounded, or to successfully negotiate privacy, data protection or security-related contractual terms with content publishers, advertisers, or others, or to comply with applicable laws, regulations and other obligations relating to privacy, data protection, and security, could result in additional cost and liability to us, regulatory investigations and proceedings, and claims, litigation, and other liability involving governmental entities and private parties, damage to our reputation, and inhibit use of our platform by advertisers and sales of subscriptions to our platform, all of which could harm our business, financial condition,margins, liquidity and results of ~~operations.~~
~~If government regulations relating to the Internet or other areas of our business change, we~~operations may ~~need to alter the manner in which we conduct our business and we may incur greater operating expenses.~~
We are subject to general business regulations and laws, as well as regulations and laws specific to the Internet, which may include laws and regulations related to user privacy, data protection, information security, consumer protection, payment processing, taxation, intellectual property, electronic contracts, Internet access and content restrictions. We cannot guarantee that we have been or will be fully compliant in every jurisdiction. Litigation and regulatory proceedings are inherently uncertain, and the laws and regulations governing issues such as privacy, payment processing, taxation and consumer protection related to the Internet continue to develop. For example, laws relating to the liability of providers of online services for activities of their subscribers and other third parties have been tested by a number of claims, including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark infringement, and other theories based on the nature and content of the materials searched, the advertisements posted or the content provided by subscribers. Moreover, as Internet commerce and advertising continues to evolve, increasing regulation by federal, state and foreign regulatory authorities becomes more likely.
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~~As we improve our TV streaming platform, we may also be subject to new laws and regulations specific to such technologies.~~
~~We are subject to payment processing risk.~~
Acceptance and processing of payments are subject to certain rules and regulations, including additional authentication requirements for certain payment methods, and require payment of interchange and other fees. To the extent there are increases in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors, changes to rules or regulations concerning payments, loss of payment partners and/or disruptions or failures in our payment processing systems, partner systems or payment products, including products we use to update payment information, our revenue, operating expenses and results of operation could be adversely impacted.
~~Changes in competitive offerings for entertainment video, including the potential rapid adoption of piracy-based video offerings, could adversely impact our business.~~
The market for entertainment video is intensely competitive and subject to rapid change. Through new and existing distribution channels, consumers have increasing options to access entertainment video. The various economic models underlying these channels include subscription, transactional, ad-supported and piracy-based models. All of these have the potential to capture meaningful segments of the entertainment video market. Piracy, in particular, threatens to damage our business, as its fundamental proposition to consumers is so compelling and difficult to compete against: virtually all content for free. Furthermore, in light of the compelling consumer proposition, piracy services are subject to rapid global growth. Traditional providers of entertainment video, including broadcasters and cable network operators, as well as Internet based e-commerce or entertainment video providers are increasing their streaming video offerings.
Several of these competitors have long operating histories, large customer bases, strong brand recognition, exclusive rights to certain content and significant financial, marketing and other resources. They may secure better terms from suppliers, adopt more aggressive pricing and devote more resources to product development, technology, infrastructure, content acquisitions and marketing. New entrants may enter the market or existing providers may adjust their services with unique offerings or approaches to providing entertainment video. Companies also may enter into business combinations or alliances that strengthen their competitive positions. If we are unable to successfully compete with current and new competitors in both retaining our existing subscribers and attracting new subscribers, our business will be adversely ~~affected,~~affected. Further, if excessive numbers of subscribers cancel our service, we may be required to incur significantly higher marketing expenditures than we currently anticipate replacing these subscribers with new subscribers.
Our agreements with distribution partners contain parity obligations which limit our ability to pursue unique partnerships.
Our agreements with certain distribution partners contain obligations which require us to offer them the same technical features, content, pricing and packages that we make available to our other distribution partners and also require us to provide parity in the marketing of the availability of our application across our distribution partners. These parity obligations may limit our ability to pursue technological innovation or partnerships with individual distribution partners and may limit our capacity to negotiate favorable transactions with different partners or otherwise provide improved products and services. As our technical feature developments progress at varying speeds and at different times with different distribution partners, we currently offer some enhanced technical features on distribution platforms that we do not make available on other distribution platforms, which limits the quality and uniformity of our offering to all consumers across our distribution platforms. In addition, delays in technical developments across our distribution partners puts us at risk of breaching our parity obligations with such distribution platforms, which threatens the certainty of our agreements with distribution partners.
If we are unable to maintain an adequate supply of ad inventory on our platform, our business may be harmed.
We may fail to attract content providers that generate sufficient ad content hours on our platform and continue to grow our video ad inventory. Our business model depends on our ability to grow video ad inventory on our platform and sell it to advertisers. We grow ad inventory by adding and retaining content providers on our platform with ad-supported channels that we can monetize. If we are unable to grow and maintain a sufficient supply of quality video advertising inventory at reasonable costs to keep up with demand, our business may be harmed.
We operate in a highly competitive industry and we compete for advertising revenue with other internet streaming platforms and services, as well as traditional media, such as radio, broadcast, cable and satellite TV and satellite and Internet radio. We may not be successful in maintaining or improving our fill-rates or cost per thousand (“CPMs”).
Our competitors offer content and other advertising mediums that may be more attractive to advertisers than our TV streaming platform. These competitors are often very large and have more advertising experience and financial resources than we do, which may adversely affect our ability to compete for advertisers and may result in lower revenue and gross profit from advertising. If we are unable to increase our advertising revenue by, among other things, continuing to improve our platform’s data capabilities to further optimize and measure advertisers’ campaigns, increase our advertising inventory and expand our advertising sales team and programmatic capabilities, our business and our growth prospects may be harmed. We may not be able to ~~increase~~compete effectively or ~~maintain market share~~adapt to any such changes or ~~revenues.~~trends, which would harm our ability to grow our advertising revenue and harm our business.
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If content providers refuse to license streaming content or other rights upon terms acceptable to us, our business could be adversely affected.
Our ability to provide our subscribers with content they can watch depends on content providers and other rights holders licensing rights, including distribution rights, to such content and certain related elements thereof, such as the public performance of music contained within the content we distribute. The license periods and the terms and conditions of such licenses ~~vary.~~vary, and we may be operating outside the terms of some of our current licenses. As content providers develop their own streaming services, they may be unwilling to provide us with access to certain content, including popular series or movies. If the content providers and other rights holders are not or are no longer willing or able to license us content upon terms acceptable to us, our ability to stream content to our subscribers may be adversely affected and/or our costs could increase. Because of these provisions as well as other actions we may take, content available through our service can be withdrawn on short notice. As competition increases, we see the cost of certain programming increase.

Further, if we do not maintain a compelling mix of content, our subscriber acquisition and retention may be adversely affected.
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Our content providers impose a number of restrictions on how we distribute and market our products and services, which can adversely affect our business.

A number of our major content partners impose significant restrictions on how we can distribute and market our products and services. For example, our content partners may prevent us from partnering with third party distributors and manufacturers to exploit new market opportunities or prevent us from bundling or reselling our products with third party products and services, or otherwise restrict how we might brand or market our products and services. Our content partners also impose restrictions on the content and composition of the packages we can make available to our customers and restrictions on how we might make some or all of our content available to customers (such as on a standalone basis, length of free trials or access modified or shorter form content). These restrictions may prevent us from responding dynamically to changing customer expectations or market demands or exploiting lucrative partnership opportunities. Content providers may also restrict the advertising that may be made available in connection with their content, including restrictions on the content and timing of such advertising, and restrictions on how advertising may be sold (such as a limit to sale on an aggregated, non-content specific basis only), which limits our opportunity to exploit potentially lucrative revenue streams.

Content providers may also only provide their content on a service that includes a minimum number of channels from other providers, or require that we only provide their content in specific service tiers that include a specific mix of programming. Certain provisions in these agreements could become a challenge to comply with if we were to lose rights under agreements with key programmers.

In addition, our content partners generally impose requirements on us to treat them at least as favorably as other major providers in various ways, such as equal treatment with respect to content recommendations, displays on user interfaces, the marketing and promotion of content and streaming quality standards. This may materially restrict the functionality and performance of our technology, particularly our proprietary recommendation engine. This may also prevent us from offering commercial benefits to certain content providers, limiting our capacity to negotiate favorable transactions and overall limiting our ability to provide improved products and services.

Our agreements with content providers are complex, with various rights restrictions and favorability obligations which impose onerous compliance obligations.

The content rights granted to us are complex and multi-layered and differ substantially across different content and content providers. We may be able to make certain content available on a video-on-demand basis or on certain devices but may be restricted from doing the same with other content, sometimes even with the same content provider. We are often not able to make certain content available at certain times or in certain geographical regions. In addition, our obligations to provide equality in the treatment between certain content providers require us to continuously monitor and assess treatment of content providers and content across our products and services.

These complex restrictions and requirements impose a significant compliance burden which is costly and challenging to maintain. A failure to maintain these obligations places us at risk of breaching our agreements with content providers, which could lead to loss of content and damages claims, which would ~~negatively~~have a negative impact on our products and service and our financial position.
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If our efforts to build a strong brand and to maintain customer satisfaction and loyalty are not successful, we may not be able to attract or retain subscribers, and our business may be harmed.

Building and maintaining a strong brand is important to our ability to attract and retain subscribers, as potential subscribers have a number of TV streaming choices. Successfully building a brand is a time-consuming and comprehensive endeavor and can be positively and negatively impacted by any number of factors. Some of these factors, such as the quality or pricing of our platform or our customer service, are within our control. Other factors, such as the quality of the content that our content publishers provide, may be out of our control, yet subscribers may nonetheless attribute those factors to us. Our competitors may be able to achieve and maintain brand awareness and market share more quickly and effectively than we can. Many of our competitors are larger companies and promote their brands through traditional forms of advertising, such as print media and TV commercials, and have substantial resources to devote to such efforts. Our competitors may also have greater resources to utilize Internet advertising or website product placement more effectively than we can. If we are unable to execute on building a strong brand, it may be difficult to differentiate our business and platform from our competitors in the marketplace; therefore, our ability to attract and retain subscribers may be adversely affected and our business may be harmed.

