QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
th Floor |
||
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ | Smaller reporting company | |||||
Emerging growth company |
Page |
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PART I. |
3 | |||||
Item 1. |
3 | |||||
3 | ||||||
4 | ||||||
5 | ||||||
6 | ||||||
7 | ||||||
Item 2. |
32 | |||||
Item 3. |
58 | |||||
Item 4. |
59 | |||||
PART II. |
61 | |||||
Item 1. |
61 | |||||
Item 1A. |
61 | |||||
Item 2. |
61 | |||||
Item 3. |
62 | |||||
Item 4. |
62 | |||||
Item 5. |
62 | |||||
Item 6. |
62 | |||||
63 |
• | our dependence on the operational and financial results of, and our relationships with, our franchisees and the success of their new and existing studios; |
• | our ability to protect our brand and reputation; |
• | our ability to identify, recruit and contract with a sufficient number of qualified franchisees; |
• | our ability to execute our growth strategy, including through development of new studios by new and existing franchisees; |
• | our ability to manage our growth and the associated strain on our resources; |
• | our ability to successfully integrate any acquisitions, or realize their anticipated benefits; |
• | the high level of competition in the health and fitness industry; |
• | economic, political and other risks associated with our international operations; |
• | changes to the industry in which we operate; |
• | our reliance on information systems and our and our franchisees’ ability to properly maintain the confidentiality and integrity of our data; |
• | the occurrence of cyber incidents or a deficiency in our cybersecurity protocols; |
• | our and our franchisees’ ability to attract and retain members; |
• | our and our franchisees’ ability to identify and secure suitable sites for new franchise studios; |
• | risks related to franchisees generally; |
• | our ability to obtain third-party licenses for the use of music to supplement our workouts; |
• | certain health and safety risks to members that arise while at our studios; |
• | our ability to adequately protect our intellectual property; |
• | risks associated with the use of social media platforms in our marketing; |
• | our ability to obtain and retain high-profile strategic partnership arrangements; |
• | our ability to comply with existing or future franchise laws and regulations; |
• | our ability to anticipate and satisfy consumer preferences and shifting views of health and fitness; |
• | our business model being susceptible to litigation; |
• | the increased expenses associated with being a public company; and |
• | additional factors discussed in our filings with the Securities and Exchange Commission, or the SEC. |
June 30, 2021 |
December 31, 2020 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
Accounts receivable, net |
||||||||
Due from related parties |
||||||||
Inventories |
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Deferred costs |
||||||||
Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Deferred tax assets, net |
||||||||
Intangible assets, net |
||||||||
Deferred costs, net of current |
||||||||
Other long-term assets |
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Total assets |
$ | $ | ||||||
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|||||
Liabilities, convertible preferred stock and stockholders’ deficit |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | $ | ||||||
Deferred revenue |
||||||||
Interest payable |
||||||||
Current portion of long-term debt |
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Income taxes payable |
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Total current liabilities |
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Deferred revenue, net of current |
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Long-term derivative liability |
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Long-term debt, net of current |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 11) |
||||||||
Convertible preferred stock, $ |
||||||||
Stockholders’ deficit |
||||||||
Common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Accumulated deficit |
( |
) | ( |
) | ||||
Less: Treasury stock |
( |
) | ( |
) | ||||
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|||||
Total stockholders’ deficit |
( |
) | ( |
) | ||||
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|||||
Total liabilities, convertible preferred stock and stockholders’ deficit |
$ | $ | ||||||
|
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|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Revenues: |
||||||||||||||||
Franchise (Related party: $ |
$ | $ | $ | $ | ||||||||||||
Equipment and merchandise (Related party: $ |
||||||||||||||||
Total revenues |
||||||||||||||||
Costs and operating expenses: |
||||||||||||||||
Cost of franchise revenue (Related party $ |
||||||||||||||||
Cost of equipment and merchandise (Related party: $ |
||||||||||||||||
Selling, general and administrative expenses |
||||||||||||||||
Total costs and operating expenses |
||||||||||||||||
Income (losses) from operations |
||||||||||||||||
Loss on derivative liabilities |
— | — | ||||||||||||||
Interest expense, net |
||||||||||||||||
Other expense (income), net |
( |
) | ( |
) | ||||||||||||
(Loss) income before income taxes |
( |
) | ( |
) | ||||||||||||
Provision for income taxes |
||||||||||||||||
Net (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Other comprehensive income (loss) |
||||||||||||||||
Unrealized gain (loss) on interest rate swap, net of tax |
( |
) | ||||||||||||||
Foreign currency translation adjustment, net of tax |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Comprehensive (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Per share data: |
||||||||||||||||
Net (loss) income per common share |
||||||||||||||||
Basic and diluted |
( |
) | ( |
) | ||||||||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic and diluted |
Convertible Preferred Stock |
Common Stock |
Additional Paid-In Capital |
Treasury Stock |
Accumulated other comprehensive loss |
Accumulated deficit |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||
Balance at March 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||
Unrealized gain on interest rate swap, net of tax |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Cumulative translation adjustment, net of tax |
— | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
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|||||||||||||||||||
Balances at June 30, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
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|||||||||||||||||||
Convertible Preferred Stock |
Common Stock |
Additional Paid- In Capital |
Treasury Stock |
Accumulated other comprehensive loss |
Accumulated deficit |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||
Balance at March 31, 2020 |
$ | $ | $ | — | $ | — | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
Net income |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Unrealized loss on interest rate swap, net of tax |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Cumulative translation adjustment, net of tax |
— | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
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Balances at June 30, 2020 |
$ | $ | $ | — | $ | — | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
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|
|||||||||||||||||||
Convertible Preferred Stock |
Common Stock |
Additional Paid-In Capital |
Treasury Stock |
Accumulated other comprehensive loss |
Accumulated deficit |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||
Balances at December 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||
Unrealized gain on interest rate swap, net of tax |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Cumulative translation adjustment, net of tax |
— | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
|
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|
|
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|
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|
|||||||||||||||||||
Balances at June 30, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
|
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|
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|
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|
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|
|||||||||||||||||||
Convertible Preferred Stock |
Common Stock |
Additional Paid- In Capital |
Treasury Stock |
Accumulated other comprehensive loss |
Accumulated deficit |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||
Balances at December 31, 2019 |
$ | $ | $ | — | $ | — | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Unrealized loss on interest rate swap, net of tax |
— | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
Cumulative translation adjustment, net of tax |
— | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
|
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|
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|
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|||||||||||||||||||
Balances at June 30, 2020 |
$ | $ | $ | — | $ | — | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
|
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|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Cash flows from operating activities |
||||||||
Net (loss) income |
$ | ( |
) | $ | ||||
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
||||||||
Depreciation |
||||||||
Amortization of intangible assets |
||||||||
Amortization of deferred costs |
||||||||
Provision for inventories |
— | |||||||
Accretion of debt discount |
— | |||||||
Loss on derivative liabilities |
— | |||||||
Paid in kind interest accrual |
— | |||||||
Bad debt expense |
||||||||
Gain and loss on disposal of property and equipment |
— | |||||||
Deferred income taxes |
— | |||||||
Unrealized foreign currency transaction gains (losses) |
( |
) | ||||||
Changes in operating assets and liabilities: |
||||||||
Due from related parties |
||||||||
Accounts receivable, net |
( |
) | ( |
) | ||||
Inventories |
( |
) | ( |
) | ||||
Prepaid expenses |
( |
) | ||||||
Other current assets |
( |
) | ( |
) | ||||
Deferred costs |
( |
) | ( |
) | ||||
Other long-term assets |
( |
) | ( |
) | ||||
Accounts payable |
( |
) | ||||||
Deferred revenue |
( |
) | ||||||
Interest payable |
( |
) | ||||||
Income tax payable |
||||||||
Other long-term liabilities |
||||||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Cash flows from investing activities |
||||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
Disposal of property and equipment |
||||||||
Purchases of intangible assets |
( |
) | ( |
) | ||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities |
||||||||
Borrowings under revolving facility |
— | |||||||
Repayments under term facility |
— | ( |
) | |||||
Repayment of 1st Lien Loan |
( |
) | — | |||||
Proceeds from Paycheck Protection Program loan |
— | |||||||
Deferred offering costs |
— | ( |
) | |||||
Net cash (used in) provided by financing activities |
( |
) | ||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
( |
) | ||||||
Net decrease in cash, cash equivalents, and restricted cash |
( |
) | ( |
) | ||||
Cash, cash equivalents, and restricted cash at beginning of period |
||||||||
Cash, cash equivalents, and restricted cash at end of period |
$ | $ | ||||||
Supplemental disclosures of cash flow information |
||||||||
Income taxes paid |
$ | — | $ | |||||
Interest paid |
||||||||
Supplemental disclosure of noncash financing and investing activities: |
||||||||
Liability assumed on intellectual property license agreement with FW SPV II LLC (Note 4) |
— | |||||||
Intangible assets included in accounts payable and accrued expenses |
— | |||||||
Deferred offering costs included in accounts payable and accrued expenses |
As of June 30, |
||||||||
2021 |
2020 |
|||||||
Cash and cash equivalents |
$ |
$ |
||||||
Restricted cash |
— |
|||||||
|
|
|
|
|||||
Total cash, cash equivalents, and restricted cash |
$ |
$ |
||||||
|
|
|
|
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Balance at beginning of period |
$ | $ | $ | $ | ||||||||||||
Provisions for bad debts, included in selling, general and administrative |
( |
) | ||||||||||||||
Uncollectible receivables written off |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at end of period |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Estimated Useful Life |
June 30, 2021 |
December 31, 2020 |
||||||||||
(years) |
||||||||||||
Vehicles |
$ | $ | ||||||||||
Furniture and fixtures |
||||||||||||
Office and other equipment |
||||||||||||
Leasehold improvements |
Lesser of lease term or useful life |
|
||||||||||
Less accumulated depreciation |
( |
) | ( |
) | ||||||||
Total property and equipment, net |
$ | $ | ||||||||||
As of June 30, 2021 |
As of December 31, 2020 |
|||||||||||||||||||||||||||
Useful Life |
Gross Value |
Accumulated Amortization |
Net Value |
Gross Value |
Accumulated Amortization |
Net Value |
||||||||||||||||||||||
(in years) |
||||||||||||||||||||||||||||
Internal-use software |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
Trademarks |
n/a | — | — | |||||||||||||||||||||||||
FW Intangible Asset |
$ | $ | $ | $ | — | $ | — | $ | — | |||||||||||||||||||
Total intangible assets, net |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
Future Amortization |
||||
Remainder of 2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
Thereafter |
||||
Total |
$ | |||
Deferred Revenue |
||||
Balance at December 31, 2019 |
$ | |||
Revenue Recognized |
( |
) | ||
Increase |
||||
|
|
|||
Balance at March 31, 2020 |
$ | |||
Revenue Recognized |
( |
) | ||
Increase |
||||
|
|
|||
Balance at June 30, 2020 |
$ | |||
|
|
|||
Deferred Revenue |
||||
Balance at December 31, 2020 |
$ | |||
Revenue Recognized |
( |
) | ||
Increase |
||||
|
|
|||
Balance at March 31, 2021 |
$ | |||
|
|
|||
Revenue Recognized |
$ | ( |
) | |
Increase |
$ | |||
|
|
|||
Balance at June 30, 2021 |
$ | |||
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Revolving Facility |
$ | $ | ||||||
First Lien Term Loan |
||||||||
Second Lien Term Loan |
||||||||
Convertible Note |
||||||||
PPP Loan |
||||||||
|
|
|
|
|||||
Total debt, excluding deferred financing costs and discounts |
||||||||
Unamortized financing costs |
( |
) | ( |
) | ||||
Unamortized debt discount |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total debt |
$ | $ | ||||||
|
|
|
|
1. |
Prepayment at the option of the Company. |
2. |
Prepayment at the option of the Company following a Qualified Public Offering. |
3. |
Prepayment required by Excess Cash Flow. |
4. |
Prepayment required by a Prepayment Event. |
5. |
Prepayment required by an Event of Default. |
Remainder of 2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
|
|
|||
Total principal payments |
||||
Deferred financing costs, net of accumulated amortization |
( |
) | ||
Discount on debt |
( |
) | ||
|
|
|||
Net carrying value |
$ | |||
|
|
As of June 30, 2021 |
As of December 31, 2020 |
|||||||||||||||
Derivative Liabilities |
Derivative Liabilities |
|||||||||||||||
Current |
Long-Term |
