FuboTV Inc. 10-K

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock began trading on the New York Stock Exchange under the symbol, “FUBO” on October 8, 2020. Prior to that date, our common stock was quoted on the OTC Markets under the symbol “FUBO,” and prior to May 1, 2020, our stock symbol was “FBNK.” Holders of Record As of March 23, 2021, there were 336 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. Securities Authorized for Issuance under Equity Compensation Plans Refer to Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K for more information regarding securities authorized for issuance. Dividend Policy We have not declared or paid any cash dividends on our common shares. We intend to retain future earnings, if any, to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, the requirements and contractual restrictions of then-existing debt instruments, and other factors that our board of directors deems relevant. Recent Sales of Unregistered Securities We did not sell any equity securities which were not registered under the Securities Act during the fiscal year ended December 31, 2020 that were not otherwise disclosed in our Quarterly Reports on Form 10-Q or our Current Reports on Form 8-K. Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table provides information with respect to purchases by us of our shares during the fourth quarter of the year ended December 31, 2020: Date Number of Shares Purchased Price per share 12/15/2020 800,000 $ 0.0001 On December 15, 2020, we purchased 800,000 shares of our common stock held by FBNK Finance S.a.r.l. Item 6. Selected Financial Data. Not applicable. 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, 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 sections titled “Cautionary Note Regarding 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 results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our historical results are not necessarily indicative of the results that may be expected for any period in the future . 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 The widespread global impact from the outbreak and spread of the COVID-19 pandemic continued throughout 2020. We took precautionary measures to protect the health and safety of 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 have created significant volatility, uncertainty and economic disruption in 2020. The impact of the COVID-19 pandemic on 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 ongoing COVID-19 pandemic continued to accelerate the shift of TV viewing away from traditional pay TV to streaming TV and the on-going shift of advertising budgets away from traditional linear TV into streaming offering. While in 2020 we have experienced an increase in TV streaming and our overall business was largely unaffected by the COVID-19 pandemic there can be no assurance that these positive trends will continue during 2021 and beyond. 40 Merger with fuboTV and Basis of Presentation On April 1, 2020, fuboTV Acquisition Corp., a Delaware corporation and our wholly-owned subsidiary (“Merger Sub”) merged with and into fuboTV Sub, whereby fuboTV 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 Sub (the “Merger Agreement”). Following the Merger, we changed our name from “FaceBank Group, Inc.” to “fuboTV Inc.,” and we changed the 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, all of the capital stock of fuboTV Sub was converted into the right to receive shares of our newly created class of Series AA convertible preferred stock, par value $0.0001 per share (the “Series AA Preferred Stock”). Each share of Series AA Preferred Stock was entitled to 0.8 votes per share and was convertible into two (2) shares of our common stock following the sale of such share of Series AA Preferred Stock on an arms’-length basis either pursuant to Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act. On March 1, 2021, we consummated an offer to exchange the remaining outstanding shares of Series AA Preferred Stock for two shares of our common stock per share of Series AA Preferred Stock (the “Exchange Offer”). As a result of the 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 and the combined company post-Merger from April 1 through December 31, and 2019 financial statements and metrics include fuboTV pre-merger. These financial statements are reported on a GAAP basis. The Company does not intend to report pro forma results to compare fuboTV Pre-Merger’s 2019 and first quarter 2020 performance against the combined company post-Merger’s 2020 performance. A discussion and analysis covering the comparison of the year ended December 31, 2019 to the year ended December 31, 2018 as well as the three months ended March 31, 2020 as compared to the three months ended March 31, 2019, for fuboTV Sub premerger, are included in our prospectus filed pursuant to Rule 424(b) with the Securities and Exchange Commission on December 28, 2020. Restatement of Financial Statements In connection with the preparation of the 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020. Between May 11, 2020 and June 8, 2020, we entered into securities purchase agreements pursuant to which we sold an aggregate of 3,735,922 shares of our common stock at a purchase price of $7.00 per share and issued warrants to several investors covering a total of 3,735,922 shares of our common stock for an aggregate purchase price of $26.2 million. We determined that the fair value of the warrants totaled $26.8 million. We originally recorded a loss on issuance of common stock