10-K
1
form10-k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-K
(Mark
One)
For
the fiscal year ended December 31, 2020
Or
For
the transition period from ______ to ______
Commission
file number 001-39590
fuboTV
Inc.
(Exact
name of registrant as specified in its charter)
1330 Avenue of the Americas New York, NY 10019
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (212) 672-0055
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of exchange on which registered
Common Stock, par value $0.0001 per share FUBO New York Stock Exchange
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, par value $0.0001 per share
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No ☒
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 ☐ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes ☐ 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 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 ☒ Smaller reporting company ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☒
The
aggregate market value of the registrant’s voting and non-voting common stock held by non-affiliates of the registrant,
based on the closing sale price of the registrant’s common stock on June 30, 2020 (the last business day of the registrant’s
most recently completed second fiscal quarter) was $404,405,971.
The
number of shares outstanding of the registrant’s common stock as of March 23, 2021, was 140,160,575 shares.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the registrant’s definitive proxy statement, which will be filed with the SEC no later than 120 days after December 31,
2021 in connection with our 2021 annual meeting of shareholders (the “Proxy Statement”), are incorporated by reference
into Part III of this Annual Report on Form 10-K, as noted herein.
.
TABLE
OF CONTENTS
PAGE NO.
PART I
Item 1. Business. 4
Item 1A. Risk Factors. 10
Item 1B. Unresolved Staff Comments. 38
Item 2. Properties. 38
Item 3. Legal Proceedings. 39
Item 4. Mine Safety Disclosures. 39
PART II
Item 6. Selected Financial Data. 39
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 49
Item 8. Financial Statements and Supplementary Data. 49
Item 9A. Controls and Procedures. 49
Item 9B. Other Information. 50
PART III
Item 10. Directors, Executive Officers and Corporate Governance. 51
Item 11. Executive Compensation. 51
Item 14. Principal Accounting Fees and Services. 51
PART IV
Item 15. Exhibits, Financial Statement Schedules. 51
Signatures. 56
PART
I
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
As
used in this Annual Report on Form 10-K, 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 formerly known as fuboTV Inc. (“fuboTV Sub”).
This
Annual 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 Annual Report on Form 10-K include,
but are not limited to, statements about:
● our ability to access debt and equity financing;
● our efforts to maintain proper and effective internal controls;
○ 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;
● changes in applicable laws or regulations;
We
have based the forward-looking statements contained in this Annual Report on Form 10-K 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 1 Item 1A titled “Risk Factors.” These risks are not exhaustive.
Other sections of this Annual Report on Form 10-K 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 Annual Report on Form 10-K 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 statements are based upon information available to us as of the date of this Annual Report on Form 10-K, 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K to reflect
events or circumstances after the date of this Annual Report or to reflect new information or the occurrence of unanticipated
events, except as required by law.
Item
1. Business
On
April 1, 2020, fuboTV Inc. (formerly known as FaceBank Group, Inc.) acquired fuboTV Media Inc. (formerly known as fuboTV Inc.),
which we refer to as the “Merger.” 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 “fuboTV
Pre-Merger” refers to fuboTV Media Inc. (“fuboTV Sub”) and its subsidiaries prior to the Merger.
Overview
We
are a sports-first, live TV streaming company, offering subscribers access to tens of thousands of live sporting events annually
as well as leading news and entertainment content. Our platform, fuboTV, allows customers to access content through streaming
devices and on SmartTVs, mobile phones, tablets, and computers.
Live
TV streaming has disrupted the traditional pay TV model (linear video received through cable or satellite providers for a paid
subscription), which we refer to as “Pay TV”. This disruption has shifted billions of dollars in subscription and
advertising revenue to streaming platforms. The number of cable TV cord-cutting households (those that terminate their cable or
satellite subscription) and cable TV cord-never households (those that have never subscribed to traditional cable or satellite)
continues to accelerate in the United States, as cable and satellite subscribers increasingly favor the streaming experience.
As consumers continue to spend more time streaming content, we also believe that advertisers will allocate more dollars away from
traditional linear TV advertising spend and towards streaming services. Yet, despite being a growing share of TV consumption,
streaming is still in the early stages of adoption. We believe this creates a significant opportunity for us to capitalize on
the cord-cutting movement.
