FXLV F45 Training Holdings Inc

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Note 1—Nature of the business and basis of presentation

Organization

F45 Training Holdings Inc. and its subsidiaries (“F45 Training Holdings”, the “Company”, or “F45”) are a global fitness franchisor engaged in franchising and licensing the F45 Training, FS8, and Vive Active brands to fitness facilities in multiple countries across the globe. The Company was incorporated in the State of Delaware on March 12, 2019. The Company is headquartered in Austin, Texas.

Joint Venture with Club Sports Group LLC

On May 16, 2022, the Company announced the formation of a joint venture with Club Sports Group LLC, a Delaware limited liability company (“CSG”), to, among other things, make, hold and monetize certain loans to prospective franchisees of the Company who have prior military service, with such loans secured by first priority senior liens on the equity interests of such franchisees and all or substantially all of the assets of such franchisees and its subsidiaries (if applicable). The joint venture will be conducted through FAFC LLC, a newly-formed Delaware limited liability company (“FAFC”). CSG is wholly owned by Kennedy Lewis Management LP, a significant stockholder of the Company which beneficially owns directly or indirectly through funds it manages, as of the date hereof, in excess of 14% of the Company’s outstanding common stock, and its related affiliates, and has the right to nominate a majority of the Company’s board of directors. As of March 31, 2023, no activity has occurred through FAFC.

Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) and applicable regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting, and include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The Company consolidates variable interest entities (“VIE”) in which it is the primary beneficiary and has a controlling financial interest, which is defined as (i) the power to direct the activities of a VIE that most significantly affect the entity’s economic performance and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The Company has determined it possesses a variable interest in certain franchisee entities to which the Company provides a lease guaranty or financing (see Note 15—Commitments and contingencies) but lacks the characteristics of having a controlling financial interest. As our franchisee entities provide our franchisee the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might be a VIE. The Company, therefore, is not deemed to be the primary beneficiary for these franchise entities and, as a result, does not include them in the Company’s consolidation.

Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the applicable required disclosures and regulations of the SEC. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Use of estimates

The preparation of unaudited 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 unaudited interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

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Key estimates and judgments relied upon in preparing these unaudited interim condensed consolidated financial statements include revenue recognition, allowance for credit losses, depreciation of long-lived assets, internally developed software, amortization of intangible assets, valuation of inventory, fair value of derivative instruments, valuation of stock-based compensation, 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.

Going Concern

The accompanying unaudited interim condensed consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company currently funds its operations primarily from cash on hand, credit facilities and operating cash flow. The Company has historically incurred losses and negative cash flows from operations. The Company’s forecast for the twelve months from the date of these unaudited interim condensed consolidated financial statements could result in the possibility of insufficient resources to meet its ongoing obligations and maintain compliance with the minimum liquidity requirement of $10 million in its credit agreement. The Company has determined that these circumstances represent conditions regarding the Company’s ability to continue as a going concern before consideration of management’s plans.

In response to these conditions, the Company obtained additional financing and intends to implement the following to reduce the demands on future Company resources: i) eliminate costs associated with being a public registrant with the SEC by the filing of Form-15 as soon as it is able to; and ii) manage the cash flows associated with non-recurring expenditures, including legal fees, certain professional services fees, and others. The NYSE filed a Form 25 with the SEC on August 25, 2023 with respect to the Company to effect the withdrawal of the listing of its common stock from the NYSE and the deregistration of its common stock under Section 12(b) of the Exchange Act (which became effective on September 5, 2023), and the Company intends to file a Form 15 as soon as practicable after the Company’s outstanding filings with the SEC have been filed. Additionally, management believes that they will be successful in limiting the Company’s non-recurring expenditures and managing the timing of such expenditures for at least twelve months from the date these unaudited interim condensed consolidated financial statements are issued. As a result, the Company’s management believes that the Company will be able to continue as a going concern for at least twelve months from the date these unaudited interim condensed consolidated financial statements are issued. The unaudited interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Subordinated Credit Agreement

On February 14, 2023, the Company entered into a credit agreement (as amended, the “Subordinated Credit Agreement”) with certain subsidiaries of the Company party thereto as guarantors (the “Guarantors”), Alter Domus (US) LLC, as administrative Agent and Australian security trustee, and the lenders party thereto. The lender group consists of existing stockholders of the Company led by affiliates of Kennedy Lewis Investment Management LP (“KLIM”), the investment manager to significant stockholders of the Company and party to the Company’s Third Amended and Restated Stockholders’ Agreement. The Subordinated Credit Agreement provides for a $90.0 million, five-and-a-half-year term loan facility (the “KLIM Term Loan”) at an original issue discount of 3.00% payable in kind. The proceeds from the KLIM Term Loan were used by the Company to pay down $20.1 million of existing indebtedness and accrued interest and fees on its existing credit facility with JPMorgan Chase Bank, N.A., and to pay down other liabilities of the Company and for general corporate purposes. The obligations under the Subordinated Credit Agreement are secured by substantially all of the assets of the Company and the Guarantors.

Amounts outstanding under the Subordinated Credit Agreement accrue interest at a rate of 12.00% per annum, payable in kind. Upon repayment or acceleration of the KLIM Term Loan (including in connection

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with a change of control), the Company is required to pay an exit fee equal to: (i) 35% of the then-current principal balance of the KLIM Term Loan during the first 12 months following closing of the KLIM Term Loan; (ii) 25% of the then-current principal balance of the KLIM Term Loan during the next 12 months; and (iii) 10% of the then-current principal balance of the KLIM Term Loan thereafter.

Amendment to Subordinated Credit Agreement

On October 20, 2023, the Company entered into an Amendment to the Subordinated Credit Agreement. Pursuant to the amendment, the lenders agreed to extend credit in the form of an incremental loan in an original aggregate principal amount equal to $40.0 million, upon the same terms as the original loan amount. Approximately $5.0 million of the proceeds were used to pay down a portion of the loan outstanding on the Company’s existing credit facility with JPMorgan Chase Bank, N.A. In addition, the lenders provided the Company with a delayed draw facility of up to $10 million.

Note 2—Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements

As previously described in Part II Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Company restated its consolidated financial statements as of and for the year ended December 31, 2021. The errors underlying the restatement also impacted the unaudited interim condensed consolidated financial statements for each of the interim periods within the year ended December 31, 2022.

Description of Restatement Errors

The errors identified as of and for the three months ended March 31, 2022 are as follows:

•Equipment and merchandise revenue - The Company prematurely recognized Equipment and merchandise revenue before the criteria under ASC 606, Revenue from Contracts with Customers (“ASC 606”) had been met. In particular, errors resulted from incorrect conclusions regarding (i) the identification and recognition of performance obligations for customer contracts and (ii) the assessment of criteria of a contract under ASC 606. The restatement resulted in a change in the timing of the recognition of revenue and deferred revenue until such transactions meet all the criteria for revenue recognition.

•Cost of equipment and merchandise - The associated Cost of equipment and merchandise for each equipment and merchandise revenue sales order was also recognized in the incorrect period.

•Vendor rebate - The Company incorrectly recognized a rebate received from a vendor.

•Income taxes - The Company recalculated its income tax expense on an annual and quarterly basis to account for the identified restatement adjustments.

•Other errors - There are other restatement errors otherwise not described in the restatement errors listed above. These errors and related restatement adjustments were not material for the three months ended March 31, 2022.

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The following table presents the impact of the restatement to the unaudited interim condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2022:

			Three Months Ended
			March 31, 2022
			As Previously Reported						Restatement Adjustments						As Restated
Revenues:
Franchise			$	19,860					$	—					$	19,860
Equipment and merchandise			30,148						(20,620)						9,528
Total revenues			50,008						(20,620)						29,388
Costs and operating expenses:
Cost of franchise revenue			1,231						76						1,307
Cost of equipment and merchandise			10,943						(3,830)						7,113
Selling, general and administrative expenses			32,090						26						32,116
Total costs and operating expenses			44,264						(3,728)						40,536
Income (loss) from operations			5,744						(16,892)						(11,148)
Interest expense, net			126						—						126
Other expense, net			570						52						622
Income (loss) before income taxes			5,048						(16,944)						(11,896)
Provision (benefit) for income taxes			2,536						(4,954)						(2,418)
Net income (loss)			$	2,512					$	(11,990)					$	(9,478)
Other comprehensive income (loss)
Foreign currency translation adjustment, net of tax			906						110						1,016
Comprehensive income (loss)			$	3,418					$	(11,880)					$	(8,462)
Per share data:
Earnings (loss) per share
Basic and diluted			$	0.03					$	(0.13)					$	(0.10)
Shares used in computing earnings (loss) per share
Basic			95,709,671						—						95,709,671
Diluted			96,687,283						(977,612)						95,709,671

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The following table presents the impact of the restatement to the unaudited interim condensed consolidated statement of cash flows for the three months ended March 31, 2022:

			Three Months Ended
			March 31, 2022
			As Previously Reported						Restatement Adjustments						As Restated
Cash flows from operating activities
Net income (loss)			$	2,512					$	(11,990)					$	(9,478)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation			286						—						286
Amortization of intangible assets			888						—						888
Amortization of deferred costs			626						—						626
Bad debt expense			1,464						—						1,464
Stock-based compensation			2,073						—						2,073
In-kind marketing			57						—						57
Provision for inventories			(52)						—						(52)
Unrealized foreign currency transaction gains			381						(21)						360
Changes in operating assets and liabilities:
Due from related parties			(294)						—						(294)
Accounts receivable, net			(16,413)						3,915						(12,498)
Inventories			(4,160)						(5,102)						(9,262)
Prepaid expenses			(20,085)						—						(20,085)
Other current assets			(12,498)						6,301						(6,197)
Deferred costs			(1,194)						388						(806)
Other long-term assets			(8,068)						2,693						(5,375)
Accounts payable and accrued expenses			1,963						8,315						10,278
Deferred revenue			3,527						(4,301)						(774)
Interest payable			(104)						—						(104)
Income taxes payable			3,149						(5,495)						(2,346)
Other long-term liabilities			952						4,453						5,405
Net cash used in operating activities			$	(44,990)					$	(844)					$	(45,834)
Cash flows from investing activities
Purchases of property and equipment			(2,117)						—						(2,117)
Purchases of intangible assets			(1,296)						—						(1,296)
Net cash used in investing activities			$	(3,413)					$	—					$	(3,413)
Cash flows from financing activities
Borrowings under revolving facility			31,600						—						31,600
Taxes paid related to net share settlement of equity awards			(10,991)						—						(10,991)
Net cash provided by financing activities			$	20,609					$	—					$	20,609
Effect of exchange rate changes on cash and cash equivalents			(218)						844						626
Net increase (decrease) in cash, cash equivalents, and restricted cash			(28,012)						—						(28,012)
Cash and cash equivalents at beginning of period			42,004						—						42,004
Cash and cash equivalents at end of period			$	13,992					$	—					$	13,992

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There were no changes to the significant accounting policies or recent accounting pronouncements that were disclosed in Note 3—Summary of significant accounting policies to the audited consolidated financial statements of the Company as of and for the years ended December 31, 2022 and 2021, other than as discussed below.

Concentration of credit risk

One of the Company’s customers accounted for approximately 37% of the Company’s Accounts receivable as of March 31, 2023. No customer accounted for more than 10% of the Company’s Accounts receivable as of December 31, 2022. No customer accounted for more than 10% of the Company’s total revenues for the three months ended March 31, 2023 or 2022.

Credit losses

The Company’s accounts and notes receivable are recorded at net realizable value, which includes an allowance for estimated credit losses. The Company estimates credit losses based on historical collections, age of receivable balances, the customer’s financial condition, and current economic trends, all of which are subject to change. The Company’s payment terms on its accounts receivable from franchisees are generally 30 days.

The change in the Company’s allowance for credit losses is as follows (in thousands):

			For the Three Months Ended March 31,
			2023						2022
Balance at beginning of period			$	16,043					$	8,132
Provisions for bad debts, included in Selling, general and administrative			5,514						1,464
Uncollectible receivables written off			(2,449)						(4,230)
Balance at end of period			$	19,108					$	5,366

Debt issuance costs and debt discount

The Company records debt issuance costs as a reduction to the carrying value of the related debt on the condensed consolidated balance sheets. Debt issuance costs and debt discount are amortized over the term of the related debt using the straight-line method of amortization, which approximates the effective interest method. Amortization of debt issuance costs are included in Interest expense, net on the unaudited condensed consolidated statements of operations and comprehensive loss.

Derivative instruments

Embedded derivatives

When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative liability. The estimated fair value of the derivative feature is recorded as a liability in the consolidated balance sheets, separate from the carrying value of the host contract. Subsequent changes in the estimated fair value of the embedded derivatives are recorded as a gain or loss in within Loss on derivative liabilities in the Company’s condensed consolidated statements of operations and comprehensive loss.

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The Company estimates the fair value of the embedded derivatives through a “with-and-without method” that isolates the value of the embedded derivatives by measuring the difference between the host contract’s value “with” and “without” the embedded derivatives. This method utilizes the following inputs: (i) the expected term in years, (ii) the probability of a change in control event, (iii) an exit fee, (iv) the make-whole premium discount rate, and (v) the implied discount rate. These inputs are considered Level 3 inputs in the fair value hierarchy. The host contract’s value with the embedded derivatives involves the application of an implied discount rate based on repayment and prepayment scenarios upon the estimated timing and probability weighted expected change in control events. Valuations derived from this method are subject to ongoing internal and external verification review. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors.

Recently issued accounting pronouncements

Under the Jumpstart Our Business Startups Act (“JOBS Act”), the Company meets the definition of an emerging growth company (“EGC”). The Company has elected to take advantage of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act.

Recently Adopted Accounting Standards

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. 2019-05, Targeted Transition Relief; ASU No. 2019-10, Effective Dates, ASU No. 2019-11, Codification Improvements, 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 ASU 2016-02, and ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures. 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 adoption of this accounting standard on January 1, 2023 did not have a material impact on the Company's unaudited interim condensed consolidated financial statements.

Accounting Standards Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (“ASU 2020-04”), which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (LIBOR). In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.” ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company is currently evaluating the impact of ASU 2022-06 on its consolidated financial statements; however, the Company does not believe that adoption of ASU 2022-06 will materially impact its consolidated financial statements.

