Related Party Transactions
|6 Months Ended|
Jun. 30, 2021
|Related Party Transactions [Abstract]|
|Related Party Transactions||
Note 9 – Related Party Transactions
The Company has numerous transactions with the Member and the Parent and its affiliates. The significant related party transactions consist of borrowings from and payments to the Member and other related parties under common control of the Parent.
In September 2017, the Parent entered into a management services agreement with TPG Growth III Management, LLC (“TPG”), which was an affiliate of the Parent, to pay TPG an annual fee of $750 for management services provided to the Company. In June 2018, TPG assigned the management services agreement to H&W Investco Management LLC (“H&W Investco”), which is beneficially owned by a member of the Company’s board of directors. The Company recorded approximately $207 and $399, during the three and six months ended June 30, 2021 respectively, and $194 and $414 during the three and six months ended June 30, 2020, respectively, of management fees included within SG&A expenses for services received from H&W Investco, including reimbursement for reasonable out-of-pocket expenses. The management services agreement was terminated following the IPO in July 2021.
As of December 31, 2019, the Company recorded a reduction to Member’s equity of $31,735, representing the net amount of funds advanced to the Member, as the Company determined that the Member had no plan to repay these amounts in the foreseeable future. The receivable from the Parent was repaid in February 2020. During the three months ended March 31, 2020, the Company
provided net funds to STG aggregating $1,456 and recorded a corresponding reduction to member’s equity for this same amount. During the six months ended June 30, 2021, the Parent repaid $2 of the receivable. The aggregate receivable from the Parent at June 30, 2021 and December 31, 2020 was $1,454 and $1,456, respectively.
In February 2020, the Member contributed $49,443 to the Company in satisfaction of the $31,735 receivable at December 31, 2019 with the remainder recorded as a contribution. The proceeds were used to make a $30,000 principal payment on the Company’s outstanding term loan under the Prior Facility (see Note 8), with the remainder available for unrestricted use by the Company. Also, in February 2020, the Company returned $19,443 of the contribution to the Member, which was recorded as a distribution. Also, in the three months ended March 31, 2020, $53,760 of the proceeds from the borrowings under the 2020 Facility were forwarded to the Parent and recorded as a distribution.
In March 2021, the Company recorded a distribution to the Parent of $10,600, which the Parent used to fund a note payable under a debt financing obligation in connection with the acquisition of Rumble. The Company earns interest at the rate of 11% per annum on the receivable from the Parent. At June 30, 2021, $314 was receivable from the Parent for interest accrued in the six months ended June 30, 2021.
The Company’s Chief Executive Officer is the sole owner of ICI, which previously provided unsecured loans to the Company, which loans the funds to franchisees to purchase a franchise territory or to setup a studio. The Company records notes payable to ICI and notes receivable from the franchisees resulting from these transactions. The notes from ICI to the Company accrue interest at the time the loan is made, which is recorded as interest expense. The notes receivable begin to accrue interest 45 days after the issuance to the franchisee. At June 30, 2021 and December 31, 2020, the Company had recorded $96 and $94 of notes receivable and $0 and $86 of notes payable, respectively. The Company recognized $3 and $6 of interest income in the three and six months ended June 30, 2021, respectively and $3 and $7 in the three and six months ended June 30, 2020, respectively. The Company recognized interest expense of $2 and $5 in the three and six months ended June 30, 2021, respectively, and $3 and $7 in the three and six months ended June 30, 2020, respectively.
In September 2019, the Company entered into a building lease agreement with Von Karman Production LLC, which is owned by the Company’s Chief Executive Officer. Pursuant to the lease, the Company is obligated to pay monthly rent of $25 for an initial lease term of five years expiring on August 31, 2024. During the three and six months ended June 30, 2021 and 2020, the Company recorded expense related to this lease of $80 and $159, respectively.
The Company earns revenues and has accounts receivable and notes receivables from franchisees who are also shareholders of the Parent or officers of the Company. Revenues from these affiliates, primarily related to franchise revenue, marketing fund revenue and merchandise revenue, were $401 and $598 for the three and six months ended June 30, 2021, respectively, and $93 and $373 for the three and six months ended June 31, 2020, respectively. Included in accounts receivable as of June 30, 2021 and December 31, 2020 is $138 and $9, respectively, for such sales. At June 30, 2021 and December 31, 2020, notes receivable from franchisees includes $0 and $135 and notes receivable from franchisees, net of current portion includes $1,744 and $2,093, respectively, related to financing provided to these affiliates.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef