253G2 1 f253g2_ipic.htm

OFFERING CIRCULAR Filed Pursuant to Rule 253(g)(2)
File No. 024-10773

 

UP TO 2,165,000 SHARES OF CLASS A COMMON STOCK

This is the initial public offering of shares of Class A common stock of iPic Entertainment Inc.

We are offering up to 2,165,000 shares of our Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), at an offering price of $18.50 per share (the “Shares”) for an offering amount of $40,052,500 (the “Offering”). The Offering will terminate at the earliest of: (1) the date at which $40,052,500 of Shares has been sold, (2) the date which is one year after this Offering being qualified by the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”), or (3) the date on which this Offering is earlier terminated by the Company in its sole discretion and for any reason (the “Termination Date”).

This Offering is being conducted on a “best efforts” basis without any minimum offering amount pursuant to Regulation A of Section 3(6) of the Securities Act of 1933, as amended (the “Securities Act”), for Tier 2 offerings. The Company currently intends to complete one closing of this Offering, once we have met the NASDAQ minimum listing requirements; however, we reserve the right to undertake one or more closings on a rolling basis even if we have not yet met the NASDAQ minimum listing requirements at such time. Even if we meet the minimum requirements for listing on NASDAQ, we may wait before terminating the Offering and commencing trading of our Class A Common Stock on NASDAQ in order to raise additional proceeds. Until we complete a closing, the proceeds for the Offering will be kept in an escrow account, except with respect to those investors using a BANQ online brokerage account. At a closing, the proceeds will be distributed to the Company and the associated Shares will be issued to the investors in such Shares. If there are no closings or if funds remain in the escrow account upon termination of this Offering without any corresponding closing, the investments for this Offering will be promptly returned to investors, without deduction and generally without interest. Wilmington Trust, N.A. will serve as the escrow agent. There is a 25 share minimum purchase requirement for investors. See “Plan of Distribution.”

TriPoint Global Equities, LLC has agreed to act as our lead managing selling agent, along with Roth Capital Partners, LLC acting as the Institutional Placement Book-Running Agent and Telsey Advisory Group LLC acting as a co-manager (collectively, the “Selling Agents”), to offer the Shares to prospective investors on a “best efforts” basis. In addition, the Selling Agents may engage one or more co-managing selling agents, sub selling agents or selected dealers. The Selling Agents are not purchasing the Shares, and are not required to sell any specific number or dollar amount of the Shares in the Offering.

We expect to commence the offer and sale of the Shares as of the date on which the offering statement of which this Offering Circular is a part (the “Offering Statement”) is qualified by the Commission. Prior to this Offering, there has been no public market for our Class A Common Stock. Our Class A Common Stock has been approved for listing on the NASDAQ Stock Market LLC (“NASDAQ”) under the symbol “IPIC.” We expect our Class A Common Stock to begin trading on NASDAQ upon consummation of the Offering.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, and, as such, may elect to comply with certain reduced reporting requirements for this Offering Circular and future filings after this Offering.

Investing in our Class A Common Stock involves a high degree of risk. See “Risk Factors” beginning on page 14 for a discussion of certain risks that you should consider in connection with an investment in our Class A Common Stock.

 

 

Per Share

 

Total

Price to Public

 

$

18.50

 

$

40,052,500

Selling Agents Discounts and Commissions(1)

 

$

1.34

 

$

2,903,806

Proceeds, Before Expenses, to Us(2)

 

$

17.16

 

$

37,148,694

____________

(1)       We have agreed to reimburse certain expenses of our Selling Agents. Please refer to the section entitled “Plan of Distribution” in this Offering Circular for additional information regarding total compensation for the Selling Agents.

(2)       Assumes that all of the Shares are sold.

NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO www.investor.gov.

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED HEREBY OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

For more information concerning the procedures of the Offering, please refer to “Plan of Distribution” beginning on page 121, including the sections “— Investment Limitations” and “— Procedures for Subscribing.”

This Offering Circular follows the disclosure format of Part I of Form S-1 pursuant to the general instructions of Part II(a)(1)(ii) of Form 1-A.

 

 

 

Lead Managing Selling Agent

 

 

 

Institutional Placement Book-Running Agent

Co-Manager

The date of this Offering Circular is January 30, 2018.

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

iii

NON-GAAP FINANCIAL MEASURES

 

iv

OFFERING CIRCULAR SUMMARY

 

1

RISK FACTORS

 

14

THE TRANSACTIONS

 

36

USE OF PROCEEDS

 

43

CAPITALIZATION

 

44

DILUTION

 

46

DIVIDEND POLICY

 

47

UNAUDITED PRO FORMA AND PRO FORMA AS ADJUSTED CONSOLIDATED FINANCIAL STATEMENTS

 

48

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

 

58

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

62

BUSINESS

 

76

MANAGEMENT

 

87

EXECUTIVE COMPENSATION

 

92

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

102

PRINCIPAL STOCKHOLDERS

 

105

DESCRIPTION OF SECURITIES

 

107

DESCRIPTION OF INDEBTEDNESS

 

112

SHARES ELIGIBLE FOR FUTURE SALE

 

115

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF OUR CLASS A COMMON STOCK

 

117

PLAN OF DISTRIBUTION

 

121

LEGAL MATTERS

 

128

EXPERTS

 

128

WHERE YOU CAN FIND MORE INFORMATION

 

128

FINANCIAL STATEMENTS

 

F-1

i

We are offering to sell, and seeking offers to buy, the Shares only in jurisdictions where such offers and sales are permitted. You should rely only on the information contained in this Offering Circular. We have not authorized anyone to provide you with any information other than the information contained in this Offering Circular. The information contained in this Offering Circular is accurate only as of its date, regardless of the time of its delivery or of any sale or delivery of our securities. Neither the delivery of this Offering Circular nor any sale or delivery of our securities shall, under any circumstances, imply that there has been no change in our affairs since the date of this Offering Circular. This Offering Circular will be updated and made available for delivery to the extent required by the federal securities laws.