We
offer subscribers a live TV streaming service with the option to purchase incremental features available for purchase that include
additional content or enhanced functionality (“Attachments”) best suited to their preferences. Our base plan includes
a broad mix of channels, including top 50 Nielsen-ranked networks, across sports, news, and entertainment. In the summer of 2020,
we enhanced our sports-centric offering with the addition of ESPN and ABC as well as other top programming from Disney. At the
core of our offering are our proprietary technology platform, purpose-built for live TV and sports viewership, and our first-party
data. Our proprietary technology stack has enabled us to regularly offer new features and functionality. Unlike other popular
Video-on-Demand-only (VOD) streaming services, live TV streaming requires sophisticated infrastructure and technology, given the
nuances associated with an offering of live programming that refreshes regularly. Today, our proprietary video delivery platform
supports all major sports leagues and entertainment content owner delivery requirements. We offer multi-view on Apple TV, which
enables subscribers to watch four live streams simultaneously. Our technology enables us to meet blackout and geographical rights
requirements with zip-code-level fidelity and deliver conforming streams on a per-user, per-device basis, protected by industry-standard
Digital Rights Management (“DRM”) technology. We leverage our data throughout our organization to make data driven
decisions on what content we acquire for our subscribers to influence product design and strategy, to drive subscriber engagement,
and to enhance the capabilities and performance of our advertising platform for our advertising partners.
As
a result of our direct-to-consumer model, we gain further insight into customer behavior from the billions of data points captured
by our platform each month. This data drives our continued innovation and is at the core of our enhanced user experience, product
and content strategy, and advertising differentiation. The data also enables us to provide users with real-time personalized discovery
of live and on-demand programming and to surface relevant content for our users.
Our
growth strategy is to acquire subscribers who are attracted to our sports offering and can find with us a compelling sport, news, and
entertainment viewing alternative to a traditional Pay TV service. We actively engage those subscribers by providing a seamless Pay TV
replacement through a personalized easy-to-use streaming product at a significantly lower cost than traditional Pay TV providers. We
then monetize our audience through subscription fees and our digital advertising offering. In 2020, the majority of our revenue was
generated from monthly subscriptions.
We
are investing to accelerate expansion into the sports wagering space, which we believe will be a complementary revenue stream to our
current business model. We recently announced our intent to expand into wagering and our subsequent acquisition of Camo Holdings
Inc. d/b/a Balto (“Balto”) and acquisition of Vigtory, Inc. (“Vigtory”). We plan to leverage Balto’s contest
automation software to launch a free to play game offering. With the Vigtory acquisition, we expect to add Vigtory’s sportsbook
technology and pipeline of market access agreements to our business. Our intended online wagering strategy includes the planned roll-out
of free to play gaming in the third quarter of 2021, the launch of a sportsbook application by the end of 2021 and ultimately the integration
of wagering with our live TV streaming platform. By expanding into free to play gaming, we believe we can build further scale and drive
additional subscribers.
Industry
Overview
Streaming
services have experienced rapid growth in adoption as consumers engage with streaming video and audio through a variety of devices,
including connected TVs, mobile phones, and tablets. Traditional live TV accounts for the majority of TV viewing hours for U.S.
households, however, the proportion is declining as customers continue cutting the cord. We believe consumers are increasingly
favoring the superior customer experience, lower cost, and better value of streaming services.
Sports
and news content have been a key driver for pay TV operators to retain and grow audiences. Most streaming subscription services
have primarily focused on entertainment content offerings, requiring sports fans to, until recently, remain tethered to the pay
TV ecosystem. This positions our offering well to provide a pay TV replacement service via streaming that also features an enhanced
live sports and news viewing experience.
Our
Business Model
Our
business model is “come for the sports, stay for the entertainment.” This consists of leveraging 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
Our
Offerings
Our
offerings address the needs of the parties in the TV streaming ecosystem.
Subscribers
We
offer consumers a live TV streaming platform for sports, news, and entertainment. We provide basic plans with the flexibility
for consumers to purchase the Attachments best suited for them. Our base plan, fubo Standard, includes approximately 100+ channels,
including many of the top Nielsen-rated networks, dozens of channels with sports, double digit news channels, and some popular
entertainment channels. Subscribers have the option to add premium channels and additional channel packages, as well as upgrade
Attachments such as more DVR storage with Cloud DVR Plus and additional simultaneous streams with Family Share.
Advertisers
As
cord cutting continues and traditional Pay TV viewers decline, advertisers are increasingly allocating their ad budgets to Over-the-Top
(“OTT”) platforms to reach these audiences. fuboTV’s sports-first live TV platform offers advertisers a growing
and increasingly valuable live audience and provides un-skippable ad inventory on high quality content. Advertisers also benefit
from combining traditional TV advertising formats with the advantages of digital advertising including measurability, relevancy,
and interactivity.