Current |
Long-Term |
|||||||||||||
Fair Value of Derivatives : |
||||||||||||||||
Interest Rate Swap |
$ | $ |
( |
) |
$ |
$ |
( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Fair Value |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
|
|
|
|
|
|
|
|
As of June 30, 2021 |
||||||||||||||||
Risk-free rate |
Volatility |
Term (years) |
Dividend yield |
|||||||||||||
Liquidity event |
% | |||||||||||||||
QPO event |
% | |||||||||||||||
As of December 31, 2020 |
||||||||||||||||
Risk-free rate |
Volatility |
Term (years) |
Dividend yield |
|||||||||||||
Liquidity event |
% | |||||||||||||||
QPO event |
% |
Fair Value of Embedded Derivative Liabilities (Level 3 Inputs): |
||||
Balance at January 1, 202 0 |
$ | |||
Initial measurement on October 6, 202 0 |
( |
) | ||
Change in fair value |
( |
) | ||
|
|
|||
Balance at December 31, 2020 |
( |
) | ||
Change in fair value |
( |
) | ||
|
|
|||
Balance at March 31, 2021 |
( |
) | ||
Change in fair value |
( |
) | ||
|
|
|||
Balance at June 30, 2021 |
$ | ( |
) | |
|
|
As of June 30, 2021 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Liabilities |
||||||||||||||||
Interest rate swap |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
Derivative liability |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
|
|
|
|
|
|
|
|
As of December 31, 2020 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Liabilities |
||||||||||||||||
Interest rate swap |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
Derivative liability |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
|
|
|
|
|
|
|
|
Operating Leases |
||||
Remainder of 2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
Thereafter |
||||
Total Minimum Lease Payments |
$ | |||
Company Equity Value Threshold |
Potential Restricted Stock Units Vested |
|||
$ |
||||
$ |
||||
$ |
Scenario: |
IPO |
Sale |
||||||
Probability |
% | % | ||||||
Term (years) |
||||||||
Remaining Term of the RSUs (years) |
||||||||
Dividend Yield |
% | % | ||||||
Risk-free rate |
% | % | ||||||
Volatility |
% | % |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Numerator: |
||||||||||||||||
Net (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Net (loss) income allocated to participating preferred shares |
$ | — | $ | $ | — | $ | ||||||||||
Net (loss) income attributable to common stockholders—basic and diluted |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Denominator: |
||||||||||||||||
Weighted average common shares outstanding—basic and diluted |
||||||||||||||||
Net (loss) income per common share: |
||||||||||||||||
Basic and diluted |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Anti-dilutive securities excluded from diluted loss per common share: |
||||||||||||||||
Convertible preferred stock |
— | — | ||||||||||||||
Restricted stock units |
— | — | ||||||||||||||
Convertible notes |
— | — | ||||||||||||||
Total |
— | — | ||||||||||||||
For the Three Months Ended June 30, 2021 |
For the Three Months Ended June 30, 2020 |
|||||||||||||||||||||||
Revenue |
Cost of revenue |
Gross profit |
Revenue |
Cost of revenue |
Gross profit |
|||||||||||||||||||
United States: | ||||||||||||||||||||||||
Franchise |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Equipment and merchandise |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Australia: |
||||||||||||||||||||||||
Franchise |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Equipment and merchandise |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Rest of World: |
||||||||||||||||||||||||
Franchise |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Equipment and merchandise |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Consolidated: |
||||||||||||||||||||||||
Franchise |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Equipment and merchandise |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
For the Six Months Ended June 30, 2021 |
For the Six Months Ended June 30, 2020 |
|||||||||||||||||||||||
Revenue |
Cost of revenue |
Gross profit |
Revenue |
Cost of revenue |
Gross profit |
|||||||||||||||||||
United States: | ||||||||||||||||||||||||
Franchise |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Equipment and merchandise |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Australia: |
||||||||||||||||||||||||
Franchise |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Equipment and merchandise |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Rest of World: |
||||||||||||||||||||||||
Franchise |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Equipment and merchandise |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Consolidated: |
||||||||||||||||||||||||
Franchise |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Equipment and merchandise |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
For the Three Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Segment gross profit |
$ | $ | ||||||
Selling, general and administrative expenses |
||||||||
Loss on derivative liabilities |
— | |||||||
Interest expense, net |
||||||||
Other expense (income), net |
( |
) | ||||||
Provision for income taxes |
||||||||
Net (loss) income |
$ | ( |
) | $ | ||||
For the Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Segment gross profit |
$ | $ | ||||||
Selling, general and administrative expenses |
||||||||
Loss on derivative liabilities |
— | |||||||
Interest expense, net |
||||||||
Other expense (income), net |
( |
) | ||||||
Provision for income taxes |
||||||||
Net (loss) income |
$ | ( |
) | $ | ||||
• | expanding our studio footprint in the United States; |
• | expanding our studio footprint throughout Rest of World; |
• | growing same store sales and transitioning to a franchise fee based on the greater of a fixed monthly franchise fee or percentage of gross monthly studio revenue model; |
• | expanding into new channels; |
• | developing new workout programs to access new target demographics; and |
• | driving increased member spend through ancillary product offerings. |
Three Months Ended June 30, 2021 |
Three Months Ended June 30, 2020 |
Year Ended December 31, 2020 |
||||||||||||||||||||||||||||||||||||||||||||||
U.S. |
Australia |
ROW |
Total |
U.S. |
Australia |
ROW |
Total |
U.S. |
Australia |
ROW |
Total |
|||||||||||||||||||||||||||||||||||||
Total Franchises Sold, beginning of period |
941 | 676 | 630 | 2,247 | 826 | 653 | 480 | 1,959 | 814 | 643 | 435 | 1,892 | ||||||||||||||||||||||||||||||||||||
New Franchises Sold, net(a) |
438 | 109 | 7 | 554 | 20 | 14 | 66 | 100 | 117 | 36 | 199 | 352 | ||||||||||||||||||||||||||||||||||||
Total Franchises Sold, end of period |
1,379 | 785 | 637 | 2,801 | 846 | 667 | 546 | 2,059 | 931 | 679 | 634 | 2,244 |
(a) | New Franchises Sold are shown net of franchises that were signed but subsequently terminated prior to studio opening. |
Three Months Ended June 30, 2021 |
Three Months Ended June 30, 2020 |
Year Ended December 31, 2020 |
||||||||||||||||||||||||||||||||||||||||||||||
U.S. |
Australia |
ROW |
Total |
U.S. |
Australia |
ROW |
Total |
U.S. |
Australia |
ROW |
Total |
|||||||||||||||||||||||||||||||||||||
Total Studios, beginning of period |
518 | 617 | 352 | 1,487 | 376 | 593 | 273 | 1,242 | 320 | 581 | 239 | 1,140 | ||||||||||||||||||||||||||||||||||||
Initial Studio Openings, net |
38 | 11 | 19 | 68 | 20 | 2 | 11 | 33 | 166 | 35 | 96 | 297 | ||||||||||||||||||||||||||||||||||||
Total Studios, end of period |
556 | 628 | 371 | 1,555 | 396 | 595 | 284 | 1,275 | 486 | 616 | 335 | 1,437 |
Monthly System-wide Sales for the 18 Months Ended June 30, 2021 ($ in millions) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
JAN |
FEB |
MAR |
APR |
MAY |
JUNE |
JULY |
AUG |
SEP |
OCT |
NOV |
DEC |
JAN |
FEB |
MAR |
APR |
MAY |
JUN |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
United States |
$ | 10 | $ | 10 | $ | 8 | $ | 3 | $ | 4 | $ | 5 | $ | 6 | $ | 7 | $ | 7 | $ | 9 | $ | 9 | $ | 8 | $ | 10 | $ | 9 | $ | 12 | $ | 12 | $ | 14 | $ | 15 | ||||||||||||||||||||||||||||||||||||
Australia |
19 | 19 | 16 | 4 | 5 | 11 | 13 | 14 | 14 | 16 | 17 | 17 | 18 | 16 | 18 | 17 | 17 | 15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
ROW |
8 | 7 | 5 | 1 | 1 | 2 | 3 | 5 | 5 | 6 | 5 | 4 | 4 | 3 | 5 | 4 | 4 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total |
$ |
36 |
$ |
36 |
$ |
29 |
$ |
9 |
$ |
10 |
$ |
18 |
$ |
23 |
$ |
25 |
$ |
26 |
$ |
30 |
$ |
31 |
$ |
29 |
$ |
31 |
$ |
29 |
$ |
35 |
$ |
33 |
$ |
35 |
$ |
35 |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Other Data: |
(dollars in thousands) |
|||||||||||||||
EBITDA |
(18,908 | ) | 8,449 | (47,084 | ) | 8,658 | ||||||||||
Adjusted EBITDA |
10,676 | 10,026 | 15,946 | 12,640 | ||||||||||||
Adjusted EBITDA margin (1) |
39.8 | % | 57.4 | % | 35.4 | % | 29.9 | % | ||||||||
Same store sales growth (2) |
126.0 | % | (65.0 | )% | 19.5 | % | (32.1 | )% |
(1) |
Management believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are useful to investors as they eliminate certain items identified as affecting the period-over-period comparability of our operating results. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin eliminate, among other items, non-cash depreciation and amortization expense that results from our capital investments and intangible assets, as well as income taxes, which may not be comparable with other companies based on our tax structure. |
• | they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and EBITDA, Adjusted EBITDA and Adjusted EBITDA margin do not reflect any cash requirement for such replacements or improvements; and |
• | they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||
Net (loss) income |
(30,524 | ) | 5,868 | (67,369 | ) | 5,135 | ||||||||||
Net interest expense |
8,853 | 421 | 17,268 | 799 | ||||||||||||
Provision for income taxes |
1,313 | 1,552 | 915 | 1,562 | ||||||||||||
Depreciation and amortization |
1,173 | 249 | 1,377 | 477 | ||||||||||||
Amortization of deferred costs |
277 | 359 | 725 | 685 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
EBITDA |
(18,908 | ) | 8,449 | (47,084 | ) | 8,658 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Sales tax reserve (a) |
147 | 12 | 247 | 515 | ||||||||||||
Transaction fees (b) |
1,749 | 1,214 | 3,331 | 2,656 | ||||||||||||
Loss (gain) on derivative liability (c) |
23,098 | — | 48,603 | — | ||||||||||||
Certain legal costs and settlements (d) |
886 | 351 | 3,423 | 781 | ||||||||||||
Forgiveness of loans to directors (e) |
— | — | — | — | ||||||||||||
Recruitment (f) |
53 | — | 53 | — | ||||||||||||
Inventory write-off (g) |
— | — | — | — | ||||||||||||
COVID concessions (h) |
1,851 | — | 4,333 | — | ||||||||||||
Relocation (i) |
183 | — | 252 | 30 | ||||||||||||
Development costs (j) |
1,617 | — | 2,788 | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
10,676 | 10,026 | 15,946 | 12,640 | ||||||||||||
|
|
|
|
|
|
|
|
(a) |
Represents the impact of one-time sales tax liability arising from a change in timing of enforceability of certain contractual terms in arrangements with franchisees. |
(b) |
Represents transaction costs incurred as a part of a reorganization and the issuance of preferred shares, including legal, tax, accounting and other professional services. |
(c) |
Represents loss on derivative liabilities associated with convertible note. |
(d) |
Represents legal costs related to litigation activities and legal settlements. |
(e) |
Represents the one-time forgiveness of loans to our directors. |
(f) |
Represents one-time recruitment expense of department leaders. |
(g) |
Represents inventory written off. |
(h) |
Represents concessions made to studios impacted by COVID, including one time COVID-19 related write-offs. |
(i) |
Represents costs incurred as a part of the relocation of our corporate headquarters. |
(j) |
Represents one-time non-recurring costs incurred with launch of new brand. |
(2) |
“Same store sales” means, for any reporting period, studio-level revenue generated by a comparable base of franchise studios, which we define as Total Studios that have been operating for more than 16 months. As of June 30, 2021 and December 31, 2020, there were 1,083 and 940 studios, respectively in our comparable base of franchise studios. |
• | the number of studios that have been in operation for more than 16 months; |
• | the mix of recurring membership and workout pack revenue per studio; |
• | growth in total memberships and workout pack visits per studio; |
• | consumer recognition of our brand and our ability to respond to changing consumer preferences; |
• | our and our franchisees’ ability to operate studios effectively and efficiently to meet consumer expectations; |
• | marketing and promotional efforts; |
• | local competition; |
• | trade area dynamics; |
• | opening of new studios in the vicinity of existing locations; and |
• | overall economic trends, particularly those related to consumer spending. |
• | Franchise Revenue |
• | Equipment and Merchandise F45-branded fitness equipment and related technology required to operate an F45 Training studio and (ii) subsequent additional and/or replacement equipment and merchandise sales to franchisees including technology, apparel and other fitness-related products. Typically, a portion of the World Pack fee is required to be paid upon the execution of a franchise agreement, with the balance due upon the earlier of: (i) the date the franchisee orders the World Pack; or (ii) eight months from the effective date of the franchise agreement. The franchise agreement mandates all franchisees to order and update new equipment on an annual basis. |
• | Cost of Franchise Revenue: |
• | Cost of Equipment and Merchandise Revenue: |
• | Selling, General, and Administrative Expenses: |
• | Forgiveness of Loans to Directors |
• | Other Expense, Net: |
• | on March 12, 2019, F45 Training Holdings was incorporated in the State of Delaware as an ultimate holding company; |
• | on March 15, 2019, MWIG invested $100 million in F45 Training Holdings in exchange for 10,000,000 shares of convertible preferred stock; and |
• | immediately following such investment by MWIG, our predecessor’s stockholders, Adam Gilchrist, our Co-Founder and President and Chief Executive Officer, Robert Deutsch, our Co-Founder and former Executive Chairman of our Board of Directors, and 2M Properties Pty Ltd, or 2M Properties, sold all of their existing capital stock in our predecessor, F45 Aus to Flyhalf Acquisition Company Pty Ltd, or Flyhalf Acquisition, an indirect wholly-owned subsidiary of F45 Training Holdings, for an aggregate of (a) $100 million in cash, (b) $50 million in secured promissory notes from Flyhalf Acquisition, or the Initial Stockholder Notes, and (c) 29,000,000 shares of our common stock. In connection with the issuance of the Initial Stockholder Notes, we entered into a guaranty with each of Messrs. Gilchrist and Deutsch and 2M Properties pursuant to which we guaranteed the obligations of Flyhalf Acquisition under their respective Initial Stockholder Notes. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Revenues: |
||||||||||||||||
Franchise (Related party: $50 and $137 for the three months ended June 30, 2021 and 2020, respectively, and $100 and $234 for the six months ended June 30, 2021 and 2020, respectively) |