We rely upon a number of partners to make our service available on their devices.
We currently offer subscribers the ability to receive streaming content through a host of Internet-connected screens, including TVs, digital video players, television set-top boxes and mobile devices. Some of our agreements with key distribution partners give distribution partners the ability to terminate their carriage of our service at any time. If we are not successful in maintaining existing and creating new relationships, or if we encounter technological, content licensing, regulatory, business or other impediments to delivering our streaming content to our subscribers via these devices, our ability to retain subscribers and grow our business could be adversely impacted.
Our business could be adversely affected if a number of our partners do not continue to provide access to our service or are unwilling to do so on terms acceptable to us, which terms may include the degree of accessibility and prominence of our service. Furthermore, devices are manufactured and sold by entities other than fuboTV, and while these entities should be responsible for the devices’ performance, the connection between these devices and fuboTV may nonetheless result in consumer dissatisfaction toward fuboTV and such dissatisfaction could result in claims against us or otherwise adversely impact our business. In addition, technology changes to our streaming functionality may require that partners update their devices or may lead us to stop supporting the delivery of our service on certain legacy devices. If partners do not update or otherwise modify their devices, or if we discontinue support for certain devices, our service and our subscribers’ use and enjoyment could be negatively impacted.
We rely upon Google Cloud Platform and Amazon Web Services to operate certain aspects of our service, and any disruption of or interference with our use of Google Cloud Platform and/or Amazon Web Services would impact our operations and our business would be adversely impacted.
Each of Google Cloud Platform, or GCP, and Amazon Web Services, or AWS, provides a distributed computing infrastructure platform for business operations, or what is commonly referred to as a “cloud” computing service. We have architected our software and computer systems so as to utilize data processing, storage capabilities and other services provided by both GCP and AWS. Currently, we run the vast majority of our computing on GCP with some key components running on AWS. Given this, along with the fact that we cannot easily switch what is specifically running now on GCP and/or AWS to another cloud provider, any disruption of or interference with our use of GCP and/or AWS would impact our operations, and our business would be adversely impacted. Google (through YouTube TV) and, to a lesser extent, Amazon (through Amazon Prime) compete with us and, if Google or Amazon were to use GCP or AWS, respectively, in such a manner as to gain competitive advantage against our service, it could harm our business.
Risks Related to Our Financial Reporting and Disclosure
We identified material weaknesses in our internal control over financial reporting in 2019 and 2020 and while we continue to take steps to address the internal control deficiencies that contributed to the material weaknesses, a material weakness in our internal control over financial reporting still exists as it relates to non-routine transactions. We may identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which could lead investors to lose confidence in the accuracy and completeness of our financial reports.
As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and determine the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the SEC following the later of the date we are deemed to be an “accelerated filer” or a “large accelerated filer,” each as defined in the Exchange Act. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
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During 2020, we identified the following material weaknesses in our internal control over financial reporting with respect to the accounting for business combinations:
● We did not have appropriately designed internal controls in place at the time the Merger was consummated on April 1, 2020 with respect to the accounting for the business combination and the allocation of consideration to the acquired assets and assumed liabilities, including deferred income taxes; and
● Our internal controls over the review of accounting considerations for non-routine transactions and events were not appropriately designed with respect to the timing and consistency of performance.
In February 2021, the Company consummated the acquisition of a sports betting and interactive gaming company. Management took steps to address the internal control deficiencies that contributed to the foregoing material weaknesses, including:
● Extensive financial and legal due diligence performed by various members of the Company and outside legal counsel. Board of Directors reviewed the strategic business case and formally approved the transaction;
● Key model assumptions were supported by detailed documentation of the reasonableness of the assumptions used;
● Evaluated the competency of the valuation specialist engaged to determine the fair value of specific accounts on the opening balance sheet;
● Existence and completeness of assets acquired, and liabilities assumed as of the closing date were determined through specific procedures;
● Comprehensive technical accounting memo was prepared that documents the applicable accounting for business combinations; and
● The income tax impact of the acquisition was assessed and documented
In addition, during 2019, we identified additional material weaknesses in our internal control over financial reporting relating to the inappropriate application of U.S. GAAP and are undertaking remediation efforts with respect to these material weaknesses. While we believe that these efforts will improve our internal control over financial reporting, the implementation of these measures is ongoing and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. We cannot assure you that the measures we have taken to date, and are continuing to implement, will be sufficient to remediate the material weaknesses we have identified or avoid potential future material weaknesses. If the steps we take do not correct the material weaknesses in a timely manner, we will be unable to conclude that we maintain effective internal controls over financial reporting. Accordingly, there could continue to be a reasonable possibility that these deficiencies or others could result in a misstatement of our accounts or disclosures that would result in a material misstatement of our financial statements that would not be prevented or detected on a timely basis.
The process of designing and implementing internal control over financial reporting required to comply with Section 404 of the Sarbanes-Oxley Act is time consuming, costly, and complicated. If during the evaluation and testing process we identify one or more other material weaknesses in our internal control over financial reporting or determine that existing material weaknesses have not been remediated, our management will be unable to assert that our internal control over financial reporting is effective. Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal controls or the level at which our internal controls are documented, designed, implemented, or reviewed. If we are unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected and we could become subject to litigation or investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
Our actual operating results may differ significantly from our guidance.
From time to time, we may release guidance regarding our future performance. Such guidance is based upon a number of assumptions and estimates that, although presented with numerical specificity, are inherently subject to business, economic and competitive uncertainties and contingencies, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions, some of which will change. The principal reason that we release this data is to provide a basis for our management to discuss our business outlook with analysts and investors. We do not accept any responsibility for any projections or reports published by any third parties.
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Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the guidance furnished by us will not materialize or will vary significantly from actual results. Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of this prospectus. Any failure to successfully implement our operating strategy or the occurrence of any of the risks or uncertainties set forth in this prospectus could result in actual results being different than the guidance, and such differences may be adverse and material. In light of the foregoing, investors are urged to put the guidance in context and not to place undue reliance on it.
If we fail to comply with the reporting obligations of the Exchange Act, our business, financial condition, and results of operations, and investors’ confidence in us, could be materially and adversely affected.
As a public company, we are required to comply with the periodic reporting obligations of the Exchange Act, including preparing annual reports, quarterly reports, and current reports. In the past, we have failed to prepare and disclose this information in a timely manner. Our failure to prepare and disclose this information in a timely manner and meet our reporting obligations in their entirety could subject us to penalties under federal securities laws and regulations of the exchange we are listed on, expose us to lawsuits, and restrict our ability to access financing on favorable terms, or at all.
Prior to the Merger, fuboTV Pre-Merger was not a public company and FaceBank Pre-Merger had limited resources. Our management has faced significant challenges in consolidating the functions of fuboTV Pre-Merger and FaceBank Pre-Merger and their subsidiaries, including integrating their technologies, organizations, procedures, policies and operations. In connection with the Merger, we have been working to integrate certain operations of fuboTV Pre-Merger and FaceBank Pre-Merger, including, among other things, back-office operations, information technology and regulatory compliance.
We expect to experience significant growth in the number of our employees and the scope of our operations. Prior to such expansion, as a result of previously maintaining a limited staff, we may later determine that certain related party transactions were not properly identified, reviewed and approved prior to us entering into them with such related parties.
As we seek to increase staffing levels to manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and our limited experience in managing such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert or stretch our management and business development resources in a way that we may not anticipate. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.
Additionally, for certain of our recent Exchange Act filings, we have relied on an order (the “Order”) issued by the SEC pursuant to Section 36 of the Exchange Act (Release No. 34-88465), permitting filing extensions to certain public companies based on the COVID-19 pandemic. We relied upon this permissible extension in good faith after analyzing, among other things, the fact that our books and records were not easily accessible, which resulted in delays in preparation and completion of our financial statements, and that the various governmental mandatory closures of businesses have precluded our personnel, particularly our senior accounting staff, from obtaining access to our subsidiaries’ books and records necessary to prepare our financial statements. Following this analysis, we believe that we satisfied all eligibility criteria to take advantage of these extensions. If it is later determined that we were ineligible to rely upon the Order for such extensions, our filings could be deemed to be late, which could have a material adverse effect on our ability to raise capital, which could have a material adverse effect on our business, results of operations, and financial condition.
We will need to improve our operational and financial systems to support our expected growth, increasingly complex business arrangements, and rules governing revenue and expense recognition, and any inability to do so could adversely affect our billing services and financial reporting.
We have increasingly complex business arrangements with our content publishers and licensees, and the rules that govern revenue and expense recognition in our business are increasingly complex. To manage the expected growth of our operations and increasing complexity, we will need to improve our operational and financial systems, procedures and controls and continue to increase systems automation to reduce reliance on manual operations. Any inability to do so will negatively affect our billing services and financial reporting. Our current and planned systems, procedures and controls may not be adequate to support our complex arrangements and the rules governing revenue and expense recognition for our future operations and expected growth. Delays or problems associated with any improvement or expansion of our operational and financial systems and controls could adversely affect our relationships with our subscribers, content publishers or licensees; cause harm to our reputation and brand; and could also result in errors in our financial and other reporting.
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Our key metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may seriously harm and negatively affect our reputation and our business.
We regularly review key metrics related to the operation of our business, including, but not limited to Content Hours, Monthly Active Users (“MAU”), Monthly Content Hours Watched per MAU, ARPU, and number of subscribers, to evaluate growth trends, measure our performance, and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third party. While these numbers are based on what we believe to be reasonable estimates of our subscriber base for the applicable period of measurement, there are inherent challenges in measuring how our platform is used across large populations.
Errors or inaccuracies in our metrics or data could result in incorrect business decisions and inefficiencies. For instance, if a significant understatement or overstatement of MAUs were to occur, we may expend resources to implement unnecessary business measures or fail to take required actions to attract a sufficient number of subscribers to satisfy our growth strategies.
In addition, advertisers generally rely on third-party measurement services to calculate our metrics, and these third-party measurement services may not reflect our true audience. If advertisers, partners, or investors do not perceive our subscriber, geographic, or other demographic metrics to be accurate representations of our subscriber base, or if we discover material inaccuracies in our subscriber, geographic, or other demographic metrics, our reputation may be seriously harmed, and our business and operating results could be materially and adversely affected.
Preparing and forecasting our financial results requires us to make judgments and estimates which may differ materially from actual results, and if our operating and financial performance does not meet the guidance that we provide to the public, the market price of our common stock may decline.
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. We base such estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, but actual results may differ from these estimates. Using such estimates has the potential to negatively impact the results we report which could negatively impact our stock price.
In addition, we may, but are not obligated to, provide public guidance on our expected operating and financial results for future periods. Any such guidance will be comprised of forward-looking statements subject to the risks and uncertainties described in this prospectus and in our other public filings and public statements. Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of economic uncertainty. If, in the future, our operating or financial results for a particular period do not meet any guidance we provide or the expectations of investment analysts, or if we reduce our guidance for future periods, the market price of our common stock may decline.
Risks Related to Our Products and Technologies
TV streaming is highly competitive and many companies, including large technology and entertainment companies, TV brands, and service operators, are actively focusing on this industry. If we fail to differentiate ourselves and compete successfully with these companies, it will be difficult for us to attract or retain subscribers and our business will be harmed.
TV streaming is increasingly competitive and global. Our success depends in part on attracting and retaining subscribers on, and effective monetization of, our platform. To attract and retain subscribers, we need to be able to respond efficiently to changes in consumer tastes and preferences and continue to increase the type and number of content offerings. Effective monetization requires us to continue to update the features and functionality of our streaming platform for subscribers and advertisers.
Companies such as AT&T, Comcast, Cablevision, Cox and Altice, along with vMVPDs, such as YouTube TV, Hulu Live and Sling TV offer TV streaming products that compete with our platform. In many cases, these competitors have the financial resources to subsidize the cost of their streaming devices in order to promote their other products and services making it harder for us to acquire new subscribers and increase hours streamed. Similarly, some service operators, such as Comcast and Cablevision, offer TV streaming applications as part of their cable service plans and can leverage their existing consumer bases, installation networks, broadband delivery networks and name recognition to gain traction in the TV streaming market. Some of these companies also promote their brands through traditional forms of advertising, such as TV commercials, as well as Internet advertising or website product placement, and have greater resources than us to devote to such efforts.
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In addition, many TV brands, such as LG, Samsung Electronics Co., Ltd. and VIZIO, Inc., offer their own TV streaming solutions within their TVs. Other devices, such as Microsoft’s Xbox and Sony’s PlayStation game consoles and many DVD and Blu-ray players, also incorporate TV streaming functionality.
We expect competition in TV streaming from the large technology companies and service operators described above, as well as new and growing companies, to increase in the future. This increased competition could result in pricing pressure, lower revenue and gross profit or the failure of our platform to gain or maintain broad market acceptance. To remain competitive, we need to continuously invest in product development and marketing. We may not have sufficient resources to continue to make the investments needed to maintain our competitive position. In addition, many of our competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical, sales, marketing and other resources than us, which provide them with advantages in developing, marketing or servicing new products and offerings. As a result, they may be able to respond more quickly to market demand, devote greater resources to the development, promotion and sales of their products or the distribution of their content, and influence market acceptance of their products better than we can. These competitors may also be able to adapt more quickly to new or emerging technologies or standards and may be able to deliver products and services at a lower cost. New entrants may enter the TV streaming market with unique service offerings or approaches to providing video. In addition, our competitors may enter into business combinations or alliances that strengthen their competitive positions. Increased competition could reduce our market share, revenue and operating margins, increase our operating costs, harm our competitive position and otherwise harm our business.
If the advertisements on our platform are not relevant or not engaging to our subscribers, our growth in active accounts and hours streamed may be adversely impacted.
We have made, and are continuing to make, investments to enable advertisers to deliver relevant advertising content to subscribers on our platform. Existing and prospective advertisers may not be successful in serving ads that lead to and maintain user engagement. Those ads may seem irrelevant, repetitive or overly targeted and intrusive. We are continuously seeking to balance the objectives of our subscribers and advertisers with our desire to provide an optimal user experience, but we may not be successful in achieving a balance that continues to attract and retain subscribers and advertisers. If we do not introduce relevant advertisements or such advertisements are overly intrusive and impede the use of our TV streaming platform, our subscribers may stop using our platform which will harm our business.
We may not be successful at expanding our content to areas outside our current content offering and even if we are able to expand into other content areas and sustain such expansion, we may not be successful in overcoming our reputation as primarily a live sports streaming service.
We currently have a reputation as primarily a live sports streaming service. We are making efforts to expand our content offerings outside live sports streaming, and currently offer a wide selection of news and entertainment content. However, we may not be successful at expanding our content to areas outside our current content offering, or maintaining content from our current content offering, and even if we are able to expand into other content areas and sustain such expansion, we may not be successful in overcoming our reputation as primarily a live sports streaming service.
If TV streaming develops more slowly than we expect, our operating results and growth prospects could be harmed. In addition, our future growth depends in part on the growth of TV streaming advertising.
TV streaming is a relatively new and rapidly evolving industry, making our business and prospects difficult to evaluate. The growth and profitability of this industry and the level of demand and market acceptance for our platform are subject to a high degree of uncertainty.
We believe that the continued growth of streaming as an entertainment alternative will depend on the availability and growth of cost-effective broadband Internet service, the quality of broadband content delivery, the quality and reliability of new devices and technology, the cost for subscribers relative to other sources of content, as well as the quality and breadth of content that is delivered across streaming platforms. These technologies, products and content offerings continue to emerge and evolve. Subscribers, content publishers or advertisers may find TV streaming platforms to be less attractive than traditional TV, which would harm our business. In addition, many advertisers continue to devote a substantial portion of their advertising budgets to traditional advertising, such as TV, radio and print. The future growth of our business depends in part on the growth of TV streaming advertising, and on advertisers increasing spend on such advertising. We cannot be certain that they will do so. If advertisers do not perceive meaningful benefits of TV streaming advertising, then this market may develop more slowly than we expect, which could adversely impact our operating results and our ability to grow our business.
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Changes in competitive offerings for entertainment video, including the potential rapid adoption of piracy-based video offerings, could adversely impact our business.
The market for entertainment video is intensely competitive and subject to rapid change. Through new and existing distribution channels, consumers have increasing options to access entertainment video. The various economic models underlying these channels include subscription, transactional, ad-supported, and piracy-based models. All of these have the potential to capture meaningful segments of the entertainment video market. Piracy in particular, threatens to damage our business, as its fundamental proposition to consumers is so compelling and difficult to compete against: virtually all content for free. Furthermore, in light of the compelling consumer proposition, piracy services are subject to rapid global growth. Traditional providers of entertainment video, including broadcasters and cable network operators, as well as Internet based e-commerce or entertainment video providers are increasing their streaming video offerings.
Several of these competitors have long operating histories, large customer bases, strong brand recognition, exclusive rights to certain content and significant financial, marketing and other resources. They may secure better terms from suppliers, adopt more aggressive pricing and devote more resources to product development, technology, infrastructure, content acquisitions and marketing. New entrants may enter the market or existing providers may adjust their services with unique offerings or approaches to providing entertainment video. Companies also may enter into business combinations or alliances that strengthen their competitive positions. If we are unable to successfully compete with current and new competitors, our business will be adversely affected, and we may not be able to increase or maintain market share or revenues.
Our products and services related to sports betting will cause our business to become subject to a variety of related U.S. and foreign laws, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business. The violation of any such laws, any adverse change in any such laws or their interpretation, or the regulatory climate applicable to these contemplated products and services, or changes in tax rules and regulations or interpretation thereof related to these contemplated products and services, could adversely impact our ability to operate our business as we seek to operate in the future, and could have a material adverse effect on our financial condition and results of operations.
The intended expansion of our business into sports betting will generally subject to laws and regulations of the jurisdictions in which we will conduct our business or in some circumstances, of those jurisdictions in which our services are offered or are available, as well as the general laws and regulations that apply to all e-commerce businesses, such as those related to privacy and personal information, tax and consumer protection. These laws and regulations vary from one jurisdiction to another and future legislative and regulatory action, court decisions or other governmental action, which may be affected by, among other things, political pressures, attitudes and climates, as well as personal biases, may (along with existing laws and regulations) have a material adverse impact on our operations and financial results, or may prevent us from expanding into such businesses entirely. In particular, some jurisdictions have introduced regulations attempting to restrict or prohibit online gaming, while others have taken the position that online gaming should be licensed and regulated and have adopted or are in the process of considering legislation and regulations to enable that to happen. There is also risk that the federal government of the U.S. will enact new legislation relating to gaming, online gaming or sports wagering, or alter its interpretation of existing federal law as related to gaming, online gaming or sports wagering, which would have the effect of the limiting, delaying or halting the expansion of online gaming or sports wagering throughout the U.S.
Our growth prospects may also depend on the legal status of real-money gaming in various jurisdictions, predominantly within the U.S., which is an initial area of focus, and legalization may not occur in as many states as we expect or may occur at a slower pace than we anticipate. Additionally, even if jurisdictions legalize real money gaming, this may be accompanied by legislative or regulatory restrictions and/or taxes that make it impracticable or less attractive to operate in those jurisdictions, or the process of implementing regulations or securing the necessary licenses to operate in a particular jurisdiction may take longer than we anticipate, which could adversely affect our future results of operations and make it more difficult to meet our expectations for financial performance.
In connection with the foregoing, future legislative and regulatory action, and court decisions or other governmental action, may have a material adverse impact on our operations and financial results. Governmental authorities could view us as having violated applicable laws, despite efforts to obtain all applicable licenses or approvals and otherwise comply with such laws. There is also a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or public entities or incumbent monopoly providers, or private individuals, could be initiated against us, Internet service providers, credit card and other payment processors, advertisers and others involved in the sports betting industry who partner with, service or work with or for us. Such potential proceedings could involve substantial litigation expense, penalties, fines, seizure of assets, injunctions or other restrictions being imposed upon us or our licensees or other business partners, while diverting the attention of key executives. Such proceedings could have a material adverse effect on our business, financial condition, results of operations, and prospects, as well as impact our reputation.
Furthermore, there can be no assurance that legally enforceable legislation will not be proposed and passed in jurisdictions relevant or potentially relevant to our business to prohibit, legislate or regulate various aspects of the sports betting industry (or that existing laws in those jurisdictions will not be interpreted negatively). Compliance with any such legislation may have a material adverse effect on our business, financial condition and results of operations, either as a result of our determination not to offer products or services in a jurisdiction or to cease doing so, or because a local license or approval may be costly for us or our business partners to obtain and/or such licenses or approvals may contain other commercially undesirable conditions.
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Our anticipated participation in the sports betting industry may expose us to risks to which we have not previously been exposed, including risks related to trading, liability management, pricing risk, payment processing, palpable errors, and reliance on third-party sports data providers for real-time and accurate data for sporting events, among others. We may experience lower than expected profitability and potentially significant losses as a result of a failure to determine accurately the odds in relation to any particular event and/or any failure of its sports risk management processes.
Participation in the sports, sports betting industry will expose our business to new risks that we have limited experience in handling. The nature and extent of such risks may be difficult to anticipate at this time, and therefore we may be relatively unprepared to manage these risks or may obtain inadequate insurance to cover potential claims resulting from these risks.
Examples of these risks include:
● There can be significant variation in gross win percentage event-by-event and day-by-day, and odds compilers and risk managers are capable of human error; thus even allowing for the fact that a number of betting products are subject to capped pay-outs, significant volatility can occur. In addition, it is possible that there may be such a high volume of trading during any particular period that even automated systems would be unable to address and eradicate all risks.
● In some cases, the odds offered on a website constitute an obvious error, such as inverted lines between teams, or odds that are significantly different from the true odds of the outcome in a way that all reasonable persons would agree is an error. It is commonplace virtually worldwide for operators to void bets associated with such palpable errors, and in most mature jurisdictions these bets can be voided without regulatory approval at operator discretion, but in the U.S., it is unclear long term if state regulators will consistently approve voids or re-setting odds to correct odds on such bets, and in some cases, we may require regulatory approval to void palpable errors ahead of time. If regulators were to not allow voiding of bets associated with large obvious errors in odds making, we could be subject to covering significant liabilities.
● We may need to rely on other third-party sports data providers for real-time and accurate data for sporting events, and if such third parties do not perform adequately or terminate their relationships with us, our costs may increase and our business, financial condition and results of operations could be adversely affected.
● Our ability to offer products and services related to sports wagering will be dependent on the occurrence of a wide-variety of professional, collegiate and amateur sporting events upon which wagers may be offered, subject to the laws and regulations of the jurisdictions in which we operate. The cancellation or postponement of such sporting events due to pandemic, government action or labor dispute could consequently limit our ability to offer our sports wagering products or services.
Any of the foregoing risks, or other risks we fail to anticipate as we expand our business into the sports betting industry, could expose us to significant liability or have a material adverse effect on our business, financial condition and results of operations.
Our future sports betting business depends on our ability to gain market access in states as such states legalize sports wagering activities, the inability to gain such market access could have negative impacts on our future growth.
The prevailing trend in the U.S. is for states to require sports wagering to be conducted by or through an existing licensed casino or racetrack. In such states where mobile or internet-based sports wagering is legal, each casino or racetrack often is permitted to offer sports wagering through a limited number of branded websites, known as skins. The number of skins each casino or racetrack is permitted to offer varies by state and is dictated by law, regulation, or policy. Casinos and racetracks have, accordingly, begun to enter into agreements to allow third-party sports wagering operators to operate skins through the casino’s or racetrack’s license. Further, certain of these agreements provide for a sports wagering operator to obtain “second skin” or “third skin” access, meaning that another operator has the right to operate the first, and potentially the second, skin of a casino, to the extent permitted by law. Consequently, if a state does not permit casinos or racetracks to have more than one skin (or more than two skins as the case may be), an operator’s right to utilize a second (or third skin as the case may be) is rendered meaningless in such state. We may enter into agreements allowing us market access via the right to operate specific skins. Certain of these agreements may contemplate us receiving second or third skins. Accordingly, should states not permit our future casino or racetrack partners to offer sports wagering through an adequate number of skins, we would not have access to such markets (unless we enter into additional agreements for market access). Our inability to gain access to offer mobile and internet sports wagering in states as such states legalize sports wagering could have a material adverse effect on our business.
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Our business depends on the ongoing support of payment processors, the quality and cost of which may be variable in certain jurisdictions.
Our sports wagering business will depend on payment processing providers to facilitate the movement of funds between our sportsbook and our customer base. Anything that could interfere with or otherwise harm the relationships with payment service providers could have a material adverse effect on our businesses. Our ability to accept payments from our customers or facilitate withdrawals by them may be restricted by any introduction of legislation or regulations restricting financial transactions with online or mobile sports wagering operators or prohibiting the use of credit cards and other banking instruments for online or mobile sports wagering transactions, or by any other increase in the stringency of regulation of financial transactions, whether in general or in relation to the gambling industry in particular.
Stricter money laundering regulations may also affect the quickness and accessibility of payment processing systems, resulting in added inconvenience to customers. Card issuers and acquirers may dictate how transactions and products need to be coded and treated which could also make an impact on acceptance rates. Card issuers, acquirers, payment processors and banks may also cease to process transactions relating to the online or mobile sports wagering industry as a whole or as to certain operators. This would be due to reputational and/or regulatory reasons or in light of increased compliance standards of such third parties that seek to limit their business relationships with certain industry sectors considered as “high risk” sectors. It may also result in customers being dissuaded from accessing our product offerings if they cannot use a preferred payment option or the quality or the speed of the supply is not suitable or accessible. Any such developments may have a material and adverse effect on our future financial position.
Our sports betting business may experience significant losses with respect to individual events or betting outcomes.
Our sports betting fixed-odds betting products will involve betting where winnings are paid on the basis of the stake placed and the odds quoted. Odds are determined with the objective of providing an average return to the bookmaker over a large number of events and therefore, over the long term. In contrast, there can be significant variation in gross win percentage event-by-event and day-by-day. We will have systems and controls seeking to reduce the risk of daily losses occurring on a gross-win basis, but there can be no assurance that these will be effective in reducing their exposure, and consequently, our exposure to this potential risk in the future. As a result, in the short term, there is less certainty of generating a positive gross win, and we may experience significant losses with regard to individual events or betting outcomes, specifically if large, individual bets are placed on an event or betting outcome or series of events or betting outcomes. Odds compilers and risk managers are capable of human error, thus even noting that a number of betting products are subject to capped pay-outs, significant volatility can occur. Furthermore, there may be such a volume of trading during any particular period that even automated systems would be unable to address and eradicate all risks. Any significant losses on a gross-win basis could have a material adverse effect on our business and its cash flows. This can result in a material adverse effect on its business, financial condition, and results of operations.
Our betting operations can fluctuate due to seasonal trends and other factors. Our operations (and thus their financial performance) are also dependent on the seasonal variations dictated by various sports calendars, which will have an effect on our financial performance of such operations.
Although we will implement systems and controls to monitor and manage such risk stated above, there can be no assurance that these systems and controls will be effective in reducing the exposure to this risk. The effect of future fluctuations and single event losses could have a material adverse effect on our cash flows. This would create material adverse effect on our business, results of operations, financial condition and prospects.
The online and mobile sports wagering industries are intensely competitive and our potential inability to compete successfully could have a significant adverse impact.
There is heightened competition among online and mobile sports wagering providers. The online and mobile sports wagering industries are shaped by increasing consumer demand and technological advances in the industry. These advances create greater and stronger competition for us. A number of established, well-financed companies producing online and mobile sports wagering products and services compete with our proposed product and service offerings. These competitors may spend more money and time on developing and testing products and services, undertake more extensive marketing campaigns, adopt more aggressive pricing or promotional policies, or otherwise develop more commercially successful products or services than us, which could negatively impact our business.
We must continually introduce and successfully market new and innovative technologies, product offerings and product enhancements to remain competitive and effectively procure customer demand, acceptance, and engagement as a result of the intense industry competition, along with other factors. The process of developing new product offerings and systems is unclear and complex, and new product offerings may not be well received by customers. Although we intend to continue investing in research and development, there can be no assurance that such investments will lead to successful new technologies or timely new product offerings or enhanced existing product offerings with product life cycles long enough to be successful. We may not recover the often substantial up-front costs of developing and marketing new technologies and product offerings, or recover the opportunity cost of diverting management and financial resources away from other technologies and product offerings.
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If the technology we use in operating our business fails, is unavailable, or does not operate to expectations, our business and results of operation could be adversely impacted.
We utilize a combination of proprietary and third-party technology to operate our business. This includes the technology that we have developed to recommend and merchandise content to our consumers as well as enable fast and efficient delivery of content to our subscribers and their various consumer electronic devices. For example, as part of the content delivery systems, we use third-party ~~content delivery networks (“CDNs”).~~CDNs. To the extent Internet Service Providers (“ISPs”) do not interconnect with our CDN or charge us to access their networks, or if we experience difficulties in our CDN’s operation, our ability to efficiently and effectively deliver our streaming content to our subscribers could be adversely impacted and our business and results of operation could be adversely affected.