Note 4—Other current assets

Other current assets consists of the following as of March 31, 2023 and December 31, 2022 (in thousands):

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Note 5—Property and equipment, net

Property and equipment, net, consists of the following as of March 31, 2023 and December 31, 2022 (in thousands):

			Estimated Useful Life						March 31, 2023						December 31, 2022
			(years)
Vehicles			5						$	112					$	246
Furniture and fixtures			7						1,116						1,105
Office and other equipment			5						1,199						1,190
Leasehold improvements			Lesser of lease term or useful life						8,294						8,272
Construction in progress			n/a						1,004						994
									11,725						11,807
Less: accumulated depreciation									(2,060)						(1,772)
Total property and equipment, net									$	9,665					$	10,035

Construction in progress (“CIP”) consists of costs associated with the build-out of corporate-owned FS8 studios.

Note 6—Goodwill and intangible assets

The following table summarizes the useful lives and carrying values of intangible assets, including internal-use software (in thousands):

									As of March 31, 2023																		As of December 31, 2022
			Useful Life						Gross Value						Accumulated Amortization						Net Value						Gross Value						Accumulated Amortization						Net Value
			(in years)
Goodwill			n/a						$	2,110					$	—					$	2,110					$	2,145					$	—					$	2,145
Internal-use software			3						$	6,179					$	3,433					$	2,746					$	5,852					$	3,054					$	2,798
Trade names & trademarks			n/a						1,926						—						1,926						1,808						—						1,808
Customer contracts			7						721						59						662						733						30						703
Acquired software			3 - 6						962						27						935						966						13						953
Total intangible assets, net									$	9,788					$	3,519					$	6,269					$	9,359					$	3,097					$	6,262

The amortization expense of intangible assets was $0.5 million and $0.9 million for the three months ended March 31, 2023 and 2022, respectively, and was recorded in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss. The weighted average remaining life of internal-use software was 1.9 years and 1.8 years as of

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March 31, 2023 and December 31, 2022, respectively. The weighted average remaining life of acquired software was 2.4 years and 2.3 years as of March 31, 2023 and December 31, 2022, respectively.

As of March 31, 2023, the expected amortization of intangible assets for future periods, excluding assets not yet placed in service of $0.1 million, is as follows (in thousands):

			Future Amortization
Remainder of 2023			$	1,330
2024			1,490
2025			942
2026			171
2027			162
Thereafter			99
Total			$	4,194

Note 7—Other long-term assets

Other long-term assets consist of unbilled receivables, right of return asset, debt issuance costs, investments in CLF High Street Limited, long-term accounts receivable and other long-term assets. The Company recorded a right of return asset related to World Packs that were sold to franchisees pursuant to multi-unit development agreements. These agreements did not meet the criteria of a contract with a customer under ASC 606. The Company intends to recover the World Packs that were delivered, for which it has not yet received payment. The amounts for delivered World Packs have been recorded as a right of return asset. The following table summarizes Other long-term assets as of March 31, 2023 and December 31, 2022 (in thousands):

			March 31, 2023						December 31, 2022
Unbilled receivables, net of current			$	9,771					$	11,112
Right of return asset			8,239						8,224
Debt issuance costs(1)			—						733
Investment in CLF High Street Limited			606						590
Long-term accounts receivable			1,900						2,135
Other long-term assets			870						852
Total			$	21,386					$	23,646

(1)			As of January 1, 2023, debt issuance costs and debt discount, net of accumulated amortization, were recorded as a reduction to the carrying value of the related debt within Long-term debt, net of current portion, on the unaudited interim condensed consolidated balance sheets. See Note 10—Debt for additional information.

Note 8—Accounts payable and accrued expenses

Accounts payable and accrued expenses were comprised of the following (in thousands):

			March 31, 2023						December 31, 2022
Accounts payable			$	17,995					$	21,767
Accrued sales tax			5,576						6,329
Accrued payroll and benefits			3,207						3,281
Accrued litigation expenses			2,525						9,613
Accrued professional fees			8,312						3,557
Accrued inventory purchases and storage costs			975						3,089
Other payables			5,627						849
Total			$	44,217					$	48,485

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Note 9—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. During the three months ended March 31, 2023, the Company recognized approximately $4.0 million of revenue that was included in the Deferred revenue balance at the beginning of the period. The following tables reflect the change in Deferred revenue during the three months ended March 31, 2023 and 2022 (in thousands):

			Deferred Revenue
Balance at December 31, 2022			$	18,909
Net change			(895)
Balance at March 31, 2023			$	18,014

			Deferred Revenue
Balance at December 31, 2021			$	22,366
Net change			(673)
Balance at March 31, 2022 (As Restated)			$	21,693

Note 10—Debt

The following table provides a summary of the Company’s outstanding debt as of March 31, 2023 and December 31, 2022 (in thousands):

			March 31, 2023						December 31, 2022
Term loan			$	66,000					$	—
Revolving facility			2,000						88,100
Subordinated second lien PIK loan			88,530						—
Other debt			336						347
Total debt, excluding deferred financing costs and discounts			156,866						88,447
Deferred financing costs, net			(6,353)						(733)
Discount on debt, net			(23,357)						—
Total debt			$	127,156					$	87,714

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”).

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 further amended the Secured Credit Agreement, pursuant to which amendment, the Company agreed to

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convert $8.0 million of the amount outstanding under 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 $5.0 million of the principal amount of the Revolving Facility outstanding.

On July 19, 2021, the Company repaid in full all outstanding indebtedness and terminated all commitments and obligations under the Term 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.

On August 13, 2021, the Company entered into an amended and restated credit agreement (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “Senior Credit Agreement”), which amended and restated the Secured Credit Agreement dated September 18, 2019. The Senior Credit Agreement provided for a $90.0 million five-year senior secured revolving facility (“Facility”). The Senior Credit Agreement also provided that, under certain circumstances, the Company may increase the aggregate principal amount of revolving commitments by an aggregate amount of up to $35.0 million.

On May 13, 2022, the Company entered into a second amendment (the “Second Amendment”) to the Senior Credit Agreement. Pursuant to the Second Amendment, certain terms of the Senior Credit Agreement were amended to permit the execution of the Fortress Credit Agreement (including establishing the securitization of the franchisee loans described below) and the issuance of warrants pursuant to the Warrant Purchase Agreement.

On July 25, 2022, the Company entered into a Waiver Under Credit Agreement (the “Senior Credit Agreement Waiver”) with JPMorgan Chase Bank, N.A., as administrative agent and Australian Security Trustee. Pursuant to the Senior Credit Agreement Waiver, certain lenders party to the Credit Agreement agreed to waive certain defaults under the Senior Credit Agreement related to cross-default provisions associated with required minimum market capitalization thresholds under the Company’s Fortress Credit Agreement.