Content
Providers
Our
TV streaming platform creates the opportunity for content providers to monetize and distribute their content to our highly engaged
audience. In doing so, content providers are expanding their audiences, which have shrunk on traditional TV because of ongoing
cord-cutting. By aggregating a broad variety of content to deliver a comprehensive offering on our platform, we believe fuboTV
is able to provide greater engagement and value to subscribers than content providers would otherwise be able to deliver independently.
Furthermore, our data-driven platform enables us to capture valuable insights on consumer behavior and preferences, which are
increasingly valuable to our content providers.
Seasonality
We
generate significantly higher levels of revenue and subscriber additions in the third and fourth quarters of the year. This seasonality
is driven primarily by sports leagues, specifically the NFL, which has a shorter partial-year season. In addition, we typically
see average subscribers on our platform decline from the fourth quarter of the previous year through the first and second quarter
of the following year.
Our
Growth Strategy
We
believe that we are at the early stages of our growth and that we are at an inflection point in the TV industry where streaming
has begun to surpass traditional linear Pay TV in several key areas, including content choice, ease of access and use across devices,
and cost savings to consumers. We have identified potential growth opportunities, both in current markets and adjacent markets,
that we believe may provide additional upside to our business model. The key elements to our growth strategy include:
Intellectual
Property
Our
intellectual property is an essential element of our business. We rely on a combination of patent, trademark, copyright and other
intellectual property laws, confidentiality agreements and license agreements to protect our intellectual property rights. We
also license certain third-party technology for use in conjunction with our products.
We
believe that our continued success depends on hiring and retaining highly capable and innovative employees, especially as it relates
to our engineering base. It is our policy that our employees and independent contractors involved in development are required
to sign agreements acknowledging that all inventions, trade secrets, works of authorship, developments and other processes generated
by them on our behalf are our property and assigning to us any ownership that they may claim in those works. Despite our precautions,
it may be possible for third parties to obtain and use without consent intellectual property that we own or license. Unauthorized
use of our intellectual property by third parties, and the expenses incurred in protecting our intellectual property rights, may
adversely affect our business.
Patents
and Patent Applications
As
of December 31, 2020, we had four issued U.S. patents, three non-provisional U.S. patent applications, one U.S. design patent
application, 18 granted international design registrations in three international design patents, two granted international patents,
five international patent applications, and one international Patent Cooperation Treaty patent application pending. The issued
patents expire in 2038, and the international design registrations have expiration dates ranging from 2035 to 2045. Although we
actively attempt to utilize patents to protect our technologies, we believe that none of our patents, individually or in the aggregate,
are material to our business. We will continue to file and prosecute patent applications when appropriate to attempt to protect
our rights in our proprietary technologies. However, there can be no assurance that our patent applications will be approved,
that any patents issued will adequately protect our intellectual property, or that such patents will not be challenged by third
parties or found by a judicial authority to be invalid or unenforceable.
Trademarks
We
also rely on several registered and unregistered trademarks to protect our brand. As of December 31, 2020, we had three trademarks
registered globally. “fuboTV” is a registered trademark in the United States and the European Union.
Competition
The
TV streaming market continues to grow and evolve as more viewers shift from traditional Pay TV to streaming. There is significant
competition in the TV market for users, advertisers, and broadcasters. We principally compete with Pay TV operators, such as AT&T,
Comcast, Cox and Altice, along with other multichannel video programming distributors (“vMVPDs”), such as YouTube
TV, Hulu Live and Sling TV. While the presence of these competitors in the market has helped to boost consumer awareness of TV
streaming, contributing to the growth of the overall market, their resources and brand recognition present substantial competitive
challenges.
We
compete on various factors to acquire and retain users. These factors include quality and breadth of content offerings, especially
within live sports; features of our TV streaming platform, including ease of use and superior user experience; brand awareness
in the market; and perceived value relative to the price of our service. Additionally, we compete for user engagement. Many users
have multiple subscriptions to various streaming services and allocate time and money between them.
We
also face competition for advertisers, which in part depends on our ability to acquire and retain users. Providing a large and
engaged audience is crucial for advertisers on our live TV streaming platform. In the TV streaming market, the effectiveness of
advertisements and return on investments play a pivotal role. As such, we are also competing for advertisers based on the return
of ads compared to various other digital advertising platforms, including mobile and web. Additionally, advertisers continue to
allocate a large portion of spend to advertise offline. Therefore, we also compete with traditional media platforms such as traditional
linear TV and radio. We are increasingly leveraging our data and analytics capabilities to optimize advertisements for both users
and advertisers. We need to continue to maintain an appropriate advertising inventory for the growing demand for ads on our platform.
Furthermore,
we compete to attract and retain broadcasters. Our ability to license content from broadcasters is dependent on the scale of our
user base as well as license terms.