and warrants totaling $26.8 million, resulting in an overstatement of the loss by $26.2 million (the “Error”). We should have allocated the purchase price of $26.2 million to a warrant liability with the residual amount of $0.6 million to the loss on issuance of common stock and warrants. ● On the condensed consolidated balance sheet as of June 30, 2020, there was no net effect of the Error to total assets, total liabilities, and total stockholders’ equity. The only line items on the condensed consolidated balance sheet that the Error affected were additional paid in capital and accumulated deficit, both of which were overstated by $26.2 million. ● On the statement of condensed consolidated operations for the three months and six months ended June 30, 2020, the Error caused a $26.2 million overstatement of loss on issuance of common stock, notes, bonds and warrants. ● On the condensed consolidated statement of cash flows for the six months ended June 30, 2020, there was no net effect of the Error on cash used in operating activities, cash used in investing activities and cash provided by financing activities. As a result, we were required to restate certain financial statements in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020. 41 Components of Results of Operations Revenues, net Subscription Subscription revenue consists primarily of subscription plans sold through the Company’s website and third-party app stores. Advertisement Advertisement revenue consists primarily of fees charged to advertisers who want to display ads (“impressions”) within the streamed content. Software licenses, net Software license revenue consists of revenue generated from the sale of software licenses at one of our former subsidiaries, Nexway eCommerce Solutions. As a result of the deconsolidation of Nexway AG, which was effective as of March 31, 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 (expense) Other 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. Income tax benefit The Company’s deferred tax liability and income tax benefit relates to our book and tax basis differences in identifiable intangible assets and the current tax impact of the amortization of finite-lived intangible assets. These intangible assets are not deductible for tax purposes and the deferred tax liability has been established for the amount of such temporary differences expected to reverse in periods where net operating loss carryforwards will not be available to offset the taxable income generated from these reversals. 42 Results of Operations for the years ended December 31, 2020 and 2019 (in thousands): For the Years Ended December 31, 2020 2019 Revenues Subscriptions $ 184,328 $ - Advertisements 24,904 - Software licenses, net 7,295 4,271 Other 1,219 - Total revenues 217,746 4,271 Operating expenses Subscriber related expenses 204,240 - Broadcasting and transmission 29,542 - Sales and marketing 63,141 491 Technology and development 30,189 - General and administrative 77,635 13,302 Depreciation and amortization 43,972 20,765 Impairment of intangible assets and goodwill 248,926 8,598 Total operating expenses 697,645 43,156 Operating loss (479,899 ) (38,885 ) Other income (expense) Interest expense and financing costs (18,637 ) (2,062 ) Loss on extinguishment of debt (24,521 ) - Gain on sale of assets 7,631 - Loss on investments - (8,281 ) Unrealized gain in equity method investment 2,614 - Loss on deconsolidation of Nexway (11,919 ) - Change in fair value of warrant liabilities (83,338 ) - Change in fair value of subsidiary warrant liabilities - 4,504 Change in fair value of shares settled liability (1,665 ) - Change in fair value of derivative liability (426 ) 815 Change in fair value of profit share liability 1,971 (198 ) Foreign currency exchange loss (1,010 ) (18 ) Other income 147 726 Total other expense (129,153 ) (4,514 ) Loss before income taxes (609,052 ) (43,399 ) Income tax benefit 9,660 5,272 Net loss $ (599,392 ) $ (38,127 ) On August 15, 2019, the Company acquired 100% of the capital stock of Facebank AG. On September 16, 2019, the Company acquired approximately 51% of the stock of Nexway. On April 1, 2020, the Company merged with fuboTV Pre-Merger. The results of our operations for the year ended December 31, 2020 include the results of operations of Facebank AG and Nexway and also include the effects of the deconsolidation of Nexway as of March 31, 2020 and the sale of Facebank AG in the three months ended September 30, 2020. The results of our operations for the year ended December 31, 2020 also include the results of operations of fuboTV post-Merger from April 1, 2020. Because of this, the results of operations for the years ended December 31, 2020 and 2019 are not comparable. Revenue, net During the year ended December 31, 2020, we recognized revenues of $217.7 million, primarily related to $184.3 million of subscription revenue, $24.9 million of advertising revenue and $1.2 million in other revenue in connection with the second quarter acquisition of fuboTV Pre-Merger. These revenues were generated entirely by the fuboTV business, which we acquired through the Merger that closed 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 Nexway. 