Arena Group Holdings Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2024 and2023should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in the Annual Report on Form 10-K filed with the SEC on April 1, 2024. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors.. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Forward-Looking Statements.”

Current wording

The following discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2024 and2023should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in the Annual Report on Form 10-K filed with the SEC on April 1, 2024. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Forward-Looking Statements.”

Previous wording

We are a media company that leverages technology to build deep content verticals powered by anchor brands and a best-in-class digital media platform (the “Platform”) empowering publishers who impact, inform, educate, and entertain. Our strategy is to focus on key subject matter verticals where audiences are passionate about a topic category (e.g., sports and finance) where we can leverage the strength of our core brands to grow our audience and increase monetization both within our core brands as well as for our media publisher partners(each, a “Publisher Partner”). Our focus is on leveraging our Platform and brands in targeted verticals to maximize audience reach, enhance engagement, and optimize monetization of digital publishing assets for the benefit of our users, our advertiser clients, and our greater than 40 owned and operated properties as well as properties we run on behalf of independent Publisher Partners. We own and operateAthlon Sports,TheStreet, The Spun, Parade, and Men’sJournal and power more than 360 independent Publisher Partners, including the many sports team sites that contribute to Athlon Sports.

Current wording

We are a media company that leverages technology to build deep content verticals powered by anchor brands and a best-in-class digital media platform (the “Platform”) empowering publishers who impact, inform, educate, and entertain. Our strategy is to focus on key subject matter verticals where audiences are passionate about a topic category (e.g., sports and finance) where we can leverage the strength of our core brands to grow our audience and increase monetization both within our core brands as well as for our media publisher partners (each, a “Publisher Partner”). Our focus is on leveraging our Platform and brands in targeted verticals to maximize audience reach, enhance engagement, and optimize monetization of digital publishing assets for the benefit of our users, our advertiser clients, and our greater than 40 owned and operated properties as well as properties we run on behalf of independent Publisher Partners. We own and operateAthlon Sports, TheStreet, The Spun, Parade, and Men’s Journal and power more than 360 independent Publisher Partners, including the many sports team sites that contribute to Athlon Sports.

Previous wording

On February 9, 2024, New Arena Holdco, Inc. (“New Arena”), a wholly owned subsidiary of us, filed a Registration Statement on Form S-4 (File No. 333-276999) with the SEC in connection with the Business Combination Agreement by and among us, Simplify Inventions, LLC (“Simplify”), Bridge Media Networks, LLC (“Bridge Media”), New Arena and the other parties dated November 5, 2023, as amended on December 1, 2023 (the “Transaction Agreement”), that provides for us to combine our operations with those of Bridge Media, a wholly owned subsidiary of Simplify by way of a series of mergers with and among New Arena (the “Mergers”), subject to customary conditions, including the approval by our shareholders and certain regulatory approvals. Immediately following the Mergers, the Transaction Agreement provides for: (i) the purchase by The Hans Foundation USA, a nonprofit nonstock corporation (the “Hans Foundation”) of 25,000 shares of New Arena Series A Preferred Stock, par value $0.0001 per share, at a purchase price of $1,000.00 per share, for an aggregate purchase price of $25,000 pursuant to the subscription agreement, dated as of November 5, 2023, by and between New Arena and the Hans Foundation; and (ii) the purchase by 5-Hour International Corporation Pte. Ltd. (“5-Hour”) of 5,000,000 shares of New Arena common stock , par value $0.0001 per share (the “New Arena Common Stock”) at a purchase price of $5.00 per share, for an aggregate purchase price of $25,000 pursuant to the subscription agreement, dated as of November 5, 2023, by and between New Arena and 5-Hour. Further, concurrently with the closing of the Mergers, pursuant to that certain Committed Equity Facility Term Sheet, dated November 5, 2023, by and between New Arena and Simplify, New Arena will enter into a Stock Purchase Agreement with Simplify, pursuant to which Simplify will agree to purchase, at New Arena’s request, up to $20,000 in aggregate purchase price of shares of New Arena Common Stock from time to time during the 12 months following the closing date at a price per share equal to the lesser of (i) the volume-weighted average price of the New Arena Common Stock for the last sixty trading days prior to the purchase date and (ii) $3.86 per share (the “Equity Line of Credit”), along with 60,000 shares of New Arena Common Stock as payment of a 1.5% commitment fee.