Employees
As
of December 31, 2020, we had 220 employees, all of whom were located in North America. We consider our relationship
with our employees to be good. None of our domestic employees is represented by a labor union or covered by a collective
bargaining agreement.
Impact
of COVID-19
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 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.
Merger
with fuboTV
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.
Recent
Developments
Exchange
Offer
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.
2026
Notes
On
January 28, 2021, we entered into a purchase agreement with Evercore Group L.L.C. (“Evercore”) relating to our sale
of our 3.25% Convertible Senior Notes due 2026 (the “2026 Notes”) to persons reasonably believed to be qualified institutional
buyers pursuant to Rule 144A under the Securities Act. On February 2, 2021, we issued $402.5 million aggregate principal amount
of our 2026 Notes, the proceeds of which we expect to use for general corporate purposes, including working capital, business
development, sales and marketing activities and capital expenditures, and to pay fees and expenses related thereto. For more information
about the 2026 Notes, see Note 2 and 18 to our consolidated financial statements in Part II, Item 8 of this Annual Report
on Form 10-K.
Government
Regulation
Our
business and our devices and platform are subject to numerous domestic and foreign laws and regulations covering a wide variety
of subject matters. These include general business regulations and laws, as well as regulations and laws specific to providers
of Internet-delivered streaming services and Internet-connected devices. New or modified laws and regulations in these areas may
have an adverse effect on our business. The costs of compliance with these laws and regulations are high and are likely to increase
in the future. We anticipate that several jurisdictions may, over time, impose greater financial and regulatory obligations on
us. If we fail to comply with these laws and regulations, we may be subject to significant liabilities and other penalties. Additionally,
compliance with these laws and regulations could, individually or in the aggregate, increase our cost of doing business, impact
our competitive position relative to our peers, and otherwise have an adverse impact on our operating results. For additional
information about the impact of government regulations on our business, see “Risk Factors— Risks Related to Regulation”
and “Risk Factors—Risks Related to Privacy and Cybersecurity” in Part I, Item 1A in this Annual Report on Form
10-K.
Data
Protection and Privacy
We
are subject to various laws and regulations covering the privacy and protection of users’ data. Because we handle, collect,
store, receive, transmit, transfer, and otherwise process certain information, which may include personal information, regarding
our users and employees in the ordinary course of business, we are subject to federal, state and foreign laws related to the privacy
and protection of such data. These laws and regulations, and their application to our business, are increasingly shifting and
expanding. Compliance with these laws and regulations, such as the California Consumer Privacy Act and the European Union General
Data Protection Regulation 2016/679 (the “GDPR”) could affect our business, and their potential impact is unknown.
Any actual or perceived failure to comply with these laws and regulations may result in investigations, claims and proceedings,
regulatory fines or penalties, damages for breach of contract, or orders that require us to change our business practices, including
the way we process data.
We
are also subject to breach notification laws, including the GDPR, in the jurisdictions in which we operate, and we may be subject
to litigation and regulatory enforcement actions as a result of any data breach or other unauthorized access to or acquisition
or loss of personal information. Any significant change to applicable laws, regulations, interpretations of laws or regulations,
or market practices, regarding the processing of personal data, or regarding the manner in which we seek to comply with applicable
laws and regulations, could require us to make modifications to our products, services, policies, procedures, notices, and business
practices, including potentially material changes. Such changes could potentially have an adverse impact on our business. For
additional information about the impact of data protection and privacy regulations on our business, see “Risk Factors—Risks
Related to Privacy and Cybersecurity” in Part I, Item 1A in this Annual Report on Form 10-K.
Gaming
Regulations
The
Company is subject to various U.S. federal and state laws and regulations that affect our ability to launch and operate a sportsbook
and offer other gaming-related products. These product offerings are generally subject to extensive and evolving regulations that
could change based on political and social norms and that could be interpreted in ways that could negatively impact our business.