$ | 20,581 | $ | 12,061 | $ | 33,737 | $ | 25,699 | ||||||||
Equipment and merchandise (Related party: $0 and $112 for the three months ended June 30, 2021 and 2020, respectively, and $0 and $112 for the six months ended June 30, 2021 and 2020, respectively) |
6,251 | 5,397 | 11,286 | 16,601 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues |
26,832 | 17,458 | 45,023 | 42,300 | ||||||||||||
Costs and operating expenses: |
||||||||||||||||
Cost of franchise revenue (Related party $0 and $0 for the three months ended June 30, 2021 and 2020, respectively, and $0 and $12 for the six months ended June 30, 2021 and 2020, respectively) |
1,462 | 1,410 | 2,676 | 4,594 | ||||||||||||
Cost of equipment and merchandise (Related party: $1,203 and $265 for the three months ended June 30, 2021 and 2020, respectively, and $2,144 and $1,316 for the six months ended June 30, 2021 and 2020, respectively) |
3,739 | 2,832 | 6,920 | 9,163 | ||||||||||||
Selling, general and administrative expenses |
18,562 | 7,633 | 35,390 | 21,624 | ||||||||||||
Forgiveness of loans to directors |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total costs and operating expenses |
23,763 | 11,875 | 44,986 | 35,381 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (losses) from operations |
3,069 | 5,583 | 37 | 6,919 | ||||||||||||
Loss on derivative liabilities |
23,098 | — | 48,603 | — | ||||||||||||
Interest expense, net |
8,853 | 421 | 17,268 | 799 | ||||||||||||
Other expense (income), net |
329 | (2,258 | ) | 620 | (577 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
(Loss) income before income taxes |
(29,211 | ) | 7,420 | (66,454 | ) | 6,697 | ||||||||||
Provision for income taxes |
1,313 | 1,552 | 915 | 1,562 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net (loss) income |
$ | (30,524 | ) | $ | 5,868 | $ | (67,369 | ) | $ | 5,135 | ||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Franchise |
||||||||||||||||
USA |
$ | 11,741 | $ | 7,461 | $ | 4,280 | 57 | % | ||||||||
Australia |
4,420 | 2,089 | 2,331 | 112 | % | |||||||||||
ROW |
4,420 | 2,511 | 1,909 | 76 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total franchise revenue |
$ | 20,581 | $ | 12,061 | $ | 8,520 | 71 | % | ||||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Franchise |
||||||||||||||||
USA |
$ | 18,756 | $ | 15,709 | $ | 3,047 | 19 | % | ||||||||
Australia |
7,709 | 4,840 | 2,869 | 59 | % | |||||||||||
ROW |
7,272 | 5,150 | 2,122 | 41 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total franchise revenue |
$ | 33,737 | $ | 25,699 | $ | 8,038 | 31 | % | ||||||||
Six Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Stores |
% |
|||||||||||||
(in units) |
||||||||||||||||
Number of studios open |
||||||||||||||||
USA |
$ | 556 | $ | 396 | 160 | 40 | % | |||||||||
Australia |
628 | 595 | 33 | 6 | % | |||||||||||
ROW |
371 | 284 | 87 | 31 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total studios open |
$ | 1,555 | 1,275 | 280 | 22 | % | ||||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Equipment and merchandise |
||||||||||||||||
USA |
$ | 4,523 | $ | 1,383 | $ | 3,140 | 227 | % | ||||||||
Australia |
689 | 960 | (271 | ) | (28 | )% | ||||||||||
ROW |
1,039 | 3,054 | (2,015 | ) | (66 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total equipment and merchandise |
$ | 6,251 | $ | 5,397 | $ | 854 | 16 | % | ||||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Equipment and merchandise |
||||||||||||||||
USA |
$ | 7,004 | $ | 7,462 | $ | (458 | ) | (6 | )% | |||||||
Australia |
1,528 | 2,478 | (950 | ) | (38 | )% | ||||||||||
ROW |
2,754 | 6,661 | (3,907 | ) | (59 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total equipment and merchandise |
$ | 11,286 | $ | 16,601 | $ | (5,315 | ) | (32 | )% | |||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Franchise |
||||||||||||||||
USA |
$ | 1,308 | $ | 1,158 | $ | 150 | 13 | % | ||||||||
Australia |
94 | 173 | (79 | ) | (46 | )% | ||||||||||
ROW |
60 | 79 | (19 | ) | (24 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cost of franchise revenue |
$ | 1,462 | $ | 1,410 | $ | 52 | 4 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Percentage of franchise revenue |
7 | % | 12 | % |
Six Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Franchise |
||||||||||||||||
USA |
$ | 2,330 | $ | 4,089 | $ | (1,759 | ) | (43 | )% | |||||||
Australia |
272 | 332 | (60 | ) | (18 | )% | ||||||||||
ROW |
74 | 173 | (99 | ) | (57 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cost of franchise revenue |
$ | 2,676 | $ | 4,594 | $ | (1,918 | ) | (42 | )% | |||||||
|
|
|
|
|
|
|
|
|||||||||
Percentage of franchise revenue |
8 | % | 18 | % |
Three Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Equipment and merchandise |
||||||||||||||||
USA |
$ | 2,437 | $ | 678 | $ | 1,759 | 259 | % | ||||||||
Australia |
514 | 902 | (388 | ) | (43 | )% | ||||||||||
ROW |
788 | 1,252 | (464 | ) | (37 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total equipment and merchandise cost of revenue |
$ | 3,739 | $ | 2,832 | $ | 907 | 32 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Percentage of equipment and merchandise revenue |
60 | % | 52 | % |
Six Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Equipment and merchandise |
||||||||||||||||
USA |
$ | 3,915 | $ | 3,704 | $ | 211 | 6 | % | ||||||||
Australia |
1,321 | 2,184 | (863 | ) | (40 | )% | ||||||||||
ROW |
1,684 | 3,275 | (1,591 | ) | (49 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total equipment and merchandise cost of revenue |
$ | 6,920 | $ | 9,163 | $ | (2,243 | ) | (24 | )% | |||||||
|
|
|
|
|
|
|
|
|||||||||
Percentage of equipment and merchandise revenue |
61 | % | 55 | % |
Three Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Selling, general and administrative expenses |
18,562 | 7,633 | $ | 10,929 | 143 | % | ||||||||||
Percentage of revenue |
69 | % | 44 | % |
Six Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Selling, general and administrative expenses |
35,390 | 21,624 | $ | 13,766 | 64 | % | ||||||||||
Percentage of revenue |
79 | % | 51 | % |
Three Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Loss on derivative liabilities |
23,098 | — | $ | 23,098 | 100 | % |
Six Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Loss on derivative liabilities |
48,603 | — | $ | 48,603 | 100 | % |
Three Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Interest expense, net |
8,853 | 421 | $ | 8,432 | 2003 | % | ||||||||||
Six Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Interest expense, net |
17,268 | 799 | $ | 16,469 | 2061 | % |
Three Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Other expense (income), net |
329 | (2,258 | ) | $ | 2,587 | (115 | )% | |||||||||
Six Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Other expense (income), net |
620 | (577 | ) | $ | 1,197 | (207 | )% |
Three Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Provision for income taxes |
1,313 | 1,552 | $ | (239 | ) | (15 | )% | |||||||||
Six Months Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Provision for income taxes |
915 | 1,562 | $ | (647 | ) | (41 | )% |
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
(dollars in thousands) |
||||||||
Net cash used in operating activities |
$ | (7,579 | ) | $ | (10,541 | ) | ||
Net cash used in investing activities |
(902 | ) | (877 | ) | ||||
Net cash (used in) provided by financing activities |
(2,625 | ) | 8,270 | |||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
$ | 300 | $ | (291 | ) | |||
|
|
|
|
|||||
Net decrease in cash, cash equivalents, and restricted cash |
$ | (10,806 | ) | $ | (3,439 | ) | ||
|
|
|
|
• | adopt formal internal control processes and documentation related to controls that address the elements of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Framework; |
• | hired additional accounting personnel to implement more robust internal controls and enhanced financial reporting; |
• | maintain sufficient accounting personnel so that journal entries and account reconciliations are reviewed by someone other than the preparer, including retaining evidence of the reviews performed by management; |
• | implemented a more robust enterprise resource planning, or ERP, system to assist with the monthly close process, segregation of duties and the timely review and recording of financial transactions; and |
• | restrict access to our financial systems to appropriate personnel and implementing segregation of duties within our finance and accounting processes. |
* | Filed herewith. |
** | Exhibit is furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. |
F45 Training Holdings Inc. | ||||||
Date: September 17, 2021 | By: | /s/ Chris E. Payne | ||||
Chris E. Payne | ||||||
Chief Financial Officer |
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Adam J. Gilchrist, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of F45 Training Holdings Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: September 17, 2021 | By: | /s/ Adam J. Gilchrist | ||||
Adam J. Gilchrist | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Chris Payne, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of F45 Training Holdings Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: September 17, 2021 | By: | /s/ Chris Payne | ||||
Chris Payne | ||||||
Chief Financial Officer | ||||||
(Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of F45 Training Holdings Inc. (the Company) on Form 10-Q for the quarter ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Adam J. Gilchrist, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: September 17, 2021 | By: | /s/ Adam J. Gilchrist | ||||
Adam J. Gilchrist | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) |
A signed original of this written statement required by Section 906 has been provided to F45 Training Holdings Inc. and will be retained by F45 Training Holdings Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of F45 Training Holdings Inc. (the Company) on Form 10-Q for the quarter ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Chris Payne, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: September 17, 2021 | By: | /s/ Chris Payne | ||||
Chris Payne | ||||||
Chief Financial Officer | ||||||
(Principal Financial Officer) |
A signed original of this written statement required by Section 906 has been provided to F45 Training Holdings Inc. and will be retained by F45 Training Holdings Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Cover Page - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Aug. 30, 2021 |
|
Document Information [Line Items] | ||
Document Type | 10-Q/A | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Amendment Flag | true | |
Amendment Description | The sole purpose of this Amendment No. 1 to F45 Trainings Holding Inc.’s Quarterly Report on Form 10-Q for the period ended June 30, 2021, filed with the Securities and Exchange Commission on August 30, 2021 (“Form 10-Q”), is to furnish Exhibit 101 to the Form 10-Q, including the XBRL tags embedded within the Inline XBRL document, in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this Report provides the condensed consolidated financial statements and related notes from the Form 10-Q formatted in eXtensible Business Reporting Language (“XBRL”), in accordance with the 30-day grace period provided under Regulation S-T for the first quarterly period in which XBRL is required. Except for the foregoing, no other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. | |
Document Period End Date | Jun. 30, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | F45 Training Holdings Inc. | |
Entity Central Index Key | 0001788717 | |
Entity File Number | 001-40590 | |
Entity Tax Identification Number | 38-3978689 | |
Entity Incorporation, State or Country Code | DE | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Interactive Data Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Address, Address Line One | 801 Barton Springs Road | |
Entity Address, Address Line Two | 9th Floor | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78704 | |
City Area Code | 737 | |
Local Phone Number | 787-1955 | |
Trading Symbol | FXLV | |
Title of 12(b) Security | Common Stock, par value $0.00005 per share | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 90,554,571 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Temporary equity, shares issued | 9,854,432 | 9,854,432 |
Temporary equity shares outstanding | 9,854,432 | 9,854,432 |
Common stock par or stated value per share | $ 0.00005 | $ 0.00005 |
Common stock shares issued | 29,281,514 | 29,281,514 |
Common stock shares outstanding | 29,281,514 | 29,281,514 |
Convertible Preferred Stock [Member] | ||
Temporary equity par or stated value per share | $ 0.0001 | $ 0.0001 |
Temporary equity, shares issued | 9,854,432 | 9,854,432 |
Temporary equity shares outstanding | 9,854,432 | 9,854,432 |
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Revenue from Related Parties | $ 0 | |||
Franchise [Member] | ||||
Revenue from Related Parties | $ 50 | $ 137 | $ 100 | 234 |
Related Party Costs | 0 | 0 | 0 | 12 |
Equipment And Merchandise [Member] | ||||
Revenue from Related Parties | 0 | 112 | 0 | 112 |
Related Party Costs | $ 1,203 | $ 265 | $ 2,144 | $ 1,316 |