Current wording

On February 9, 2024, New Arena Holdco, Inc. (“New Arena”), a wholly owned subsidiary of us, filed a Registration Statement on Form S-4 (File No. 333-276999) with the SEC in connection with the Business Combination Agreement by and among us, Simplify, Bridge Media, New Arena and the other parties dated November 5, 2023, as amended on December 1, 2023 and July 12, 2024 (the “Transaction Agreement”), that provides for us to combine our operations with those of Bridge Media, a wholly owned subsidiary of Simplify by way of a series of mergers with and among New Arena (the “Mergers”), subject to customary conditions, including the approval by our shareholders and certain regulatory approvals (the “Business Combination”). Immediately following the Mergers, the Transaction Agreement provides for: (i) the purchase by The Hans Foundation USA, a nonprofit nonstock corporation (the “Hans Foundation”) of 25,000 shares of New Arena Series A Preferred Stock, par value $0.0001 per share, at a purchase price of $1,000.00 per share, for an aggregate purchase price of $25,000 pursuant to the subscription agreement, dated as of November 5, 2023, by and between New Arena and the Hans Foundation; and (ii) the purchase by 5-Hour International Corporation Pte. Ltd. (“5-Hour”) of 5,000,000 shares of New Arena common stock, par value $0.0001 per share (the “New Arena Common Stock”) at a purchase price of $5.00 per share, for an aggregate purchase price of $25,000 pursuant to the subscription agreement, dated as of November 5, 2023, by and between New Arena and 5-Hour. Further, concurrently with the closing of the Mergers, pursuant to that certain Committed Equity Facility Term Sheet, dated November 5, 2023, by and between New Arena and Simplify, New Arena will enter into a Stock Purchase Agreement with Simplify, pursuant to which Simplify will agree to purchase, at New Arena’s request, up to $20,000 in aggregate purchase price of shares of New Arena Common Stock from time to time during the 12 months following the closing date at a price per share equal to the lesser of (i) the volume-weighted average price of the New Arena Common Stock for the last sixty trading days prior to the purchase date and (ii) $3.86 per share (the “Equity Line of Credit”), along with 60,000 shares of New Arena Common Stock as payment of a 1.5% commitment fee.

Previous wording

Uncertainty in the global economy presents significant risks to our business. Increases in inflation, rising interest rates, instability in the global banking system, geopolitical factors, including the ongoing conflicts in Ukraine and Israel and the responses thereto, and the remaining effects of the COVID-19 pandemic may have an adverse effect on our business. While we are closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside of our control and could exist for an extended period of time. As a result, we are subject to continuing risks and uncertainties. For additional information, see the sections titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 1, 2024 and in this Quarterly Report.

Current wording

Uncertainty in the global economy presents significant risks to our business. Increases in inflation, increasing and continued elevated interest rates, instability in the global banking system, geopolitical factors, including the ongoing conflicts in Ukraine and Israel and the responses thereto, and the remaining effects of the COVID-19 pandemic may have an adverse effect on our business. While we are closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside of our control and could exist for an extended period of time. As a result, we are subject to continuing risks and uncertainties. For additional information, see the sections titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 1, 2024 and in this Quarterly Report.