The gaming industry, including any sportsbook product offering, is highly regulated and subject to extensive regulation under
the laws, rules, and regulations of the jurisdictions in which we operate. These laws, rules and regulations generally concern
the responsibility, financial stability, integrity and character of the owners, officers, directors, key management employees
and persons with material financial interests in the gaming operations along with the integrity and security of our sportsbook
offerings and the technologies supporting such offering. Violations of laws or regulations in one jurisdiction could result in
disciplinary action in that and other jurisdictions. As well, as a condition of operating in certain jurisdictions, we must obtain
either a temporary or permanent license, approval, or determination of suitability from the relevant gaming authorities. We seek
to ensure that we obtain all necessary licenses to develop and put forth our offerings in the jurisdictions in which we operate
or seek to operate. Gaming laws and regulations in certain jurisdictions require us, and/or our subsidiaries engaged in gaming
operations, certain of our directors, officers, and key management employees, and in some cases, certain of our shareholders,
to obtain licenses, qualifications or findings of suitability from gaming authorities. Such licenses, qualifications or findings
of suitability typically require a determination that the applicant qualifies or is suitable to hold the license, qualification
or finding of suitability. Various factors are considered including, without limitation, the financial stability, integrity and
responsibility of the applicant; the quality and security of the applicant’s gaming platform, hardware and related software
and the applicant’s ability to operate its gaming business in a responsible manner and in compliance with all applicable
laws and regulations. Gaming authorities have broad authority to, subject to certain administrative procedural requirements, deny
an application, or limit, condition, revoke or suspend any license or approval issued by them, or demand that named individuals
or shareholders be disassociated from a gaming business. Various events may trigger revocation of such a gaming license or another
form of sanction which may vary by jurisdiction. Examples of such events include, without limitation, conviction of certain persons
with an interest in, or key personnel of, the licensee of an offense that is punishable by imprisonment or may otherwise cast
doubt on such person’s integrity; failure without reasonable cause to comply with any material term or condition of the
gaming license; obtaining the gaming license by a materially false or misleading representation or in some other improper way;
or violation of an applicable gaming law or regulation or other law or regulation, such as anti-money laundering or terrorist
financing laws or regulations. For additional information about the impact of gaming regulations on our business, see “Risk
Factors— Risks Related to Our Products and Technologies” and “Risk Factors – Risks Related to Regulation”
in Part I, Item 1A in this Annual Report on Form 10-K.
Corporate
Information
We
were incorporated in 2009 as a Florida corporation under the name York Entertainment, Inc., and on August 10, 2020, our name was
changed to fuboTV Inc. fuboTV Sub was incorporated in 2014 as a Delaware corporation. Our principal executive offices are located
at 1330 Avenue of the Americas, New York, New York 10010, and our telephone number is (212)
672-0055. Our website address is at https://fubo.tv. Information contained on, or that can be accessed through,
our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider information on
our website to be part of this Annual Report on Form 10-K.
Available
Information
Our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant
to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are filed with the SEC. Such
reports and other information filed by us with the SEC are available free of charge on our website at https://ir.fubo.tv
when such reports are available on the SEC’s website. The SEC maintains an internet site that contains reports, proxy and
information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The information
contained on the websites referenced in this Annual Report on Form 10-K is not incorporated by reference into this filing. Further,
our references to website URLs are intended to be inactive textual references only.
We
announce material information to the public through filings with the SEC, the investor relations page on our website, press releases,
our Twitter account (@fuboTV), our Facebook page, our LinkedIn page, public conference calls, and webcasts in order to achieve
broad, non-exclusionary distribution of information to the public and for complying with our disclosure obligations under Regulation
FD. We encourage investors, the media, and others to follow the channels listed above and to review the information disclosed
through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted
on the investor relations page on our website.
Item
1A. Risk Factors.
On
April 1, 2020, fuboTV Inc. (formerly known as FaceBank Group, Inc.) acquired fuboTV Media Inc. (formerly known as fuboTV Inc.),
which we refer to as the “Merger.” 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 “fuboTV
Pre-Merger” refers to fuboTV Media Inc.(“fuboTV Sub”) 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 Annual
Report on Form 10-K, including our 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.
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 are subject to taxation-related risks in multiple jurisdictions.
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 year ended December 31, 2020 was $599.4 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.
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
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 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.
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 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.
We
might not be able to utilize a significant portion of our net operating loss carryforwards.
As
of December 31, 2019, fuboTV Pre-Merger had federal net operating loss carryforwards of approximately $375.8 million, a
portion of which will, if not used, expire at various 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 experienced ownership changes in the past, and therefore
a portion of our net operating loss carryforwards 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 as a result
of conversions of the 2026 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.
Our
financial condition and results of operations could be adversely affected if we do not effectively manage our current or future
debt.
As
of December 31, 2020, we had $29.2 million of outstanding indebtedness on a consolidated basis which included approximately $20.0
million of indebtedness to AMC Networks Ventures LLC, which is secured by a lien on substantially all of the assets of fuboTV
Sub; $4.7 million principal outstanding under the Payment Protection Program Loan (the “PPP Loan”) with JPMorgan Chase
Bank, N.A., and other notes outstanding with an aggregate principal of approximately $4.5 million. In the first quarter of 2021,
the PPP Loan was paid off in full.
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:
If
we incur any additional debt, the related risks that we and our subsidiaries face could intensify.
Finally,
we may 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