Unless otherwise indicated, data contained in this Offering Circular concerning the hospitality, theater and restaurant markets and the other markets relevant to our operations are based on information from various public sources. Although we believe that these data are generally reliable, such information is inherently imprecise, and our estimates and expectations based on these data involve a number of assumptions and limitations. As a result, you are cautioned not to give undue weight to such data, estimates or expectations.

In this Offering Circular, unless the context indicates otherwise, references to “iPic,” “we,” the “Company,” “our” and “us” refer: (i) on or following the consummation of the Transactions, including this Offering, to iPic Entertainment Inc. and, unless otherwise stated or the context requires otherwise, all of its subsidiaries, including (a) iPic Gold Class Holdings LLC, which we refer to as “Holdings,” (b) iPic-Gold Class Entertainment, LLC, which we refer to as “iPic-Gold Class,” and (c) unless otherwise stated, all of iPic-Gold Class’s subsidiaries; and (ii) prior to the completion of the Transactions, including this Offering, to iPic-Gold Class and, unless otherwise stated or the context requires otherwise, all of its subsidiaries. References to “iPic Entertainment” refer to iPic Entertainment Inc.

In this Offering Circular, references to “Class A Common Stock” refer to our Class A common stock, par value $0.0001 per share; references to “Class B Common Stock” refer to our Class B common stock, par value $0.0001 per share; and references to “Common Stock” refer to our Class A Common Stock and our Class B Common Stock collectively.

In this Offering Circular, we refer to our iPic locations as “iPics,” “stores,” “locations,” “units,” and “iPic theaters.”

ii

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain of the statements in this Offering Circular constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” or the negatives of these terms or other comparable terminology, but the absence of these particular words does not mean that a statement is not forward-looking.

You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Offering Circular, including in “Risk Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

         our inability to successfully identify and secure appropriate sites and timely develop and expand our operations in existing and new markets;

         our inability to optimize our theater circuit through new construction and transforming our existing theaters;

         competition from other theater chains and restaurants;

         our inability to operate profitably;

         our dependence on a small number of suppliers for motion picture products;

         our inability to manage fluctuations in attendance in the motion picture exhibition industry;

         our inability to address the increased use of alternative film delivery methods or other forms of entertainment;

         our ability to serve menu items that appeal to our guests and to avoid food safety problems;

         our inability to obtain sufficient capital to open up new units, to renovate existing units and to deploy strategic initiatives;

         our ability to address issues associated with entering into long-term non-cancelable leases;

         our inability to protect against security breaches of confidential guest information;

         our inability to manage our growth;

         our inability to maintain sufficient levels of cash flow, or access to capital, to meet growth expectations;

         our inability to manage our substantial level of outstanding debt;

         our ability to continue as a going concern;

         our failure to meet any operational and financial performance guidance we provide to the public; and

         our ability to compete and succeed in a highly competitive and evolving industry.

Although the forward-looking statements in this Offering Circular are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained. Should one or more of the risks or uncertainties referred to above and elsewhere in this Offering Circular materialize, or should any of our assumptions prove to be incorrect, our actual results may vary in material and adverse respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws.

iii

NON-GAAP FINANCIAL MEASURES

Certain financial measures presented in this Offering Circular, such as EBITDA, Adjusted EBITDA and Store-Level EBITDA are not recognized under accounting principles generally accepted in the United States, which we refer to as “GAAP.” We define these terms as follows:

         “EBITDA” means, for any reporting period, net loss before interest, taxes, depreciation, and amortization,

         “Adjusted EBITDA” is a supplemental measure of our performance and is also the basis for performance evaluation under our executive compensation programs. Adjusted EBITDA is defined as EBITDA adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include, among other things, equity-based compensation expense, pre-opening expenses, other income and loss on disposal of property and equipment, impairment of property and equipment as well as certain non-recurring charges. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to our ongoing business performance.

         “Store-Level EBITDA” is a supplemental measure of our performance which we believe provides management and investors with additional information to measure the performance of our locations, individually and as an entirety. Store-Level EBITDA is defined by us as EBITDA adjusted for pre-opening expenses, other income, loss on disposal of property and equipment, impairment of property and equipment non-recurring charges, and general and administrative expense. We use Store-Level EBITDA to measure operating performance and returns from opening new stores. We believe that Store-Level EBITDA is another useful measure in evaluating our operating performance because it removes the impact of general and administrative expenses, which are not incurred at the store level, and the costs of opening new stores, which are non-recurring at the store-level, and thereby enables the comparability of the operating performance of our stores for the periods presented. We also believe that Store-Level EBITDA is a useful measure in evaluating our operating performance within the entertainment and dining industry because it permits the evaluation of store-level productivity, efficiency and performance, and we use Store-Level EBITDA as a means of evaluating store financial performance compared with our competitors.

You are encouraged to evaluate the adjustments we have made to GAAP financial measures and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA and Store-Level EBITDA, you should be aware that in the future we may incur income and expenses that are the same as or similar to some of the adjustments in this Offering Circular.

EBITDA and Adjusted EBITDA are included in this Offering Circular because they are key metrics used by management and our board of directors to assess our financial performance. EBITDA and Adjusted EBITDA are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Store-Level EBITDA is utilized to measure the performance of our locations, both individually and in entirety.