Previous wording

We monitor and review our key operating metrics as we believe that these metrics are relevant for our industry and specifically to us and to understanding our business. Moreover, they form the basis for trends informing certain predictions related to our financial condition. Our key operating metrics focus primarily on our digital advertising revenue, which has experienced significant growth in recent periods. For the three months ended March 31, 2024, digital advertising revenue increased by 19.1%, as compared to the same period in 2023 as indicated in the Results of Operations section below. Management monitors and reviews these metrics because such metrics are readily measurable in real time and can provide valuable insight into the performance of and trends related to our digital advertising revenue and our overall business. We consider only those key operating metrics described here to be material to our financial condition, results of operations and future prospects.

Current wording

We monitor and review our key operating metrics as we believe that these metrics are relevant for our industry and specifically to us and to understanding our business. Moreover, they form the basis for trends informing certain predictions related to our financial condition. Our key operating metrics focus primarily on our digital advertising revenue, which has experienced significant growth in recent periods. As indicated in the Results of Operations section below, for the three months ended June 30, 2024, digital advertising revenue decreased by 10.0%, as compared to the same period in fiscal 2023. For the six months ended June 30, 2024, digital advertising revenue increased by 3.2%, as compared to the same period in 2023. Management monitors and reviews these metrics because such metrics are readily measurable in real time and can provide valuable insight into the performance of and trends related to our digital advertising revenue and our overall business. We consider only those key operating metrics described here to be material to our financial condition, results of operations and future prospects.

Previous wording

For the three months ended March 31, 2024 and 2023, our RPM was $19.99 and $14.56, respectively. The 37.29% increase in RPM reflects a significant increase in video advertising as a percentage of total digital advertising as digital video advertising is sold at a significantly higher price than digital display advertising. For the three months ended March 31, 2024 and 2023, our monthly average pageviews were 399,683,984 and 397,094,535, respectively. The 0.65% increase in monthly average pageviews reflects algorithmic changes at Google, Facebook and other platforms which subdued user click-throughs to the original content.

Current wording

For the three and six months ended June 30, 2024, our RPM was $22.90 and $21.22, respectively. For the three and six months ended June 30, 2023, our RPM was $20.95 and $17.58, respectively. The 9% and 21% increases in RPM for the three and six months reflect a significant increase in video advertising as a percentage of total digital advertising as digital video advertising is sold at a significantly higher price than digital display advertising.

Previous wording

For the three months ended March 31, 2024, we incurred a net loss from continuing operations of $12,720, and as of March 31, 2024, had cash on hand of $4,003 and a working capital deficit of $225,009. Our net loss from continuing operations and working capital deficit have been evaluated by management to determine if the significance of those conditions or events would limit our ability to meet our obligations when due. Also, since our 2023 Notes (see Note 11 in our accompanying condensed consolidated financial statements), Senior Secured Notes, Delayed Draw Term Notes and 2022 Bridge Notes (see Note 12 in our accompanying condensed consolidated financial statements) (collectively our “current debt”) are subject to a forbearance period through the earlier of the following: (a) September 30, 2024; (b) the occurrence of the closing of the Business Combination and (c) the termination of the Business Combination prior to closing (as further described in Note 18 in our accompanying condensed consolidated financial statements) unless we are able to refinance or modify the terms of our current debt we run the risk that our debt could be called, therefore, we may not be able to meet our obligations when due.

Current wording

For the six months ended June 30, 2024, we incurred a net loss from continuing operations of $19,658, and as of June 30, 2024, had cash on hand of $6,085 and a working capital deficit of $231,579. Our net loss from continuing operations and working capital deficit have been evaluated by management to determine if the significance of those conditions or events would limit our ability to meet our obligations when due. Management also evaluated the 2023 Notes (see Note 11 in our accompanying condensed consolidated financial statements), Senior Secured Notes, Delayed Draw Term Notes and 2022 Bridge Notes (see Note 12 in our accompanying condensed consolidated financial statements) (collectively our “current debt”) that are subject to a forbearance period through the earlier of the following: (a) September 30, 2024, as further extended on July 12, 2024 to December 31, 2024 (as further described under the headingArena Loan Agreement in Note 20 in our accompanying condensed consolidated financial statements); (b) the occurrence of the closing of the Business Combination(as further described in Note 18 in our accompanying condensed consolidated financial statements); or (c) the termination of the Business Combination prior to closing. In addition to the forgoing, management evaluated the August 2, 2024 shut down all of the operations and layoff of substantially all of the employees of Bridge Media Networks, LLC (“Bridge Media”), an affiliated entity of Simplify Inventions, LLC (“Simplify”), and both parties to the Business Combination. Unless we are able to refinance or modify the terms of our current debt we run the risk that our debt could be called, therefore, we may not be able to meet our obligations when due.