Nature of the Business and Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business and Basis of Presentation | Note 1—Nature of the business and basis of presentation Organization F45 Training Holdings Inc. (“F45 Training Holdings”, the “Company,” or “F45”) was incorporated in the State of Delaware on March 12, 2019 as a C-Corp. The Company and its subsidiaries are engaged in franchising and licensing the F45 Training brand to fitness facilities in multiple countries across the globe. Initial Public Offering The Company’s registration statement on Form 20,312,500S-1 (“IPO Registration Statement”) related to its initial public offering (“IPO”) was declared effective on July 14, 2021, and the Company’s common stock began trading on the New York Stock Exchange on July 15, 2021. On July 15, 2021, the Company completed its IPO ofUpon completion of the IPO, 9,854,432 shares of the Company’s redeemable convertible preferred stock then outstanding with a carrying value of $98.5 million were automatically converted into an aggregate of 27,368,102 shares of the Company’s common stock and the Company’s outstanding convertible notes were converted into an aggregate of 14,847,066 shares of common stock. Following the completion of the IPO, the Company has one class of authorized and outstanding common stock. 2020 Stock Repurchase Agreements On October 6, 2020, the Company entered stock repurchase agreements (“Repurchase Agreements”) with 2M Properties Pty Ltd and Robert Deutsch in which the Company purchased a total of 31,900,000 shares of common stock for $174.7 million. In addition, the Company paid a $2.5 million bonus to Mr. Deutsch. As a result of the Repurchase Agreements, these two parties no longer own any common stock in the Company. Transaction with MWIG LLC (“MWIG”) On March 15, 2019, MWIG, a special purpose private investment fund vehicle led by FOD Capital LLC, a family office investment fund, and Mark Wahlberg, made a minority preferred investment in the Company. On March 15, 2019, F45 Training Holdings, MWIG and Flyhalf Acquisition Company Pty Ltd, a newly incorporated wholly-owned, indirect subsidiary of F45 Training Holdings, entered into a Share Purchase Agreement with F45 Aus Hold Co Pty Ltd (“F45 Aus Hold Co”) and its existing stockholders pursuant to which F45 Training Holdings became the ultimate parent of F45 Aus Hold Co and its subsidiaries. Upon the consummation of the transaction with MWIG, the existing stockholders and MWIG held 72.5% and 27.5% ownership interests, respectively, in the Company and, its wholly-owned subsidiaries. This ownership percentage assumes the conversion of the MWIG preferred stock at its original issue conversion price and does not reflect the restricted stock units issued to Mark Wahlberg pursuant to the promotional agreement. See Note 12—Convertible Preferred Stock and Stockholders’ Deficit for further discussion. Pursuant to the Share Purchase Agreement and in return for acquiring 100% of the shares in F45 Aus Hold Co, F45 Training Holdings issued 29,000,000 shares of common stock to the existing stockholders of F45 Aus Hold Co proportionate to their relative ownership of the common stock of F45 Aus Hold Co and its wholly-owned subsidiaries. As a result of this transaction there was no change in control. All references to shares in the financial statements and the notes to the financial statements presented herein, including but not limited to the number of shares and per share amounts, unless otherwise noted, have been adjusted to reflect the effects of the transaction retrospectively as of the earliest period presented in the interim unaudited condensed consolidated financial statements. Basis of presentation The accompanying unaudited condensed consolidated financial statements and related notes to the unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. In accordance with such rules and regulations, certain information and accompanying note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, although the Company believes the disclosures included herein are adequate to make the information presented not misleading. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments which are considered necessary for the fair presentation of the financial position of the Company at June 30, 2021 and the results of operations for the interim periods represented. The operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. All intercompany balances and transactions have been eliminated in consolidation. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company as of and for the years ended December 31, 2020 and 2019. |
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Note 2—Summary of significant accounting policies There were no changes to the significant accounting policies or recent accounting pronouncements that were disclosed in Note 2—Summary of significant accounting policies to the audited consolidated financial statements of the Company as of and for the years ended December 31, 2020 and 2019, other than as discussed below. Stock split In July 2021, the Company effected a -for-1 Use of estimates The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Key estimates and judgments relied upon in preparing these interim condensed consolidated financial statements include revenue recognition, allowance for doubtful accounts, depreciation of long-lived assets, internally developed software, amortization of intangible assets, valuation of inventory, fair value of derivative instruments, fair value of stock-based awards, and accounting for income taxes. The Company bases its estimates on historical experience and various other assumptions that the Company believes to be reasonable. Actual results could differ from these estimates. Cash, cash equivalents, and restricted cash Cash and cash equivalents consist of bank deposits. The Company holds cash and cash equivalents at major financial institutions, which often exceed insured limits. Historically, the Company has not experienced any losses due to such bank depository concentration. Restricted cash relates to cash held in escrow as a requirement of one the Company’s office lease agreements. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows (in thousands):
Accounts receivable and allowance for doubtful accounts Accounts receivable is primarily comprised of amounts owed to the Company resulting from fees due from franchisees. The Company evaluates its accounts receivable on an ongoing basis and establishes an allowance for doubtful accounts based on historical collections and specific review of outstanding accounts receivable. Accounts receivable are written off as uncollectible when it is determined that further collection efforts will be unsuccessful. The change in allowance for doubtful accounts is as follows (in thousands):
None of the Company’s related parties accounted for more than 10% of accounts receivable as of June 30, 2021 and December 31, 2020. None of the Company’s customers accounted for more than 10% of the Company’s accounts receivable as of June 30, 2021 and December 31, 2020. N one of the Company’s customers accounted for more than 10% of the Company’s revenue for the three and six months ended June 30, 2021 and 2020. Deferred initial public offering costs Deferred initial public offering costs, which consist of direct incremental legal and accounting fees relating to the IPO, are capitalized. The deferred offering costs will be offset against IPO proceeds upon the consummation of the offering. In the event the offering is terminated, deferred offering costs will be expensed. As of June 30, 2021 and December 31, 2020, $2.2 million and $0, respectively, of offering costs were deferred in other current assets on the condensed consolidated balance sheets. Revenue recognition—Change in estimate During the height of the COVID-19 pandemic in 2020, the Company entered into franchise agreements that included a discount on upfront establishment fees and modified other contract terms as part of a limited-time promotional offer made exclusively to existing franchises (“limited-time promotional deals”). The Company deemed that the limited-time promotional deals did not meet the criteria of a contract at the inception of the agreement under606-10-25-1 due to the Company’s inability to determine that collectability under the agreements was probable, and as such, did not begin immediately recognizing revenue upon the inception of these franchise agreements. During the three months ended June 30, 2021, the Company assessed the limited-time promotional deals and determined the criteria of a contract under ASC 606-10-25-1 catch-up in revenue of $2.2M during the three and six months ended June 30, 2021. The Company noted the assessment of collectability was primarily driven by a review of post-COVID payment and collection history for franchisees who owned multiple studios within the Company’s network, system-wide sales per region, and increases in post re-opening weekly visit volume and store-level gross sales volumes compared to specified periods in which the contracts were initially signed. The Company’s United States subsidiary, F45 Training, Inc., operates in various states within the United States which require the Company to defer collection of certain fees (“the Deferred States”), including the initial establishment fees, until certain criteria are met as specified by state and local requirements. In Deferred States, the Company concluded that the deferred establishment fees represent variable consideration as receipt was subject to uncertainty due to a lack of experience with contracts requiring deferral of establishment fees and uncertainty on the length of timing between inception of an agreement and the opening of a studio. As a result, establishment fees were excluded from the transaction price upon signing of the franchise agreements within the Deferred States. The Company re-evaluates the transaction price on its Deferred State franchise agreements if there is a significant change in facts and circumstances at the end of each reporting period. During the three months ended June 30, 2021, the Company increased the transaction price of the Deferred State contracts byRecently issued accounting pronouncements In February 2016, the FASB established Topic 842, Leases (“Topic 842”), by issuing ASU No. 2016-02, Leases (“ASU 2016-02”). Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; ASU No. 2018-11, Targeted Improvements; ASU No. 2018-20, Narrow-Scope Improvements for Lessors; ASU No. 2019-01, Codification Improvements; ASU No. 2019-10, Effective Dates, and ASU No. 2020-20, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02. This guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new guidance requires lessees to recognize the assets and liabilities on the balance sheet for the rights and obligations created by leases with lease terms of more than 12 months, amends various other aspects of accounting for leases by lessees and lessors, and requires enhanced disclosures. Leases will be classified as finance or operating, with the classification affecting the pattern and classification of expense recognition within the income statement. Topic 842 is effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. While the Company is currently evaluating the impact of adopting Topic 842, the Company expects to recognize right-of-use In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). Topic 326 was subsequently amended by ASU No. 2018-19, Codification Improvements; ASU No. 2019-04, Codification Improvements; ASU No. 2019-11, Codification Improvements that clarify the scope of the standard in the amendments in ASU 2016-13; ASU No. 2019-05, Targeted Transition Relief; ASU No. 2019-10, Effective Dates; and ASU no. 2020-02, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC section on Effective Date Related to Accounting Standards Update No. 2016-02. The guidance changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current ‘incurred loss’ model with an ‘expected loss’ approach. The guidance will be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the impact that the guidance will have on its consolidated financial statements. |
Property and Equipment, Net |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net | Note 3—Property and equipment, net Property and equipment, net, consists of the following as of June 30, 2021 and December 31, 2020 (in thousands):
Depreciation expense related to property and equipment was less than $0.1 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively, and $0.1 million and $0.2 million for the six months ended June 30, 2021 and 2020, respectively. Depreciation expense was recorded in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive (loss) income. |
Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Note 4—Intangible assets The following table summarizes the useful lives and carrying values of intangible assets, including internal-use software (in thousands):
The amortization expense of intangible assets was internal-use software was 1.9 years and 1.7 years as of June 30, 2021 and December 31, 2020, respectively.The weighted average remaining life of FW Intangible Assets was 4.8 years as of June 30, 2021. In April 2021, the Company entered into an intellectual property license agreement with FW SPV II LLC (“FW SPV”), a Delaware limited liability company, regarding certain intellectual property previously owned by Flywheel Sports, Inc. (“Flywheel IP”). The license agreement is for a period of , on March 31, 2021, the Company entered into an asset purchase agreement with FW SPV, whereby the Company can acquire the rights to the Flywheel IP upon the occurrence of certain circumstances for $25.0 million. See Note 16-Subsequent Events for further discussion. As of June 30, 2021, the expected amortization of intangible assets for future periods, excluding those assets not yet placed in service as of June 30, 2021, is as follows (in thousands):
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Deferred Revenue |
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Deferred Revenue | Note 5—Deferred revenue Deferred revenue results from establishment fees paid by franchisees at the outset of the contract term and the value of material rights related to discounted renewal options as well as equipment fees paid by franchisees prior to the transfer of the equipment. The following table reflects the change in deferred revenue during the six months ended June 30, 2021 and 2020 (in thousands):
Deferred revenue expected to be recognized within one year from the balance sheet date is classified as current, and the remaining balance is classified as noncurrent. Transaction price allocated to remaining performance obligations represents contracted franchise and equipment revenue that has not yet been recognized, which includes deferred revenue recognized as revenue in future periods. Total contract revenues from franchisees yet to be recognized as revenue was $201.1 million as of June 30, 2021, of which the Company expects to recognize approximately 23% of the revenue over the next 12 months and the remainder thereafter. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Note 6—Debt The following table provides a summary of the Company’s outstanding long-term debt, as of June 30, 2021 and December 31, 2020 (in thousands):