Likewise, our system for predicting subscriber content preferences is based on advanced data analytics systems and our proprietary algorithms. We have invested, and will continue to invest, significant resources in refining these technologies; however, we cannot assure you that such investments will yield an attractive return or that such refinements will be effective. The effectiveness of our ability to predict subscriber content preferences depends in part on our ability to gather and effectively analyze large amounts of subscriber data. Our ability to predict content that our subscribers enjoy is critical to the perceived value of our platform among subscribers and failure to make accurate predictions could materially adversely affect our ability to adequately attract and retain subscribers and sell advertising to meet investor expectations for growth or to ~~operate the business profitably.~~generate revenue. We also utilize third-party technology to help market our service, process payments, and otherwise manage the daily operations of our business. If our technology or that of third-parties we utilize in our operations fails or otherwise operates improperly, including as a result of “bugs” in our development and deployment of software, our ability to operate our service, retain existing subscribers and add new subscribers may be impaired. Any harm to our subscribers’ personal computers or other devices caused by software used in our operations could have an adverse effect on our business, results of operations and financial condition.
Risks Related to Regulation
The gaming industry is heavily regulated and our failure to obtain or maintain applicable licensure or approvals, or otherwise comply with applicable requirements, could be disruptive to our business and could adversely affect our operations.
We and our officers, directors, major shareholders, key employees, and business partners will generally be subject to the laws and regulations relating to sports wagering of the jurisdictions in which we will conduct such business.
The jurisdictions where we will operate have, or will have, their own regulatory framework, more often than not these frameworks will require us to receive a license. Each jurisdiction will normally require us to make detailed and extensive disclosures as to their beneficial ownership, their source of funds, the suitability and integrity of certain persons associated with the applicant, the applicant’s management competence, structure, and business plans, the applicant’s proposed geographical territories of operation, and the applicant’s ability to operate a gaming business in a socially responsible manner in compliance with regulation. Such jurisdictions will also impose ongoing reporting and disclosure obligations, both on a periodic and ad hoc basis in response to material issues affecting the business.
Our gaming-related technology will also be subject to testing and certification, generally designed to confirm matters such as the fairness of the gaming products offered by the business, their ability to accurately generate settlement instructions, and recover from outages.
Any gaming license may be revoked, suspended, or conditioned at any time. The loss of a gaming license in one jurisdiction, or failure to comply with regulatory requirements in a particular jurisdiction, could prompt the loss of a gaming license or affect our eligibility for such a license in another jurisdiction, could impact our ability to comply with licensing and regulatory requirements in other jurisdictions, or could cause the rejection of license applications or cancelation of existing licenses in other jurisdictions, or could cause payment processors or other third parties to stop providing services to us which we may rely upon to deliver or promote our services. These potential losses could cause us to cease offering some or all of its product offerings in the impacted jurisdictions. We may be unable to obtain or maintain all necessary registrations, licenses, permits or approvals, and could incur fines or experience delays related to the licensing process, which could adversely affect its operations. The process of determining suitability may be expensive and time-consuming. Our delay or failure to obtain gaming licenses in any jurisdiction may prevent us from offering its products in such jurisdiction, increasing our customer base and/or generating revenues. A gaming regulatory body may refuse to issue or renew a gaming license if we, or one of its directors, officers, employees, major shareholders or business partners: (i) is considered to be a detriment to the integrity or lawful conduct or management of gaming, (ii) no longer meets a licensing or registration requirement, (iii) has breached or is in breach of a condition of licensure or registration or an operational agreement with a regulatory authority, (iv) has made a material misrepresentation, omission or misstatement in an application for licensure or registration or in reply to an inquiry by a person conducting an audit, investigation or inspection for a gaming regulatory authority, (v) has been refused a similar gaming license in another jurisdiction, (vi) has held a similar gaming license in that state or another jurisdiction which has been suspended, revoked or cancelled, or (vii) has been convicted of an offence, inside or outside of the U.S. that calls into question the honesty or integrity of us or any of our directors, officers, employees or associates.
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Furthermore, our product offerings must be approved in most regulated jurisdictions in which they are offered; this process cannot be assured or guaranteed. It is a prolonged, potentially costly process to obtain these approvals. A developer and provider of online or mobile sports wagering products may pursue corporate regulatory approval with regulators of a particular jurisdiction while it pursues technical regulatory approval for its product offerings by that same jurisdiction. It is also possible that after incurring significant expenses and dedicating substantial time and effort towards such regulatory approvals, we may not obtain either of them. In the event we fail to obtain the necessary gaming license in a given jurisdiction, we would likely be prohibited from operating in that particular jurisdiction altogether. If we fail to seek, do not receive, or receive a suspension or revocation of a license in a particular jurisdiction for our product offerings (including any related technology and software), then we cannot operate in that jurisdiction and our gaming licenses in other jurisdictions may be impacted. We may not be able to obtain all necessary gaming licenses in a timely manner, or at all. These delays in regulatory approvals or failure to obtain such approvals may also serve as a barrier to entry to the market for our product offerings. Our operations and future prospects will be affected if we are unable to overcome these barriers to entry.
To the extent new sports wagering jurisdictions are established or expanded, we cannot guarantee we will be successful in penetrating such new jurisdictions or expanding our business or customer base in line with the growth of existing jurisdictions. As we directly or indirectly enter into new markets, we may encounter legal, regulatory, and political challenges that are difficult or impossible to foresee and which could result in an unforeseen adverse impact on planned revenues or costs associated with the new market opportunity. In the event we are unable to effectively develop and operate directly or indirectly within these new markets or if our competitors are able to successfully penetrate geographic markets that we cannot access or where we face other restrictions, then our business, operating results, and financial condition could be impaired. Our failure to obtain or maintain the necessary regulatory approvals in jurisdictions, whether individually or collectively, would have a material adverse effect on our business. We may need to be licensed, obtain approvals of our products and/or seek licensure of our officers, directors, major shareholders, key employees or business partners to expand into new jurisdictions. This is a costly and time-consuming process. Any delays in obtaining or difficulty in maintaining regulatory approvals needed for expansion within existing markets or into new jurisdictions can negatively affect our opportunities for growth. This includes the growth of our customer base, or delay in our ability to recognize revenue from our product offerings in any such jurisdictions.
Future legislative and regulatory action, and court decisions or other governmental action, may have a material impact on our operations and financial results. There can be no assurance that legally enforceable and prohibiting legislation will not be proposed and passed in jurisdictions relevant or potentially relevant to our business to prohibit, legislate, or regulate various aspects of the Internet, e-commerce, payment processing, or the online and mobile wagering and interactive entertainment industries (or that existing laws in those jurisdictions will not be interpreted negatively). Moreover, legislation may require us to pay certain fees in order to operate a sports wagering-related business. Such fees include integrity fees paid to sports leagues and/or fees required to obtain official sports-wagering related data. Compliance with any such legislation may have a material adverse effect on our business, financial condition and results of operations. We will strive to comply with all applicable laws and regulations relating to our business, However, it is possible that any requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules. Non-compliance with any such law or regulations could expose us to claims, proceedings, litigation and investigations by private parties and regulatory authorities, as well as substantial fines and negative publicity, each of which may have a material adverse effect on our business, financial condition, and results of operations.
We will be subject to regulatory investigations, which could cause us to incur substantial costs or require us to change our business practices in a materially adverse manner.
We expect to receive formal and informal inquiries from government authorities and regulators from time to time, including securities authorities, tax authorities and gaming regulators, regarding its compliance with laws and other matters. We expect to continue to be the subject of investigations and audits in the future as we continue to grow and expand our operations. Violation of existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties providing a negative effect on our financial condition and results of operations. In addition, there is a possibility that future orders issued by, or inquiries or enforcement actions initiated by, government or regulatory authorities may cause us to incur substantial costs, expose us to unanticipated civil and criminal liability or penalties, or require us to change our business practices that may have materially adverse effects to our business.
We may not be able to capitalize on the expansion of sports wagering, including due to laws and regulations governing this industry.
We intend to capitalize on the expansion of legalized sports wagering throughout the U.S. The success of online and mobile sports wagering and our product offerings may be affected by future developments in social networks, mobile platforms, regulatory developments, payment processing laws, data and information privacy laws, and other factors that we are unable to predict and are beyond our control. Following these unpredictable issues, our future operating results relating to our sports wagering products are difficult to anticipate, and we cannot provide assurance that our product offerings will grow as expected or with success in the long term.
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Additionally, our ability to successfully pursue our sports wagering strategy depends on the laws and regulations relating to wagering through interactive channels. There is considerable debate over online and interactive real-money gaming and opposition to it as well. There can be no assurance that this opposition will not succeed in preventing the legalization of online and mobile sports wagering in jurisdictions where it is presently prohibited, prohibiting, or limiting the expansion of such activities where it is currently permitted or causing the repeal of legalized online or mobile sports wagering in any jurisdiction. Any successful effort to limit the expansion of, or prohibit legalized online or mobile sports wagering could have an adverse effect on our results of operations, cash flows and financial condition. Combatting such efforts to curtail expansion of, or limit or prohibit, legalized online and mobile sports wagering can again be time-consuming and can be extremely costly.
If we fail to comply with any existing or future laws or requirements, regulators may take action against us. This action could include fines, the conditioning, suspension or revocation of approvals, registrations, permits or licenses, and other disciplinary action. If we fail to adequately adjust to any such potential changes, its business, results of operations or financial condition could also be harmed.
Our shareholders will be subject to extensive governmental oversight, and if a shareholder is found unsuitable by a gaming authority, that shareholder may not be able to beneficially own, directly or indirectly, certain of our securities.
A number of jurisdictions’ gaming laws may require any of our shareholders to file an application, be investigated, and qualify or have his, her, or its suitability determined by gaming authorities. Gaming authorities have very broad discretion when ruling on whether an applicant should be deemed suitable or not. Subject to certain administrative proceeding requirements, the gaming authorities have the authority to deny any application or limit, condition, revoke or suspend any gaming license, or fine any person licensed, registered or found suitable or approved, for any cause deemed reasonable by the gaming authorities.
Any person found unsuitable by a gaming authority may not hold directly or indirectly ownership of any voting security or the beneficial or record ownership of any nonvoting security or any debt security of any company that is licensed with the relevant gaming authority beyond the time prescribed by the relevant gaming authority. A finding of unsuitability by a particular gaming authority impacts that person’s ability to associate or affiliate with gaming licensees in that specific jurisdiction and could impact the person’s ability to associate or affiliate with gaming license holders in other jurisdictions.
Many jurisdictions also require any person who obtains a beneficial ownership of more than a certain percentage, most normally 5%, of voting securities of a publicly-traded gaming company or parent company thereof and, in some jurisdictions, non-voting securities to report the acquisition to gaming authorities. Gaming authorities may require such holders to apply for qualification or a finding of suitability, subject to limited exceptions for “institutional investors” that hold a company’s voting securities for investment purposes only. Other jurisdictions may also limit the number of gaming licenses with which a person may be associated.
As a result, we intend to seek shareholder approval to adopt certain amendments to our articles of incorporation to facilitate compliance with applicable gaming regulations. These amendments, if approved, would provide us with the right, subject to certain conditions set forth in our articles of incorporation, to redeem shares held by an unsuitable person. Such redemption may be made at the per share purchase price of the lesser of then fair market value and the price at which the stockholder acquired the shares. Such redemption rights may negatively affect the trading price and/or liquidity of our shares. The utilization of such redemption rights may also negatively impact our cash flows and financial condition.
If government regulations relating to the Internet or other areas of our business change, we may need to alter the manner in which we conduct our business and we may incur greater operating expenses.
We are subject to general business regulations and laws, as well as regulations and laws specific to the Internet, which may include laws and regulations related to user privacy, data protection, information security, consumer protection, payment processing, taxation, intellectual property, electronic contracts, Internet access and content restrictions. We cannot guarantee that we have been or will be fully compliant in every jurisdiction. Litigation and regulatory proceedings are inherently uncertain, and the laws and regulations governing issues such as privacy, payment processing, taxation and consumer protection related to the Internet continue to develop.
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For example, laws relating to the liability of providers of online services for activities of their subscribers and other third parties have been tested by a number of claims, including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark infringement, and other theories based on the nature and content of the materials searched, the advertisements posted or the content provided by subscribers. In some instances, we have certain protections against claims related to such subscriber generated content, including or defamatory content. Specifically, Section 230 of the Communications Decency Act (the “CDA”) provides immunity from liability for providers of an interactive computer service who publish defamatory information provided by users of the service. Immunity under the CDA has been well-established through case law. On a regular basis, however, challenges to both laws seek to limit immunity. For example, a recent executive order and a letter from several senators to the Federal Communications Commission (the “FCC”) have renewed calls for the protections of Section 230 to be scaled back. Any such changes could affect our ability to claim protection under the CDA.
Moreover, as Internet commerce and advertising continues to evolve, increasing regulation by federal, state and foreign regulatory authorities becomes more likely. For example, California’s Automatic Renewal Law requires companies to adhere to enhanced disclosure requirements when entering into automatically renewing contracts with consumers. Other states have enacted similar laws in recent years. As a result, a wave of consumer class action lawsuits has been brought against companies that offer online products and services on a subscription or recurring basis, and we have received a letter alleging that we may have violated such a law. Any failure, or perceived failure, by us to comply with any of these laws or regulations could result in damage to our reputation, lost business, and proceedings or actions against us by governmental entities or others, which could impact our operating results. As we improve our TV streaming platform, we may also be subject to new laws and regulations specific to such technologies.
We are subject to payment processing risk.
Acceptance and processing of payments are subject to certain rules and regulations, including additional authentication and security requirements for certain payment methods, and require payment of interchange and other fees. To the extent there are increases in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors, changes to rules or regulations concerning payments, loss of payment partners and/or disruptions or failures in the operations or security of our payment processing systems, partner systems or payment products, including products we use to update payment information, our revenue, operating expenses and results of operation could be adversely impacted.
We may be subject to fines or other penalties imposed by the Internal Revenue Service and other tax authorities.
Certain of our subsidiaries are currently delinquent in filing annual tax returns with the Internal Revenue Service and several states. We are in the process of working with our subsidiaries to remedy this issue by filing these delinquent tax returns. We may be subject to penalties and interest with the tax authorities because of the late tax returns. There can be no assurance that we will remedy our delinquent filings sufficiently, and we may face penalties and fees which would adversely affect our operating results and investors’ confidence in our internal operations.
We could be required to collect additional sales and other similar taxes or be subject to other tax liabilities that may increase the costs our customers would have to pay for our subscriptions and adversely affect our operating results.
Sales and use, value-added, goods and services, and similar tax laws and rates are complicated and vary greatly by jurisdiction. There is significant uncertainty as to what constitutes sufficient nexus for a state or local jurisdiction to levy taxes, fees, and surcharges for sales made over the internet, as well as whether our subscriptions are subject to tax in various jurisdictions. The vast majority of states have considered or adopted laws that impose collection obligations on out-of-state companies for such taxes. Additionally, the Supreme Court of the U.S. ruled in South Dakota v. Wayfair, Inc. et. al. (Wayfair) that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments may enforce laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. We have not always collected sales and other similar taxes in all jurisdictions in which we are required to. We may be obligated to collect and remit sales tax in jurisdictions in which we have not previously collected and remitted sales tax. A successful assertion by one or more states requiring us to collect taxes where we historically have not or presently do not do so could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us and decrease our future sales, which could adversely affect our business and operating results.
We are subject to taxation-related risks in multiple jurisdictions.
We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Judgment is required in determining our global provision for income taxes, value added and other similar taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis. It is possible that our tax positions may be challenged by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.
Tax laws are being re-examined and evaluated globally. New laws and interpretations of the law are taken into account for financial statement purposes in the quarter or year that they become applicable. Tax authorities are increasingly scrutinizing the tax positions of multinational companies. If U.S. or other foreign tax authorities change applicable tax laws, our overall liability could increase, and our business, financial condition or results of operations may be adversely impacted.
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Social responsibility concerns and public opinion can significantly influence the regulation of sports wagering and impact responsible gaming requirements, each of which could impact our business and could adversely affect our operations.
Public opinion can meaningfully affect sports wagering regulation. A negative shift in sports wagering perception by the public, by politicians or by others could impact future legislation or regulation in different jurisdictions. Moreover, such a shift could cause jurisdictions to abandon proposals to legalize sports wagering, thereby limiting the number of new jurisdictions into which we could expand. Negative public perception also can lead to new, harsher restrictions on sports wagering. It also could promote prohibition of sports wagering in jurisdictions where sports wagering is presently legal.
Concerns with responsible betting and gaming could lead to negative publicity, resulting in increased regulatory attention, which may result in restrictions on our operations. If we had to restrict our marketing or product offerings or incur increased compliance costs, a material adverse effect on its business, results of operations, financial condition and prospects could result.
Risks Related to Our Operations
The COVID-19 pandemic and the global attempt to contain it may harm our industry, business, results of operations and ability to raise additional capital.
The global spread of COVID-19 and the various attempts to contain it created significant volatility, uncertainty and economic disruption. In response to government mandates, health care advisories and employee concerns, we have altered certain aspects of our operations. Travel has been curtailed, and numerous professional and college sports leagues have cancelled or altered seasons and events. As a result, our broadcasting partners had and are having to substitute other content in the place of previously scheduled live sporting events. While professional sports are returning in the United States, there is no guarantee that those seasons continue uninterrupted or at all. The potential further delay or cancellation of professional and college sports may cause us to temporarily have less popular content available on our platform, which could negatively impact consumer demand for and subscription retention to our platform and our number of paid subscribers.
The full extent to which the COVID-19 pandemic and the various responses to it impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the actions of professional and college sports leagues; the availability and cost to access the capital markets; the effect on our subscribers and subscriber demand for and ability to pay for our platform; disruptions or restrictions on our employees’ ability to work and travel; and interruptions or restrictions related to the provision of streaming services over the internet, including impacts on content delivery networks and streaming quality. During the COVID-19 pandemic, we may not be able to provide the same level of customer service that our subscribers are used to, which could negatively impact their perception of our platform resulting in an increase in cancellations. There can be no assurance that financing may be available on attractive terms, if at all. Our workforce has had to spend a significant amount of time working from home, which may impact their productivity. Such limitations caused by the pandemic have also resulted in us seeking extensions for our current and periodic filings with the SEC. We will continue to actively monitor the issues raised by the COVID-19 pandemic and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, subscribers and shareholders. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our subscribers, or on our financial results.
We could be subject to claims or have liability based on defects with respect to certain historical corporate transactions that were not properly authorized or documented.
We have determined that there have been defects with respect to certain historical corporate transactions, including transactions that were not or may not have been properly approved by our board of directors, transactions that may have breached our organizational documents, or transactions that may not have been adequately documented.
While we have attempted to narrow potential future claims by taking certain remedial corporate actions, the scope of liability with respect to such defects is uncertain and we cannot be sure that these actions will entirely remediate these defects or that we will not receive claims in the future from other persons asserting rights to shares of our capital stock, to stock options, or to amounts owed under other equity or debt instruments or investment contracts. To the extent any such claims are successful, the claims could result in dilution to existing shareholders, payments by us to note holders or security holders, us having to comply with registration or other investor rights, which could have a material adverse effect on our business, financial condition and results of operations.
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Legal proceedings could cause us to incur unforeseen expenses and could occupy a significant amount of our management’s time and attention.
From time to time, we may be subject to litigation or claims that could negatively affect our business operations and financial position. We may face allegations or litigation related to our acquisitions, securities issuances or business practices. For example, putative class action lawsuits have been filed by certain of our shareholders against us and certain of our officers and directors alleging certain violations of the federal securities laws in connection with certain statements we have made regarding our business and financial condition. In addition, certain of our shareholders have filed related derivative lawsuits against certain of our officers and directors alleging certain federal securities law violations and that the officers and directors breached their fiduciary duties and committed corporate waste. Litigation disputes, including the disputes we are currently facing, could cause us to incur unforeseen expenses, result in content unavailability, and otherwise occupy a significant amount of our management’s time and attention, any of which could negatively affect our business operations and financial position. While the ultimate outcome of investigations, inquiries, information requests and related legal proceedings is difficult to predict, such matters can be expensive, time-consuming and distracting, and adverse resolutions or settlements of those matters may result in, among other things, modification of our business practices, reputational harm or costs and significant payments, any of which could negatively affect our business operations and financial position.