Previous wording

In our evaluation, management determined there is substantial doubt about our ability to continue as a going concern for a one-year period following the (unaudited) condensed consolidated financial statement issuance date, unless we are able to refinance or modify our current debt and complete the Business Combination.

Current wording

In its evaluation, management determined that substantial doubt exists about our ability to continue as a going concern for a one-year period following the financial statement issuance date. The plans to seek refinancing or modification of the terms of our current debt, complete the Business Combination orenter into possible alternative structures or options to the transactions contemplated under the Business Combination which are discussed below are outside of management’s control.

Previous wording

We plan to refinance or modify the maturities of our current debt and complete the Business Combination to alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, however, there can be no assurance that we will be able to refinance or modify our current debt and complete the Business Combination.

Current wording

We plan to refinance or modify the terms of our current debt, complete the Business Combination or enter into possible alternative structures or options to the transactions contemplated under the Business Combination based on our continuing discussions with Simplify(as further discussed above inRecent Developments) to alleviate the conditions that raised substantial doubt about our ability to continue as a going concern. However, there can be no assurance that we will be able to refinance or modify the terms of our current debt, complete the Business Combination or enter into possible alternative structures or options to the transactions contemplated under the Business Combination.

Previous wording

As of March 31, 2024, our principal sources of liquidity consisted of cash of $4,003 and accounts receivable from continuing operations, net of our allowance for doubtful accounts, of $26,452. In addition, as of March 31, 2024, we had $17,252 available for additional use under our working capital loan with Simplify. As of March 31, 2024, the outstanding balance of the Simplify working capital loan was $7,748. Our cash balance as of the issuance date of our accompanying condensed consolidated financial statements is $4,151.

Current wording

As of June 30, 2024, our principal sources of liquidity consisted of cash of $6,085 and accounts receivable from continuing operations, net of our allowance for credit losses, of $22,698. In addition, as of June 30, 2024, we had $12,252 available for additional use under our working capital loan with Simplify. As of June 30, 2024, the outstanding balance of the Simplify working capital loan was $12,748. Our cash balance as of the issuance date of our accompanying condensed consolidated financial statements is $6,719.

Previous wording

We have material contractual obligations that arise in the normal course of business primarily consisting of employment contracts, consulting agreements, leases, liquidated damages, debt and related interest payments. Purchase obligations consist of contracts primarily related to merchandise, equipment, and third-party services, the majority of which are due in the next 12 months. See Notes 5, 8, 10, 11 and 12 in our accompanying condensed consolidated financial statements for amounts outstanding as of March 31, 2024, related to leases, liquidated damages, working capital loan, bridge notes and debt, respectively. During 2022, we assumed the lease from Men’s Journal for office space in Carlsbad, California, that expires in March 2025, and we remain responsible for $1,439 over the lease term. The lease provides for fixed payments ranging from $89 to $94 over the remainder of the lease term, with an estimate of common expenses per month of $25 through the end of the lease term. There have been no material changes from the disclosures in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