On February 14, 2023, the Company entered into a third amendment (the “Third Amendment”) to the Senior Credit Agreement. Pursuant to the Third Amendment, certain amendments were made to the terms of the Senior Credit Agreement to permit the execution of a $90.0 million, five-and-a-half-year term loan facility with a lender group consisting of existing stockholders of the Company led by affiliates of Kennedy Lewis Investment Management LP. In addition, a $20.1 million repayment to the Lender was required to facilitate the carve out of a $66.0 million term loan (“Term Loan”) on the Facility, with an interest rate of the Secured Overnight Financing Rate) (“SOFR”) plus 550 basis points per annum and a two-year term, and a $2.0 million revolving credit facility (“New Revolving Facility”) (10.46% as of March 31, 2023).

In connection with the New Revolving Facility, the Lender issued standby letters of credit on behalf of the Company associated with our corporate headquarters. The outstanding commitments under these letters of credit as of March 31, 2023 totaled $1.6 million, all of which have expiration dates in less than one year. The amount of borrowings available at any time under the New Revolving Facility is reduced by the amount of letters of credit outstanding.

As a result of the reduction in borrowing capacity on the Facility with the Third Amendment, the Company, in proportion to the decrease in borrowing capacity, performed a write-off of debt issuance costs of $0.2 million during the three months ended March 31, 2023 which is included in Interest expense, net. Additionally, the Company has capitalized all new lender and third party fees paid and recognizes these fees as part of interest expense over the life of the modified debt in accordance with the effective interest method. The unamortized debt issuance cost in connection to the Facility as of March 31, 2023 and December 31, 2022 was $0.7 million and $0.7 million, respectively. The availability on the Facility as of March 31, 2023 and December 31, 2022 was $0.4 million and $0.3 million, respectively.

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Subordinated Second Lien PIK Credit Agreement

On February 14, 2023, the Company entered into a subordinated credit agreement (the “Subordinated Credit Agreement”) with certain subsidiaries of the Company party thereto as guarantors (the “Guarantors”), Alter Domus (US) LLC, as administrative Agent and Australian security trustee, and the lenders party thereto. The lender group consists of existing stockholders of the Company led by affiliates of Kennedy Lewis Investment Management LP (“KLIM”), the investment manager to significant stockholders of the Company and party to the Company’s Third Amended and Restated Stockholders’ Agreement. The Subordinated Credit Agreement provides for a $90.0 million, five-and-a-half-year term loan facility (the “KLIM Term Loan”) at an original issue discount of 3.00% payable in kind. The proceeds from the KLIM Term Loan were used by the Company to pay down $20.1 million of outstanding amounts owed on the existing credit facility with JPMorgan Chase Bank, N.A., to pay down other liabilities of the Company and for general corporate purposes. The obligations under the Subordinated Credit Agreement are secured by substantially all of the assets of the Company and the Guarantors.

Amounts outstanding under the KLIM Term Loan accrue interest at a rate of 12.00% per annum, payable in kind. The outstanding balance on the loan facility as of March 31, 2023 was $88.5 million, which included $90.0 million of principal, $2.7 million in a paid-in-kind (“PIK”) fee taking the form of original issue discount, and $1.2 million of PIK interest accrued.

Certain features of the Subordinated Credit Agreement, specifically the exit fee and applicable premium, as described below, were identified as embedded derivatives and require bifurcation and separate valuation.

Exit Fee - The terms of the Subordinated Credit Agreement state that upon repayment or acceleration of the KLIM Term Loan, including in connection with a change of control, optional prepayment, or Event of Default, as defined under the Subordinated Credit Agreement, the Company is required to pay an exit fee (“Exit Fee”) equal to: (i) 35% of the then-current principal balance of the Subordinated Credit Agreement during the first 12 months following closing of the Subordinated Credit Agreement; (ii) 25% of the then-current principal balance of the Subordinated Credit Agreement during the next 12 months; and (iii) 10% of the then-current principal balance of the Subordinated Credit Agreement thereafter.

Applicable Premium - The terms of the Subordinated Credit Agreement state that in the event that a change in control shall occur, the Company shall prepay all of the outstanding KLIM Term Loan on the change in control date. The Company is also required to pay the Applicable Premium should the change in control date occur on or prior to the third anniversary of the effective date of the Subordinated Credit Agreement. The Applicable Premium is either a Make-Whole Premium, if the change in control date is prior to or on the first anniversary of the effective date of the Subordinated Credit Agreement, or a Prepayment Premium, if the change in control date occurs after the first anniversary of the effective date through the third anniversary of the effective date of the Subordinated Credit Agreement. The Make-Whole Premium is the present value of all required interest payments from the prepayment date through the first anniversary of the effective date of the Subordinated Credit Agreement. The present value is to be calculated using a discount rate equal to the Treasury Rate plus 50 basis points, plus an additional 2% of the then-current principal amount. The Prepayment Premium is 2% of the then-current principal amount if the prepayment date is after the first anniversary of the effective date but on or prior to the second anniversary of the effective date of the Subordinated Credit Agreement, or 1% of the then-current principal amount if the prepayment date is after the second anniversary of the effective date but on or prior to the third anniversary of the effective date of the Subordinated Credit Agreement, or 0% afterwards.

In accordance with ASC 815, Derivatives and Hedging, the Company identified embedded derivatives relating to the Exit Fee and Applicable Premium requiring bifurcation. See Note 11—Derivative instruments for further discussion on the Company’s accounting for the embedded derivatives.

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In connection with issuing of the KLIM Term Loan, the Company repaid the Lender $20.1 million on the Facility and $5.7 million in third party fees. 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 straight-line method of amortization, which approximates the effective interest method.

March 2023 Consents under Credit Agreements

On March 31, 2023, the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and Australian Security Trustee, entered into a Consent Under Amended and Restated Credit Agreement, dated March 31, 2023 (the “JPM Credit Agreement Consent”) under the Senior Credit Agreement. In addition, on March 31, 2023, the Company, as borrower, the lenders party thereto and Alter Domus (US) LLC, entered into a Consent Under Subordinated Credit Agreement, dated March 31, 2023 (collectively with the JPM Credit Agreement Consent, the “March 2023 Consents”) under the Subordinated Credit Agreement (collectively with the Senior Credit Agreement, the “Credit Agreements”). Pursuant to the March 2023 Consents, the parties to the Credit Agreements agreed to waive certain defaults under the Credit Agreements with respect to the Company’s delayed audited financial statements for the year ended December 31, 2022 up until May 15, 2023, subject to the terms and conditions set forth in the March 2023 Consents.

Amendment of Letter Agreement

In connection with the entry into the Subordinated Credit Agreement, the Company and affiliates of KLIM entered into a letter agreement, dated as of February 14, 2023 (the “Side Letter”), as previously disclosed in the Company’s Current Report on Form 8-K, filed with the SEC on February 15, 2023. On April 14, 2023, the Company and such affiliates of KLIM entered into an Amendment to the Side Letter, to extend the time period provided to the Company to identify a permanent Chief Financial Officer candidate.