43 Subscriber related expenses During the year ended December 31, 2020, we recognized subscriber related expenses of $204.2 million due to affiliate distribution rights and other distribution costs in connection with the streaming revenue generated from the fuboTV business. There are no comparable results in the prior year. Broadcasting and transmission During the year ended December 31, 2020, we recognized broadcasting and transmission expenses of $29.5 million primarily related to transmissions of our services in connection with the streaming revenue generated from the fuboTV business. There are no comparable results in the prior year. Sales and marketing During the year ended December 31, 2020, we recognized sales and marketing expenses of $63.1 million as compared to $0.5 million during the year ended December 31, 2019. The increase in sales and marketing expense is primarily related to marketing expenses incurred to acquire new customers to the fuboTV streaming platform after the Merger on April 1, 2020. There are no comparable results in the prior year. Technology and development During the year ended December 31, 2020, we recognized technology and development expenses of $30.2 million in connection with the development of our streaming platform after the Merger on April 1, 2020. There were no technology and development expenses recognized during the year ended December 31, 2019. General and Administrative During the year ended December 31, 2020, general and administrative expenses totaled $77.6 million, compared to $13.3 million for the year ended December 31, 2019. The increase of $64.3 million was primarily related to $43.9 million of stock-based compensation, $16.7 million of incremental general and administrative expenses as a result of the acquisition of fuboTV Pre-Merger, $7.5 million in professional fees and $1.2 million in insurance partially offset by a reduction of $5.1 million of expenses related to Facebank AG and Nexway, which was sold during 2020. Depreciation and amortization During the year ended December 31, 2020, we recognized depreciation and amortization expenses of $44.0 million compared to $20.8 million during the year ended December 31, 2019. The increase of $23.2 million is primarily related to $27.2 million of amortization expense recorded for the intangible assets acquired in connection with the Merger on April 1, 2020 offset by a reduction of amortization expense of $4.5 million resulting from the impairment of legacy Facebank intangible assets recorded during 2020. Impairment of intangible assets and goodwill During the year ended December 31, 2020, we recognized an impairment of Facebank Pre-Merger intangible assets and goodwill of $248.9 million. During the year ended December 31, 2019, we recognized an impairment of intangible assets of Nexway of $8.6 million. Other Income (Expense) During the year ended December 31, 2020, we recognized $129.2 million of other expense (net), compared to $4.5 million during the year ended December 31, 2019. The increase of $124.6 million was primarily related to an increase of $83.3 million change in fair value of warrant liabilities, $16.6 million of interest expense on our outstanding borrowings, $24.5 million loss on extinguishment of debt, $11.9 million loss on the deconsolidation of Nexway, $4.5 million change in fair value of subsidiary warrants, $1.7 million change in fair value of change in shares settled liability, $1.2 million change in fair value of derivative liabilities, and $1.0 million increase in foreign currency exchange loss. These expenses were partially offset by a $8.3 million loss on investment recorded during 2019, $7.6 million gain on the sale of the Facebank AG and Nexway assets, $2.2 million change in fair value of profit share liability and $2.6 million unrealized gain on our equity method investment in Nexway. Income tax benefit During the year ended December 31, 2020, we recognized an income tax benefit of $9.7 million compared to $5.3 million during the year ended December 31, 2019. The increase is due to an increase in deferred tax assets primarily resulting from the merger. 44 Key Metrics & Non-GAAP Measures Note that unless otherwise stated, 2020 metrics below represent pro-forma combined fuboTV, Facebank Pre-Merger and fuboTV Pre-Merger, and year-over-year comparisons refer to 2019 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, 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 a free (trial) period are not included in this metric. We had 547,880 and 315,729 paid subscribers as of December 31, 2020 and 2019, respectively. 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. We had 544.9 million and 289.7 million Content Hours streamed in the twelve months ending December 31, 2020 and 2019, respectively. 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. Our ARPU was $62.84 and $53.73 for the twelve months ending December 31, 2020 and 2019, respectively. 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. Our ACPU was $56.48 and $55.37 for the twelve months ending December 31, 2020 and 2019, respectively. 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. Our ACM was 10.1% and (3.1%) for the twelve months ending December 31, 2020 and 2019, respectively. 