We have material contractual obligations that arise in the normal course of business primarily consisting of employment contracts, consulting agreements, leases, liquidated damages, debt and related interest payments. Purchase obligations consist of contracts primarily related to merchandise, equipment, and third-party services, the majority of which are due in the next 12 months. See Notes 5, 8, 10, 11 and 12 in our accompanying condensed consolidated financial statements for amounts outstanding as of June 30, 2024, related to leases, liquidated damages, working capital loan, bridge notes and debt, respectively. During 2022, we assumed the lease from Men’s Journal for office space in Carlsbad, California, that expires in March 2025, and we remain responsible for $1,080 over the lease term. The lease provides for fixed payments ranging from $89 to $94 over the remainder of the lease term, with an estimate of common expenses per month of $25 through the end of the lease term. Other than with respect to leases, as described in Note 5,Leases, in our accompanying condensed consolidated financial statements, there have been no material changes from the disclosures in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

In connection with our discontinued operations from the discontinuance of the Sports Illustrated media business, we recorded the termination fee liability of $45,000 and recognized a loss on impairment of assets of $39,391 for the three months ended March 31, 2024. As a result of this discontinuance, our total liabilities from the discontinued operations were $98,874, offset by our total assets from discontinued operations of $5,691 as of March 31, 2024.

Current wording

In connection with our discontinued operations from the discontinuance of the Sports Illustrated media business, we recorded the termination fee liability of $45,000 and recognized a loss on impairment of assets of $39,391 for the six months ended June 30, 2024. As a result of this discontinuance, our total liabilities from the discontinued operations were $97,516, offset by our total assets from discontinued operations of $1,014 as of June 30, 2024.

Previous wording

Net loss from our discontinued operations, net of tax, was $90,638 and $4,853 for the three months ended March 31, 2024 and 2023, respectively, as indicated in the Results of Operations section below.

Current wording

Loss from our discontinued operations, net of tax, was $91,887 and $12,810 for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

See Note 2,Discontinued Operations and Note 19,Commitments and Contingencies in our accompanying condensed consolidated financial statements for information regarding our discontinued operations and action filed by ABG on April 1, 2024, respectively.

Current wording

Further details are provided in our accompanying condensed consolidated financial statements in Note 2,*Discontinued Operations,*related to ourdiscontinued operations and Note 19,Commitments and Contingencies, regarding our legal matters and an action filed by ABG Group againstthe Company and Manoj Bhargava on April 1, 2024.

Previous wording

As of March 31, 2024, we had a working capital deficit of $225,009, as compared to $145,622 as of December 31, 2023, consisting of $43,168 in total current assets and $268,177 in total current liabilities. As of December 31, 2023, our working capital deficit consisted of $90,399 in total current assets and $236,021 in total current liabilities.

Current wording

As of June 30, 2024, we had a working capital deficit of $231,579, as compared to $145,622 as of December 31, 2023, consisting of $35,352 in total current assets and $266,931 in total current liabilities. As of December 31, 2023, our working capital deficit consisted of $90,399 in total current assets and $236,021 in total current liabilities.

Previous wording

Our cash flows for the three months ended March 31, 2024 and 2023 consisted of the following:

Current wording

Our cash flows for the six months ended June 30, 2024 and 2023 consisted of the following:

Previous wording

For the three months ended March 31, 2024, net cash used in operating activities was $1,965, consisting primarily of $58,343 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements, professional services, and $964 of cash paid for interest, offset by $56,632 of cash received from customers. For the three months ended March 31, 2023, net cash used in operating activities was $1,672, consisting primarily of $59,394 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements, advance of royalty fees and professional services, and $3,252 of cash paid for interest, offset by $60,974 of cash received from customers.

Current wording

For the six months ended June 30, 2024, net cash used in operating activities was $5,161, consisting primarily of $90,094 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements, professional services, and $2,033 of cash paid for interest, offset by $93,222 of cash received from customers. For the six months ended June 30, 2023, net cash used in operating activities was $16,400, consisting primarily of $119,903 of cash paid to employees, Publisher Partners, expert contributors, suppliers, and vendors, and for revenue share arrangements, advance of royalty fees and professional services, and $7,140 of cash paid for interest, offset by $110,643 of cash received from customers.