May 2023 Consents Under Credit Agreements

On May 12, 2023, the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and Australian Security Trustee, entered into a Consent Under Amended and Restated Credit Agreement, dated May 12, 2023 (the “JPM Credit Agreement Consent”) under the Senior Credit Agreement. In addition, on May 12, 2023, the Company, as borrower, the lenders party thereto and Alter Domus (US) LLC, entered into a Consent Under Subordinated Credit Agreement, dated May 12, 2023 (collectively with the JPM Credit Agreement Consent, the “May 2023 Consents”) under the Subordinated Credit Agreements. Pursuant to the May 2023 Consents, the parties to the Credit Agreements agreed to extend the deadlines under the Credit Agreements with respect to delivery of the Company’s audited financial statements for the year ended December 31, 2022 and unaudited interim condensed consolidated financial statements for the quarters ended March 31, 2023 (collectively, the “Financial Statements”), together with the accompanying compliance certificates, subject to the terms and conditions set forth in the May 2023 Consents.

Fourth Amendment to Senior Credit Agreement

On June 30, 2023, the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and Australian Security Trustee, entered into a Fourth Amendment to Amended and Restated Credit Agreement, dated June 30, 2023 (the “Fourth Amendment”), amending the Senior Credit Agreement. Pursuant to the Fourth Amendment, the lenders agreed to extend the deadlines under the Senior Credit Agreement with respect to delivery of the Financial Statements and unaudited interim condensed consolidated financial statements for the quarter ended June 30, 2023, together with the accompanying compliance certificates, and financial projections, to August 31, 2023, subject to the terms and conditions set forth in the Fourth Amendment.

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June 2023 Consent Under Subordinated Credit Agreement

On June 30, 2023, the Company, as borrower, the lenders party thereto and Alter Domus (US) LLC as administrative agent, entered into a Consent Under Subordinated Credit Agreement, dated June 30, 2023 (the “June 2023 Consent”) under the Subordinated Credit Agreement. Pursuant to the June 2023 Consent, the lenders agreed to extend the deadlines under the Subordinated Credit Agreement with respect to delivery of the Company’s Financial Statements and unaudited interim condensed consolidated financial statements for the quarter ended June 30, 2023, together with the accompanying compliance certificates, and financial projections, to August 31, 2023, subject to the terms and conditions set forth in the June 2023 Consent.

Further Amendment of Side Letter Agreement

On July 13, 2023, the Company and affiliates of KLIM further amended the Side Letter to extend the time period provided to the Company to identify a permanent Chief Financial Officer candidate.

Additional Consents Under Credit Agreements

On each of August 31, 2023, September 15, 2023 and September 29, 2023, the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent and Australian security trustee, entered into a Consent under Amended and Restated Credit Agreement (the “JPM Consents”), under the Senior Credit Agreement. Pursuant to the JPM Consents, the lenders agreed to extend the deadlines under the Senior Credit Agreement with respect to delivery of (i) the Company’s audited financial statements for the fiscal year ended December 31, 2022 (the “2022 Financial Statements”), together with the accompanying compliance certificate, to October 20, 2023, and (ii) the Company’s unaudited interim condensed consolidated financial statements for the first and second quarters ended March 31, 2023 and June 30, 2023 (together with the 2022 Financial Statements, the “Financial Statements”) together with the accompanying compliance certificates, to October 24, 2023, in each case subject to the terms and conditions set forth in the JPM Consents.

On each of August 31, 2023, September 15, 2023 and September 29, 2023, the Company as borrower, the lenders party thereto and Alter Domus (US) LLC as administrative agent, entered into a Consent Under Subordinated Credit Agreement (the “Subordinated Credit Agreement Consents”) under the Subordinated Credit Agreement. Pursuant to the Subordinated Credit Agreement Consent, the lenders have agreed to extend the deadlines under the Subordinated Credit Agreement with respect to delivery of (i) the 2022 Financial Statements, together with the accompanying compliance certificate, to October 20, 2023, and (ii) the Company’s unaudited interim condensed consolidated financial statements for the first and second quarters ended March 31, 2023 and June 30, 2023, together with the accompanying compliance certificates, to October 24, 2023, in each case subject to the terms and conditions set forth in the Subordinated Credit Consents.

Amendment to Subordinated Credit Agreement and Senior Credit Agreement

On October 20, 2023, the Company entered into an Amendment to the Subordinated Credit Agreement. Pursuant to the amendment, the lenders agreed, subject to the satisfaction of certain conditions precedent, to extend credit in the form of an incremental loan in an original aggregate principal amount equal to $40.0 million, upon the same terms as the original loan amount, which the Company received on October 23, 2023, provide delayed draw commitments in an aggregate principal amount of up $10 million, and extend the deadline under the Subordinated Credit Agreement with respect to the delivery of the Company’s quarterly financial statements for the first and second fiscal quarters of 2023, together with the accompanying compliance certificate, to November 8, 2023. The delayed draw commitments are available to be drawn until the date that is fifteen months following the effective date of the Amendment to the Subordinated Credit Agreement. The incremental term loans and delayed draw

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loans will accrue interest at a rate of 12.00% per annum, payable in kind, and will mature on August 13, 2028.

On October 20, 2023, the Company entered into a Fifth Amendment to the Senior Credit Agreement (the “Fifth Amendment”). Pursuant to the Fifth Amendment, the lenders agreed to permit the incremental loans and delayed draw commitments under the Subordinated Credit Agreement, and extend the deadline under the Senior Credit Agreement with respect to delivery of the Company’s quarterly financial statements for the first and second fiscal quarters of 2023, together with the accompanying compliance certificate, to November 8, 2023. In addition, the minimum liquidity covenant was amended to require that, as of the end of each fiscal month, the Company will not permit the sum of (i) Unrestricted Cash (as defined in the Senior Credit Agreement) and (ii) any undrawn commitments under the Specified Secured Subordinated Debt (as defined in the Senior Credit Agreement) to be less than $10 million, provided, however, that at no time shall the sum of (A) Unrestricted Cash and (B) any undrawn commitments under the Specified Secured Subordinated Debt be less than $7.5 million. The Fifth Amendment also required that that $5.0 million in term loans under the Senior Credit Agreement be repaid, which the Company repaid on October 23, 2023.

Interest expense

Interest expense recorded on the debt facilities was $3.2 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively.

Note 11—Derivative instruments

Embedded Derivatives

As discussed in Note 10—Debt, in February 2023, the Company entered into the Subordinated Credit Agreement. The Company has analyzed the embedded features of the Subordinated Credit 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) the Exit Fee and (ii) the Applicable Premium.

The $23.5 million initial fair value of the embedded derivatives for the Subordinated Credit Agreement has been recorded as a debt discount along with a corresponding liability on the Company’s condensed consolidated balance sheets. The initial debt discount is not subsequently revalued and is being amortized using the straight-line method, which approximates the effective interest method over the life of the Subordinated Credit Agreement. 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 at each reporting period with changes in fair value recorded within Loss on derivative liabilities in the Company’s unaudited interim condensed consolidated statements of operations and comprehensive loss.

The Company valued the embedded derivatives using a “with-and-without method” where the value of the KLIM Term Loan including the embedded derivatives were defined as the “with” and the value of the KLIM Term Loan excluding the embedded derivatives were defined as the “without.” This method estimates the fair value of the embedded derivatives as the difference between the KLIM Term Loan value with and without the embedded derivatives. The fair value of the embedded derivative liabilities associated with the KLIM Term Loan was estimated using a probability weighted discounted cash flow model to measure the fair value. This involves significant Level 3 inputs and assumptions including an (i) estimated probability and timing of a change in control and (ii) our risk-adjusted discount rate.