Subordinated Convertible Debt Agreement On October 6, 2020, the Company entered into a subordinated convertible debt agreement (the “Convertible Notes”), whereby the Company issued paid-in-kind Voluntary Conversion million times the number of shares of common stock equal to 20% of the equity value of the Company, provided that the aggregate number of shares of common stock into which all outstanding notes are converted do not exceed 20% of the shares of common stock of the Company. Mandatory Conversion Offering Proceeds Mandatory Conversion Public Float Payment due on Liquidation Payment due default – Prepayment Option As a part of the subordinated convertible debt agreement the Company identified embedded derivatives that require bifurcation under ASC 815, Derivatives and Hedging, Subordinated Second Lien Term Loan On October 6, 2020, the Company entered into a Subordinated Credit Agreement with certain lenders which committed the lenders to provide million of financing to the Company in exchange for a note payable. This agreement matures over a five-year period that carries a Paid-In Kind (“PIK”) Interest rate of 13.00%. PIK Interest is accrued over the term of the Subordinated Credit Agreement. The outstanding balance of the note, including PIK Interest, payable as of June 30, 2021 and December 31, 2020 was $133.0 million and $124.2 million, respectively, net of unamortized debt issuance costs of $4.5 million and $4.7 million, respectively. The Subordinated Credit Agreement has a maturity date of October 5, 2025. The Company is required to make prepayments in circumstances where it has (i) excess cash flow; (ii) certain prepayment events occur; or (ii) if an event of default were to occur as further described below. Commencing with the fiscal year ending December 31, 2021, the Company shall prepay, or cause to be prepaid, an aggregate principal amount of the obligations equal to 50% of Excess Cash Flow (the “ECF Percentage”), if any, for the fiscal year covered by such financial statements; provided, that the ECF Percentage shall be reduced to 25% when the Secured Leverage Ratio as of the last date of the applicable fiscal year is less than or equal to 3.08 to 1.00 and shall be reduced to 0% when the Secured Leverage Ratio as of the last date of the applicable fiscal year is less than or equal to 2.08 to 1.00; provided, that no payments shall be required prior to payment in full of the First Lien Term Loan obligations. In the event and on each occasion that any net proceeds are received by the Company in respect of any prepayment event (any disposition (including pursuant to a sale and leaseback Transaction) of any property or asset of, other than dispositions described in the Subordinated Credit Agreement; or (b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Company resulting in aggregate net proceeds greater than $500,000; or (c) the incurrence by the Company of any indebtedness, other than indebtedness permitted under the Subordinated Credit Agreement, the Company must within three business days after such net proceeds are received, prepay the obligations under the Subordinated Credit Agreement in an aggregate amount equal to 100% of such net proceeds. If an event of default were to occur, in addition to the obligations becoming due, the Company is responsible for paying a make-whole premium defined as the amount equal to the discounted value of the remaining scheduled payments with respect the outstanding obligations under the Subordinated Credit Agreement. The Subordinated Credit Agreement contains cross-default provisions; whereby; if an event of default were to occur under the Subordinated Credit Agreement that were not cured within the applicable grace period; it would trigger an event of default under the First Lien Credit Agreement. The Agreement contains the following put and call options:
In accordance with ASC 815, Derivatives and Hedging In connection with issuing the note the Company paid the lenders approximately $3.8 million in fees. Similarly, the Company paid third parties fees of approximately $1.0 million associated with issuing the note. The Company determined that all fees paid to the lenders and third parties would result in a reduction of the initial carrying amount of the note. The Company is amortizing the debt discount and debt issuance costs into interest expense utilizing the effective interest method. Beginning with the first fiscal quarter ending after the first anniversary of the agreement effective date and as of the last day of each fiscal quarter thereafter, the Company must not permit the Total Leverage Ratio, for any period of four consecutive fiscal quarters ending on the last day of such fiscal quarter, to exceed COVID-19, EBITDA shall be adjusted by a percentage equal to (1) the excess (if any) of (x) the number of studios that were closed by government mandate due to COVID-19 during such fiscal quarter over (y) the number of studios that were closed by government mandate due to COVID-19 as of the Effective Date, divided by (2) the total number of studios during such fiscal quarter. On July 19, 2021, the Company repaid in full all outstanding indebtedness and terminated all commitments and obligations under the Subordinated Credit Agreement. The Company used proceeds from its IPO to repay $150.5 million under the terms of the Subordinated Credit Agreement, inclusive of a prepayment penalty of $3.8 million as a result of the repayment of indebtedness or termination of the Subordinated Credit Agreement. In connection with the repayment of outstanding indebtedness, the Company was automatically and permanently released from all security interests and encumbrances under the Subordinated Credit Agreement. First Lien Loan The Company entered into a senior Secured Credit Agreement, dated as of September 18, 2019 (the “Secured Credit Agreement”), with JPMorgan Chase Bank, N.A., as Administrative Agent, Australian Security Trustee, Lender, Swingline Lender and Issuing Bank, consisting of a $20.0 million revolving credit facility (the “Revolving Facility”) and a $30.0 million term loan facility (the “Term Facility”). Initial borrowings of The Term Facility bears interest at floating rate of LIBOR plus 1.5 percent. The outstanding balance of the Revolving Facility as of June 30, 2021 and December 31, 2020 was $7.0 million. There was no undrawn remaining availability. The Term Facility principal and interest payments are due quarterly in accordance with an amortization schedule with a maturity date of September 18, 2022. The weighted-average interest rate on the Company’s outstanding debt during the year ended June 30, 2021 was 15.45%. The terms of the Secured Credit Agreement require that the Company not permit the fixed charge coverage ratio, as defined within the Secured Credit Agreement, for any period of four consecutive fiscal quarters to be less than non-financial covenants. On October 25, 2019, the Company entered into an interest rate swap contract (the “Swap Agreement”) with JP Morgan Chase Bank N.A. to fix the interest rate on the Term Facility over the life of the loan. The notional amount of the swap covers the entire $30.0 million borrowings outstanding under the Term Facility. Under the terms of the Swap Agreement, the Term Facility, which formerly accrued interest at a rate of LIBOR plus 1.50%, started effectively accruing interest on the effective date (October 30, 2019) at a fixed rate of 1.74% on an annualized basis. On June 23, 2020, the Company amended the Secured Credit Agreement to allow it to enter into a definitive agreement with a special purpose acquisition corporation. On October 6, 2020, the Company amended the agreement a second time. Through the second amendment, the Company agreed to convert $8,000,000 of the amount outstanding on the Revolving Facility to be part of the Term Facility. In addition to converting a portion of the Revolving Facility to the Term Facility, the Company agreed to repay $5,000,000 of the principal amount of the Revolving Facility outstanding. In connection with the second amendment to the Secured Credit Agreement, the Company modified the existing covenants under the Secured Credit Agreement. The total leverage ratio was modified such that the Company is required to maintain a total leverage ratio, for any period of four consecutive fiscal quarters, of less than 7.00 to 1.00. Prior to the second amendment to the Secured Credit Agreement, the Company was required to maintain a total leverage ratio, for any period of four consecutive fiscal quarters, of less than 2.00 to 1.00. Additionally, the second amendment to the Secured Credit Agreement introduced a new covenant, a senior secured leverage ratio, which requires the Company to maintain a senior secured leverage ratio, for any period of four consecutive fiscal quarters, of less than 2.00 to 1.00. As of June 30, 2021 and December 31, 2020, the Company was in compliance with its covenants. The interest rate of both the Term Facility and the Revolving facility were amended to 4.00% and 3.00% for Eurodollar loans and letters of credit, and ABR Loans, respectively. The outstanding balance of the Term Facility as of June 30, 2021 and December 31, 2020 was $30.8 million and $33.3 million, respectively, net of unamortized debt issuance costs of $0.2 million and $0.4 million, respectively. The Company considered if this amendment resulted in the terms of the amended debt being substantially different than those of the original Term Facility and Revolving Facility. As the change in cash flows between the amended and original agreement were less than 10%, the Company determined that there was not a substantial difference between the amended and original agreement. As such, the Company concluded that the amendments resulted in a modification of the debt rather than a debt extinguishment. As the amendments resulted in a modification of the Debt, the Company has capitalized all new lender fees paid and recognize these fees as part of interest expense over the life of the modified debt in accordance with the interest method. Similarly, all unamortized debt issuance costs from the original agreement will continue to be deferred. Conversely, new fees paid to third parties as a result of the modification have been expensed as incurred. On July 19, 2021, the Company repaid in full all outstanding indebtedness and terminated all commitments and obligations under the Term Facility and Revolving Facility. The Company used proceeds from its IPO to repay the Term Facility and Revolving Facility in the amount of $31.1 million and $7.0 million, respectively. Interest expense recorded on the debt facilities was $8.9 million and $0.4 million for the three months ended June 30, 2021 and June 30, 2020, respectively, and $17.3 million and $0.8 million for the six months ended June 30, 2021 and June 30, 2020, respectively. On April 10, 2020, the Company received loan proceeds of approximately COVID-19 pandemic. Loans obtained through the PPP are eligible to be forgiven as long as the proceeds are used for qualifying purposes, which include the payment of payroll costs, interest on covered mortgage obligations, rent obligations and utility payments. The receipt of these funds, and the forgiveness of the loan is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its adherence to the forgiveness criteria. In June 2020, Congress passed the Payroll Protection Program Flexibility Act that made several significant changes to PPP loan provisions, including providing greater flexibility for loan forgiveness. While the Company believes that it qualifies for full forgiveness of the loan, the Company will withdraw its forgiveness application and repay the loan in full in the event the Company consummates the offering. The Company is using the proceeds from the PPP loan to fund payroll costs in accordance with the relevant terms and conditions of the CARES Act. The Company is following the government guidelines and tracking costs to ensure full forgiveness of the loan. To the extent it is not forgiven, the Company would be required to repay that portion at an interest rate of 1% over a period of 1.5 years, beginning November 2020 with a final installment in April 2025. Any amounts forgiven when the Company is legally released as the primary obligor under the loan will be recognized as a gain from the extinguishment of the loan in the consolidated statements of operations and comprehensive (loss) income. As of June 30, 2021 and December 31, 2020, long-term portion of the loan was $1.6 million and $1.9 million, respectively. The following table presents contractually scheduled maturities of our consolidated debt obligations outstanding at June 30, 2021 for the next five years (in thousands).
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Derivative Instruments |
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Derivative Instruments | Note 7–Derivative Instruments Interest Rate Swap The Company is subject to interest rate volatility with regard to existing debt. From time to time, the Company enters into swap agreements to manage exposure to interest rate fluctuations. To hedge the variability in cash flows due to changes in benchmark interest rates, the Company entered into an interest rate swap agreement related to debt issuances. The swap agreement is designated as a cash flow hedge. The derivative’s gain or loss is recorded in OCI and is subsequently reclassified to interest expense over the life of the related debt. During 2019, the Company entered into an interest rate swap agreement with an aggregate notional amount of 3-year variable-rate term loan due September 18, 2022. Refer to Note 6–Debt, for details of the components of our long-term debt. As of June 30, 2021 and December 31, 2020, the interest rate swap liability was $0.5 million and $0.7 million, respectively. The following table presents the categories of the Company’s derivative instruments on a gross basis, as reflected in the Company’s condensed consolidated balance sheets. Balances presented below have been classified and presented within the caption other long-term liabilities (in thousands):
The Company recognized an unrealized gain of $0.1 million and $0.1 million on this instrument in the three months ended June 30, 2021 and 2020, respectively, and an unrealized gain of $0.2 million and unrealized loss of $0.7 million on this instrument in the six months ended June 30, 2021 and 2020, respectively. The unrealized gains and losses have been presented within OCI in the condensed consolidated statement of operations and comprehensive (loss) income. On July 21, 2021, in connection with the repayment in full of all outstanding obligations under the Subordinated Credit Agreement, the Company terminated the interest rate swap. The Company paid $0.5 million to terminate the interest rate swap. As discussed in Note 6—Debt, in October 2020 the Company entered into a subordinated convertible debt agreement (the “Convertible Notes”) whereby the Company issued $100 million of Convertible Notes to certain holders maturing on September 30, 2025. These notes can be converted into common shares of the Company at the holders’ option. The Company has analyzed the conversion and redemption features of the agreement and determined that certain of the embedded features should be bifurcated and classified as derivatives. The Company has bifurcated the following embedded derivatives: (i) Liquidity Event Conversion Option; (ii) Liquidity Event Redemption Option; and (iii) Qualified Public Offering (“QPO”) Redemption Option. The re-valued and is being amortized using the effective interest method over the life of the Convertible Notes. The derivative liabilities are classified in the condensed consolidated balance sheets as non-current as the Company is not required to net cash settle within 12 months of the balance sheet date and are marked-to-market The Company fair values the embedded derivatives using the Bond plus Black-Scholes option pricing model because it believes that this technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likely consider in transactions involving compound embedded derivatives. The following table sets forth the inputs to the Bond plus Black-Scholes option pricing model that were used to value the embedded conversion and redemption features derivatives:
The following table summarizes the derivative liabilities included in the consolidated balance sheets at June 30, 2021 and December 31, 2020 (in thousands):
Upon completion of the Company’s IPO, the embedded derivative liability balance was settled upon the conversion of the Convertible Notes into 14,847,066 shares of common stock. |
Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Note 8 – Fair Value The following table presents the Company’s liabilities accounted for at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands). None of the Company’s assets are currently accounted for at fair value on a recurring basis.