Previous wording

For the three months ended March 31, 2024, net cash used in investing activities was $713 consisting of $713 for capitalized costs for our Platform. For the three months ended March 31, 2023, net cash used in investing activities was $1,688, consisting of $1,188 for capitalized costs for our Platform and $500 for the acquisition of a business.

Current wording

For the six months ended June 30, 2024, net cash used in investing activities was $1,512 consisting of (i) $27 for purchase of property and equipment and (ii) $1,485 for capitalized costs for our Platform. For the six months ended June 30, 2023, net cash used in investing activities was $2,632, consisting of $2,132 for capitalized costs for our Platform and $500 for the acquisition of a business.

Previous wording

For the three months ended March 31, 2024, net cash used in financing activities was $2,603, consisting primarily of (i) $2,263 for the payment of the Fexy put option, (ii) $19,609 from repayment of our line of credit with SLR Digital Finance LLC (“SLR”) and (iii) $479 for tax payments relating to the withholding of shares of common stock for certain employees, less (iv) $12,000 in net proceeds from the common stock private placement, and (v) $7,748 in net proceeds from our working capital loan with Simplify. For the three months ended March 31, 2023, net cash provided by financing activities was $5,450, consisting primarily of (i) $11,431(excluding accrued offering costs of $69) in net proceeds from the public offering of common stock, less (ii) $4,533 from repayments of our SLR line of credit; (ii) $25 in payment of deferred cash payments, and (iii) $1,423 for tax payments relating to the withholding of shares of common stock for certain employees.

Current wording

For the six months ended June 30, 2024, net cash provided by financing activities was $3,474, consisting of (i) $561 for the payment of the contingent consideration, (ii) $20,027 from repayment of our line of credit with SLR Digital Finance LLC (“SLR”) and (iii) $486 for tax payments relating to the withholding of shares of common stock for certain employees, less (iv) $12,000 in net proceeds from the common stock private placement, and (v) $12,748 in net proceeds from our working capital loan with Simplify. For the six months ended June 30, 2023, net cash provided by financing activities was $10,650, consisting of (i) $11,500 (before a reduction for accrued offering costs of $167) in proceeds from the public offering of common stock, and (ii) $815 of proceeds from our SLR line of credit; less (iii) $75 for deferred cash payments, and (iv) $1,423 for tax payments relating to the withholding of shares of common stock for certain employees.

Previous wording

For the three months ended March 31, 2024, the net loss from continuing operations improved $1,804 to $12,720, as compared to our prior period of $14,524. This improvement was primarily due to a $3,153 decrease in operating expenses that was offset by a decrease in gross profit of $1,395. This improvement was offset by a loss from discontinued operations of $90,638 as compared to $4,853 for the three months ended March 31, 2023. The increase in the loss from discontinued operations was primarily driven by the accrual of the $45,000 termination fee liability and the recognition of a loss on impairment of assets of $39,391. This increased loss from discontinued operations lead to an increase in our net loss of $83,981 as compared to $19,377 from our prior period, resulting in a net loss of $103,358 for the three months ended March 31, 2024.

Current wording

For the three months ended June 30, 2024, the net loss from continuing operations improved $4,589 to $6,938 as compared to our prior period of $11,527. This improvement was primarily due to a $6,274 decrease in operating expenses that was offset by a decrease in gross profit of $2,499.

Previous wording

For the three months ended March 31, 2024 we had gross profit of $8,933, as compared to $10,328 for the three months ended March 31, 2023, a decrease of $1,395. Gross profit percentage for the three months ended March 31, 2024 was 30.9%, as compared to 36.3% for the three months ended March 31, 2023.

Current wording

For the three months ended June 30, 2024 we had gross profit of $10,718, as compared to $13,217 for the three months ended June 30, 2023, a decrease of $2,499. Gross profit percentage for the three months ended June 30, 2024 was 39.4%, as compared to 38.8% for the three months ended June 30, 2023.