The following table sets forth the inputs to the “with-and-without method” that was used to value the embedded derivatives based on potential change in control scenarios with different probabilities and a maturity scenario that would not result in a change in control event:

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Note 12—Fair value

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

•Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

•Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amount of Cash and cash equivalents, Restricted cash, Accounts receivable, Inventory, and Accounts payable and accrued expenses, as reflected on the unaudited interim condensed consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments. These estimated fair values may not be representative of actual values of the financial instruments that could have been realized or that will be realized in the future.

The promotional agreements (see Note 15—Commitments and contingencies) and derivative instruments (see Note 11—Derivative instruments) are Level 3 instruments and use internal models to estimate fair value using certain significant unobservable inputs which require determination of relevant inputs and assumptions. Accordingly, changes in these unobservable inputs may have a significant impact on fair value. Such inputs include risk-free interest rate, expected dividend yield, expected volatility, and expected vesting date. The Level 3 liabilities generally decrease (increase) in value based upon an increase (decrease) in risk-free interest rate, expected vesting date, and expected dividend yield. Conversely, the fair value of these Level 3 liabilities generally increases (decreases) if the expected volatility were to increase (decrease).

The inputs for determining fair value of the embedded Exit Fee and Applicable Premium are Level 3 instruments. Refer to Note 11—Derivative instruments for further discussion related to the inputs and accounting for these instruments.

The following table summarizes the Company’s total Level 3 liability activity for the three months ended March 31, 2023 (in thousands):

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			Derivative Liability						Total Level 3 Liabilities
Fair value as of January 1, 2023			$	—					$	—
Initial measurement on February 14, 2023			23,532						23,532
Fair value as of March 31, 2023			$	23,532					$	23,532

The following table summarizes the Company’s total Level 3 liability activity for the three months ended March 31, 2022 (in thousands):

			Promotional Agreements						Total Level 3 Liabilities
Fair value as of January 1, 2022			$	4,474					$	4,474
Change in valuation of promotional agreements			1,588						1,588
Issuance of common stock pursuant to promotional agreement awards			(2,963)						(2,963)
Fair value as of March 31, 2022			$	3,099					$	3,099

Note 13—Income taxes

The effective income tax rate was a provision rate of negative 0.9% and positive 20.3% for the three months ended March 31, 2023 and 2022, respectively. The income tax expense for the interim period was computed using the effective tax rate estimated to be applicable for the full year. The effective tax rate reflects the tax effect of the establishment of a valuation allowance against the Company’s deferred tax assets in the second quarter of tax year 2022, and the effect of not recognizing the benefit of the losses incurred in 2023 and 2022 in jurisdictions where the Company concluded it is more likely than not that such benefits would not be realized.

The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As a result of this assessment during the second quarter of 2022, the Company concluded that it was more likely than not that the Company would not realize its deferred tax assets. For the period ended March 31, 2023, the Company considered cumulative losses as a significant source of negative evidence and maintained the valuation allowance against the Company’s deferred tax attributes in the U.S. and foreign jurisdictions.

As of March 31, 2023, the Company had $15.2 million of gross unrecognized tax benefits primarily related to marketing service awards that are not more-likely-than-not to be realized due to insufficient evidence to support payment of the service awards.

Note 14—Related party transactions

During each of the three months ended March 31, 2023 and 2022, the Company recognized less than $0.1 million of Franchise revenue and Equipment and merchandise revenue from studios owned by Mark Wahlberg, Chief Brand Officer and Director of the Company, and Michael Raymond, Director of the Company. With respect to these transactions, the Company has presented the revenue recognized during these periods in Franchise revenue in the unaudited interim condensed consolidated statements of operations and comprehensive loss. As of March 31, 2023 and December 31, 2022, the Company had no outstanding receivables from these studios. These amounts are included in Due from related parties on the unaudited interim condensed consolidated balance sheets.

During each of the three months ended March 31, 2023 and 2022, the Company recognized less than $0.1 million of Franchise revenue from studios owned by an entity in which an existing stockholder that is an executive officers. With respect to these transactions, the Company has presented the revenue recognized during these periods in Franchise revenue in the unaudited interim condensed consolidated

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statements of operations and comprehensive loss. As of each of March 31, 2023 and December 31, 2022, the Company had less than $0.1 million outstanding receivables from these studios. These amounts are included in Due from related parties on the unaudited condensed consolidated balance sheets.

During the three months ended March 31, 2023 and 2022, the Company incurred expenses totaling approximately $0.4 million and $1.0 million, respectively, in connection with certain shipping and logistic services from a third-party vendor that is owned by an immediate family member of a former executive officer of the Company (who was an executive officer of the Company during this time period). The Company has presented the expenses incurred during these periods in Cost of equipment and merchandise in the unaudited interim condensed consolidated statements of operations and comprehensive loss. As of March 31, 2023 and December 31, 2022, the Company had approximately $2.3 million and $2.2 million, respectively, of outstanding payables to the third-party vendor. These amounts are included in Accounts payable and accrued expenses on the unaudited interim condensed consolidated balance sheets.

During the first quarter of 2022, the Company entered into a development agreement with an existing multi-unit franchisee to open approximately 87 studios. Following the execution of this agreement, the Company entered into an employment agreement and contractor agreement with two individuals who hold an equity ownership in the franchisee entity. As a result of the employment agreements, the Company determined the development agreement and studios operating under ownership of its franchisee now represent related party transactions. During the three months ended March 31, 2023, the Company recognized Franchise revenue and Equipment and merchandise revenue totaling $0.1 million from studios under the development agreement. The Company has presented the expenses incurred during these periods in Cost of equipment and merchandise in the unaudited interim condensed consolidated statements of operations and comprehensive loss.

The development agreement required payment for equipment delivered during the first quarter of 2022 to be made at the earlier of opening of the underlying studio or 12 months from the date of the purchase of the equipment. The Company is currently assessing alternatives to the current agreement, including potentially amending the agreements to provide for no further development of studios or termination of the agreements; however, it cannot be certain that a solution will be reached. As of March 31, 2023 and December 31, 2022, the Company had receivables outstanding related to amounts due under the development agreement of $0.2 million and $0.6 million, respectively. These amounts are included in Due from related parties on the unaudited interim condensed consolidated balance sheets.

U.S. Development Agreement Transaction with Club Franchise Group LLC

On June 15, 2021, the Company entered into a long-term multi-unit studio agreement, with Club Franchise Group LLC (“Club Franchise”), an affiliate of KLIM, the investment manager to significant stockholders of the Company, an affiliate of lenders under the Company’s KLIM Credit Agreement and party to the Company’s Third Amended and Restated Stockholders’ Agreement. Pursuant to the term multi-unit studio agreement, the Company granted to Club Franchise the right to, and Club Franchise agreed to, open at least 300 studios in certain territories in the U.S. over 36 months, with the first 150 studios to be open within 18 months of the date of the multi-unit studio agreement, or December 15, 2022. Club Franchise had 24 studios opened as of March 31, 2023 under the multi-unit studio agreement.

Club Franchise is obligated to pay to the Company the same general fees as other franchisees in the U.S., and to enter into a franchise agreement in respect of each studio upon approval by the Company of the studio site. Consistent with some of the franchise agreements in the United States entered into since July 2019, Club Franchise is required to pay the Company a monthly franchise fee based on the greater of a fixed monthly franchise fee of $2,500 per month or 7% of gross monthly studio revenue regardless of whether such studios are open. Club Franchise has also agreed to pay the Company an upfront establishment fees of $7.5 million as follows: (i) $1.9 million upon execution of the multi-unit studio agreement (which amount had been paid as of December 31, 2021); (ii) $1.9 million by June 2022; (iii) $1.9 million by December 2022; and (iv) $1.9 million by December 2023. Club Franchise is required to pay monthly franchise fees to the Company in respect of additional studios with monthly franchise fees for

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150 studios being payable by December 2022. With respect to the remaining 150 studios, the Company and Club Franchise have agreed to negotiate a payment schedule that provides for the monthly franchise fees in respect of such studios to commence no later than 12 months after the opening date of the relevant studio. Like other franchisees, Club Franchise is also obligated to pay the Company other fees, including fees related to marketing and equipment and merchandise, some of which the Company has agreed to provide at a discounted rate.

During the fourth quarter of 2022, the Company determined that Club Franchise was no longer in compliance with the multi-unit studio agreement as a result of outstanding franchise fee invoices as well as delays related to required studio openings in accordance with development schedules. As a result of the non-compliance and subsequent discussions with Club Franchise management, the Company determined that collections related to approximately 280 studios under the agreement were no longer probable based on their expected opening date.

The Company recognized $0.2 million and $2.3 million, respectively, of Franchise revenue and Equipment and merchandise revenue in conjunction with the transaction with Club Franchise Group LLC during the three months ended March 31, 2023 and 2022. There was less than $0.1 million and $3.2 million outstanding receivable balance owed by Club Franchise as of March 31, 2023 and December 31, 2022, respectively.

European Master Franchise Agreement Transaction with Club Sports Group, LLC

On October 26, 2022, the Company entered into a Master Franchise Agreement (“MFA”) with Club Sports Group, LLC (“Club Sports”), an affiliate of KLIM, pursuant to which the Company granted Club Sports the master franchise rights to sell F45 licenses to franchisees in certain territories as defined in the agreement, including Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. In exchange, the Company will receive certain fees and royalties, including a percentage of the revenue generated by franchise agreements signed under the MFA. In accordance with the MFA, F45 will assign existing franchise agreement rights to approximately 103 studios previously signed by the Company. Subsequent to the original signing of the MFA, the MFA was modified to include an additional 71 franchise agreements. The term of the MFA provides for a ten-year period for Club Sports to sell licenses to franchisees with the option to renew the MFA for two additional ten-year periods at the then current master franchise fee rate. The MFA expires at the expiration or termination of the last franchise agreement sold by Club Sports.

At signing of the MFA, Club Sports was required to make an upfront master franchise fee payment of $1.5 million on the effective date of the MFA as well as purchase 40 equipment packs to be sold to sub-franchisees under the MFA. The Company recognized Equipment and merchandise revenue of less than $0.1 million during the three months ended March 31, 2023 as a result of these orders. No franchise revenues were recognized under the MFA during the three months ended March 31, 2023 as it was determined that Club Sports had not taken over master franchising activities, including marketing of sale of new franchise agreements and general and administrative activities over the franchise agreements as of March 31, 2023.

Related party franchise arrangements were transacted at arm’s length pricing with standard contractual terms.

Litigation

Where appropriate, the Company establishes accruals in accordance with FASB guidance over loss contingencies in accordance with ASC 450, Contingencies. As of March 31, 2023 and December 31, 2022, the Company had established a litigation accrual of $2.5 million and $9.6 million, respectively, in Accounts payable and accrued expenses for claims brought against the Company in the ordinary course

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of business. Subsequent to year end 2022, the Company resolved certain legal claims for approximately $6.6 million, which was included in the litigation accrual as of December 31, 2022, and paid during the first half of 2023. Our accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. The Company does not presently believe that the ultimate resolution of the matters for which accruals have been established 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 lease portfolio consists of office buildings, a company-owned studio, and warehouse space in the United States, England, and Australia. Certain lease agreements contain options that allow the Company to extend the lease agreement. All of the Company’s leases are classified as operating leases on the unaudited interim condensed consolidated balance sheets.

As of March 31, 2023, the Company had outstanding guaranties of $2.6 million for lease payments related to 8 franchisee studio leases in the states of California, Maryland, and Virginia. These leases have non-cancelable remaining lease periods ranging from 1 to 10 years.

Promotional agreements

Liability-classified awards

On October 15, 2020, the Company entered into a promotional agreement with ABG-Shark, LLC (“ABG-Shark”). Pursuant to this agreement, Greg Norman agreed to provide certain promotional services to the Company in exchange for annual compensation. In connection with the Company becoming publicly traded on July 15, 2021, ABG-Shark became 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 agreed to provide certain promotional and marketing services to the Company in exchange for equity compensation equal to 15% of the fair market value of Malibu Crew, Inc. (“Malibu Crew”). Both of these promotional agreements expire on October 14, 2025.

On November 24, 2020, the Company entered into a promotional agreement with DB Ventures Limited (“DB Ventures”). Pursuant to this agreement, David Beckham agreed to provide certain promotional services to the Company in exchange for annual compensation. In connection with the Company becoming publicly traded on July 15, 2021, DB Ventures became entitled to receive the greater of 1% of the Company’s issued and outstanding common stock or $5.0 million on the six- and 12-month anniversaries of the Company becoming publicly traded. This agreement expires on December 5, 2025. The Company has been recognizing expenses related to the promotional activities and image rights under this agreement ratably over the five-year 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. In December 2021, the Company invested in a joint venture with 75% ownership in the newly incorporated CLF High Street Limited that operates the DB studios and provided $0.5 million of cash for equipment and other studio opening costs. For the three months ended March 31, 2022, the Company recorded $1.4 million in expense related to this agreement. During the three months ended March 31, 2022, 914,692 of common shares vested under this agreement as a result of meeting the six-month anniversary of the Company becoming publicly traded.

On October 19, 2022, DB Ventures and ABG-Shark filed a complaint (‘the complaint”) against the Company alleging breach of contract in connection with these promotional agreements. Prior to the filing of the complaint, the Company recognized expenses associated with the DB Ventures promotional agreement over the service period which was to run through December 5, 2025. As a result of the

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complaint, the Company determined it was no longer probable that any future services would be provided by the promoters under the agreements and for the year ended December 31, 2022, accelerated recognition of $5.6 million of additional marketing expenses equal to the fair value of 914,692 common shares vested and issued under the promotional agreement with DB Ventures which were previously expected to be recognized over the service period of the promotional agreement. The Company disputes the claims filed under the complaint and intends to vigorously defend itself. As the litigation is preliminary in nature and involves substantial uncertainties, no additional amounts have been accrued as a result of the complaint.