The inputs for determining fair value of the interest rate swap are classified as Level 2 inputs. Level 2 fair value is based on estimates using standard pricing models. These standard pricing models use inputs which are derived from or corroborated by observable market data such as interest rate yield curves, index forward curves, discount curves, and volatility surfaces. Credit risk relates to the risk of loss resulting from the non-performance or non-payment by the Company’s counterparties in connection with contractual obligation. Risk around counterparty performance and credit could ultimately impact the amount and timing of cash flows. The Company believes it has appropriately addressed any credit risk due to the financial standing of the counterparties with which it trades. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. The inputs for determining fair value of the embedded conversion and redemption features of the Company’s convertible notes are classified as Level 3 inputs, refer to Note 7—Derivative Instruments for further discussion related to the accounting for these instruments. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9—Income taxes For interim reporting periods, the Company’s provision for income taxes is calculated using its annualized estimated effective tax rate for the year. This rate is based on its estimated full-year income and the related income tax expense for each jurisdiction in which the Company operates. Changes in the geographical mix, permanent differences or the estimated level of annual pre-tax income can affect the effective tax rate. This rate is adjusted for the effects of discrete items occurring in the period. Provision for income taxes The provision for income taxes was $1.3 million for the three months ended June 30, 2021, compared with the provision for income taxes of $1.6 million for the three months ended June 30, 2020. The provision for income taxes was $0.9 million for the six months ended June 30, 2021, compared with the provision for income taxes of $1.6 million for the six months ended June 30, 2020. The effective tax rate for the six months ended June 30, 2021 of (1.36)% differed from the U.S. statutory tax rate of 21% primarily due to state taxes, the foreign tax rate differential and by current period losses incurred by F45 Holdings Inc. not benefited due to its full valuation allowance. The effective tax rate for the six months ended June 30, 2020 of 25.40% differed from the U.S. statutory tax rate of 21% primarily due to state taxes, foreign jurisdiction earnings taxes at different rates, and interest and penalties for uncertain tax positions. |
Related Party Transactions |
6 Months Ended |
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Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 10—Related party transactions As discussed in Note 1—Description of the business and basis of presentation, due to the repurchase of the Company’s shares from two primary directors that occurred in October 6, 2020, the Company no longer considers these two directors as related parties from October 6, 2020 onward. Group Training is owned by certain existing stockholders that are executive officers and directors of the Company, through which, they operate one F45 studio in the United States. As of June 30, 2021 and December 31, 2020, the Company had receivables related to fees under this management service agreement of $0.4 million and $0.4 million, respectively. These amounts are included in due from related parties on the condensed consolidated balance sheets. The Company recognized less than $0.1 million of franchise revenue related to fees under this management service agreement during the three and six months ended June 30, 2021 and 2020. During the three months ended June 30, 2021 and 2020, the Company also recognized less than $0.1 million franchise revenue and no fr anchise revenue, respectively, from studios owned by Group Training. During the six months ended June 30, 2021 and 2020, the Company also recognized less than $0.1 million franchise revenue and $0.1 million franchise revenue, respectively, from studios owned by Group Training. With respect to these transactions, the Company has presented the revenue recognized during these periods in franchise revenue and the related expenses in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive (loss) income. During the three months ended June 30, 2021 and 2020, the Company recognized less than $0.1 million and $ 0.2 million, respectively, of franchise revenue and of equipment and merchandise revenue from studios owned by Messrs. Wahlberg and Raymond. During the six months ended June 30, 2021 and 2020, the Company recognized less than $0.1 million and $ 0.2 million. respectively, of f ranchise revenue and of equipment and merchandise revenue from studios owned by Messrs. Wahlberg and Raymond. As of June 30, 2021 and December 31, 2020, the Company had less than $0.1 million and no outstanding receivables, respectively. With respect to these transactions, the Company has presented the revenue recognized during these periods in franchise revenue and equipment and merchandise revenue and the related expenses in selling, general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income. During the three months ended June 30, 2021 and 2020, the Company recognized less than $0.1 million from studios owned by an entity in which an existing stockholder that is an executive officer and director of the Company holds a 10% ownership interest. During the six months ended June 30, 2021 and 2020, the Company recognized less than $0.1 million and no franchise revenue, respectively, from these studios. As of June 30, 2021 and December 31, 2020, the Company had $0.2 million and no outstanding receivables from these studios, respectively. With respect to these transactions, the Company has presented the revenue recognized during these periods in franchise revenue and equipment and merchandise revenue and the related expenses in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive (loss) income. The Company incurred expenses totaling approximately $1.2 million and $0.1 million, respectively, during the three months ended June 30, 2021 and 2020, and $2.1 million and $1.3 million, respectively, during the six months ended June 30, 2021 and 2020, in connection with certain shipping and logistic services from a third-party vendor that is owned by an immediate family member of an executive officer of the Company. As of June 30, 2021 and 2020, the Company had approximately $0.3 million and $0.5 million of outstanding payables to the third-party vendor. The Company has presented the expenses incurred during these periods in cost of equipment and merchandise revenue in the condensed consolidated statements of operations and comprehensive (loss) income. During the three and six months ended June 30, 2021, the Company recognized franchise revenue and equipment and merchandise revenue totaling less than $0.1 million from three studios owned by employees. The Company had five studio owned by employees for the six months ended June 30, 2020. As of June 30, 2021 and December 31, 2020, the Company had no receivables outstanding related to this revenue. Transaction with LIIT LLC On June 23, 2020, the Company entered into an Asset Transfer and Licensing Agreement with LIIT LLC (“LIIT”) an entity wholly-owned by Adam Gilchrist (F45’s Co-Founder and Chief Executive Officer). Pursuant to this agreement, F45 will sell to LIIT certain at-home exercise equipment packages (including the intellectual property rights thereto) for The Company recognized $0.5 million revenue and no cost of sales in conjunction with the transaction with LIIT LLC during the three and six months ended June 30, 2021. The outstanding receivable balance as of June 30, 2021 was $1.0 million. Related party franchise arrangements were transacted at arm’s length pricing with standard contractual terms. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Note 11—Commitments and contingencies Litigation Where appropriate, the Company establishes accruals in accordance with FASB guidance over loss contingencies (ASC 450). As of June 30, 2021, the Company had established a litigation accrual of $3.9 million in accounts payable and accrued expenses for claims brought against the Company in the ordinary course of business. Our accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. The Company discloses the amount accrued if the Company believes it is material or if the Company believes such disclosure is necessary for our financial statements to not be misleading. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount previously accrued, the Company assesses whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred, and the Company adjusts the accruals and disclosures accordingly. The Company does not presently believe that the ultimate resolution of the foregoing matters will have a material adverse effect on the Company’s results of operations, financial condition, or cash flows. The outcome of litigation and other legal and regulatory matters is inherently uncertain, however, and it is possible that one or more of the legal matters currently pending or threatened could have a material adverse effect on our liquidity, consolidated financial position, and/or results of operations. Lease commitments The Company leases non-cancelable operating leases at June 30, 2021, are as follows (in thousands):
Rent expense for all operating leases was approximately $0.4 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively, and $0.6 million and $0.3 million for the six months ended June 30, 2021 and 2020, respectively. The Company has presented rent expense during these periods in selling, general and administrative expenses in the condensed consolidated statement of operations and comprehensive (loss) income. As of June 30, 2021, the Company had an outstanding guarantee of $ 2.9 million in aggregate total for lease payments over 10 years for a franchisee’s studio lease in the state of California. On December 21, 2020, the Company entered into a lease agreement with CIM Urban REIT Properties IX, L.P. to lease an office building in Austin, Texas. The lease term expires on the last day of the 96th lease month from the Rent Commencement Date, as defined in the lease agreement. In the event that the Company does not achieve earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $20.0 million for the period from January 1, 2021 through June 30, 2021, the Company shall post an additional conditional deposit of $1.0 million on or before September 30, 2021 (“First Conditional Deposit”) as additional security for the Company’s obligations under the lease. The Company did not achieve the required EBITDA for the period from January 1, 2021 through June 30, 2021. In the event that the Company does not achieve EBITDA of $53.0 million for the period from January 1, 2021 through December 31, 2021, the Company shall deposit an additional deposit of $1.0 million on or before April 30, 2022 (“Second Conditional Deposit”). The Company is not obligated to deposit the Second Conditional Deposit, regardless of the Company’s EBITDA for the year ended December 31, 2021, in the event that the Company deposits the First Conditional Deposit. As of June 30, 2021, no deposit has been made by the Company. 2020 Promotional Agreements On October 15, 2020, the Company entered into promotional agreement with 15% of the fair market value of Malibu Crew. As of June 30, 2021, no definitive partnership agreement has been reached with Malibu Crew. Both of these promotional agreements expire on October 14, 2025. It is not currently possible to determine the amounts of additional performance-based cash compensation and equity compensation that the Company will ultimately be required to pay under these two agreements as they are subject to many variables. ABG-Shark, LLC. Pursuant to this agreement, Greg Norman will provide certain promotional services to the Company in exchange for annual compensation. In addition, should the Company become publicly traded, ABC-Shark would be entitled to receive additional performance-based cash compensation based on the Company’s enterprise value. On the same date, Malibu Crew, Inc., a subsidiary of the Company, also entered into a promotional agreement with Greg Norman, whereby, he will provide certain promotional and marketing services to the Company in exchange for equity compensation equal to On November 24, 2020, the Company entered into a promotional agreement with DB Ventures Limited (“DB Ventures”). Pursuant to this agreement, DB Ventures will provide certain promotional services to the Company in exchange for annual compensation. In addition, for the use of certain image rights over the contractual term, DB Ventures is entitled to a $10 million cash payment if the Company is not publicly traded within 12 months from the execution of this agreement. If the Company were to become publicly traded within 12 months from the execution of this agreement, DB Ventures is entitled to receive the greater of 1% of the Company’s issued and outstanding common stock or $5 million on the six- and 12-month anniversaries of the Company becoming publicly traded. This agreement will expire on December 5, 2025. The Company will recognize expenses related to promotional activities and image rights under this agreement ratably over the contractual term. As part of the agreement, the Company is obligated to create two F45 studios for DB Ventures who will then have the option to take ownership of the studios upon termination of the agreement for no additional service or consideration. As of June 30, 2021, these studio and related lease agreements had yet to commence. For the three and six months ended June 30, 2021, the Company recorded $0.5 million and $1.0 million, respectively, in expense related to this agreement. 2021 Promotional Agreement On April 12, 2021, the Company entered into a promotional agreement with Magic Johnson Entertainment (“MJE”). Pursuant to this agreement, MJE will provide certain promotional services to the Company in exchange for compensation. MJE is entitled to semi-annual compensation of $1.0 million, beginning within 30 days of the date of the promotional agreement through June 30, 2023. If the Company were to become publicly traded prior to the payment dates of the semi-annual compensation, MJE is entitled to either cash or common stock at the IPO price at MJE’s option. Any semi-annual compensation that remain unpaid as of January 1, 2022 will begin to accrue interest at an annual rate of 10% compounded quarterly. In addition, should the Company become publicly traded prior to the expiration of the agreement, the Company shall grant MJE upon each occurrence of a Vesting Event, as defined in the agreement, a number of shares of common stock equal to the result of $5.00 million divided by the Average Trading Price, as defined in the agreement. The agreement between the Company and MJE terminates on January 23, 2026. For the three and six months ended June 30, 2021, the Company recorded less than $0.1 million in expense related to this agreement. On June 25, 2021, the Company entered into promotional agreement with Craw Daddy Productions. Pursuant to this agreement, effective July 1, 2021, Cindy Crawford will provide certain promotional services to the Company in exchange for annual compensation. On the same date, Avalon House, a subsidiary of the Company, also entered into a promotional agreement with Cindy Crawford, whereby, she will provide certain promotional and marketing services to the Company in exchange for equity compensation equal to 10% of the fair market value of Avalon House. Both of these promotional agreements expire on June 30, 2026. It is not currently possible to determine the amounts of additional performance-based cash compensation and equity compensation that the Company will ultimately be required to pay under these two agreements as they are subject to many variables. |
Convertible Preferred Stock and Stockholders' Deficit |
6 Months Ended |
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Jun. 30, 2021 | |
Equity [Abstract] | |
Convertible Preferred Stock and Stockholders' Deficit | Note 12—Convertible Preferred Stock and Stockholders’ Deficit Issuance of convertible preferred stock and common stock In connection with the transaction with MWIG described in Note 1—Nature of the business and basis of presentation, on July 14, 2021, the Company amended its articles of incorporation and authorized 108,000,000 shares of common stock with a par value of $0.00005, and 11,000,000 shares of preferred stock, all with par values of $0.0001. As of June 30, 2021 and December 31, 2020, the Company had 29,281,514 shares of common stock and 9,854,432 shares of convertible preferred stock issued and outstanding. As part of the transaction with MWIG and in return for Flyhalf Acquisition Company Pty Ltd acquiring 100% of the shares in F45 Aus Hold Co, the Company issued 58,000,000 shares of its common stock to F45 Aus Hold Co’s existing stockholders. In addition, Flyhalf Acquisition Company Pty Ltd made a payment to F45 Aus Hold Co’s existing stockholders of $100 million. The payment of $100 million was funded by MWIG, subscribing for 10,000,000 shares of preferred stock at $10 per share in the Company. This amount was ultimately paid to F45 Aus Hold Co’s existing stockholders pro rata in proportion to their interests in F45 Aus Hold Co. Further, Flyhalf Acquisition Company Pty Ltd issued $50.0 million secured promissory notes to F45 Aus Hold Co’s existing stockholders pro rata in proportion to their interests in F45 Aus Hold Co (the “Sellers Notes”). The $100.0 million payment, $50.0 million Sellers Notes and related interest thereon have been recorded as a dividend in the consolidated statements of changes in convertible preferred stock and stockholders’ deficit during the year ended December 31, 2019. In addition to the initial issue of 10,000,000 shares of Preferred Stock, MWIG was granted an option to acquire an additional 1,000,000 shares of Preferred Stock for $10 per share under the Share Purchase Agreement. The $10.0 million in funds raised by the issue of the additional Preferred Stock were used in full to partially settle the outstanding Sellers Notes. On December 30, 2020, MWIG converted 1,145,568 shares of preferred stock of the Company into 3,181,514 shares of common stock of the Company and sold those shares of common stock to affiliates of L1 Capital Fund, an Australian based global fund manager. Immediately after the closing of the IPO, all outstanding shares of convertible preferred stock converted into 27,368,102 shares of common stock. The rights and features of the Company’s preferred stock are as follows: Dividends The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company (other than stock dividends) unless the holders of the preferred stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of preferred stock in an amount at least equal to the product of (1) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common stock and (2) the number of shares of common stock issuable upon conversion of a share of preferred stock. Liquidation Upon the occurrence of a deemed liquidation event, as defined in the Company’s Amended and Restated Certificate of Incorporation, the holders of preferred stock shall be entitled to receive, before any distribution or payment to the holders of common stock, an amount equal to the greater of (1) preferred stock issue price per share for such preferred stock, as adjusted to reflect any combination or subdivision, stock dividend or other similar recapitalization, plus declared but unpaid dividends, if any, on such shares, and (2) the amount per share of common stock to which the holder would be entitled had all outstanding Preferred Stock shares been converted to common stock immediately before the distribution. After the distributions or payments to the holders of preferred stock have been paid in full, the entire remaining assets and funds, if any, will be distributed ratably among the holders of common stock in proportion to the number of shares of common stock held by them. Conversion The holder of each share of preferred stock has the option to convert the share at any time, into the number of fully paid and non-assessable shares of common stock that results from dividing the preferred stock issue price for the preferred stock share by the preferred stock conversion price that is in effect at the time of conversion. In addition, on (i) the consummation of Qualified Public Offering (as defined in the Company’s Amended and Restated Certificate of Incorporation) or (ii) with the consent of the holders of a majority of the outstanding shares of preferred stock, each share of preferred stock will be automatically converted. The preferred stock conversion price should initially be equal to the preferred stock issue price but subject to special adjustment upon either a Qualified Public Offering, a deemed liquidation event or a fair market value determination (each a “Conversion Price Adjustment Event”). Upon the occurrence of a Conversion Price Adjustment Event, the conversion price will be adjusted based on a formula, as defined in the Company’s Amended and Restated Certificate of Incorporation, which results in reductions to the preferred stock conversion price and additional value to the holder based on higher enterprise value; provided that in no event shall the preferred stock conversion price exceed $10.00 or be less than $7.2014 (subject to appropriate adjustment in the event of any combination or subdivision, stock dividend or other similar recapitalization). Voting rights The holders of preferred, on an as-converted basis, and common stock vote together as a single class, except with respect to certain matters specified in the Company’s Amended and Restated Certificate of Incorporation that require the separate approval of the holders of preferred stock. The Company classifies the preferred stock in temporary equity in accordance with ASC
