Item 8.01 Other Events.
Private Placement Funding
Update
As previously disclosed,
on April 29, 2022, the Company and RJB Partners LLC (“RJB”), an affiliate of Mr. Sanberg, entered into a Purchase
Agreement, which was subsequently amended by Amendment No. 1 thereto on August 7, 2022 and by Amendment No. 2 thereto on
September 7, 2022 (as amended, the “Purchase Agreement”), pursuant to which RJB agreed to purchase from the Company (i) 1,666,667
shares of the Company’s Class A common stock (the “Initial PIPE Shares”) for an aggregate purchase price of $20.0
million and (ii) 10,000,000 shares of the Company’s Class A common stock (the “Subsequent PIPE Shares”) for
an aggregate purchase price of $56.5 million (the “Outstanding Obligated Amount”). Mr. Sanberg has agreed to guarantee
the payment of RJB’s payment obligations under the Purchase Agreement. On April 29, 2022, the Initial PIPE Shares transaction
closed. The Subsequent PIPE Shares transaction has not yet closed. In addition, additional amounts are owed to the Company by an affiliate
of Mr. Sanberg under a gift card sponsorship agreement (the “Gift Card Obligations”).
On November 6, 2022,
the Company and Remember Bruce, LLC (“Pledgor”), an affiliate of Mr. Sanberg, entered into a Guaranty and Pledge Agreement
(the “Pledge Agreement”) pursuant to which Pledgor (i) agreed to guarantee the payment of the Outstanding Obligated Amount
and (ii) to secure its obligation to pay the Outstanding Obligated Amount, granted the Company a security interest in Pledgor’s
equity interests in securities (the “Pledged Shares”) of certain privately-held issuers (the “Pledged Entities”),
the certificates (if any) representing the Pledged Shares, and all dividends, distributions, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares (collectively,
the “Pledged Collateral”).
Because
the Outstanding Obligated Amount remains unpaid after November 30, 2022, the Company is permitted to exercise remedies in respect
to the Pledged Shares. In particular, the Company has the right to foreclose on the
Pledged Shares and the Company is evaluating its options to monetize the Pledged
Shares. Because the Pledged Entities are privately held, there is no public trading market
for the Pledged Shares. As a result, the value of the Pledged Shares could be less than the Outstanding Obligated Amount, and, if the
Company seeks to foreclose upon the Pledged Shares to satisfy Pledgor’s obligation to pay the Outstanding Obligated Amount, the
proceeds of any private sale of the Pledged Shares, to the extent any such private sale is permissible and effected subject to regulatory
and contractual limitations that may apply, may be less than could have been obtained from a sale in a public trading market and may be
less than the Outstanding Obligated Amount.
The
foregoing descriptions of the Purchase Agreement, Amendment No. 1 and Amendment No. 2 are qualified in their entirety by reference
to the full text of the documents, copies of which are filed, respectively, as Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on May 5, 2022, Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on August 8, 2022 and Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on November 7, 2022. The Company intends to file the Pledge Agreement with its Annual Report on Form 10-K for
the year ended December 31, 2022.
Expense Management and Liquidity Update
On
December 8, 2022, the Company announced a reduction in personnel to support its strategic priorities. This action resulted
in a reduction of approximately 10% of the Company’s total corporate workforce, inclusive of both current and vacant roles. As a
result of this action, the Company expects to incur approximately $1.2 million in employee-related expenses, primarily consisting of severance
payments, substantially all of which will result in cash expenditures. The Company expects to recognize such expenses in the fourth quarter
of 2022.
With the proceeds received to date from the Company’s
current at-the-market program, its ability to achieve certain anticipated cost savings described in the Press Release attached as Exhibit 99.1
to this Current Report on Form 8-K, and working capital management, the Company believes it has sufficient cash flow to maintain
compliance under its minimum liquidity covenant in the first quarter of 2023.
In addition, if
the Company receives the Outstanding Obligated Amount (or the equivalent value from the Pledged Collateral) and the Gift Card
Obligations, receives the full proceeds from its current at-the-market program, and achieves
the anticipated benefits of up to approximately $50.0 million of cost savings from expense management measures in 2023, the Company
believes it will have sufficient cash flow to maintain compliance under its minimum liquidity covenant into 2024.
The Company continues to work with its financial
advisors to evaluate financing and other alternatives, in addition to being in discussions with its lenders.