The quality of our customer support is important to our subscribers, and if we fail to provide adequate levels of customer support, we could lose subscribers, which would harm our business.

Our subscribers depend on our customer support organization to resolve any issues relating to our platform. A high level of support is critical for the successful marketing of our platform. Providing high-level support is further challenging during the COVID-19 pandemic and resulting remote work environment. If we do not effectively train, update and manage our customer support organization that assists our subscribers in using our platform, and if that support organization does not succeed in helping them quickly resolve any issues or provide effective ongoing support, it could adversely affect our ability to sell subscriptions to our platform and harm our reputation with potential new subscribers.

We could be subject to economic, political, regulatory and other risks arising from our international operations.
Operating in international markets requires significant resources and management attention and subjects us to economic, political, regulatory and other risks that may be different from or incremental to those in the U.S. In addition to the risks that we face in the U.S., our international operations involve risks that could adversely affect our business, including:

● the need to adapt our content and user interfaces for specific cultural and language differences;

● difficulties and costs associated with staffing and managing foreign operations;

● political or social unrest and economic instability;

● compliance with laws such as the Foreign Corrupt Practices Act, UK Bribery Act and other anti-corruption laws, export controls and economic sanctions, and local laws prohibiting corrupt payments to government officials;

● difficulties in understanding and complying with local laws, regulations and customs in foreign jurisdictions, including local ownership requirements for streaming content providers and laws and regulations relating to privacy, data protection and information security, and the risks and costs of non-compliance with such laws, regulations and customs;
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● regulatory requirements or government action against our service, whether in response to enforcement of actual or purported legal and regulatory requirements or otherwise, that results in disruption or non-availability of our service or particular content in the applicable jurisdiction;

● adverse tax consequences such as those related to changes in tax laws or tax rates or their interpretations, and the related application of judgment in determining our global provision for income taxes, deferred tax assets or liabilities or other tax liabilities given the ultimate tax determination is uncertain;

● fluctuations in currency exchange rates;
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● profit repatriation and other restrictions on the transfer of funds;

● differing payment processing systems;

● new and different sources of competition; and

● different and more stringent user protection, data protection, privacy and other laws, including data localization and/or restrictions on data export, and local ownership requirements.

Our failure to manage any of these risks successfully could harm our international operations and our overall business and results of our operations.

Any significant interruptions, delays or discontinuations in service or disruptions in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks, could result in a loss or degradation of service, unauthorized disclosure of data, including subscriber and corporate information, or theft of intellectual property, including digital content assets, which could adversely impact our business.
Our reputation and ability to attract, retain and serve our subscribers is dependent upon the reliable performance and security of our computer systems and those of third parties that we utilize in our operations. These systems may be subject to damage or interruption from, among other things, earthquakes, adverse weather conditions, other natural disasters, terrorist attacks, rogue employees, power loss, telecommunications failures, and cybersecurity risks. Interruptions in these systems, or with the Internet in general, could make our service unavailable or degraded or otherwise hinder our ability to deliver our service. Service interruptions, errors in our software or the unavailability of computer systems used in our operations could diminish the overall attractiveness of our subscription to existing and potential subscribers.
Our computer systems and those of third parties we use in our operations are subject to cybersecurity threats, including cyber-attacks such as computer viruses, denial of service attacks, physical or electronic break-ins and similar disruptions. These systems periodically experience directed attacks intended to lead to interruptions and delays in our service and operations as well as loss, misuse or theft of personal information and other data, content, confidential information or intellectual property. Additionally, outside parties may attempt to induce employees or subscribers to disclose sensitive or confidential information in order to gain access to data. Any attempt by hackers to obtain our data (including subscriber and corporate information) or intellectual property (including digital content assets), disrupt our service, or otherwise access our systems, or those of third parties we use, if successful, could harm our business, be expensive to remedy and damage our reputation.
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We have implemented certain systems and processes designed to thwart hackers and protect our data and systems, but the techniques used to gain unauthorized access to data, systems, and software are constantly evolving, and we may be unable to anticipate or prevent unauthorized access, and we may be delayed in detecting unauthorized access or other security breaches and other incidents. There is no assurance that hackers may not have a material impact on our service or systems in the future or that security breaches or other incidents may not occur due to these or other causes. Efforts to prevent disruptions to our service and unauthorized access to our systems are expensive to develop, implement and maintain. These efforts require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated and may limit the functionality of or otherwise negatively impact our service offering and systems. Additionally, disruption to our service and data security breaches and other incidents may occur as a result of employee or contractor error. Any significant disruption to our service or access to our systems or any data that we or those who provide services for us maintain or otherwise process, or the perception that any of these have occurred, could result in a loss of subscriptions, harm to our reputation, and adversely affect our business and results of operations. Further, a penetration of our systems or a third-party’s systems or any loss of or unauthorized access to, use, alteration, destruction, or disclosure of personal information or other data could subject us to business, regulatory, litigation and reputation risk, which could have a negative effect on our business, financial condition and results of operations. With the increase in remote work during the current COVID-19 pandemic, we and the third parties we use in our operations face increased risks to the security of infrastructure and data, and we cannot guarantee that our or their security measures will prevent security breaches. We also may face increased costs relating to maintaining and securing our infrastructure and data that we maintain and otherwise process.
Additionally, we cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.
We depend on highly skilled key personnel to operate our business, and if we are unable to attract, retain, and motivate qualified personnel, our ability to develop and successfully grow our business could be harmed.