480-10-S99 |
Stock-Based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Note 13—Stock-based compensation Issuance of restricted stock units In connection with the transaction with MWIG described in Note 1—Nature of the business and basis of presentation The restricted stock units vest based on the Company attaining certain valuation thresholds upon a vesting event, defined as: (i) a deemed liquidation event or change in control; (ii) the closing of a financing transaction including the sale, issuance or redemption of the Company’s (or one of its subsidiaries) equity securities, and any initial public offering; or (iii) at any time that the Company’s common stock is publicly traded, with the Company’s equity value exceeding the following thresholds:
The Company determined that the restricted stock units are equity classified awards that contain both performance (deemed liquidation event, closing of a financing transaction or the public trading of the Company’s common stock) and market conditions (achievement of prescribed Company equity values) in order for the units to vest. As the achievement of the performance condition is not probable until one of the vesting events has occurs, no stock-based compensation expense was recognized during the three and six months ended June 30, 2021 and 2020 related to these awards. Upon achievement of a performance condition and the Company reaching a prescribed company equity value threshold, the Company will recognize the grant date fair value of all vested restricted stock units immediately as stock- based compensation cost. In the event that a performance condition were achieved and the Company did not reach a prescribed company equity value threshold, none of these restricted stock units will have vested, however, the grant date fair value of these units will be recognized as compensation expense as of the date of the achievement of the performance condition as long as Mr. Wahlberg renders the requisite service under the terms of the promotional agreement. The weighted-average grant date fair value of the restricted stock units was $0.38 as of the grant date. There were no restricted stock units that vested or were cancelled or forfeited during the three and six months ended June 30, 2021 and 2020. In addition, there were no restricted stock units granted during the three and six months ended June 30, 2021 and 2020. As of June 30, 2021, there was approximately $1.0 million of unrecognized stock-based compensation expense related to the unvested restricted stock units. There was no stock compensation expense recorded for the three and six months ended June 30, 2021 and 2020. The Company determined the fair value of the restricted stock units using a Monte-Carlo simulation in a risk-neutral framework considering both an initial public offering and a Company sale scenario with an implied equity value based upon the $10 preferred stock price. The other significant assumptions used in the analysis were as follows:
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Basic and Diluted Net Loss Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Net Loss Per Share | Note 14—Basic and diluted net loss per share The computation of net loss per share and weighted average shares of the Company’s common stock outstanding for the periods presented are as follows (in thousands, except share and per share data):
For the three and six months ended June 30, 2020, the restricted stock units of 2,738,648 have no impact to the diluted net income per share as the performance condition as specified in Note
13-Stock-based compensation has not been met as of June 30, 2021. |
Segment and Geographic Area Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Geographic Area Information | Note 15—Segment and geographic area information The Company’s operating segments align with how the Company manages its business interacts with its franchisees on a geographic basis. F45 is organized by geographic region based on the Company’s strategy to become a globally recognized brand. F45 has three reportable segments: United States, Australia and Rest of World. The Company refers to “Australia” as the operations in Australia, New Zealand and the immediately surrounding island nations. The Company refers to “Rest of World” as the operations in locations other than the United States and Australia. The Company’s Chief Operating Decision Maker (“CODM”) group is comprised of two executive officers, Messrs. Adam Gilchrist and Chris Payne. Segment information is presented in the same manner that the Company’s CODM reviews the operating results in assessing performance and allocating resources. The CODM reviews revenue and gross profit for each of the reportable segments. Gross profit is defined as revenue less cost of revenue incurred by the segment. The Company does not allocate assets at the reportable segment level as these are managed on an entity wide group basis. The following is key financial information by reportable segment which is used by management in evaluating performance and allocating resources:
Selling, general and administrative expenses, other expenses, and taxes are not allocated to individual segments as these are managed on an entity wide group basis. The reconciliation between reportable segment gross profit to condensed consolidated net loss is as follows (in thousands):
For the three and six months ended June 30, 2021 and June 30, 2020 , respectively, the Company’s long-lived asset additions were not significant. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16—Subsequent events IPO On July 15, 2021, the Company closed its IPO and received net proceeds from the offering of $ 279.0million, after deducting underwriting discounts and commissions. The Company used the proceeds from the offering to (i) repay $million of indebtedness under the Term Facility, Revolving Facility, and Subordinated Term Facility, (ii) pay $ million for the acquisition of Flywheel indoor cycling studio business, (iii) $ 2.4 million in cash bonuses to certain employees, (iv) and $ 2.5 million for expenses incurred with the IPO. The remainder of the net proceeds will be utilized for working capital and continuing operations. In addition, at the time of the IPO closing, all outstanding shares of convertible preferred stock and outstanding convertible notes were converted into an aggregate of 27,368,102 and 14,847,066 shares of common stock, respectively. After the Company’s IPO closing, 90,554,571 shares of common stock were outstanding which excludes (i) 5,000,000 shares that became available for future issuance under the F45 Training Holdings Inc. 2021 Equity Incentive Plan, or the 2021 Plan (which includes 3,590,900 shares of the Company’s common stock issuable upon the settlement of restricted stock units, or RSUs, and 263,684 shares of the Company’s common stock issuable upon the exercise of stock options granted in connection with the IPO under the 2021 Plan to certain of the Company’s employees (including certain executive officers), with the stock options to have an exercise price per share equal to $16.00 per share) and (ii) 2,738,648 RSUs, which were issued to Mr. Wahlberg pursuant to a promotional services agreement that we entered into in connection with the MWIG investment, whose RSUs will vest in connection with offering, but not settle until 2022. Flywheel Acquisition Upon closing of the IPO on July 15, 2021, the Company acquired certain assets of the Flywheel indoor cycling studio business for $25.0 million, effectively transferring control of the assets to the Company and terminating the license agreement entered into in April 2021. At the closing date, the Company derecognized the unamortized intangible assets and remaining present value liability, and the acquired assets will be recognized as an asset acquisition. Settlement of Interest Rate Swap On July 21, 2021, the Company settled its interest rate swap agreement for $ 0.5 million as part of the repayment of existing debt. Payment under MJE Promotional Agreement Pursuant to terms of MJE promotional agreement, in lieu of equity compensation that MJE was entitled to receive as a result of the IPO, the Company and MJE agreed to a cash payment of $ 4.0 million, which the Company paid on July 27, 2021. Amendment of Secured Credit Agreement On August 13, 2021, the Company entered into an amended and restated credit agreement (“Credit Agreement”) which amends and restates the Secured Credit Agreement dated September 18, 2019. The Credit Agreement provides for a $ 90 million five-year senior secured revolving facility (“Facility”). The Credit Agreement also provides that, under certain circumstances, the Company may increase the aggregate principal amount of revolving commitments by an aggregate amount of up to $ 35 million. The proceeds from the Facility will be used for general corporate purposes. Amounts outstanding under the Credit Agreement accrue interest at a rate equal to either, at the Company’s election, the LIBO rate plus a margin of 2.50% to 3.50% per annum, or base rate plus a margin of 1.50% to 2.50%, in each case depending on the Company’s total leverage ratio. Exercise of Greenshoe On August 13, 2021, the underwriters in the Company’s IPO exercised their greenshoe option to purchase an additional shares of the Company’s common stock from the Company and an additional 1,231,555 shares of the Company’s common stock from a selling stockholder at $ 16.00 per share. The Company received $ 4.6 million in net proceeds from the purchase of the additional 307,889 shares after deducting underwriting discounts and commissions and will utilize the net proceeds for continuing operations. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock split | Stock split In July 2021, the Company effected a -for-1 |
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Use of estimates | Use of estimates The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Key estimates and judgments relied upon in preparing these interim condensed consolidated financial statements include revenue recognition, allowance for doubtful accounts, depreciation of long-lived assets, internally developed software, amortization of intangible assets, valuation of inventory, fair value of derivative instruments, fair value of stock-based awards, and accounting for income taxes. The Company bases its estimates on historical experience and various other assumptions that the Company believes to be reasonable. Actual results could differ from these estimates. |
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Cash, cash equivalents, and restricted cash | Cash, cash equivalents, and restricted cash Cash and cash equivalents consist of bank deposits. The Company holds cash and cash equivalents at major financial institutions, which often exceed insured limits. Historically, the Company has not experienced any losses due to such bank depository concentration. Restricted cash relates to cash held in escrow as a requirement of one the Company’s office lease agreements. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows (in thousands):
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Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts Accounts receivable is primarily comprised of amounts owed to the Company resulting from fees due from franchisees. The Company evaluates its accounts receivable on an ongoing basis and establishes an allowance for doubtful accounts based on historical collections and specific review of outstanding accounts receivable. Accounts receivable are written off as uncollectible when it is determined that further collection efforts will be unsuccessful. The change in allowance for doubtful accounts is as follows (in thousands):
None of the Company’s related parties accounted for more than 10% of accounts receivable as of June 30, 2021 and December 31, 2020. None of the Company’s customers accounted for more than 10% of the Company’s accounts receivable as of June 30, 2021 and December 31, 2020. N one of the Company’s customers accounted for more than 10% of the Company’s revenue for the three and six months ended June 30, 2021 and 2020. |
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Deferred initial public offering costs | Deferred initial public offering costs Deferred initial public offering costs, which consist of direct incremental legal and accounting fees relating to the IPO, are capitalized. The deferred offering costs will be offset against IPO proceeds upon the consummation of the offering. In the event the offering is terminated, deferred offering costs will be expensed. As of June 30, 2021 and December 31, 2020, $2.2 million and $0, respectively, of offering costs were deferred in other current assets on the condensed consolidated balance sheets. |
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Revenue recognition—Change in estimate | Revenue recognition—Change in estimate During the height of the COVID-19 pandemic in 2020, the Company entered into franchise agreements that included a discount on upfront establishment fees and modified other contract terms as part of a limited-time promotional offer made exclusively to existing franchises (“limited-time promotional deals”). The Company deemed that the limited-time promotional deals did not meet the criteria of a contract at the inception of the agreement under606-10-25-1 due to the Company’s inability to determine that collectability under the agreements was probable, and as such, did not begin immediately recognizing revenue upon the inception of these franchise agreements. During the three months ended June 30, 2021, the Company assessed the limited-time promotional deals and determined the criteria of a contract under ASC 606-10-25-1 catch-up in revenue of $2.2M during the three and six months ended June 30, 2021. The Company noted the assessment of collectability was primarily driven by a review of post-COVID payment and collection history for franchisees who owned multiple studios within the Company’s network, system-wide sales per region, and increases in post re-opening weekly visit volume and store-level gross sales volumes compared to specified periods in which the contracts were initially signed. The Company’s United States subsidiary, F45 Training, Inc., operates in various states within the United States which require the Company to defer collection of certain fees (“the Deferred States”), including the initial establishment fees, until certain criteria are met as specified by state and local requirements. In Deferred States, the Company concluded that the deferred establishment fees represent variable consideration as receipt was subject to uncertainty due to a lack of experience with contracts requiring deferral of establishment fees and uncertainty on the length of timing between inception of an agreement and the opening of a studio. As a result, establishment fees were excluded from the transaction price upon signing of the franchise agreements within the Deferred States. The Company re-evaluates the transaction price on its Deferred State franchise agreements if there is a significant change in facts and circumstances at the end of each reporting period. During the three months ended June 30, 2021, the Company increased the transaction price of the Deferred State contracts by |
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Recently issued accounting pronouncements | Recently issued accounting pronouncements In February 2016, the FASB established Topic 842, Leases (“Topic 842”), by issuing ASU No. 2016-02, Leases (“ASU 2016-02”). Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; ASU No. 2018-11, Targeted Improvements; ASU No. 2018-20, Narrow-Scope Improvements for Lessors; ASU No. 2019-01, Codification Improvements; ASU No. 2019-10, Effective Dates, and ASU No. 2020-20, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02. This guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new guidance requires lessees to recognize the assets and liabilities on the balance sheet for the rights and obligations created by leases with lease terms of more than 12 months, amends various other aspects of accounting for leases by lessees and lessors, and requires enhanced disclosures. Leases will be classified as finance or operating, with the classification affecting the pattern and classification of expense recognition within the income statement. Topic 842 is effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. While the Company is currently evaluating the impact of adopting Topic 842, the Company expects to recognize right-of-use In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). Topic 326 was subsequently amended by ASU No. 2018-19, Codification Improvements; ASU No. 2019-04, Codification Improvements; ASU No. 2019-11, Codification Improvements that clarify the scope of the standard in the amendments in ASU 2016-13; ASU No. 2019-05, Targeted Transition Relief; ASU No. 2019-10, Effective Dates; and ASU no. 2020-02, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC section on Effective Date Related to Accounting Standards Update No. 2016-02. The guidance changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current ‘incurred loss’ model with an ‘expected loss’ approach. The guidance will be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the impact that the guidance will have on its consolidated financial statements. |
Summary of Significant Accounting Policies (Tables) |
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Summary of Reconciliation of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows (in thousands):
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Summary of Change in Allowance for Doubtful Accounts | The change in allowance for doubtful accounts is as follows (in thousands):
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Property and Equipment, Net (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property and Equipment, Net | Property and equipment, net, consists of the following as of June 30, 2021 and December 31, 2020 (in thousands):
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Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Useful Lives and Carrying Values of Intangible Assets | The following table summarizes the useful lives and carrying values of intangible assets, including internal-use software (in thousands):
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Summary of Expected Amortization of Intangible Assets | As of June 30, 2021, the expected amortization of intangible assets for future periods, excluding those assets not yet placed in service as of June 30, 2021, is as follows (in thousands):
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Deferred Revenue (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Change in Deferred Revenue | The following table reflects the change in deferred revenue during the six months ended June 30, 2021 and 2020 (in thousands):
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Long-term Debt Instruments | The following table provides a summary of the Company’s outstanding long-term debt, as of June 30, 2021 and December 31, 2020 (in thousands):
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Summary of Maturities of Long-term Debt | The following table presents contractually scheduled maturities of our consolidated debt obligations outstanding at June 30, 2021 for the next five years (in thousands).