EBITDA and Adjusted EBITDA are not GAAP measures of our financial performance or liquidity and should not be considered as alternatives to net income (loss) as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP. Our presentation of Adjusted EBITDA and Store-Level EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not reflect tax payments, debt service requirements, capital expenditures, iPic openings and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. Management compensates for these limitations by relying on our GAAP results in addition to using EBITDA and Adjusted EBITDA supplementally. Our measures of EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

iv

See “Offering Circular Summary — Summary Historical and Pro Forma Financial and Other Data — Non-GAAP Financial Measures” for a reconciliation of EBITDA, Adjusted EBITDA and Store-Level EBITDA to net loss for each of the periods presented.

v

OFFERING CIRCULAR SUMMARY

This summary highlights selected information contained elsewhere in this Offering Circular. This summary is not complete and does not contain all the information that you should consider before deciding whether to invest in our Class A Common Stock. You should carefully read the entire Offering Circular, including the risks associated with an investment in the Company discussed in the “Risk Factors” section of this Offering Circular, before making an investment decision. Some of the statements in this Offering Circular are forward-looking statements. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Overview: The iPic Experience

iPic strives to be our guest’s favorite local destination for a night out on the town. Our newest locations blend three distinct areas — a polished-casual restaurant, a farm-to-glass full-service bar, and our world-class luxury theater auditoriums with in-theater dining — into a one-of-a-kind experience. Our team endeavors to deliver world class hospitality in innovative, one-of-a-kind theaters which we believe are among the finest in the world. Our chefs and mixologists create craveable food and drink offerings that are outstanding on a standalone basis, but it is the interplay between our movie-entertainment, dining and full-service bar areas that is the defining feature of a typical four-hour guest experience. We thoughtfully design the layout, ambiance, and energy-flow of each unit to maximize the crossover between these activities. With constantly changing movie content and menu offerings, each visit is different, providing our customers with a reason to visit us repeatedly. We believe that we deliver an experience that is innovative, unique and cannot be easily replicated at home or elsewhere without the hassle of having to visit multiple destinations. Our locations also act as great venues for private events, family and business functions and other corporate-sponsored events. We believe our concept is well-positioned within today’s ever-increasing experiential economy.

iPic’s Evolution: Our Historical Path

Our Generation I locations: Our initial seven locations are designated as our First-Generation format (Glendale, WI; Redmond, WA; Pasadena, CA; South Barrington, IL; Bolingbrook, IL; Austin, TX; and Fairview, TX). These units were built between 2007 and 2010, and generally do not have a separate restaurant attached. These initial sites tested and validated the business-model for Premium-Plus seating and service, and, over time, began to showcase the synergistic opportunity of having a complementary restaurant and dining experience within the facility. In 2017, our Generation I locations averaged approximately $5.8 million of revenues, or $814,000 per screen.

Our Generation II locations: We have designated five iPic units as our Second-Generation format (Scottsdale, AZ; Boca Raton, FL; Bethesda, MD; Westwood, CA; and Miami, FL). Built in 2011 to 2014, these units feature a Tuck Hospitality Group signature restaurant (City Perch, Tanzy, or Tuck Room Tavern). Among other things, these units further expanded the quality and quantity of our Premium-Plus auditorium sections (which generally sell-out first, indicating growing consumer preference for added luxury and service), upgraded the in-theater dining experience with our redesigned iPic Express offerings, and launched the iPic Life program, which is a 20-minute on-screen lifestyle program. In 2017, our Generation II locations averaged approximately $10.3 million of revenues, or $1,351,000 per screen.

Our Generation III locations: We have designated four of our units built since the fourth quarter of 2015 as our Third-Generation format (Houston, TX; Ft. Lee, NJ; Fulton Market, NY; and Dobbs Ferry, NY). These units represent our go-forward development design for the foreseeable future. They feature our perfected auditorium layout (six to eight screens; 500 seats; elevated ratio of Premium-Plus seating) and introduced our patent-pending POD seating and Chaise Lounges. In 2017, our Generation III locations that have been open for at least twelve months (Houston, TX; Ft. Lee, NJ; and Fulton Market, NY) averaged approximately $13.4 million of revenues, or $1,658,000 per screen.

iPic: Our Growth Strategy

We believe that we are still in the very nascent stage of our growth story. We currently operate 121 screens at 16 locations in 10 states with an additional 4 locations under construction and a pipeline of an additional 15 sites that either have a signed lease or are in lease negotiations. We believe that we currently control less than 0.5% market share of the theater business in the United States, based on data provided by the National Association of Theatre Owners and our financial results. We believe there is tremendous whitespace opportunity to expand in both existing and new U.S. markets, as well as overseas, and we have invested in our infrastructure through new hires at our home office to enable us to continue to grow with discipline. We plan to upgrade three of our seven Generation I locations in 2018 and open at least four new domestic units per year, starting in 2019, for the foreseeable future. Based on our experience and

1

analysis, along with research we engaged Eastern Consolidated Properties, Inc. to perform for us, we believe that over the long-term we have the potential to grow our iPic U.S. footprint to at least 200 U.S. units and to potentially explore overseas expansion as well. The rate of future growth in any particular period is inherently uncertain and is subject to numerous factors that are outside of our control. As a result, we do not currently have an anticipated timeframe to reach our long-term potential.

Summary Risk Factors

We are subject to a number of risks, including risks that may prevent us from achieving our business objectives or that may adversely affect our business, financial condition, results of operations, cash flows and prospects. You should carefully consider the risks discussed in the section entitled “Risk Factors,” including the following risks, before investing in our Class A Common Stock:

         Our long-term success is highly dependent on our ability to successfully identify and secure appropriate sites and timely develop and expand our operations in existing and new markets.

         Optimizing our theater circuit through new construction and the transformation of our existing theaters is subject to delay and unanticipated costs.

         Our theaters and restaurants operate in highly competitive environments.

         New iPic locations, once opened, may not be profitable, and the performance of our units that we have experienced in the past may not be indicative of future results.

         We have no control over distributors of the films and our business may be adversely affected if our access to motion pictures is limited or delayed.

         The motion picture exhibition industry has experienced fluctuations in attendance during recent years.

         An increase in the use of alternative film delivery methods or other forms of entertainment may drive down our attendance and limit our ticket prices.

         Our continued success depends in part on the continued popularity of our menu and the experience we offer guests.

         Food safety and food-borne illness incidents could adversely affect guests’ perception of our brand, result in lower sales and increase operating costs.

         Our plans to open new units, and the ongoing need for capital expenditures at our existing units, require us to expend capital.

         We are subject to risks associated with leasing property subject to long-term non-cancelable leases.

         Our substantial debt could adversely affect our operations and prevent us from satisfying those debt obligations.

         Limitations on the availability of capital may prevent deployment of strategic initiatives.

         We have a limited operating history which provides limited reference for you to evaluate our ability to achieve our business objectives.

         Our sales growth and ability to achieve profitability could be adversely affected if comparable-store sales are less than we expect.

         Our results of operations are subject to fluctuations due to the timing of new iPic location openings.

2

Summary of the Transactions

Prior to the consummation of this Offering and the organizational transactions (the “Transactions”) described below, the business and operations of the Company were conducted through iPic-Gold Class Entertainment, LLC (“iPic-Gold Class”), a Delaware limited liability company. iPic Entertainment Inc. (“iPic Entertainment”) was incorporated as a Delaware corporation on October 18, 2017 to serve as the issuer of the Class A Common Stock offered hereby. iPic Gold Class Holdings LLC (“Holdings”) was formed as a Delaware limited liability company on December 22, 2017 to hold the equity interests in iPic-Gold Class. iPic Entertainment will be the sole manager of Holdings, and Holdings will be the sole managing member of iPic-Gold Class immediately following the completion of the Transactions.

Prior to the Transactions, the only members of iPic Gold Class were iPic Holdings, LLC; Village Roadshow Attractions USA, Inc.; Teachers’ Retirement System of Alabama; Employees’ Retirement System of Alabama; Regal/Atom Holdings, LLC; and PVR Limited (collectively, the “Original iPic Equity Owners”). iPic-Gold Class was treated as a partnership for U.S. federal income tax purposes and, as such, was not subject to any U.S. federal entity-level income taxes. Rather, taxable income or loss was included in the U.S. federal income tax returns of iPic-Gold Class’s members.

Transactions

Immediately prior to or in connection with the closing of this Offering, we and the Original iPic Equity Owners will consummate the following organizational transactions:

         all of the membership interests in iPic-Gold Class will be contributed by the Original iPic Equity Owners to Holdings in exchange for all of the membership interests in Holdings (the “LLC Interests”), following which iPic-Gold Class will be 100% owned and controlled by Holdings;

         we will amend and restate the limited liability company agreement of Holdings (the “Holdings LLC Agreement”), to, among other things, provide for the organizational structure described below under “Organizational Structure Following this Offering”;

         we will amend and restate the limited liability company agreement of iPic-Gold Class to appoint Holdings as the sole managing member of iPic-Gold Class and reflect iPic-Gold Class’s status as a wholly-owned subsidiary of Holdings;

         certain of the Original iPic Equity Owners will transfer the LLC Interests that they hold in Holdings to certain direct or indirect members of such Original iPic Equity Owners. The recipients of these LLC Interests, together with the Original iPic Equity Owners that did not transfer any of the LLC Interests that they held in Holdings, are collectively referred to herein as the “Continuing iPic Equity Owners”;

         we will amend and restate iPic Entertainment’s Certificate of Incorporation to, among other things, (i) provide for Class A Common Stock and Class B Common Stock and (ii) issue shares of Class B Common Stock to the Continuing iPic Equity Owners, on a one-to-one basis with the number of LLC Interests they own, for nominal consideration;

         we will issue up to 2,165,000 shares of our Class A Common Stock to the purchasers in this Offering in exchange for net proceeds of up to approximately $37.1 million, assuming the shares are offered at $18.50 per share, after deducting selling agents’ discounts and commissions but before offering expenses payable by us;

         we will use all of the net proceeds from this Offering to purchase newly-issued LLC Interests from Holdings at a purchase price per interest equal to the net proceeds, before expenses, to us per share of Class A Common Stock, collectively representing 17.5% of Holdings’s outstanding LLC Interests;

         Holdings will transfer to iPic-Gold Class the proceeds Holdings receives from the sale of LLC Interests to iPic Entertainment;

         iPic-Gold Class will use the proceeds it receives from Holdings as follows: (i) to pay fees and expenses other than the selling agents discounts and commissions of approximately $1.2 million in connection with this Offering and the Transactions, and (ii) to use approximately $35.9 million for general corporate purposes, including opening new iPic locations and renovating existing iPic locations. See “Use of Proceeds”;

         the Continuing iPic Equity Owners will continue to own the LLC Interests that they owned prior to this Offering and will have no economic interest in iPic Entertainment despite their ownership of Class B Common Stock (where “economic interests” means the right to receive any distributions or dividends, whether cash or stock, in connection with common stock);

3

         assuming that all of the LLC Interests of the Continuing iPic Equity Owners are redeemed or exchanged for newly-issued shares of Class A Common Stock on a one-for-one basis, such Continuing iPic Equity Owners would own 10,220,629 shares of iPic Entertainment’s Class A Common Stock, representing approximately 82.5% of the combined voting power of our Common Stock, immediately following the closing of this Offering; and

         iPic Entertainment will enter into the Registration Rights Agreement with certain of the Continuing iPic Equity Owners.

For a description of the terms of the Registration Rights Agreement, see “Description of Securities — Registration Rights.”

Organizational Structure Following this Offering

Immediately following the completion of the Transactions, including this Offering, assuming the maximum amount of shares are sold:

         iPic Entertainment will be a holding company and the principal asset of iPic Entertainment will be LLC Interests of Holdings;

         Holdings will be a holding company and will own 100% of the limited liability company interests of, and control, iPic-Gold Class, subject to the pledge of such limited liability company interests to secure the obligations under the Non-Revolving Credit Facility as described in “Description of Indebtedness”;

         iPic Entertainment will be the sole manager of Holdings, and Holdings will be the sole managing member of iPic-Gold Class. iPic Entertainment will, therefore, directly or indirectly control the business and affairs of, and conduct its day-to-day business through, iPic-Gold Class and its subsidiaries;

         iPic Entertainment’s Amended and Restated Certificate of Incorporation and the Holdings LLC Agreement will require that (i) we at all times maintain a ratio of one LLC Interest owned by us for each share of Class A Common Stock issued by us (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities), and (ii) Holdings at all times maintain (x) a one-to-one ratio between the number of shares of Class A Common Stock issued by us and the number of LLC Interests owned by us and (y) a one-to-one ratio between the number of shares of Class B Common Stock owned by the Continuing iPic Equity Owners and the number of LLC Interests owned by the Continuing iPic Equity Owners;

         iPic Entertainment will own LLC Interests representing 17.5% of the economic interest in Holdings;

         the purchasers in this Offering (i) will own 2,165,000 shares of Class A Common Stock, representing approximately 17.5% of the combined voting power of the Common Stock, (ii) will own 100.0% of the economic interest in iPic Entertainment and (iii) through iPic Entertainment’s ownership of LLC Interests, indirectly will hold (applying the percentages in the preceding clause (ii) to iPic Entertainments percentage economic interest in Holdings) approximately 17.5% of the economic interest in Holdings; and

         the Continuing iPic Equity Owners will own (i) LLC Interests, representing 82.5% of the economic interest in Holdings, and (ii) through their ownership of Class B Common Stock, approximately 82.5% of the combined voting power of the Common Stock. Following this Offering, each LLC Interest held by the Continuing iPic Equity Owners will be redeemable, at the election of such members, for, at iPic Entertainment’s option, newly-issued shares of Class A Common Stock on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of Class A Common Stock for each LLC Interest redeemed (subject to customary adjustments, including for stock splits, stock dividends and reclassifications). In the event of such election by a Continuing iPic Equity Owner, iPic Entertainment may, at its option, instead effect a direct exchange of cash or Class A Common Stock for such LLC Interests in lieu of such a redemption. Any such redemption or exchange is required to be in accordance with the terms of the Holdings LLC Agreement. When a Continuing iPic Equity Owner’s LLC Interests are redeemed or exchanged, iPic Entertainment will cancel a number of shares of Class B Common Stock held by such Continuing iPic Equity Owner equal to the number of LLC Interests of such Continuing iPic Equity Owner that were redeemed or exchanged. The decisions made by iPic Entertainment will be made by its board of directors, which will include directors who hold LLC Interests or are affiliated with holders of LLC Interests and may include such directors in the future. See “The Transactions — Holdings LLC Agreement.”

4

Immediately following this Offering, although we will have a minority economic interest in Holdings, we will have the sole voting interest in, and control the management of, Holdings and, indirectly, iPic-Gold Class. As a result, we will consolidate both Holdings and iPic-Gold Class in our consolidated financial statements and will report non-controlling interests related to the LLC Interests held by the Continuing iPic Equity Owners on our consolidated financial statements. iPic Entertainment will have a board of directors and executive officers, but will have no other employees. All of our employees and their functions are expected to reside at iPic-Gold Class and its subsidiaries.

As a result of our ownership structure, we generally expect to obtain an increase in our share of the tax basis of assets owned indirectly by Holdings when the Continuing iPic Equity Owners exchange their LLC Interests or such LLC Interests are redeemed for Class A Common Stock or for cash. These basis increases may have the effect of reducing the amounts that we would otherwise pay in the future to various tax authorities. Our structure does not contemplate a tax receivable agreement. Therefore, any tax benefits realized from this arrangement will inure to our benefit. There can be no assurance that we will generate sufficient taxable income to utilize any such tax benefits.

The following diagram shows our organizational structure after giving effect to the Transactions, including this Offering, assuming the maximum amount of shares are sold:

5

Implications of Being an “Emerging Growth Company”

As a public reporting company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” under the JOBS Act. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we:

         are not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

         are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”);

         are not required to obtain a non-binding advisory vote from our stockholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes);

         are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

         may present only two years of audited financial statements and only two years of related Management’s Discussion & Analysis of Financial Condition and Results of Operations, or MD&A; and

         are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act.

We have elected to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our consolidated financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under Section 107 of the JOBS Act.

Certain of these reduced reporting requirements and exemptions were already available to us due to the fact that we also qualify as a “smaller reporting company” under the Commission’s rules. For instance, smaller reporting companies are not required to obtain an auditor attestation and report regarding management’s assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required to provide a pay-for-performance graph or CEO pay ratio disclosure; and may present only two years of audited financial statements and related MD&A disclosure.

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act, or such earlier time that we no longer meet the definition of an emerging growth company. Note that this Offering, while a public offering, is not a sale of common equity pursuant to a registration statement, since the Offering is conducted pursuant to an exemption from the registration requirements. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1.07 billion in annual revenues, have more than $700 million in market value of our Common Stock held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period. Furthermore, under current Commission rules, we will continue to qualify as a “smaller reporting company” for so long as we have a public float (i.e., the market value of common equity held by non-affiliates) of less than $75 million as of the last business day of our most recently completed second quarter.

6

Company and Other Information

The Company was formed in the State of Delaware on October 18, 2017. The Company’s principal executive office is 433 Plaza Real Boulevard, Suite 335, Boca Raton, FL, 33432. Our telephone number is (561) 393-3269. Our internet address is www.ipic.com. We do not incorporate the information on, or accessible through, our website into this Offering Circular, and you should not consider any information on, or that can be accessed through, our website a part of this Offering Circular.

We own various U.S. federal trademark registrations, certain foreign trademark registrations and applications, and unregistered trademarks, including the following marks referred to in this Offering Circular: “iPic®”. All other trademarks or trade names referred to in this Offering Circular are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Offering Circular are referred to without the symbols® and ™, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent possible under applicable law, their rights thereto.

7

The Offering

Issuer

 

iPic Entertainment Inc.

 

 

 

Securities offered

 

Class A Common Stock

 

 

 

Class A Common Stock offered by us in this Offering

 


Up to 2,165,000 shares

 

 

 

Class A Common Stock to be outstanding after this Offering

 


2,165,000 shares, assuming the maximum amount of shares are sold

 

 

 

Class B Common Stock to be outstanding after this Offering

 


10,220,629

 

 

 

Price per share of Class A Common Stock

 

$18.50

 

 

 

Minimum investment amount

 

25 shares at $18.50 per share, or $462.50

 

 

 

Voting rights

 

Holders of our Class A Common Stock and Class B Common Stock will vote together as a single class on all matters presented to stockholders for their vote or approval, except as otherwise required by law. Each share of Class A Common Stock and Class B Common Stock will entitle its holder to one vote per share on all such matters. See “Description of Securities.”

 

 

 

Voting power held by all holders of Class A Common Stock after giving effect to this Offering

 



17.5%

 

 

 

Voting power held by all holders of Class B Common Stock after giving effect to this Offering

 



82.5%

 

 

 

Ratio of shares of Class A Common Stock to LLC Interests

 


Our Amended and Restated Certificate of Incorporation and the Holdings LLC Agreement will require that (i) we at all times maintain a ratio of one LLC Interest owned by us for each share of Class A Common Stock issued by us (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities), and (ii) Holdings at all times maintain (x) a one-to-one ratio between the number of shares of Class A Common Stock issued by us and the number of LLC Interests owned by us and (y) a one-to-one ratio between the number of shares of Class B Common Stock owned by the Continuing iPic Equity Owners and the number of LLC Interests owned by the Continuing iPic Equity Owners. This construct is intended to result in the Continuing iPic Equity Owners having a voting interest in iPic Entertainment that is identical to the Continuing iPic Equity Owners’ percentage economic interest in Holdings. The Continuing iPic Equity Owners will own all of our outstanding Class B Common Stock.

8

Proposed listing:

 

Our Class A Common Stock has been approved for listing on NASDAQ under the symbol “IPIC.” Our Class A Common Stock will not commence trading on NASDAQ until all of the following conditions are met: (i) the Offering is completed; (ii) we have filed a post-qualification amendment to the Offering Statement and a registration statement on Form 8-A (“Form 8-A”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); (iii) such post-qualification amendment is qualified by the Commission; and (iv) the Form 8-A has become effective. Pursuant to applicable rules under Regulation A, the Form 8-A will not become effective until the SEC qualifies the post-qualification amendment. We intend to file the post-qualification amendment and request its qualification immediately prior to the termination of the Offering so that the Form 8-A may become effective as soon as practicable. The Company currently intends to complete one closing of this Offering, once we have met the NASDAQ minimum listing requirements; however, we reserve the right to undertake one or more closings on a rolling basis even if we have not yet met the NASDAQ minimum listing requirements at such time. Even if we meet the minimum requirements for listing on NASDAQ, we may wait before terminating the Offering and commencing the trading of our Class A Common Stock on NASDAQ in order to raise additional proceeds. As a result, you may experience a delay between the closing of your purchase of shares of our Class A Common Stock and the commencement of exchange trading of our Class A Common Stock on NASDAQ.

 

 

 

Use of proceeds:

 

We estimate that the net proceeds to us from this Offering, after deducting selling agents’ discounts and commissions but before offering expenses payable by us, will be up to approximately $37.1 million.

 

 

 

 

 

We intend to use the net proceeds that we receive from this Offering to purchase newly-issued LLC Interests from Holdings at a purchase price per interest equal to the net proceeds, before expenses, to us per share of Class A Common Stock.

 

 

 

 

 

Holdings will transfer to iPic-Gold Class the proceeds Holdings receives from the sale of LLC Interests to iPic Entertainment. We intend to cause iPic-Gold Class to use the proceeds that it receives from this Offering as follows: (i) to pay fees and expenses, other than the selling agents discounts and commissions, of approximately $1.2 million in connection with this Offering and the Transactions, and (ii) to use up to approximately $35.9 million for general corporate purposes, including opening new iPic locations and renovating existing iPic locations.

 

 

 

Risk factors:

 

Investing in our Class A Common Stock involves a high degree of risk. See “Risk Factors” starting on page 14.

The number of shares of our Class A Common Stock to be outstanding after this Offering excludes:

         1,600,000 shares of Class A Common Stock under our 2017 Equity Incentive Plan which was adopted on December 21, 2017 (as described in “Executive Compensation — 2017 Equity Incentive Plan”), of which (i) 955,300 shares of Class A Common Stock are issuable upon the exercise of stock options granted on December 21, 2017 at an exercise price of $18.13 per share and (ii) 644,700 shares of Class A Common Stock are reserved for future issuance, and any additional shares that become available under our 2017 Equity Incentive Plan pursuant to provisions thereof that automatically increase the share reserve under the plan each year, as more fully described in the section titled “Executive Compensation — 2017 Equity Incentive Plan;”

         10,220,629 shares of Class A Common Stock reserved as of the closing date of this Offering for future issuance upon redemption or exchange of LLC Interests by the Continuing iPic Equity Owners;

         483,864 shares of Class A Common Stock subject to outstanding RSU awards; and

         up to 47,630 shares of Class A Common Stock issuable upon the exercise of the Selling Agents’ Warrants, exercisable at $23.125 per share.

9

Summary Historical and Pro Forma Consolidated Financial and Other Data

The following tables present the summary historical and pro forma consolidated financial and other data for iPic-Gold Class Entertainment, LLC and its subsidiaries. iPic-Gold Class Entertainment, LLC, a wholly-owned subsidiary of iPic Gold Class Holdings LLC, is the predecessor of the issuer, iPic Entertainment Inc., for financial reporting purposes. The summary consolidated statement of operations data for the years ended December 31, 2015 and December 31, 2016 and the summary consolidated balance sheet data as of December 31, 2015 and December 31, 2016 are derived from the audited consolidated financial statements of iPic-Gold Class Entertainment, LLC and its subsidiaries included elsewhere in this Offering Circular. The summary consolidated statements of operations data for six months ended June 30, 2016 and June 30, 2017, and the summary consolidated balance sheet data as of June 30, 2017 are derived from the unaudited condensed consolidated financial statements of iPic-Gold Class Entertainment, LLC and its subsidiaries included elsewhere in this Offering Circular. In the opinion of our management, such unaudited financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for those periods.

The results of operations for the periods presented below are not necessarily indicative of the results to be expected for any future period and the results for any interim period are not necessarily indicative of the results that may be expected for a full year. The information set forth below should be read together with the “Selected Historical Consolidated Financial and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the accompanying notes appearing elsewhere in this Offering Circular.

The summary unaudited pro forma consolidated financial data of iPic Entertainment Inc. presented below have been derived from our unaudited pro forma consolidated financial statements included elsewhere in this Offering Circular. The summary unaudited pro forma financial data for the year ended December 31, 2016 and as of and for the six months ended June 30, 2017 give effect to the Transactions (Pro Forma) as described in “The Transactions” and the completion of this Offering (Pro Forma As Adjusted) as if all such transactions had occurred on January 1, 2016, in the case of the summary unaudited pro forma consolidated statements of operations data, and as of June 30, 2017, in the case of the summary unaudited pro forma consolidated balance sheet data. The unaudited pro forma financial information includes various estimates which are subject to material change and may not be indicative of what our operations or financial position would have been had this Offering and related transactions taken place on the dates indicated, or that may be expected to occur in the future. See “Unaudited Pro Forma and Pro Forma As Adjusted Consolidated Financial Statements” for a complete description of the adjustments and assumptions underlying the summary unaudited pro forma consolidated financial data.

The summary historical consolidated financial and other data of iPic Entertainment Inc. have not been presented below, as iPic Entertainment Inc. is a newly incorporated entity, has had no business transactions or activities to date and had no assets or liabilities during the periods presented in this section. The summary historical financial and other data of iPic Gold Class Holdings LLC have not been presented below, as iPic Gold Class Holdings LLC is a holding company with no operations and no assets other than its ownership of all of the membership interests of iPic-Gold Class Entertainment, LLC.

10

Summary Historical and Pro Forma Financial and Operating Data

$ in thousands, except share and per share data

 

 

Six Months Ended

 

Year Ended

 

Pro Forma

 

 

June 30,
2017

 

June 30,
2016

 

December 31,
2016

 

December 31,
2015

 

Six Months
Ended June
30, 2017

 

Year Ended
December 31,
2016

Statement of Operations data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and beverage

 

$

37,701

 

 

$

29,115

 

 

$

64,363

 

 

$

53,025

 

 

$

37,701

 

 

$

64,363

 

Theater

 

 

30,780

 

 

 

25,948

 

 

 

57,459

 

 

 

45,866

 

 

 

30,780

 

 

 

57,459

 

Other

 

 

893

 

 

 

284

 

 

 

2,994

 

 

 

997

 

 

 

893

 

 

 

2,994

 

Total revenues

 

 

69,375

 

 

 

55,348

 

 

 

124,816

 

 

 

99,889

 

 

 

69,375

 

 

 

124,816

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of food and beverage

 

 

10,307

 

 

 

7,762

 

 

 

17,377

 

 

 

14,614

 

 

 

10,307

 

 

 

17,377

 

Cost of theater

 

 

12,283

 

 

 

10,169

 

 

 

22,108

 

 

 

18,709

 

 

 

12,283

 

 

 

22,108

 

Operating payroll and benefits

 

 

18,906

 

 

 

14,488

 

 

 

32,141

 

 

 

25,918

 

 

 

18,906

 

 

 

32,141

 

Occupancy expenses

 

 

8,766

 

 

 

8,334

 

 

 

17,104

 

 

 

13,073

 

 

 

8,766

 

 

 

17,104

 

Other operating expenses

 

 

12,164

 

 

 

9,015

 