We believe that our future success is highly dependent on the talents and contributions of Edgar Bronfman, our ~~senior management and co-founders, including~~Executive Chairman, David Gandler, our Co-Founder and Chief Executive Officer, Simone Nardi, our Chief Financial Officer, Alberto Horihuela, our Co-Founder and Chief Marketing Officer, Sung Ho Choi, our Co-Founder and Head of Product, Geir Magnusson Jr., our Chief Technology Officer,other members of our executive team, and other key employees, such as ~~key~~ engineering, finance, legal, research and development, marketing, and sales personnel. Our future success depends on our continuing ability to attract, develop, motivate, and retain highly qualified and skilled employees. All of our employees, including our senior management, are free to terminate their employment relationship with us at any time, and their knowledge of our business and industry may be difficult to replace. Qualified individuals are in high demand, particularly in the digital media industry, and we may incur significant costs to attract them. We use equity awards to attract talented employees, but if the value of our common stock declines significantly and remains depressed, that may prevent us from recruiting and retaining qualified employees. If we are unable to attract and retain our senior management and key employees, we may not be able to achieve our strategic objectives, and our business could be harmed. In addition, we believe that our key executives have developed highly successful and effective working relationships. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees. If one or more of these individuals leave, we may not be able to fully integrate new executives or replicate the current dynamic and working relationships that have developed among our senior management and other key personnel, and our operations could suffer.
~~We rely upon a number of partners to make our service available on their devices.~~
We currently offer subscribers the ability to receive streaming content through a host of Internet-connected screens, including TVs, digital video players, television set-top boxes and mobile devices. Some of our agreements with key distribution partners give distribution partners the ability to terminate their carriage of our service at any time. If we are not successful in maintaining existing and creating new relationships, or if we encounter technological, content licensing, regulatory, business or other impediments to delivering our streaming content to our subscribers via these devices, our ability to retain subscribers and grow our business could be adversely impacted.
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Our business could be adversely affected if a number of our partners do not continue to provide access to our service or are unwilling to do so on terms acceptable to us, which terms may include the degree of accessibility and prominence of our service. Furthermore, devices are manufactured and sold by entities other than the Company, and while these entities should be responsible for the devices’ performance, the connection between these devices and fuboTV may nonetheless result in consumer dissatisfaction toward the Company and such dissatisfaction could result in claims against us or otherwise adversely impact our business. In addition, technology changes to our streaming functionality may require that partners update their devices, or may lead to us to stop supporting the delivery of our service on certain legacy devices. If partners do not update or otherwise modify their devices, or if we discontinue support for certain devices, our service and our subscribers’ use and enjoyment could be negatively impacted.

The impact of worldwide economic conditions may adversely affect our business, operating results, and financial condition.
Our financial performance is subject to worldwide economic conditions and their impact on levels of advertising spending. Expenditures by advertisers generally tend to reflect overall economic conditions, and to the extent that the economy continues to stagnate, reductions in spending by advertisers could have a material adverse impact on our business. Historically, economic downturns have resulted in overall reductions in advertising spending. Economic conditions may adversely impact levels of consumer spending, which could adversely impact our number of subscribers.

Consumer purchases of discretionary items generally decline during recessionary periods and other periods in which disposable income is adversely affected. To the extent that overall economic conditions reduce spending on discretionary activities, our ability to retain current and obtain new subscribers could be hindered, which could reduce our subscription revenue and negatively impact our business.
We rely upon Amazon Web Services to operate certain aspects of our service and any disruption of or interference with our use of the Amazon Web Services operation would impact our operations and our business would be adversely impacted.
Amazon Web Services, or AWS, provides a distributed computing infrastructure platform for business operations, or what is commonly referred to as a “cloud” computing service. We have architected our software and computer systems so as to utilize data processing, storage capabilities and other services provided by AWS. Currently, we run the vast majority of our computing on AWS. Given this, along with the fact that we cannot easily switch our AWS operations to another cloud provider, any disruption of or interference with our use of AWS would impact our operations and our business would be adversely impacted. While the retail side of Amazon competes with us, we do not believe that Amazon will use the AWS operation in such a manner as to gain competitive advantage against our service, although if it was to do so it could harm our business.

Changes in how we market our service could adversely affect our marketing expenses and subscription levels may be adversely affected.
We utilize a broad mix of marketing and public relations programs, including social media sites, to promote our service and content to existing and potential new subscribers. We may limit or discontinue use or support of certain marketing sources or activities if advertising rates increase or if we become concerned that subscribers or potential subscribers deem certain marketing platforms or practices intrusive or damaging to our brand. If the available marketing channels are curtailed, our ability to engage subscribers and attract new subscribers may be adversely affected.

Companies that promote our service may decide that we negatively impact their business or may make business decisions that in turn negatively impact us. For example, if they decide that they want to compete more directly with us, enter a similar business or exclusively support our competitors, we may no longer have access to their marketing channels. We also acquire a number of subscribers who ~~rejoin~~re-join our service having previously canceled their subscription. If we are unable to maintain or replace our sources of subscribers with similarly effective sources, or if the cost of our existing sources increases, our subscription levels and marketing expenses may be adversely affected.

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We utilize marketing to promote our content, drive conversation about our content and service, and drive viewing by our subscribers. To the extent we promote our content inefficiently or ineffectively, we may not obtain the expected acquisition and retention benefits and our business may be adversely affected.

We continue to pursue and may ~~pursue~~in the future engage in acquisitions, which involve a number of risks, and if we are unable to address and resolve these risks successfully, such acquisitions could harm our business.

We continue to pursue and may in the future acquire businesses, products or technologies to expand our offerings and capabilities, subscriber base and business. WeThe entities acquired in such acquisitions may ~~pursue acquisitions of entities that are~~ not be profitable and may have significant liabilities. We have evaluated, and expect to continue to evaluate, a wide array of potential strategic transactions. Any acquisition could be material to our financial condition and results of ~~operations and~~operations. Also, any anticipated benefits from ana given acquisition, including, but not limited to, the acquisition of Vigtory, Inc. in February 2021, may never materialize. In addition, the process of integrating ~~acquired~~any businesses, products or technologies acquired by us may create unforeseen operating difficulties and ~~expenditures. Acquisitions~~expenditures and we may have difficulties retaining key employees. Any acquisitions in international markets would involve additional risks, including those related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries. We may not be able to address these risks successfully, or at all, without incurring significant costs, delays or other operational problems, and if we were unable to address such risks successfully, our business could be harmed.