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Derivative Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instrument Detail [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Company's Derivative Instruments | The following table presents the categories of the Company’s derivative instruments on a gross basis, as reflected in the Company’s condensed consolidated balance sheets. Balances presented below have been classified and presented within the caption other long-term liabilities (in thousands):
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Summary of Fair Values the Embedded Derivatives Using the Bond Plus Black-Scholes Option Pricing Model | The following table sets forth the inputs to the Bond plus Black-Scholes option pricing model that were used to value the embedded conversion and redemption features derivatives:
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Summary of Derivative Liabilities | The following table summarizes the derivative liabilities included in the consolidated balance sheets at June 30, 2021 and December 31, 2020 (in thousands):
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Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents the Company’s liabilities accounted for at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands). None of the Company’s assets are currently accounted for at fair value on a recurring basis.
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Commitments and Contingencies (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Future Minimum Lease Payments | Future minimum lease payments, which include non-cancelable operating leases at June 30, 2021, are as follows (in thousands):
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Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restricted Stock Units, Vested and Expected to Vest | at any time that the Company’s common stock is publicly traded, with the Company’s equity value exceeding the following thresholds:
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Summary of Share Based Payment Award Restricted Stock Units Valuation Assumptions | The other significant assumptions used in the analysis were as follows:
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Basic and Diluted Net Loss Per Share (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Loss Per Share and Weighted Average Shares | The computation of net loss per share and weighted average shares of the Company’s common stock outstanding for the periods presented are as follows (in thousands, except share and per share data):
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Segment and Geographic Area Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Segment Reporting Information | The following is key financial information by reportable segment which is used by management in evaluating performance and allocating resources:
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Summary of Operating Profit (Loss) from Segments to Consolidated | Selling, general and administrative expenses, other expenses, and taxes are not allocated to individual segments as these are managed on an entity wide group basis. The reconciliation between reportable segment gross profit to condensed consolidated net loss is as follows (in thousands):
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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Jul. 01, 2021 |
Jun. 30, 2021 |
Jun. 30, 2021 |
Dec. 31, 2020 |
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Revenues | $ 2.2 | $ 2.2 | ||
Deferred State contracts [Member] | ||||
Revenues | 1.7 | |||
Deferred State franchise agreements [Member] | ||||
Revenues | $ 1.3 | |||
None Related Party [Member] | ||||
Maximum risk percentage on account receivable | 10.00% | 10.00% | ||
None Customer [Member] | ||||
Maximum risk percentage on account receivable | 10.00% | 10.00% | ||
Revenue from Rights Concentration Risk [Member] | ||||
Concentration Risk Percentage | 10.00% | 10.00% | ||
Other Current Assets [Member] | ||||
Deferred offering costs | $ 2.2 | $ 2.2 | $ 0.0 | |
Common Stock [Member] | Subsequent Event [Member] | ||||
Stockholders' equity note, stock split | 2:1 | |||
Common Stock [Member] | Minimum [Member] | Subsequent Event [Member] | ||||
Shares issued, price per share | $ 0.0001 | |||
Common Stock [Member] | Maximum [Member] | Subsequent Event [Member] | ||||
Shares issued, price per share | $ 0.00005 |
Summary of Significant Accounting Policies - Summary of Reconciliation of Cash, Cash Equivalents and Restricted Cash (Detail) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 16,604 | $ 28,967 | $ 4,828 | |
Restricted cash | 1,557 | |||
Total cash, cash equivalents, and restricted cash | $ 18,161 | $ 28,967 | $ 4,828 | $ 8,267 |
Summary of Significant Accounting Policies - Summary of Change in Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
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Receivables [Abstract] | ||||
Balance at beginning of period | $ 4,753 | $ 2,623 | $ 5,746 | $ 1,069 |
Provisions for bad debts, included in selling, general and administrative | 1,848 | (8) | 3,514 | 1,917 |
Uncollectible receivables written off | (1,345) | (420) | (4,004) | (791) |
Balance at end of period | $ 5,256 | $ 2,195 | $ 5,256 | $ 2,195 |
Property and Equipment, Net - Summary of Property and Equipment, Net (Detail) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Dec. 31, 2020 |
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Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | $ 1,743 | $ 1,617 |
Less accumulated depreciation | (848) | (733) |
Total property and equipment, net | $ 895 | 884 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 5 years | |
Property, plant and equipment, Gross | $ 43 | 43 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 7 years | |
Property, plant and equipment, Gross | $ 179 | 179 |
Office and other equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life | 5 years | |
Property, plant and equipment, Gross | $ 694 | 720 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | $ 827 | $ 675 |
Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
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Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 130 | $ 216 | ||
Selling, General and Administrative Expenses [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 100 | $ 100 | $ 100 | $ 200 |
Intangible Assets - Summary of Useful Lives and Carrying Values of Intangible Assets (Detail) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Dec. 31, 2020 |
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Finite-Lived Intangible Assets [Line Items] | ||
Gross Value | $ 24,358 | $ 3,110 |
Accumulated Amortization | 2,506 | 1,352 |
Net Value | $ 21,852 | 1,758 |
Internal-use software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 3 years | |
Gross Value | $ 3,225 | 2,767 |
Accumulated Amortization | 1,663 | 1,352 |
Net Value | 1,562 | 1,415 |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Value | 343 | 343 |
Net Value | $ 343 | $ 343 |
FW Intangible Asset [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 5 years | |
Gross Value | $ 20,790 | |
Accumulated Amortization | 843 | |
Net Value | $ 19,947 |
Intangible Assets - Summary of Expected Amortization of Intangible Assets (Detail) $ in Thousands |
Jun. 30, 2021
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2021 | $ 2,502 |
2022 | 4,875 |
2023 | 4,525 |
2024 | 4,213 |
2025 | 4,158 |
Thereafter | 1,236 |
Total | $ 21,509 |
Deferred Revenue - Summary of Change in Deferred Revenue (Detail) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2020 |
Mar. 31, 2020 |
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Deferred Revenue Arrangement [Line Items] | ||||
Beginning Balance | $ 17,650 | $ 14,095 | $ 23,185 | $ 23,941 |
Revenue Recognized | (4,507) | (7,016) | (12,960) | (7,154) |
Increase | 4,822 | 10,571 | 6,915 | 6,398 |
Ending Balance | $ 17,965 | $ 17,650 | $ 17,140 | $ 23,185 |
Deferred revenue - Additional Information (Detail) $ in Millions |
Jun. 30, 2021
USD ($)
|
---|---|
Deferred Revenue Arrangement [Line Items] | |
Revenue, remaining performance obligation, percentage | 23.00% |
Franchise [Member] | |
Deferred Revenue Arrangement [Line Items] | |
Contract with customer, liability | $ 201.1 |
Debt - Summary of Long-term Debt Instruments (Detail) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Debt Instrument [Line Items] | ||
Long term debt gross carrying amount | $ 283,817 | $ 273,618 |
Unamortized financing costs | (4,746) | (5,078) |
Unamortized debt discount | (23,740) | (26,507) |
Total Debt, net carrying value | 255,331 | 242,033 |
Revolving Facility | ||
Debt Instrument [Line Items] | ||
Long term debt gross carrying amount | 7,000 | 7,000 |
First Lien Term Loan | ||
Debt Instrument [Line Items] | ||
Long term debt gross carrying amount | 31,035 | 33,688 |
Second Lien Term Loan | ||
Debt Instrument [Line Items] | ||
Long term debt gross carrying amount | 137,443 | 128,882 |
Convertible Note | ||
Debt Instrument [Line Items] | ||
Long term debt gross carrying amount | 106,276 | 101,985 |
PPP Loan | ||
Debt Instrument [Line Items] | ||
Long term debt gross carrying amount | $ 2,063 | $ 2,063 |
Debt - Summary of Maturities of Long-term Debt (Detail) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Debt Disclosure [Abstract] | ||
Remainder of 2021 | $ 3,198 | |
2022 | 35,560 | |
2023 | 571 | |
2024 | 576 | |
2025 | 243,912 | |
Total principal payments | 283,817 | $ 273,618 |
Unamortized financing costs | (4,746) | (5,078) |
Unamortized debt discount | (23,740) | (26,507) |
Net carrying value | $ 255,331 | $ 242,033 |
Derivative Instruments - Summary of Company's Derivative Instruments (Detail) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Current | ||
Derivative Liability, Long-Term | (457) | (660) |
Interest Rate Swap [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Current | ||
Derivative Liability, Long-Term | $ (457) | $ (660) |
Derivative Instruments - Summary of Derivative Liabilities (Detail) - Embedded Derivative Financial Instruments [Member] - Level 3 Inputs [Member] - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2021 |
Mar. 31, 2021 |
Dec. 31, 2020 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Beginning balance | $ (62,145) | $ (36,640) | |
Initial measurement | (27,822) | ||
Change in fair value | (23,098) | (25,505) | (8,818) |
Ending balance | $ (85,243) | $ (62,145) | $ (36,640) |
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Income Tax Disclosure [Abstract] | ||||
Income Tax Expense (Benefit) | $ 1,313 | $ 1,552 | $ 915 | $ 1,562 |
Percentage of domestic federal statutory tax rate | 1.36% | 25.40% | ||
State and Local Income Taxes, Percent | 21.00% | 21.00% |
Commitments and Contingencies - Summary Future Minimum Lease Payments (Detail) $ in Thousands |
Jun. 30, 2021
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Remainder of 2021 | $ 752 |
2022 | 2,249 |
2023 | 2,185 |
2024 | 2,053 |
2025 | 2,001 |
Thereafter | 6,850 |
Total Minimum Lease Payments | $ 16,090 |
Stock-Based Compensation - Summary of Restricted Stock Units, Vested and Expected to Vest (Detail) - Units Vested For Equity Threshold Value [Member] $ in Billions |
6 Months Ended |
---|---|
Jun. 30, 2021
USD ($)
shares
| |
Share-based Payment Arrangement, Tranche One [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Potential Restricted Stock Units Vested | shares | 912,882 |
Company Equity Value Threshold | $ | $ 1.0 |
Share-based Payment Arrangement, Tranche Two [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Potential Restricted Stock Units Vested | shares | 912,882 |
Company Equity Value Threshold | $ | $ 1.5 |
Share-based Payment Arrangement, Tranche Three [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Potential Restricted Stock Units Vested | shares | 912,884 |
Company Equity Value Threshold | $ | $ 2.0 |
Stock-Based Compensation - Summary of Share Based Payment Award Restricted Stock Units Valuation Assumptions (Detail) |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
IPO [Member] | |
Schedule Of Share Based Payment Award Restricted Stock Units Valuation Assumptions [Line Items] | |
Probability | 50.00% |
Term (years) | 9 months |
Remaining Term of the RSUs (years) | 5 years |
Dividend Yield | |
Risk-free rate | 2.40% |
Volatility | 35.00% |
Sale [Member] | |
Schedule Of Share Based Payment Award Restricted Stock Units Valuation Assumptions [Line Items] | |
Probability | 50.00% |
Term (years) | 3 years 6 months |
Remaining Term of the RSUs (years) | 3 years 6 months |
Dividend Yield | |
Risk-free rate | 2.40% |
Volatility | 35.00% |
Basic and Diluted Net Loss Per Share - Additional Information (Detail) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Anti-dilutive securities excluded from diluted loss per share | 18,449,382 | 18,449,382 | ||
Restricted stock units | ||||
Anti-dilutive securities excluded from diluted loss per share | 2,738,648 | 2,738,648 |
Segment and Geographic Area Information - Summary of Operating Profit (Loss) from Segments to Consolidated (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Segment Reporting [Abstract] | ||||
Segment gross profit | $ 21,631 | $ 13,216 | $ 35,427 | $ 28,543 |
Selling, general and administrative expenses | 18,562 | 7,633 | 35,390 | 21,624 |
Loss on derivative liabilities | 23,098 | 48,603 | ||
Interest expense, net | 8,853 | 421 | 17,268 | 799 |
Other expense (income), net | 329 | (2,258) | 620 | (577) |
Provision for income taxes | 1,313 | 1,552 | 915 | 1,562 |
Net (loss) income | $ (30,524) | $ 5,868 | $ (67,369) | $ 5,135 |
Segment and Geographic Area Information - Additional Information (Detail) - segments |
6 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Segment Reporting [Abstract] | ||
Number of reportable segments | 3 | 3 |
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