45 Reconciliation of Certain GAAP to Non-GAAP Metrics Reconciliation of Revenue to Non-GAAP Platform Bookings and Reconciliation of Subscriber Related Expenses to Non-GAAP Variable COGS and Adjusted Contribution Margin (in thousands except average subscriber and average per user amounts) Twelve Months Ended December 31, 2020 2019 Pro Forma Combined fuboTV Pre-Merger Revenue (GAAP) $ 268,793 $ 146,530 Subtract: Software licenses, net (7,295 ) - Other revenue (1,757 ) (777 ) Prior period subscriber deferred revenue (9,377 ) (4,228 ) Add: Current period subscriber deferred revenue 17,345 9,377 Non-GAAP Platform Bookings $ 267,709 $ 150,902 Divide: Average subscribers 355,010 234,064 Months in period 12 12 Non-GAAP Monthly Average Revenue per User (Monthly ARPU) $ 62.84 $ 53.73 Subscriber Related Expenses (GAAP) $ 262,240 $ 201,448 Add (Subtract): Payment processing for deferred revenue (current period) 40 206 In-App billing fees for deferred revenue (current period) 274 53 Content credits 6,458 - Minimum guarantees expensed (24,669 ) (43,931 ) Payment processing for deferred revenue (prior period) 162 - In-App billing fees for deferred revenue (prior period) 46 (98 ) Other subscriber related expenses (3,929 ) (2,151 ) Non-GAAP Variable COGS $ 240,622 $ 155,527 Divide: Average subscribers 355,010 234,064 Months in period 12 12 Non-GAAP Monthly Average Cost per User (Monthly ACPU) $ 56.48 $ 55.37 Non-GAAP Monthly Average Revenue per User (Monthly ARPU) $ 62.84 $ 53.73 Subtract: Non-GAAP Monthly Average Cost per User (Monthly ACPU) $ 56.48 $ 55.37 Divide: Non-GAAP Monthly Average Revenue per User (Monthly ARPU) $ 62.84 $ 53.73 Non-GAAP Adjusted Contribution Margin 10.1 % (3.1 )% 46 Liquidity and Capital Resources The accompanying consolidated financial statements have been prepared assuming that 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. Our primary sources of cash are receipts from subscriber and advertising revenue, as well as proceeds from equity and debt financings. The 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 operation of our wagering business. We have multi-year lease agreements for office space. We expect to continue to incur material expenses for content and programming license fees. As our business and workforce expands, we further expect ongoing expenditures for computer systems. In addition, we may pursue merger and acquisition activities that could materially impact our liquidity and capital resources. At December 31, 2020, we had cash and cash equivalents of $134.9 million and a working capital deficiency of $70.6 million. We successfully raised $181.0 million, net of offering expenses in October 2020, through a public offering of our common stock. Subsequent to December 31, 2020, we successfully raised $391.4 million, net of offering expenses through the sale of 3.25% senior convertible notes. The proceeds from these offering together with improving results from operations provide us with the necessary liquidity to continue as a going concern within one year from the date these financial statements are issued. Our future capital requirements and the adequacy of our available funds will depend on many factors, including 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 our product and service offerings. In addition to the foregoing, based on our current assessment, we do not expect any material impact on our long-term development timeline and our liquidity due to the worldwide spread of a novel strain of coronavirus (“COVID 19”). However, 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 throughout the world. Given the daily evolution of the COVID-19 outbreak and the global response to curb its spread, COVID-19 may affect our results of operations, financial condition, or liquidity. Cash Flows (in thousands) Year Ended December 31, 2020 2019 Net cash (used in) provided by operating activities $ (149,018 ) $ 1,731 Net cash (used in) provided by investing activities (1,457 ) 1,509 Net cash provided by financing activities 279,072 4,353 Net increase in cash and cash equivalents $ 128,597 $ 7,593 Operating Activities For the year ended December 31, 2020, net cash used in operating activities was $149.0 million, which consisted of our net loss of $599.4 million, adjusted for non-cash movements of $456.2 million. The non-cash movements included $248.9 impairment of Facebank Pre-Merger intangible assets and goodwill, $83.3 million change in fair value of warrants, $50.7 million of stock-based compensation, $44.0 million of depreciation and amortization expenses primarily related to intangible assets, $24.5 million loss on extinguishment of debt, $12.3 million of amortization of debt discounts, $8.6 million loss on deconsolidation of Nexway (net of cash), $1.7 million of change in fair value of shares settled liability and $1.0 million of loss on foreign currency exchange, partially offset by $9.7 million of deferred income tax benefit, $7.6 million gain on the sale of assets, $2.6 million of unrealized gain on investments and $2.0 million change in fair value of profit share liability. Changes in operating assets and liabilities resulted in cash outflows of approximately $5.8 million, primarily due to a net increase in accounts receivable, prepaid expenses and other current assets of $14.7 million, a decrease in accounts payable, due to related parties and lease liabilities of $40.5 million, and partially offset by an increase in accrued expenses of $40.8 million, and deferred revenue of $8.6 million. Investing Activities For the year ended December 31, 2020, net cash used in investing activities was $1.5 million, which consisted of a $10.0 million advance to fuboTV Pre-Merger, $0.6 million related to the sale of Nexway and $0.2 million in capital expenditures, offset by net cash received of $9.4 million from the acquisition of fuboTV Pre-Merger. Financing Activities For the year ended December 31, 2020, net cash provided by financing activities was $279.1 million. The net cash provided is primarily related to $278.9 million of proceeds received from the sale of our common stock, $33.6 million of proceeds received in connection with short-term and long-term borrowings, $3.9 million from the exercise of stock options and warrants and $3.0 million of proceeds received from the issuance of convertible notes. These proceeds were partially offset by repayments of $35.4 million of notes payable, repayment of $3.9 million of convertible notes, and $0.9 million in connection with the redemption of Series D preferred stock. 