Risks Related to Privacy and Cybersecurity
We are subject to a number of legal requirements and other obligations regarding privacy, security, and data protection, and any actual or perceived failure to comply with these requirements or obligations could have an adverse effect on our reputation, business, financial condition and operating results.
Various international, federal, and state laws and regulations govern the processing of personal information, including the collection, use, retention, transfer, sharing and security of the data we receive from and about our subscribers and other individuals. The regulatory environment for the collection and processing of data relating to individuals, including subscriber and other consumer data, by online service providers, content distributors, advertisers and publishers is unsettled in the U.S. and internationally. Privacy groups and government bodies, including the Federal Trade Commission, increasingly have scrutinized issues relating to the use, collection, storage, disclosure, and other processing of data, including data that is associated with personal identities or devices, and we expect such scrutiny to continue to increase. Various federal, state and foreign government bodies and agencies have adopted or are considering adopting laws and regulations limiting, or laws and regulations covering the processing, collection, distribution, use, disclosure, storage, transfer and security of certain types of information. In addition to government regulation, self-regulatory standards and other industry standards may legally or contractually apply to us, be argued to apply to us, or we may elect to comply with such standards or facilitate compliance by content publishers, advertisers, or others with such standards.
For example, the California Consumer Privacy Act, or CCPA, became operative on January 1, 2020. The CCPA requires covered businesses to provide new disclosures to California consumers, and to afford such consumers the ability to access and delete their personal information, opt out of certain personal information activities, and receive details about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. California voters also approved a modification of the CCPA, the California Privacy Rights Act, or CPRA, in the November 2020 election. The CPRA significantly expands the rights under the CCPA. The CCPA and CPRA may increase our compliance costs and exposure to liability. Similarly, Virginia recently adopted the Virginia Consumer Data Protection Act, or VCDPA, which will go into effect on January 1, 2023. The VCDPA will grant Virginia residents certain rights with respect to their personal data, has notice obligations, requires consent in some circumstances, among other things. While there is no private right of action, the VCDPA empowers the Attorney General to enforce the law. As with the CCPA and the CPRA, the VCDPA may increase our compliance costs and exposure to liability. Other U.S. states are considering adopting similar laws.
Additionally, our use of subscriber data to deliver relevant advertising on our platform places us and our content publishers at risk for claims under a number of other unsettled laws, including the Video Privacy Protection Act, or VPPA. Some content publishers have been engaged in litigation over alleged violations of the VPPA relating to activities on online platforms in connection with advertising provided by unrelated third parties. The Federal Trade Commission has also revised its rules implementing the Children’s Online Privacy Protection Act, or COPPA Rules, broadening the applicability of the COPPA Rules, including by expanding the types of information that are subject to these regulations. The COPPA Rules could effectively apply to limit the information that we and, our content publishers and advertisers collect and use, the content of advertisements and certain channel partner content. We and our content publishers and advertisers could be at risk for violation or alleged violation of these and other laws, regulations, and other standards and contractual obligations relating to privacy, data protection, and information security.
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In the European Union, or EU, and its member states, there are laws and regulations that in some circumstances require informed consent for the placement of cookies or other tracking technologies and the delivery of relevant advertisements. More generally, the EU General Data Protection Regulation 2016/679, or the GDPR, which has been in effect since May 25, 2018, imposes stringent obligations relating to data protection and security and authorizes fines up to 4% of global annual revenue or €20 million, whichever is greater, for certain violations.
Further, the departure of the United Kingdom, or UK, from the EU has created uncertainty with regard to data protection regulation in the UK. In particular, while the UK has implemented the UK General Data Protection Regulation, and the UK Data Protection Act of 2018, which implements and complements the UK GDPR are still in force, it is unclear whether the UK will receive an adequacy decision from the European Commission that would allow the lawful transfer of data from the European Economic Area, or EEA, to the UK under that adequacy decision. Should the UK not be deemed adequate, transfers of data between the UK and the EEA will need to be pursuant to a different transfer mechanism, such as the entry of Standard Contractual Clauses approved by the European Commission. Failure to comply with these obligations could subject us to liability. Additionally, we may incur expenses, costs, and other operational losses under the GDPR and the privacy laws of applicable EU Member States and the UK in connection with any measures we take to comply with such laws.
Although certain legal mechanisms have been designed to allow for the transfer of personal data from the UK, EEA and Switzerland to the U.S., uncertainty about compliance with such data protection laws remains and such mechanisms may not be available or applicable with respect to the personal data processing activities necessary to research, develop and market our products. For example, legal challenges in Europe to the mechanisms allowing companies to transfer personal data from the EEA to the U.S. have resulted in further limitations on the ability to transfer personal data across borders. In particular, certain governments have been unable to reach agreement on or maintain existing mechanisms designed to support cross-border data transfers, such as the EU-U.S. and Swiss-U.S. Privacy Shield Frameworks. Specifically, on July 16, 2020, the Court of Justice of the European Union invalidated Decision 2016/1250 on the adequacy of the protection provided by the EU-U.S. Privacy Shield Framework. To the extent that we have relied on the EU-U.S. Privacy Shield Framework in the past, we will not be able to do so in the future, which could increase our costs and limit our ability to process personal data from the EEA. The same decision also challenged the ability to use one of the primary alternatives to the Privacy Shield, namely, the European Commission’s Standard Contractual Clauses, to lawfully transfer personal data from the EEA to the U.S. and most other countries without additional measures or assurances.
Complying with the GDPR, CCPA, VCDPA, and other laws, regulations, and other obligations relating to privacy, data protection, data localization or security may cause us to incur substantial operational costs or require us to modify our data handling practices. We also expect that there will continue to be new proposed laws and regulations concerning privacy, data protection and information security, and we cannot yet determine the impact such future laws, regulations and standards, or amendments to, expansions of or re-interpretations of, existing laws and regulations, industry standards, or other obligations may have on our business. New laws and regulations, amendments to, expansions of or re-interpretations of existing laws and regulations, industry standards, and contractual and other obligations may require us to incur additional costs and restrict our business operations.
Furthermore, the interpretation and application of laws, regulations, standards, contractual obligations and other obligations relating to privacy, data processing and protection, and information security are uncertain, and these laws, standards, and contractual and other obligations (including, without limitation, the Payment Card Industry Data Security Standard) may be interpreted and applied in a manner that is, or is alleged to be, inconsistent with our data management and processing practices, our policies or procedures, or the features of our platform. We may face claims or allegations that we are in violation of these laws, regulations, standards, or contractual or other obligations. We could be required to fundamentally change our business activities and practices or modify our platform or practices to address laws, regulations, or other obligations relating to privacy, data protection, or information security, or claims or allegations that we have failed to comply with any of the foregoing, which could have an adverse effect on our business. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new features could be limited.
Increased regulation of data collection, use and distribution practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws and regulations, all could increase our cost of compliance and operation, limit our ability to grow our business or otherwise harm our business. Additionally, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of content publishers and advertisers may limit their use and adoption of, and reduce the overall demand for, our platform and advertising on our platform, and content publishers and advertisers may be at risk for violation or alleged violation of laws, regulations, and other standards relating to privacy, data protection, and information security relating to their activities on our platform. More generally, privacy, data protection, and information security concerns, whether or not valid, may inhibit market adoption of our platform, particularly in certain countries.
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Any actual or perceived inability to adequately address privacy, data protection or security-related concerns, even if unfounded, or to successfully negotiate privacy, data protection or security-related contractual terms with content publishers, card associations, advertisers, or others, or to comply with applicable laws, regulations and other obligations relating to privacy, data protection, and security, could result in additional cost and liability to us. We may face regulatory investigations and proceedings, claims and litigation by governmental entities and private parties, damages for contract breach, damage to our reputation, restrictions on the use of our platform by advertisers and sales of subscriptions to our platform, and additional liabilities as a result, all of which could harm our business, reputation, financial condition, and results of operations.
Any significant interruptions, delays or discontinuations in service or disruptions in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks, could result in a loss or degradation of service, unauthorized disclosure of data, including subscriber and corporate information, or theft of intellectual property, including digital content assets, which could adversely impact our business.
Our reputation and ability to attract, retain and serve our subscribers is dependent upon the reliable performance and security of our computer systems and those of third parties that we utilize in our operations. These systems may be subject to damage or interruption from, among other things, earthquakes, adverse weather conditions, other natural disasters, terrorist attacks, rogue employees, employees who are inattentive or careless and cause security vulnerabilities, power loss, telecommunications failures, and cybersecurity risks. Interruptions in these systems, or with the Internet in general, could make our service unavailable or degraded or otherwise hinder our ability to deliver our service. Service interruptions, errors in our software or the unavailability of computer systems used in our operations could diminish the overall attractiveness of our subscription to existing and potential subscribers.
Our computer systems and those of third parties we use in our operations are subject to cybersecurity threats, including cyber-attacks such as computer viruses, denial of service attacks, physical or electronic break-ins and similar disruptions. These systems periodically experience directed attacks intended to lead to interruptions and delays in our service and operations as well as loss, misuse or theft of personal information and other data, content, confidential information, trade secrets or intellectual property. Additionally, outside parties may attempt to induce employees or subscribers to disclose sensitive or confidential information in order to gain access to data. Any attempt by hackers to obtain our data (including subscriber and corporate information) or intellectual property (including digital content assets), disrupt our service, or otherwise access our systems, or those of third parties we use, if successful, could harm our business, be expensive to remedy and damage our reputation.
We use third-party cloud computing services in connection with our business operations. We also use third-party content delivery networks to help us stream content to our subscribers over the Internet. Problems faced by us or our third-party cloud computing or other network providers, including technological or business-related disruptions, as well as cybersecurity threats and regulatory interference, could adversely impact the experience of our users.
We have implemented certain systems and processes designed to thwart hackers and protect our data and systems, but the techniques used to gain unauthorized access to data, systems, and software are constantly evolving, and we may be unable to anticipate or prevent unauthorized access, and we may be delayed in detecting unauthorized access or other security breaches and other incidents. There is no assurance that hackers may not have a material impact on our service or systems in the future or that security breaches or other incidents may not occur due to these or other causes. Efforts and technologies to prevent disruptions to our service and unauthorized access to our systems are expensive to develop, implement and maintain. These efforts require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated and may limit the functionality of or otherwise negatively impact our service offering and systems. Additionally, disruption to our service and data security breaches and other incidents may occur as a result of employee or contractor error. Any significant disruption to our service or access to our systems or any data that we or those who provide services for us maintain or otherwise process, or the perception that any of these have occurred, could result in a loss of subscriptions, harm to our reputation, and adversely affect our business and results of operations. Further, a penetration of our systems or a third-party’s systems on which we depend or any loss of or unauthorized access to, use, alteration, destruction, or disclosure of personal information or other data could subject us to business, regulatory, contractual, litigation and reputation risk, which could have a negative effect on our business, financial condition and results of operations. With the increase in remote work during the current COVID-19 pandemic, we and the third parties we use in our operations face increased risks to the security of infrastructure and data, and we cannot guarantee that our or their security measures will prevent security breaches. We also may face increased costs relating to maintaining and securing our infrastructure and data that we maintain and otherwise process.
Additionally, we cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.
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Risks Related to Our Intellectual Property
We could become subject to litigation regarding intellectual property rights that could be costly and harm our business.
Third parties have previously asserted, and may in the future assert, that we have infringed, misappropriated, or otherwise violated their intellectual property rights. Plaintiffs that have no relevant product revenue may not be deterred by our own issued patents and pending patent applications in bringing intellectual property rights claims against us. The cost of patent litigation or other proceedings, even if resolved in our favor, could be substantial. Some of our competitors may be better able to sustain the costs of such litigation or proceedings because of their substantially greater financial resources. Patent litigation and other proceedings may also require significant management time and divert management from our business. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace. The occurrence of any of the foregoing risks could harm our business.
As a result of intellectual property infringement claims, or to avoid potential claims, we have previously chosen to, and may in the future choose or be required to, seek licenses from third parties. These licenses may not be available on commercially reasonable terms, or at all. Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, with the potential for our competitors to gain access to the same intellectual property. In addition, the rights that we secure under intellectual property licenses may not include rights to all of the intellectual property owned or controlled by the licensor, and the scope of the licenses granted to us may not include rights covering all of the products and services provided by us and our licensees. Furthermore, an adverse outcome of a dispute may require us to pay damages, potentially including treble damages and attorneys’ fees, if we are found to have willfully infringed a party’s intellectual property; cease making, licensing or using technologies that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to redesign our solutions; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies, content or materials; and to indemnify our partners and other third parties. In addition, any lawsuits regarding intellectual property rights, regardless of their success, could be expensive to resolve and would divert the time and attention of our management and technical personnel.
Historically, we have acquired certain intellectual property from third parties pursuant to asset purchase agreements or similar agreements in connection with corporate acquisitions and bankruptcy proceedings. We also generally enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances. However, these agreements may not have been properly entered into on every occasion with the applicable counterparty, and such agreements may not always have been effective when entered into in granting ownership of, controlling access to and distribution of our proprietary information. Further, these agreements do not prevent our competitors or partners from independently developing technologies that are substantially equivalent or superior to our platform.
An inability to obtain music licenses could be costly and harm our business.
The Company relies on its content suppliers to secure the rights of public performance or communication to the public for musical works and sound recordings embodied in any programming provided to or through the Company’s platform. If our content suppliers have not secured public performance or communication to the public licenses on a through to the viewer basis, then the Company could have liability to copyright owners or their agents for such performances or communications. If our content suppliers are unable to secure such rights from copyright owners, then the Company may have to secure public performance and communication to the public licenses in its own name. The Company may not be able to obtain such licenses on favorable economic terms, and music licensors may assert that we have infringed their intellectual property rights in the absence of a license. The occurrence of any of the foregoing risks could harm our business.
If our technology, trademarks and other proprietary rights are not adequately protected to prevent use or appropriation by our competitors, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected.
We rely and expect to continue to rely on a combination of confidentiality and license agreements with our employees, consultants and third parties with whom we have relationships, as well as trademark, copyright, patent and trade secret protection laws, to protect our technology and proprietary rights. We may also seek to enforce our proprietary rights through court proceedings or other legal actions. We have filed and we expect to file from time to time for trademark and patent applications. Nevertheless, these applications may not be approved, third parties may challenge any copyrights, patents or trademarks issued to or held by us, third parties may knowingly or unknowingly infringe our intellectual property rights, and we may not be able to prevent infringement or misappropriation without substantial expense to us. If the protection of our intellectual property rights is inadequate to prevent use or misappropriation by third parties, the value of our brand, content, and other intangible assets may be diminished.
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Failure to protect our domain names could also adversely affect our reputation and brand and make it more difficult for subscribers to find our website and our service. We may be unable, without significant cost or at all, to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our trademarks and other proprietary rights.
Our use of open source software could impose limitations on our ability to commercialize our platform.
We incorporate open source software in our platform. From time to time, companies that incorporate open source software into their products have faced claims challenging the ownership of open source software and/or compliance with open source license terms. Therefore, we could be subject to suits by parties claiming ownership of what we believe to be open source software or non-compliance with open source licensing terms. Although we monitor our use of open source software, the terms of many open source software licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to sell subscriptions to our platform. In such event, we could be required to make our proprietary software generally available to third parties, including competitors, at no cost, to seek licenses from third parties in order to continue offering our platform, to re-engineer our platform or to discontinue our platform in the event re-engineering cannot be accomplished on a timely basis or at all, any of which could harm our business.
If we are unable to obtain necessary or desirable third-party technology licenses, our ability to develop platform enhancements may be impaired.
We utilize commercially available off-the-shelf technology in the development of our platform. As we continue to introduce new features or improvements to our platform, we may be required to license additional technologies from third parties. These third-party licenses may be unavailable to us on commercially reasonable terms, if at all. If we are unable to obtain necessary third-party licenses, we may be required to obtain substitute technologies with lower quality or performance standards, or at a greater cost, any of which could harm the competitiveness of our platform and our business.
Risks Related to the 2026 Convertible Notes
We may not have the ability to raise the funds necessary to settle conversions of the 2026 Convertible Notes in cash or to repurchase the 2026 Convertible Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the 2026 Convertible Notes.
Holders of the 2026 Convertible Notes will have the right to require us to repurchase all or a portion of the 2026 Convertible Notes upon the occurrence of a fundamental change before the maturity date at a repurchase price equal to 100% of the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of the 2026 Convertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the notes being converted. Moreover, we will be required to repay the 2026 Convertible Notes in cash at their maturity unless earlier converted, redeemed, or repurchased. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of all or a portion of the 2026 Convertible Notes surrendered therefor or pay cash with respect to notes being converted or at their maturity.
In addition, our ability to repurchase the 2026 Convertible Notes or to pay cash upon conversions of all or a portion of the 2026 Convertible Notes or at their maturity may be limited by law, regulatory authority or agreements governing our future indebtedness. Our failure to repurchase all or a portion of the 2026 Convertible Notes at a time when the repurchase is required by the indenture or to pay cash upon conversions of all or a portion of the 2026 Convertible Notes or at their maturity as required by the indenture would constitute a default under the indenture. A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our future indebtedness. Moreover, the occurrence of a fundamental change under the indenture could constitute an event of default under any such agreement. A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our existing or future indebtedness. If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the notes or make cash payments upon conversions thereof.
The conditional conversion feature of all or a portion of the 2026 Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional conversion feature of any or all of the 2026 Convertible Notes is triggered, holders of the 2026 Convertible Notes will be entitled to convert their 2026 Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert 2026 Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity. In addition, even if holders of the 2026 Convertible Notes do not elect to convert their 2026 Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
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The accounting method for convertible debt securities that may be settled in cash, such as the 2026 Convertible Notes, could have a material effect on our reported financial results.
Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account for the liability and equity components of convertible debt instruments (such as the 2026 Convertible Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the 2026 Convertible Notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet at the issuance date and the value of the equity component would be treated as debt discount for purposes of accounting for the liability component of the 2026 Convertible Notes. As a result, we will be required to record a greater amount of non-cash interest expense as a result of the accretion to the carrying value of the 2026 Convertible Notes to their face amount over the term of the 2026 Convertible Notes. We will report larger net losses (or lower net income) in our financial results because ASC 470-20 will require interest to include both the amortization of the debt discount and the instrument’s nonconvertible coupon interest rate, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the 2026 Convertible Notes.
In addition, under certain circumstances, convertible debt instruments (such as the 2026 Convertible Notes) that may be settled entirely or partly in cash may be accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon conversion of such notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of such notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. If we are unable or otherwise elect not to use the treasury stock method in accounting for the shares issuable upon conversion of the 2026 Convertible Notes, then our diluted earnings per share could be adversely affected.
In August 2020, the FASB published an Accounting Standards Update (“ASU”) 2020-06, which amends these accounting standards by reducing the number of accounting models for convertible instruments and limiting instances of separate accounting for the debt and equity or a derivative component of the convertible debt instruments. ASU 2020-06 also will no longer allow the use of the treasury stock method for convertible instruments and instead require application of the “if-converted” method. Under that method, diluted earnings per share will generally be calculated assuming that all the 2026 Convertible Notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive, which could adversely affect our diluted earnings per share. These amendments will be effective for public companies for fiscal years beginning after December 15, 2021, with early adoption permitted, but no earlier than fiscal years beginning after December 15, 2020.
Provisions in the indenture for the 2026 Convertible Notes may deter or prevent a business combination that may be favorable to you.
If a fundamental change occurs prior to the maturity date of the 2026 Convertible Notes, holders of the 2026 Convertible Notes will have the right, at their option, to require us to repurchase all or a portion of their 2026 Convertible Notes. In addition, if a make-whole fundamental change occurs prior the maturity date, we will in some cases be required to increase the conversion rate for a holder that elects to convert all or a portion of their 2026 Convertible Notes in connection with such make-whole fundamental change. Furthermore, the indenture for the 2026 Convertible Notes will prohibit us from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the 2026 Convertible Notes. These and other provisions in the indenture could deter or prevent a third party from acquiring us even when the acquisition may be favorable to you.
Risks Related to Ownership of our Common Stock
Our stock price is volatile.
The market price of our common stock is subject to wide price fluctuations in response to various factors, many of which are beyond our control. The factors include:
● the impact on global and regional economies as a result of the COVID-19 pandemic;
● variations in our operating results;
● variations between our actual operating results and the expectations of securities analysts, investors and the financial community;
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● announcements of developments affecting our business, systems or expansion plans by us or others;
● technical factors in the public trading market for our stock that may produce price movements that may or may not comport with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors (including as it may be expressed on financial trading and other social media sites), the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock, fractional share trading, and other technical trading factors or strategies;
● competition, including the introduction of new competitors, their pricing strategies and services;
● announcements regarding stock repurchases and sales of our equity and debt securities;
● market volatility in general;
● the level of demand for our stock, including the amount of short interest in our stock; and
● the operating results of our competitors.
In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect the market price of companies’ stock, including ours, regardless of actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
If a substantial number of shares become available for sale and are sold in a short period of time, the market price of our common stock could decline.
If our existing shareholders sell substantial amounts of our common stock in the public market, the market price of our common stock could decrease significantly. The perception in the public market that our existing shareholders might sell shares of common stock could also depress our market price. Our executive officers and directors and certain of our shareholders were in the past subject to certain lock-up agreements and the Rule 144 holding period requirements that have since expired. Now that these lock-up periods have expired and the holding periods have elapsed, additional shares are eligible for sale in the public market. The market price of shares of our common stock may drop significantly if our existing holders sell substantial amounts of our common stock in the public market. A decline in the price of shares of our common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities.
We also filed a registration statement to register shares reserved for future issuance under our equity compensation plans. As a result, subject to the satisfaction of applicable exercise periods, the shares issued upon exercise of outstanding stock options will be available for immediate resale in the U.S. in the open market.
Additionally, certain of our employees, executive officers, and directors have already entered into, or may in the future enter into Rule 10b5-1 trading plans providing for sales of shares of our common stock from time to time. Under a Rule 10b5-1 trading plan, a broker executes trades pursuant to parameters established by the employee, director, or officer when entering into the plan, without further direction from the employee, officer, or director. A Rule 10b5-1 trading plan may be amended or terminated in some circumstances. Our employees, executive officers, and directors also may buy or sell additional shares outside of a Rule 10b5-1 trading plan when they are not in possession of material, nonpublic information, subject to the expiration of the lock-up agreements and Rule 144 requirements referred to above.
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General Risk Factors
We have no plans to declare any cash dividends on our common stock in the foreseeable future.
We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. Consequently, investors may need to rely on sales of their common stock after price appreciation, which may never occur to realize future gains on their investment.
Future sales and issuances of our capital stock could reduce our stock price and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.
We may issue additional shares of capital stock in the future, including shares issuable pursuant to securities that are convertible into or exchangeable for, or that represent a right to receive, capital stock. We may sell common stock, convertible securities and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time, which could result in substantial dilution to our existing shareholders. New investors in such future transactions could gain rights, preferences and privileges senior to those of holders of our common stock.
If few securities or industry analysts publish research or reports, or if they publish adverse or misleading research or reports, regarding us, our business or our market, our stock price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that securities or industry analysts publish about us, our business or our market. If few securities or industry analysts commence coverage of us, the stock price would be negatively impacted. Additionally, if any of the analysts who currently cover us or initiate coverage on us in the future issue adverse or misleading research or reports regarding us, our business model, our intellectual property, our stock performance or our market, or if our operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The ~~following is a summary~~information required by this Item 2 of ~~all~~Part II of this Quarterly Report was previously reported in the ~~unregistered securities that~~Company’s Current Report on Form 8-K filed with the ~~Company has sold from March 31, 2020 to June 30, 2020.~~SEC on February 2, 2021.