Previous wording

The reduction in gross profit percentage was driven by a higher mix of revenue from sports partners, which receive a revenue share, resulting in Publisher Partner revenue share as a percentage of digital advertising revenue increasing to 27.9% for the three months ended March 31, 2024, as compared to 22.1% for the three months ended March 31, 2023.

Current wording

The increase in gross profit percentage was driven by a higher mix of revenue from sports partners, which receive a revenue share, resulting in Publisher Partner revenue share as a percentage of digital advertising revenue increasing to 20.0% for the three months ended June 30, 2024, as compared to 23.9% for the three months ended June 30, 2023.

Previous wording

For the three months ended March 31, 2024, we incurred general and administrative costs of $10,135 as compared to $12,975 for the three months ended March 31, 2023. The $2,840 decrease in general and administrative expenses is primarily due to decreases in stock-based compensation of $3,467 and other general and administrative expenses of $403; partially offset by an increase in payroll and related expenses of $858.

Current wording

For the three months ended June 30, 2024, we incurred general and administrative costs of $8,632 as compared to $11,601 for the three months ended June 30, 2023. The $2,969 decrease in general and administrative expenses is primarily due to decreases in stock-based compensation of $3,824, and payroll and related expenses of $399; partially offset by an increase professional services, including accounting, legal and insurance of $965.

Previous wording

Interest Expense. We incurred interest expense of $4,339 and $4,182 for the three months ended March 31, 2024 and 2023, respectively, an increase of $157 from the prior period, as a result of our debt increase.

Current wording

Interest Expense. We incurred interest expense of $4,249 and $5,001 for the three months ended June 30, 2024 and 2023, respectively, a decrease of $752 from the prior period, as a result of our decrease in debt.

Previous wording

Liquidated Damages. We recorded $76 of accrued interest on our liquidated damages payable for the three months ended March 31, 2024 primarily from the issuance of our convertible debentures, Series H convertible preferred stock, Series I convertible preferred stock, Series J convertible preferred stock and Series K convertible preferred stock in prior years. We recorded $127 of accrued interest on our liquidated damages payable for the three months ended March 31, 2023 primarily from issuance of the same securities as described above.

Current wording

Liquidated Damages. We recorded $76 of accrued interest on our liquidated damages payable for the three months ended June 30, 2024 primarily from the issuance of our convertible debentures, Series H convertible preferred stock, Series I convertible preferred stock, Series J convertible preferred stock and Series K convertible preferred stock in prior years. We recorded $177 of accrued interest on our liquidated damages payable for the three months ended June 30, 2023 primarily from issuance of the same securities as described above.

Previous wording

For the three months ended March 31, 2024, total revenue increased $523, or 1.8%, to $28,941 from $28,418 for the three months ended March 31, 2023. This reflected a decrease in print revenue of$1,489 due primarily to the shutdown of Athlon Outdoor print operations, which was largely offset by a 7.5% increase in digital revenue from$26,656 for the three months ended March 31, 2023 to$28,668 for the three months ended March 31, 2024.

Current wording

For the six months ended June 30, 2024, total revenue decreased $6,366, or a 10.2% decrease, to $56,124 from $62,490 for the six months ended June 30, 2023. This reflected a decrease in print revenue of $4,284 due primarily to the shutdown of Athlon Outdoor print operations and a 3.6% decrease in digital revenue from $57,180 for the six months ended June 30, 2023 to $55,098 for the six months ended June 30, 2024.

Previous wording

The primary driver of the increase in our digital revenue is a 19.1% increase in our digital advertising revenue from$19,093 for the three months ended March 31, 2023 to $22,748 in the current year period. In addition, other digital revenue increased by $735 to $1,286 for the three months ended March 31, 2024 driven by the expansion in our e-commerce revenue. These improvements were partially offset by a decrease in our digital subscriptions of $1,327 and a $1,051 decline in licensing and syndication revenue.