47 Critical Accounting Policies Our discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these 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. We have identified all significant accounting policies in Note 3 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K. Business Combinations We recognize, separately from goodwill, identifiable assets and liabilities acquired in a business combination at fair value on the date of acquisition. We use our best estimates and assumptions to accurately assign fair value to the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets. We estimate the useful lives of the intangible assets based on the expected period over which we anticipate generating economic benefit from the asset. The determination of the fair value of acquired identifiable intangible assets requires us to make significant estimates and assumptions regarding projected revenue and growth rates, royalty rates, and discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. We also review our intangible assets for impairment whenever changes in circumstances indicate that the carrying amount of an asset is not recoverable. In accounting for the Merger described in Note 4 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K, judgment was required in determining the accounting acquirer. Our evaluation of the accounting acquirer considered various indicators including voting rights, minority voting interest, composition of board of directors, composition of management and relative size of the entities. We ultimately concluded that Facebank Pre-Merger was the accounting acquirer in the Merger because (i) FaceBank Pre-Merger’s stockholders owned approximately 57% of the voting common shares of the combined company immediately following the closing of the Merger (54% assuming the exercise of all vested stock options as of the closing of the transaction) and (ii) directors appointed by FaceBank Pre-Merger would hold a majority of board seats in the combined company. Goodwill We test goodwill for impairment on an annual basis during the fourth quarter of each calendar year or earlier when circumstances dictate. We measure recoverability of goodwill at the reporting unit level. The process of determining the fair value of a reporting unit is highly subjective and involves the use of significant estimates and assumptions. In performing our annual assessment, we can opt to perform a qualitative assessment to test a reporting unit’s goodwill for impairment or we can directly perform a quantitative assessment. Based on our qualitative assessment, if we determine that the fair value of our reporting unit is, more likely than not, less than its carrying amount, then the quantitative assessment is performed. Any excess of the reporting unit’s carrying amount over its fair value will be recorded as an impairment loss. During the third quarter of 2020, we identified a triggering event related to our Facebank reporting unit that required us to perform a quantitative assessment. We concluded that the fair value of the reporting unit was less than its carrying value and we recognized an impairment charge of $148.1 million in third quarter of 2020. The impairment charge was primarily related to the departure of the former executive of the Facebank business and our shift in focus to the fuboTV business. We performed our annual impairment test as of December 31, 2020 and concluded that no additional impairment charges were necessary. Intangible Assets We identify intangible assets acquired in a business combination and determine their fair value. The determination involves certain judgments and estimates. We amortize purchased-intangible assets on a straight-line basis over the estimated useful life of the assets. We review purchased-intangible assets whenever events or changes in circumstances indicate that the useful life is shorter than we had originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances indicate an asset’s carrying amount may not be recoverable, we assess the recoverability of purchased-intangible assets by comparing the projected undiscounted net cash flows associated with the asset group against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of these asset groups. If the useful life of the asset is shorter than originally estimated, we accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life During the third and fourth quarters of 2020, we identified triggering events related to our Facebank intangible assets that required us to perform a quantitative assessment. We concluded that the fair value of the intangible assets was less than its carrying value and we recognized impairment charges of $100.3 million related to the legacy Facebank intangible assets. 48 Recently Issued Accounting Pronouncements See Note 3 in the accompanying consolidated financial statements for a discussion of recent accounting policies. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not required for smaller reporting companies. Item 8. Financial Statements and Supplementary Data. The financial statements required by this Item 8 are included elsewhere in Annual Report on Form 10-K beginning on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.