~~Issuance of Stock, Convertible Notes and Warrants for Financing Purposes~~
● ~~May-June 2020 Common Stock Financing.~~ Between May 11, 2020 and June 8, 2020, the Company entered into securities purchase agreements (the “Purchase Agreements”) with several investors (the “Investors”), one of which was an entity affiliated with a director of the Company. Pursuant to the Purchase Agreements, the Company issued (i) an aggregate of 3,735,922 shares of common stock at a purchase price of $7.00 per share and (ii) warrants to purchase up to 100% of the number of shares of common stock sold to such investors, up to an aggregate of 3,735,922 shares of common stock, at an exercise price of $7.00 per share, for aggregate gross proceeds of $26,151,454.00.diluted
● ~~Other Private Placements.~~
○ Between March 31, 2020 and August 10, 2020, the Company issued convertible notes with a principal balance of approximately $2.1 million. In connection with such notes, the Company issued (i) 55,000 shares of its common stock and (ii) warrants to purchase an aggregate of 55,172 shares of its common stock at an initial exercise price of $9.00 per share.
○ On March 30, 2020, the Company issued 142,118 warrants in connection with a $1.1 million convertible note. The exercise price is $7.74 with a 5-year term. The Company received the proceeds from the convertible note on April 1, 2020 and will therefore record the balance sheet impact of this warrant and convertible note on April 1, 2020.
○
Between March 31, 2020 and July 8, 2020, the Company raised an additional $477,694 through issuances of an aggregate of 170,391 shares of its common stock in private placement transactions to several investors.
● ~~Series D Financing and Redemption.~~
○ ~~On June 16, 2020, the Company redeemed 253,000 shares of Series D Convertible Preferred Stock for an aggregate price of $339,174.~~
74
~~Issuance of Stock for Business Acquisitions~~
● ~~Issuance of Unregistered Common Stock for Acquisition of PEC.~~
○ ~~Between March 31, 2020 and July 8, 2020, the Company has issued 1,201,749 shares of its common stock in exchange for 14,222,975 shares of its subsidiary PEC.~~
~~Issuance of Common Stock and Options for Services Provided~~
● ~~Issuance to Service Providers.~~
○ ~~On May 25, 2020, the Company issued to ARETE Wealth Management a warrant to purchase 275,000 shares of the Company’s common stock with an initial exercise price of $5.00 per share.~~
● ~~Issuance of Stock Options.~~ From January 1, 2017 through June 30, 2020, the Company granted (i) options to purchase 16,667 shares of common stock under the Company’s 2014 Plan at an exercise price of $28.20 per share and (ii) options to purchase 8,825,336 shares of common stock under the Company’s 2020 Plan with a weighted-average exercise price of $8.92 per share.
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. The Company believes the offers, sales, and issuances of the above securities were exempt from registration under the Securities Act by virtue of Section 4(a)(2) of the Securities Act because the issuance of securities to the recipients did not involve a public offering or in reliance on Rule 701 because the transactions were pursuant to compensatory benefit plans or contracts relating to compensation as provided under such rule.
Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

7560

Item 6. Exhibits
Exhibit Incorporated by Reference
Number Description Form Filing Date Exhibit No.
2.1 Agreement and Plan of Merger and Reorganization dated as of March 19, 2020 by and among FaceBank Group, Inc., fuboTV Acquisition Corp. and fuboTV, Inc. 8-K March 23, 2020 2.1
3.1(a) Articles of Incorporation dated February 20, 2009. S-1 August 5, 2011 3.1(i)
3.1(b) Articles of Amendment to Articles of Incorporation dated October 5, 2010. S-1 August 5, 2011 3.1(ii)
3.1(c) Articles of Amendment to Articles of Incorporation dated December 31, 2014. 10-K March 31, 2015 3.1(iii)
3.1(d) Articles of Amendment to Articles of Incorporation dated January 11, 2016. 8-K January 29, 2016 3.1
3.1(e) Certificate of Designation of Series A Preferred Stock dated June 23, 2016. 8-K June 28, 2016 4.1
3.1(f) Certificate of Designation of Series B Preferred Stock dated June 23, 2016. 8-K June 28, 2016 4.2
3.1(g) Certificate of Designation of Series C Preferred Stock dated July 21, 2016. 8-K July 26, 2016 4.1
3.1(h) Second Amended Certificate of Designation of Series C Preferred Stock dated March 3, 2017. 8-K March 6, 2017 3.1
3.1(i) Articles of Amendment to Articles of Incorporation dated October 17, 2017. 8-K December 5, 2017 3.1
3.1(j) Certificate of Designation of Preferences and Rights of Series X Convertible Preferred Stock dated August 3, 2018. 8-K August 6, 2018 3.1
3.1(k) Articles of Amendment to Articles of Incorporation dated September 9, 2019. 8-K September 11, 2019 3.1
3.1(l) Articles of Amendment to Articles of Incorporation dated March 16, 2020. 8-K March 23, 2020 3.2
3.1(m) Certificate of Designation of Series AA Convertible Preferred Stock dated March 20, 2020. 8-K March 23, 2020 3.2
3.1(n) Articles of Amendment to Articles of Incorporation dated September 29, 2016 10-Q July 6, 2020 3.1(n)
76
3.1(o) Articles of Amendment to Articles of Incorporation dated January 9, 2017 10-Q July 6, 2020 3.1(o)
3.1(p) Articles of Amendment to Articles of Incorporation dated May 11, 2017 10-Q July 6, 2020 3.1(p)
3.1(q) Articles of Amendment to Articles of Incorporation dated February 12, 2018 10-Q July 6, 2020 3.1(q)
3.1(r) Articles of Amendment to Articles of Incorporation dated January 29, 2019 10-Q July 6, 2020 3.1(r)
3.1(s) Articles of Amendment to Articles of Incorporation dated July 12, 2019 10-Q July 6, 2020 3.1(s)
3.1(t)

Articles of Amendment to Articles of Incorporation dated July 2, 2020.

8-K

August 13, 2020

3.1
3.2(a) By-Laws of the Company. S-1 August 5, 2011 3.2
3.2(b) Amendment to the Bylaws of the Company, dated June 22, 2016. 8-K June 28, 2016 3.1
3.2(c) Amendment to the bylaws of the Company, dated July 20, 2016. 8-K July 26, 2016 3.1
4.1 Common Stock Warrant dated May 25, 2020 issued by FaceBank Group, Inc. to ARETE Wealth Management. 10-Q July 6, 2020 4.2
4.2 Common Stock Warrant dated April 20, 2020 issued by FaceBank Group, Inc. to Platinum Point Capital LLC. 10-Q July 6, 2020 4.4
4.3 Form of Common Stock Purchase Warrant in connection with the private placement between May 11, 2020 and June 8, 2020. 10-Q July 6, 2020 4.5
4.4* Convertible promissory note in favor of Platinum Point Capital for $420,000 dated April 20, 2020.
4.5* Convertible promissory note in favor of EMA Financial for $250,000 dated May 5, 2020.
10.1† 2014 Incentive Stock Plan 10-K April 16, 2014 4.1
10.2† fuboTV Inc. 2015 Equity Incentive Plan. 10-Q July 6, 2020 10.2
10.3† Form of Stock Option Agreement under fuboTV Inc. 2015 Equity Incentive Plan. 10-Q July 6, 2020 10.3
10.4† FaceBank Group, Inc. 2020 Equity Incentive Plan. 10-Q July 6, 2020 10.4
10.5† Form of Stock Option Agreement under FaceBank Group, Inc. 2020 Equity Incentive Plan. 10-Q July 6, 2020 10.5
10.6 Consent and Second Amendment to Note Purchase Agreement dated as of May 28, 2020 by and among FaceBank Group, Inc., Evolution AI Corporation, Pulse Evolution Corporation, fuboTV Inc. and Sports Rights Management, LLC and FB Loan Series I, LLC. 10-K May 29, 2020 10.64
10.7 Guaranty Agreement, dated as of April 30, 2020, issued by Sports Rights Management, LLC to FB Loan Series I, LLC. 8-K May 6, 2020 10.3
10.8 Joinder Agreement dated as of April 30, 2020 and effective April 2, 2020, by and among fuboTV Inc., Sports Rights Management, LLC, and FB Loan Series I, LLC. 8-K May 6, 2020 10.2
10.9 Counterpart Agreement, dated as of April 30, 2020, by and between FaceBank Group, Inc. and AMC Networks Ventures LLC. 8-K May 6, 2020 10.1
77
10.10† Employment Agreement dated as of April 1, 2020 by and between FaceBank Group, Inc. and David Gandler. 8-K April 7, 2020 10.1
10.11† Letter Agreement by and between FaceBank Group, Inc. and Edgar Bronfman Jr., dated as of April 29, 2020. 8-K May 5, 2020. 10.1
10.12† Employment Agreement dated as of May 30, 2020 by and between FaceBank Group, Inc. and Simone Nardi. 8-K June 12, 2020 10.1
10.13 Third Amendment to Note Purchase Agreement dated as of July 1, 2020 by and among Facebank Group, Inc., Evolution AI Corporation, Pulse Evolution Corporation, fuboTV Inc. and Sports Rights Management, LLC, as Borrower, and FB Loan Series I, LLC, as Purchaser. 10-Q July 6, 2020 10.25
10.14°

Lease, dated August 24, 2016, by and between fuboTV Inc. and RXR 1330 Owner LLC. 10-Q July 6, 2020 10.26
10.15 First Amendment to Lease, dated January 22, 2018, by and between fuboTV Inc. and RXR 1330 Owner LLC. 10-Q July 6, 2020 10.27
10.16°

Sublease, dated February 20, 2020, by and between fuboTV Inc. and Welltower, Inc. 10-Q July 6, 2020 10.28
10.17°

Lease and Service Agreement, dated September 1, 2018, by and between Recall, Inc. and Town Center, Inc. 10-Q July 6, 2020 10.29
10.18 Lease Agreement, dated February 14, 2019, by and between Recall Studies, Inc. and JYC Investors, LLC. 10-Q July 6, 2020 10.30
10.19 Form of Purchase Agreement, by and between the Company and the Purchaser. 10-Q July 6, 2020 10.31
10.20† FaceBank Group, Inc. Outside Director Compensation Policy. 10-Q July 6, 2020 10.40
31.1* Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS* XBRL INSTANCE DOCUMENT
101.SCH* XBRL TAXONOMY EXTENSION SCHEMA
101.CAL* XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF* XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB* XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE* XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
Incorporated by Reference
Exhibit Number Description Form Filing Date Exhibit No. Furnished/Filed Herewith
2.1 Agreement and Plan of Merger and Reorganization dated as of March 19, 2020 by and among FaceBank Group, Inc., fuboTV Acquisition Corp. and fuboTV, Inc. 8-K March 23, 2020 2.1
3.1(a) Articles of Incorporation dated February 20, 2009. S-1 August 5, 2011 3.1(i)
3.1(b) Articles of Amendment to Articles of Incorporation dated October 5, 2010. S-1 August 5, 2011 3.1(ii)
3.1(c) Articles of Amendment to Articles of Incorporation dated December 31, 2014. 10-K March 31, 2015 3.1(iii)
3.1(d) Articles of Amendment to Articles of Incorporation dated January 11, 2016. 8-K January 29, 2016 3.1
3.1(e) Certificate of Designation of Series A Preferred Stock dated June 23, 2016. 8-K June 28, 2016 4.1
3.1(f) Certificate of Designation of Series B Preferred Stock dated June 23, 2016. 8-K June 28, 2016 4.2
3.1(g) Certificate of Designation of Series C Preferred Stock dated July 21, 2016. 8-K July 26, 2016 4.1
3.1(h) Second Amended Certificate of Designation of Series C Preferred Stock dated March 3, 2017. 8-K March 6, 2017 3.1
3.1(i) Articles of Amendment to Articles of Incorporation dated October 17, 2017. 8-K December 5, 2017 3.1
3.1(j) Certificate of Designation of Preferences and Rights of Series X Convertible Preferred Stock dated August 3, 2018. 8-K August 6, 2018 3.1
3.1(k) Articles of Amendment to Articles of Incorporation dated September 9, 2019. 8-K September 11, 2019 3.1
3.1(l) Articles of Amendment to Articles of Incorporation dated March 16, 2020. 8-K March 23, 2020 3.2
3.1(m) Certificate of Designation of Series AA Convertible Preferred Stock dated March 20, 2020. 8-K March 23, 2020 3.2
3.1(n) Articles of Amendment to Articles of Incorporation dated September 29, 2016 10-Q July 6, 2020 3.1(n)
3.1(o) Articles of Amendment to Articles of Incorporation dated January 9, 2017 10-Q July 6, 2020 3.1(o)
3.1(p) Articles of Amendment to Articles of Incorporation dated May 11, 2017 10-Q July 6, 2020 3.1(p)
3.1(q) Articles of Amendment to Articles of Incorporation dated February 12, 2018 10-Q July 6, 2020 3.1(q)
3.1(r) Articles of Amendment to Articles of Incorporation dated January 29, 2019 10-Q July 6, 2020 3.1(r)
3.1(s) Articles of Amendment to Articles of Incorporation dated July 12, 2019 10-Q July 6, 2020 3.1(s)
3.1(t) Articles of Amendment to Articles of Incorporation dated July 2, 2020. 8-K August 13, 2020 3.1
3.1(u) Articles of Amendment to Articles of Incorporation dated September 29, 2020 S-1 October 30, 2020 3.1(u)
3.2(a) By-Laws of the Company. S-1 August 5, 2011 3.2
3.2(b) Amendment to the Bylaws of the Company, dated June 22, 2016. 8-K June 28, 2016 3.1
3.2(c) Amendment to the bylaws of the Company, dated July 20, 2016. 8-K July 26, 2016 3.1
3.2(d) Amendment to the Bylaws of the Company dated September 13, 2020 September 15, 2020 3.2(d)
4.1 Indenture, dated as of February 2, 2021, by and between fuboTV Inc. and U.S. Bank National Association, as Trustee. 8-K February 2, 2021 4.1
4.2 Form of Note, representing fuboTV Inc.’s 3.25% Convertible Senior Notes due 2026 8-K February 2, 2021 4.2
10.1 Purchase Agreement, dated as of January 28, 2021, by and among fuboTV Inc. and Evercore Group L.L.C. 8-K February 2, 2021 4.2
10.2 Lease dated February 23, 2021 by and among fuboTV Inc. and HWA 1290 III LLC, HWA 1290 IV LLC and HWA 1290 V LLC. 8-K March 3, 2021 10.1
10.3 Separation Agreement, by and among the Company and Jordan Fiksenbaum, dated as of March 18, 2021. 8-K March 23, 2021 10.1
10.4 Consulting Agreement, by and among the Company and HC Marketing, LLC, a company controlled by Jordan Fiksenbaum, dated as of March 18, 2021. 8-K March 23, 2021 10.2
31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
101.INS XBRL INSTANCE DOCUMENT *
101.SCH XBRL TAXONOMY EXTENSION SCHEMA *
101.CAL XBRL TAXONOMY EXTENSION CALCULATION LINKBASE *
101.DEF XBRL TAXONOMY EXTENSION DEFINITION LINKBASE *
101.LAB XBRL TAXONOMY EXTENSION LABEL LINKBASE *
101.PRE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE *

* Filed herewith.
~~† Management contract or compensatory plan or arrangement.~~** Furnished herewith.
~~° Redacted.~~

7861

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FUBOTV INC.

Date: ~~August~~May 13, ~~2020~~2021 By: /s/ David Gandler
David Gandler
Chief Executive Officer (Principal Executive Officer)

FUBOTV INC.