Current wording

The primary drivers of the decrease in our digital revenue are a decrease in our digital subscriptions of $3,143 and a $1,530 decline in licensing and syndication revenue, partially offset by a 3.2%, or $1,354, increase in our digital advertising revenue from $42,112 for the six months ended June 30, 2023 to $43,466 in the current year period. In addition, other digital revenue increased by $1,237 to $3,007 for the six months ended June 30, 2024 driven by the expansion in our e-commerce revenue.

Previous wording

For the three months ended March 31, 2024, we recognized cost of revenue of $20,008, as compared to $18,090 for the three months ended March 31, 2023, which represents an increase of $1,918. Cost of revenue for the first quarter of 2024 was impacted by increases in technology, Platform and software licensing fees of $465 and Publisher Partner revenue share payments of $2,137 and content and editorial expenses of $2,453; partially offset by a decrease in stock-based compensation costs of $1,598.

Current wording

For the six months ended June 30, 2024, we recognized cost of revenue of $36,473, as compared to $38,945 for the six months ended June 30, 2023, which represents a decrease of $2,472. Cost of revenue for the six months ended June 30, 2024 was impacted by decreases in technology, Platform and software licensing fees of $708, printing, distribution and fulfillment costs of $1,299, stock-based compensation costs of $2,135, and amortization of developed technology and platform development of $1,636; partially offset by increases in Publisher Partner revenue share payments of $769 and content and editorial expenses of $2,224.

Previous wording

For the three months ended March 31, 2024, we incurred selling and marketing costs of $4,564, as compared to $5,847 for the three months ended March 31, 2023. The decrease in selling and marketing costs of $1,283 is primarily related to decreases in payroll and employee benefits costs of $552, professional marketing services of $562, advertising costs of $344 and stock based compensation of $259; partially offset by other selling and marketing expenses of $265.

Current wording

For the six months ended June 30, 2024, we incurred selling and marketing costs of $8,315, as compared to $12,751 for the six months ended June 30, 2023. The decrease in selling and marketing costs of $4,436 is primarily related to decreases in payroll and employee benefits costs of $1,589, professional marketing services of $1,783, advertising costs of $382 and stock based compensation of $517; partially offset by other selling and marketing expenses of $177.

Previous wording

Change in Fair Value of Contingent Consideration. The change in fair value of contingent consideration of $313 for the three months ended March 31, 2024 represents the change in the put option on our common stock in connection with the Fexy Studios acquisition.

Current wording

Change in Fair Value of Contingent Consideration. The change in fair value of contingent consideration of $313 for the six months ended June 30, 2024 represents the change in the put option on our common stock in connection with the Fexy Studios acquisition.

Previous wording

We report our financial results in accordance with generally accepted accounting principles in the United States of America (“GAAP”); however, management believes that certain non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods. We believe Adjusted EBITDA provides visibility to the underlying continuing operating performance by excluding the impact of certain items that are noncash in nature or not related to our core business operations. We calculate Adjusted EBITDA as net loss as adjusted for loss from discontinued operations, with additional adjustments for (i) interest expense (net), (ii) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, (v) change in valuation of contingent consideration; (vi) liquidated damages, (vii) loss on impairment of assets, (viii) employee retention credit, and (ix) employee restructuring payments.

Current wording

We report our financial results in accordance with generally accepted accounting principles in the United States of America (“GAAP”); however, management believes that certain non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods. We believe Adjusted EBITDA provides visibility to the underlying continuing operating performance by excluding the impact of certain items that are noncash in nature or not related to our core business operations. We calculate Adjusted EBITDA as net loss as adjusted for net loss from discontinued operations, with additional adjustments for (i) interest expense (net), (ii) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, (v) change in valuation of contingent consideration; (vi) liquidated damages, (vii) loss on impairment of assets, (viii) employee retention credit, and (ix) employee restructuring payments.