 

 

24,781

 

 

 

16,183

 

 

 

12,164

 

 

 

24,781

 

General and administrative expenses

 

 

7,011

 

 

 

5,842

 

 

 

14,220

 

 

 

12,471

 

 

 

9,421

 

 

 

17,649

 

Depreciation and amortization expense

 

 

9,570

 

 

 

7,232

 

 

 

16,019

 

 

 

11,819

 

 

 

9,570

 

 

 

16,019

 

 Pre-opening expenses

 

 

1,632

 

 

 

870

 

 

 

4,395

 

 

 

3,666

 

 

 

1,632

 

 

 

4,395

 

Impairment of property and equipment

 

 

3,332

 

 

 

 

 

 

 

 

 

 

 

 

3,332

 

 

 

 

Loss on disposal of property and equipment

 

 

8

 

 

 

60

 

 

 

88

 

 

 

211

 

 

 

8

 

 

 

88

 

Operating expenses

 

 

83,979

 

 

 

63,773

 

 

 

148,234

 

 

 

116,665

 

 

 

86,388

 

 

 

151,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(14,604

)

 

 

(8,425

)

 

 

(23,418

)

 

 

(16,777

)

 

 

(17,014

)

 

 

(26,847

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

(7,782

)

 

 

(5,259

)

 

 

(10,718

)

 

 

(7,891

)

 

 

(6,937

)

 

 

(9,139

)

Other income

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

Total other income (expense)

 

 

(7,777

)

 

 

(5,259

)

 

 

(10,718

)

 

 

(7,891

)

 

 

(6,932

)

 

 

(9,139

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss before income tax expense

 

 

(22,382

)

 

 

(13,684

)

 

 

(34,136

)

 

 

(24,668

)

 

 

(23,946

)

 

 

(35,986

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

43

 

 

 

30

 

 

 

87

 

 

 

61

 

 

 

43

 

 

 

87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(22,425

)

 

$

(13,715

)

 

$

(34,223

)

 

$

(24,729

)

 

$

(23,989

)

 

$

(36,072

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net loss attributable to
non-controlling interest

 

$

 

 

$

 

 

$

 

 

$

 

 

$

(19,719

)

 

$

(29,651

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to iPic Entertainment Inc.

 

$

(22,425

)

 

$

(13,715

)

 

$

(34,223

)

 

$

(24,729

)

 

$

(4,270

)

 

$

(6,421

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share of Class A Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1.97

)

 

$

(2.97

)

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1.97

)

 

$

(2.97

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares of Class A Common Stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,165,000

 

 

 

2,165,000

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,165,000

 

 

 

2,165,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP financial measures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA(1)

 

$

(5,029

)

 

$

(1,193

)

 

$

(7,399

)

 

$

(4,958

)

 

$

(7,438

)

 

$

(10,827

)

Adjusted EBITDA(1)

 

$

(62

)

 

$

(263

)

 

$

932

 

 

$

(1,081

)

 

$

(62

)

 

$

932

 

Store-Level EBITDA(1)

 

$

6,949

 

 

$

5,579

 

 

$

15,152

 

 

$

11,390

 

 

$

6,949

 

 

$

15,152

 

11

$ in thousands

 

 

As of June 30, 2017

 

 

Actual

 

Pro Forma

 

Pro Forma
As Adjusted

Balance Sheet data:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,895

 

 

$

3,895

 

 

$

39,844

 

Total current assets

 

 

8,994

 

 

 

8,994

 

 

 

44,942

 

Total assets

 

 

157,419

 

 

 

157,419

 

 

 

193,368

 

Total current liabilities

 

 

20,320

 

 

 

19,048

 

 

 

19,048

 

Long-term debt and deferred rent

 

 

188,017

 

 

 

206,017

 

 

 

206,017

 

Total liabilities

 

 

263,979

 

 

 

228,295

 

 

 

228,295

 

Accumulated deficit

 

 

(140,715

)

 

 

(1,605

)

 

 

(1,605

)

Total members’/stockholders’ deficit

 

 

(106,560

)

 

 

(70,876

)

 

 

(34,927

)

Total liabilities and members’/stockholders’ deficit

 

 

157,419

 

 

 

157,419

 

 

 

193,368

 

____________

(1)      For more information as to how we define and calculate EBITDA, Adjusted EBITDA and Store-level EBITDA and why we believe such measures are appropriate measures of operating performance, see “Non-GAAP Financial Measures.”  The following is a reconciliation of EBITDA, Adjusted EBITDA and Store-Level EBITDA to net loss for each of the periods indicated:

12

$ in thousands

 

 

Six Months Ended

 

Year Ended

 

Pro Forma

 

 

June 30,
2017

 

June 30,
2016

 

December 31,
2016

 

December 31,
2015

 

Six Months
Ended
June 30,
2017

 

Year Ended
December 31,
2016

Net loss

 

$

(22,425

)

 

$

(13,715

)

 

$

(34,223

)

 

$

(24,729

)

 

$

(23,989

)

 

$

(36,072

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

7,782

 

 

 

5,259

 

 

 

10,718

 

 

 

7,891

 

 

 

6,937

 

 

 

9,139

 

Income tax expense

 

 

43

 

 

 

30

 

 

 

87

 

 

 

61

 

 

 

43

 

 

 

87

 

Depreciation and amortization expense

 

 

9,570

 

 

 

7,232

 

 

 

16,019

 

 

 

11,819

 

 

 

9,570

 

 

 

16,019

 

EBITDA

 

 

(5,029

)

 

 

(1,193

)

 

 

(7,399

)

 

 

(4,958

)

 

 

(7,438

)

 

 

(10,827

)