Date: ~~August~~May 13, ~~2020~~2021 By: /s/ Simone Nardi
Simone Nardi
Chief Financial Officer (Principal Financial Officer)

7962

	June 30, 2020			December 31, 2019
	(unaudited)			*
ASSETS
Current assets:
Cash and cash equivalents	$	7,356		$	7,624
Accounts receivable, net		4,112			8,904
Prepaid expenses and other current assets		2,839			1,445
Assets held for sale (Note 7)		35,494			—
Total current assets		49,801			17,973
Property and equipment, net		1,933			335
Restricted cash		1,330			—
Financial assets at fair value		—			1,965
Intangible assets, net		340,785			116,646
Goodwill		710,962			227,763
Operating leases – right-of-use assets		5,152			3,519
Other non-current assets		403			24

Total assets	$	1,110,366		$	368,225

Liabilities, convertible preferred stock and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	109,404		$	56,775
Accounts payable – due to related parties		17,010			665
Accrued expenses – due to related parties		43,170			—
Notes payable, net of discount		16,542			4,090
Note payable – related parties		539			368
Convertible notes, net of $2,027 and $710 discount as of June 30, 2020 and December 31, 2019, respectively		4,407			1,358
Shares settled liability for intangible asset		—			1,000
Deferred revenue		8,855			—
Profit share liability		2,119			1,971
Warrant liability – subsidiary		21			24
Warrant liabilities		40,617			—
Derivative liabilities		163			376
Long term borrowings – current portion		8,154			—
Current portion of operating lease liabilities		970			815
Liabilities held for sale (Note 7)		56,137			—

Total current liabilities		308,108			67,442

Deferred income taxes		90,794			30,879
Operating lease liability		4,189			2,705
Long term borrowings		19,197			43,982
Other long-term liabilities		1			41

Total liabilities		422,289			145,049

Commitments and contingencies (Note 19)

Series D Convertible Preferred stock, $0.0001 par value, 2,000,000 shares authorized, 203,000 and 456,000 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively; aggregate liquidation preference of $208 and $462 as of June 30, 2020 and December 31, 2019, respectively		208			462

Stockholders’ equity:
Series AA Convertible Preferred stock, par value $0.0001, 35,800,000 shares authorized, 27,412,193 and 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		566,124			—
Series A Preferred stock, par value $0.0001, 5,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		—			—
Series B Convertible Preferred stock, par value $0.0001, 1,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		—			—
Series C Convertible Preferred stock, par value $0.0001, 41,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		—			—
Series X Convertible Preferred stock, par value $0.0001, 1,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		—			—
Common stock par value $0.0001: 400,000,000 shares authorized; 38,684,514 and 28,912,500 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively		4			3
Additional paid-in capital		315,871			257,002
Accumulated deficit		(210,540	)		(56,123	)
Non-controlling interest		16,410			22,602
Accumulated other comprehensive loss		—			(770	)

Total stockholders’ equity		687,869			222,714

TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY	$	1,110,366		$	368,225

For the three and six months ended June 30, 2020	Series AA Convertible Preferred Stock				Common Stock				Additional Paid in			Accumulated			Accumulated Other Comprehensive			Noncontrolling			Total Stockholders’ Equity
(unaudited):	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Interest			(Deficit)

Balance at December 31, 2019		—	$	—		28,912,500	$	3	$	257,002		$	(56,123	)	$	(770	)	$	22,602		$	222,714
Issuance of common stock for cash		—		—		795,593		—		2,297			—			—			—			2,297
Issuance of common stock - subsidiary share exchange		—		—		1,552,070		—		1,150			—			—			(1,150	)		—
Common stock issued in connection with note payable		—		—		7,500		—		67			—			—			—			67
Stock-based compensation		—		—		1,040,000		—		10,061			—			—			—			10,061
Deemed dividend related to immediate accretion of redemption feature of convertible preferred stock		—		—		—		—		(171	)		—			—			—			(171	)
Accrued Series D Preferred Stock dividends		—		—		—		—		(9	)		—			—			—			(9	)
Deconsolidation of Nexway		—		—		—		—		—			—			770			(2,595	)		(1,825	)
Net loss		—		—		—		—		—			(55,470	)		—			(873	)		(56,343	)

Balance at March 31, 2020		—	$	—		32,307,663	$	3	$	270,397		$	(111,593	)	$	—		$	17,984		$	176,791

Issuance of common stock and warrants for cash		—		—		3,906,313		1		26,629			—			—			—			26,630
Issuance of common stock - subsidiary share exchange		—		—		1,201,749		—		892			—			—			(892	)		—
Common stock issued in connection with note payable		—		—		25,000		—		192			—			—			—			192
Right to receive Series AA Preferred Stock in connection with acquisition of fuboTV Pre-Merger		32,324,362		566,124		—		—		—			—			—			—			566,124
Settlement of share settled liability		—		—		900,000		—		9,054			—			—			—			9,054
Stock-based compensation		—		—		343,789		—		8,715			—			—			—			8,715
Redemption of redemption feature of convertible preferred stock		—		—		—		—		—			126			—			—			126
Accrued Series D Preferred Stock dividends		—		—		—		—		(8	)		—			—			—			(8	)
Net loss		—		—		—		—		—			(99,073	)		—			(682	)		(99,755	)

Balance at June 30, 2020		32,324,362	$	566,124		38,684,514	$	4	$	315,871		$	(210,540	)	$	—		$	16,410		$	687,869

For the three and six months ended June 30, 2019	Series AA Convertible Preferred Stock					Common Stock				Additional Paid in			Accumulated			Noncontrolling		Total Stockholders’ Equity
(unaudited):	Shares			Amount		Shares		Amount		Capital			Deficit			Interest		(Deficit)

Balance at December 31, 2018		1,000,000		$	—		7,532,776	$	1	$	227,570		$	(21,763	)	$	26,742	$	232,550
Issuance of common stock for cash		—			—		378,098		—		1,778			—			—		1,778
Preferred stock converted to common stock		(1,000,000	)		—		15,000,000		1		(1	)		—			—		—
Common stock issued for lease settlement		—			—		18,935		—		130			—			—		130
Issuance of subsidiary common stock for cash		—			—		—		—		65			—			—		65
Additional shares issued for reverse stock split		—			—		1,374		—		—			—			—		—
Net loss		—			—		—		—		—			(3,466	)		599		(2,867	)

Balance at March 31, 2019		—		$	—		22,931,183	$	2	$	229,542		$	(25,229	)	$	27,341	$	231,656

Issuance of common stock for cash		—			—		386,792		—		422			—			—		422
Net loss		—			—		—		—		—			(5,547	)		2,182		(3,365	)

Balance at June 30, 2019		—		$	—		23,317,975	$	2	$	229,964		$	(30,776	)	$	29,523	$	228,713

	Fair Value

Assets acquired:
Cash and cash equivalents	$	8,040
Accounts receivable		5,831
Prepaid expenses and other current assets		976
Property & equipment		2,042
Restricted cash		1,333
Other noncurrent assets		397
Operating leases - right-of-use assets		5,395
Intangible assets		243,612
Goodwill		562,908

Total assets acquired	$	830,534

Liabilities assumed
Accounts payable	$	51,687
Accounts payable – due to related parties		14,811
Accrued expenses and other current liabilities		50,249
Accrued expenses and other current liabilities – due to related parties		34,109
Long term borrowings - current portion		5,625
Operating lease liabilities		5,395
Deferred revenue		8,809
Long-term debt, net of issuance costs		18,125
Deferred tax liabilities		65,613

Total liabilities assumed	$	254,423

Net assets acquired	$	576,111

	Estimated Useful Life (in Years)	Fair Value

Software and technology	9	$	181,737
Customer relationships	2		23,678
Tradenames	9		38,197

Total		$	243,612

	Six months ended June 30
	2020			2019

Total revenues		102,514			62,680
Net loss attributable to common stockholders		(190,672	)		(81,828	)
Basic and diluted net loss per share attributable to common stockholders		(1.96	)		(0.99	)

	Estimated	June 30,			December 31,
	useful lives	2020			2019

Furniture and fixtures	5 years	$	293		$	338
Computer equipment	3 years		199			—
Leasehold improvements	Lesser of useful life or lease term		1,572			—
			2,064			338
Less: Accumulated depreciation			(131	)		(3	)
Total property and equipment, net		$	1,933		$	335

Cash	$	5,776
Accounts receivable		9,831
Inventory		50
Prepaid expenses		164
Goodwill		51,168
Property and equipment, net		380
Right-of-use assets		3,594
Total assets	$	70,963
Less:
Accounts payable		34,262
Accrued expenses		15,788
Lease liability		3,594
Deferred income taxes		1,161
Other liabilities		40
Total liabilities	$	54,845
Non-controlling interest		2,595
Foreign currency translation adjustment		(770	)
Loss before fair value – investment in Nexway		14,293
Less: fair value of shares owned by the Company		2,374
Loss on deconsolidation of Nexway	$	11,919

Price per share Euros	€	10.90
Exchange rate		1.123
Price per share USD	$	12.24
Nexway shares held by the Company		407,550
Fair value - investment in Nexway	$	4,988

	June 30,
	2020

Investment in Nexway	$	4,988
Financial assets		1,965
Goodwill		28,541

Total assets	$	35,494

Loan payable	$	56,137

Total liabilities	$	56,137

Net carrying amount	$	(20,643	)

Panda units granted		26.2
Fair value per unit on grant date	$	67,690

Grant date fair value	$	1,773
Change in fair value of Panda interests		198

Fair value at December 31, 2019	$	1,971
Change in fair value of Panda interests		—

Fair value at March 31, 2020	$	1,971
Change in fair value of Panda interests		148

Fair value at June 30, 2020	$	2,119

	Useful	Weighted Average		June 30, 2020
	Lives (Years)	Remaining Life (Years)		Intangible Assets		Accumulated Amortization			Net Balance
Human animation technologies	7		5.1	$	123,436		(33,463	)	$	89,973
Trademark and trade names	7		5.1		7,746		(2,102	)		5,644
Animation and visual effects technologies	7		5.1		6,016		(1,633	)		4,383
Digital asset library	5-7		4.9		7,536		(1,897	)		5,639
Intellectual Property	7		5.1		828		(225	)		603
Customer relationships	2		1.8		23,678		(2,960	)		20,718
fuboTV Tradename	9		8.8		38,197		(1,061	)		37,136
Software and technology	9		8.8		181,737		(5,048	)		176,689
Total				$	389,174	$	(48,389	)	$	340,785

					March 31, 2021
	Useful Lives (Years)		Weighted Average Remaining Life (Years)		Intangible Assets		Accumulated Amortization			Net Balance
Customer relationships		2		1.0	$	23,678		(11,839	)	$	11,839
fuboTV tradename		9		8.0		38,197		(4,244	)		33,953
Software and technology		9		8.0		181,782		(20,198	)		161,584
Total					$	243,657	$	(36,281	)	$	207,376

				December 31, 2019
	Useful Lives (Years)	Weighted Average Remaining Life (Years)		Intangible Assets	Intangible Asset Impairment			Accumulated Amortization			Net Balance
Human animation technologies	7		6	$123,436	$	—		$	(24,646	)	$	98,790
Trademark and trade names	7		6	9,432		(1,686	)		(1,549	)		6,197
Animation and visual effects technologies	7		6	6,016		—			(1,203	)		4,813
Digital asset library	5-7		5.5	7,505		—			(1,251	)		6,254
Intellectual Property	7		6	3,258		(2,430	)		(236	)		592
Customer relationships	11		11	4,482		(4,482	)		—			—
Total				$154,129	$	(8,598	)	$	(28,885	)	$	116,646

	Future Amortization		Future Amortization
2020	$	28,572
2021		57,144	$	27,218
2022		48,266		27,412
2023		45,306		24,452
2024		45,233		24,437
2025				24,437
Thereafter		116,264		79,420
Total	$	340,785	$	207,376

Balance – December 31, 2019	$	227,763
Deconsolidation of Nexway		(51,168	)
Balance – March 31, 2020	$	176,595
Acquisition of fuboTV Pre-Merger		562,908
Less: transfer to asset held for sale		(28,541	)
Balance – June 30, 2020	$	710,962

Balance - December 31, 2020	$	478,406
Vigtory acquisition		10,683
Balance - March 31, 2021	$	489,089

Balance – December 31, 2019	$	30,879
Income tax benefit (associated with the amortization of intangible assets)		(1,038	)
Deconsolidation of Nexway		(1,162	)
Balance – March 31, 2020		28,679
Acquisition of fuboTV Pre-Merger		65,613
Income tax benefit (associated with the amortization of intangible assets)		(3,498	)
Balance – June 30, 2020	$	90,794

		March 31,		December 31,
Note	Stated Interest Rate	2021		2020
2026 Convertible Notes	3.25%	$	304,344	$	-
Senior secured loan	LIBOR plus 5.25% per annum		17,736		19,556
Note payable	10.0%		4,683		4,558
Paycheck Protection Program Loan	1.0%		-		4,699
Other	4.0%		35		35
		$	326,798	$	28,848

	June 30, 2020		December 31, 2019
Affiliate fees	$	59,651	$	—
Alexander Bafer, Executive Chairman		256	$	20
John Textor, Chief Executive Officer and affiliated companies		264		592
Other		9		53
Total	$	60,180	$	665

	(i)	during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ended on March 31, 2021, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

	(ii)	during the five business day period after any five consecutive trading day period in which the trading price for each trading day of such five consecutive trading day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

	(iii)	if the Company calls any or all of the 2026 Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or

	(iv)	upon the occurrence of specified corporate events.

	June 30, 2020
Principal value of Senior Note	$	10,050
Original issue discount		(2,650	)
Discount resulting from allocation of proceeds to warrant liability		(7,400	)
Amortization of discount		9,183
Principal repayment		(7,500	)
Net carrying value of Senior Note	$	1,683

	~~(i)~~	~~FB Loan consented to the May 11, 2020 sale by the Company of capital stock for aggregate consideration in the amount of $7.5 million; and~~
	~~(ii)~~	the provision requiring that following receipt by any loan party or any subsidiary of proceeds of any financing, the Borrower must prepay the Senior Note in an amount equal to 100% of the cash proceeds of such financing, was removed.

	June 30, 2020
	Total		Level 1		Level 2		Level 3

Financial Liabilities at Fair Value:
Convertible notes	$	3,661	$	—	$	—	$	3,661
Profit share liability		2,119	$	—		—		2,119
Derivative liability		163		—		—		163
Warrant liability – subsidiary		21		—		—		21
Warrant liabilities		40,617		—		—		40,617
Total	$	46,581	$	—	$	—	$	46,581

	Fair valued measured at March 31, 2021
	Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Financial liabilities at fair value:
Warrant liabilities	$	-	$	-	$	8,030	$	8,030
Total financial liabilities at fair value	$	-	$	-	$	8,030	$	8,030

	Fair valued measured at December 31, 2020
	Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Financial liabilities at fair value:
Warrant liabilities	$	-	$	-	$	22,686	$	22,686
Total financial liabilities at fair value	$	-	$	-	$	22,686	$	22,686

	Convertible Notes			Warrant Liability - Subsidiary			Profits Share Liability		Warrant Liabilities			Derivative Liability
Fair value at December 31, 2019	$	1,203		$	24		$	1,971	$	—		$	376
Change in fair value		(200	)		15			—		366			(97	)
Additions		689			—			—		15,621			172
Redemption		—			—			—		—			(62	)
Fair value at March 31, 2020	$	1,692		$	39		$	1,971	$	15,987		$	389
Change in fair value		(925	)		(18	)		148		(4,966	)		(23	)
Additions		2,894			—			—		29,596			—
Redemption		—			—			—		—			(203	)
Fair value at June 30, 2020	$	3,661		$	21		$	2,119	$	40,617		$	163

	Warrant liabilities
Fair value at December 31, 2020	$	22,686
Change in fair value	$	585
Redemption	$	(15,241	)
Fair value at March 31, 2021	$	8,030

	June 30, 2020			December 31, 2019
Exercise price	$	0.75		$	0.75
Stock price – subsidiary	$	0.05		$	0.02
Fair value of stock price	$	—		$	—
Risk free rate		0.17	%		1.62	%
Contractual term (years)		2.58			3.08
Expected dividend yield		—	%		—	%
Expected volatility		69.2	%		83.7	%
Number of subsidiary warrants outstanding		48,904,037			48,904,037

	June 30, 2020
Fair value of underlying common shares	$	10.45
Exercise price	$	5.00
Expected dividend yield		—	%
Expected volatility		50.5	%
Risk free rate		0.17	%
Expected term (years)		4.72