UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 20, 2021, the registrant had
Table of Contents
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Page |
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PART I. |
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Item 1. |
1 |
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1 |
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2 |
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Condensed Consolidated Statements of Changes to Member’s Equity |
3 |
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
6 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
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Item 3. |
35 |
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Item 4. |
35 |
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PART II. |
37 |
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Item 1. |
37 |
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Item 1A. |
37 |
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Item 2. |
72 |
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Item 3. |
72 |
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Item 4. |
72 |
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Item 5. |
72 |
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Item 6. |
73 |
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75 |
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Xponential Fitness LLC (a wholly owned subsidiary of H&W Franchise Holdings, LLC)
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands)
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June 30, |
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December 31, |
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2021 |
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2020 |
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Assets |
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Current Assets: |
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Cash, cash equivalents and restricted cash |
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$ |
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$ |
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Accounts receivable, net (Note 9) |
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Inventories |
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Prepaid expenses and other current assets |
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Deferred costs, current portion |
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Notes receivable from franchisees, net (Note 9) |
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Related party receivable (Note 9) |
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— |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Intangible assets, net |
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Deferred costs, net of current portion |
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Notes receivable from franchisees, net of current portion (Note 9) |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Member’s Equity |
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Current Liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses (Note 9) |
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Deferred revenue, current portion |
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Notes payable (Note 9) |
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Current portion of long-term debt |
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Other current liabilities |
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Total current liabilities |
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Deferred revenue, net of current portion |
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Contingent consideration from acquisitions (Note 10) |
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Long-term debt, net of current portion, discount and issuance costs |
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Other liabilities |
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Total liabilities |
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Commitments and contingencies (Note 10) |
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Member’s equity: |
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Member’s contribution |
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Receivable from Member (Note 9) |
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( |
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Accumulated deficit |
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Total member’s equity |
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Total liabilities and member’s equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
1
Xponential Fitness LLC (a wholly owned subsidiary of H&W Franchise Holdings, LLC)
Condensed Consolidated Statements of Operations
(Unaudited)
(amounts in thousands)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2021 |
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2020 |
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2021 |
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2020 |
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Revenue, net: |
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Franchise revenue |
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$ |
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$ |
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$ |
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$ |
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Equipment revenue |
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Merchandise revenue |
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Franchise marketing fund revenue |
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Other service revenue |
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Total revenue, net |
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Operating costs and expenses: |
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Costs of product revenue |
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Costs of franchise and service revenue |
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Selling, general and administrative expenses (Note 9) |
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Depreciation and amortization |
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Marketing fund expense |
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Acquisition and transaction expenses (income) |
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( |
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( |
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Total operating costs and expenses |
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Operating income (loss) |
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( |
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( |
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( |
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Other (income) expense: |
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Interest income |
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( |
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( |
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( |
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( |
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Interest expense (Note 9) |
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Gain on debt extinguishment |
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( |
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— |
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( |
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— |
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Total other expense |
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Loss before income taxes |
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( |
) |
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( |
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( |
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( |
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Income taxes |
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— |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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See accompanying notes to condensed consolidated financial statements.
2
Xponential Fitness LLC (a wholly owned subsidiary of H&W Franchise Holdings, LLC)
Condensed Consolidated Statements of Changes to Member’s Equity
(Unaudited)
(amounts in thousands)
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Member’s Contribution |
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Receivable from Member |
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Accumulated Deficit |
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Total Member’s Equity |
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Balance at December 31, 2020 |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Equity based compensation |
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— |
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— |
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Parent contribution of Rumble assets |
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— |
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— |
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Distributions to Member |
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( |
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— |
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— |
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( |
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Payment received from Member, net |
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— |
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— |
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Net loss |
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— |
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— |
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( |
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( |
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Balance at June 30, 2021 |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Member’s Contribution |
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Receivable from Member |
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Accumulated Deficit |
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Total Member’s Equity |
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Balance at December 31, 2019 |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Equity based compensation |
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— |
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— |
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Member contributions |
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— |
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— |
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Distributions to Member |
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( |
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— |
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— |
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( |
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Payment received from Member, net |
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— |
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— |
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Net loss |
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— |
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— |
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( |
) |
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( |
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Balance at June 30, 2020 |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Member’s Contribution |
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Receivable from Member |
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Accumulated Deficit |
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Total Member’s Equity |
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Balance at March 31, 2021 |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Equity based compensation |
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— |
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— |
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Net loss |
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— |
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— |
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( |
) |
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( |
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Balance at June 30, 2021 |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Member’s Contribution |
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Receivable from Member |
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Accumulated Deficit |
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Total Member’s Equity |
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Balance at March 31, 2020 |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Equity based compensation |
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— |
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— |
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Net loss |
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— |
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— |
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( |
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( |
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Balance at June 30, 2020 |
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$ |
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$ |
( |
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$ |
( |
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$ |
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See accompanying notes to condensed consolidated financial statements.
3
Xponential Fitness LLC (a wholly owned subsidiary of H&W Franchise Holdings, LLC)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in thousands)
|
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Six Months Ended June 30, |
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2021 |
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2020 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
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Amortization of debt issuance cost |
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Amortization of discount on long-term debt |
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— |
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Change in contingent consideration from acquisitions |
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( |
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Bad debt expense |
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Equity based compensation |
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Non-cash interest |
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Gain on debt extinguishment |
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( |
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— |
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Loss from disposal of assets |
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Impairment of long-lived assets |
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— |
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Changes in assets and liabilities: |
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Accounts receivable |
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( |
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Inventories |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Deferred costs |
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( |
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( |
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Notes receivable, net |
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Accounts payable |
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( |
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( |
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Accrued expenses |
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( |
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Related party payable |
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( |
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( |
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Other current liabilities |
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( |
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Deferred revenue |
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Other assets |
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( |
) |
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Other liabilities |
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Net cash provided by (used in) operating activities |
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( |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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( |
) |
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( |
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Purchase of studios |
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( |
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( |
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Proceeds from sale of assets |
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Purchase of intangible assets |
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( |
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( |
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Notes receivable issued |
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— |
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( |
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Notes receivable payment received |
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— |
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Net cash used in investing activities |
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( |
) |
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( |
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Cash flows from financing activities: |
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Borrowings from line of credit |
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— |
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Payments on line of credit |
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— |
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( |
) |
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Borrowings from long-term debt |
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Payments on long-term debt |
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( |
) |
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( |
) |
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Debt issuance costs |
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( |
) |
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( |
) |
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Payment of contingent consideration |
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( |
) |
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( |
) |
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Payments on loans from related party (Note 9) |
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( |
) |
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( |
) |
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Member contributions |
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— |
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Distributions to Member |
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( |
) |
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( |
) |
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Receipts from (advances to) Member, net (Note 9) |
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Net cash provided by financing activities |
|
|
|
|
|
|
|
|
|
Increase in cash, cash equivalents and restricted cash |
|
|
|
|
|
|
|
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|
Cash, cash equivalents and restricted cash, beginning of period |
|
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|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
|
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|
$ |
|
|
See accompanying notes to condensed consolidated financial statements.
4
Xponential Fitness LLC (a wholly owned subsidiary of H&W Franchise Holdings, LLC)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in thousands)
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Six Months Ended June 30, |
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2021 |
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