On April 12, 2021, the Company entered into a promotional agreement with Magic Johnson

Entertainment (“MJE”). Pursuant to this agreement, MJE agreed to provide certain promotional services to the Company in exchange for compensation. In connection with the Company becoming publicly traded on July 15, 2021, MJE agreed to a cash payment of $4.0 million in lieu of equity compensation that MJE was entitled to receive as a result of the IPO. The prepayment of $4.0 million was recorded as Prepaid expenses in the condensed consolidated balance sheets and the amount is amortized ratably over the service period. Additionally, in connection with the Company becoming publicly traded on July 15, 2021, the Company became obligated to grant MJE a number of shares of common stock equal to the result of $5.0 million divided by the Average Trading Price upon each occurrence of a vesting event based on increases in the Company’s market capitalization as defined in the agreement. The agreement between the Company and MJE terminates on January 23, 2026.

On June 25, 2021, the Company entered into a promotional agreement with Craw Daddy Productions (“CDP”). Pursuant to this agreement, effective July 1, 2021, Cindy Crawford agreed to provide certain promotional services to the Company in exchange for annual compensation. In connection with the Company becoming publicly traded on July 15, 2021, the Company became obligated to grant CDP a number of shares of common stock equal to the result of $5.0 million divided by the Average Trading Price upon each occurrence of a Vesting Event which is based on increases in the Company’s market capitalization as defined in the agreement. On the same date, Avalon House, a subsidiary of the Company, also entered into a promotional agreement with Cindy Crawford, whereby she agreed to 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. On October 17, 2022, the Company entered into a mutual termination agreement with CDP pursuant to which both promotional agreements were terminated in exchange for a cash payment of $0.3 million.

On September 24, 2021, the Company entered into a promotional agreement with Big Sky, Inc. (“Big Sky”). Pursuant to this agreement, Joe Montana agreed to provide certain promotional services to the Company in exchange for annual compensation. On the same date, Malibu Crew also entered into a promotional agreement with Big Sky, whereby Joe Montana agreed to provide certain promotional and marketing services to the Company in exchange for equity compensation equal to 1% of the fair market value of Malibu Crew. As part of the agreement, the Company is obligated to provide franchise rights to five Malibu Crew studios and cover costs associated with start-up of the studios, subject to the Company’s ability to recoup these start-up costs over a negotiated period of time to be defined in the underlying franchise agreements. On March 13, 2023, the Company entered into a mutual termination agreement with Big Sky in which both promotional agreements were terminated in exchange for a cash payment of $0.2 million.

No stock-based compensation expense was recognized in connection with the aforementioned promotional agreements for the three months ended March 31, 2023 as a result of reductions in the fair value of the liability-classified awards. The Company recognized total stock-based compensation expense of $1.4 million in connection with such promotional agreements for the three months ended March 31, 2022. The Company determined that the common stock to be issued upon settlement of the remaining promotional agreements with ABG-Shark and MJE are liability-classified awards. As of March 31, 2023 and December 31, 2022, the Company recorded less than $0.1 million of stock-based compensation liability in Other long-term liabilities in the condensed consolidated balance sheets.

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The Company estimates the fair value of its liability-classified awards using a Monte-Carlo simulation model at each reporting period until settlement. The other significant assumptions used in the analysis as of March 31, 2023 were as follows:

						As of March 31, 2023
Risk-free interest rate						4.20%
Expected dividend yield						—
Expected term in years						2.04 - 2.31
Expected volatility						26.40% - 42.14%

Equity-classified awards

On December 17, 2021, the Company entered into a promotional agreement with Timothy Kennedy (“TK”). Pursuant to this agreement, effective December 30, 2021, TK agreed to provide certain promotional services to the Company in exchange for annual compensation and $0.1 million of the Company’s Restricted Stock Awards (“RSAs”) for each 12-month period of service. RSAs will vest 100% upon each of the first four one-year anniversaries of the services being provided. The agreement between the Company and TK terminates on December 16, 2026. The Company determined that the RSAs granted to TK are equity-classified awards. The stock-based compensation expense related to the RSAs is recognized ratably over the requisite service period in Selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.

See Note 16—Stock-based compensation for discussion on the stock option activities and total stock-based compensation expense for the three months ended March 31, 2023 and March 31, 2022, respectively.

Note 16—Stock-based compensation

2021 Incentive Plan

The Company’s stock-based compensation plan, which became effective at the IPO date, includes equity incentive compensation plans under which three types of share-based compensation plans are granted to the employees, directors and consultants of the Company, which are stock options (“SOs”), restricted stock units (“RSUs”) and restricted stock awards (“RSAs”). The purpose of the plan is to assist the Company in securing and retaining the service of eligible award recipients, to provide incentives to employees, directors and consultants and promote the long-term financial success of the Company and thereby increase stockholder value. In accordance with the 2021 Incentive Plan, subject to adjustment for certain dilutive or related events, the maximum aggregate number of shares that may be subject to stock awards and sold under this plan is 5,000,000 shares, or the share reserve (“Share Reserve”). Beginning on January 1, 2022 and ending on January 1, 2031, the Share Reserve will automatically increase on January 1 of each year during the term of the 2021 Incentive Plan in an amount equal to 5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; provided, however, that the Company’s board of directors may provide that there will not be a January 1 increase in the Share Reserve in a given year or that the increase will be less than 5% of the shares of common stock outstanding on the preceding December 31.

Employees meeting certain employment qualifications are eligible to receive stock-based awards. In accordance with the Company’s accounting policy, forfeitures of SOs, RSUs and RSAs are accounted for as they occur.

Stock options

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SOs granted under the incentive equity plans are generally non-statutory stock options, but the incentive equity plans permit some options granted to qualify as incentive stock options under the U.S. Internal Revenue Code. SOs generally vest over one to three years from the grant date. The exercise price of a stock option is equal to the closing price of the Company’s stock on the option grant date. The majority of SOs issued by the Company are subject to only service vesting conditions.

A summary of option activity under the employee share option plan as of March 31, 2023, and changes during the period then ended, is presented below:

			Shares (in thousands)			Weighted - Average Exercise Price			Weighted - Average Remaining Contractual Term			Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2022			2,191			$	4.43		10.42			$	1,160
Granted			—			—
Exercised			(1)			2.02
Forfeited, expired, or canceled			(197)			11.32
Outstanding as of March 31, 2023			1,993			$	3.75		10.21			$	—
Vested and Exercisable			1,272			$	3.15		9.55			$	—
Expected to Vest			721			$	4.80		11.38			$	—

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that option holders would have realized had all option holders exercised their options on the last trading day of the quarter ended March 31, 2023. The aggregate intrinsic value of vested and unvested options as of March 31, 2023 was $0, since the options were out-of-the-money. The total grant date fair value of the options vested during the three months ended March 31, 2023 and 2022 was $0.4 million and $0, respectively.

As of March 31, 2023, the total unrecognized pre-tax stock-based compensation expense related to non-vested stock options was $1.2 million, which is expected to be recognized over a weighted-average vesting period of 1.9 years.

Restricted stock units

RSUs may be granted at any time and from time to time as determined by the Company. The Company will set vesting criteria at its discretion, which, depending on the extent to which the criteria are met, will determine the number of RSUs that will be paid out to the participant. The Company may set vesting criteria based upon the passage of time, the achievement of target levels of performance, or the occurrence of other events or any combination thereof as determined by the Company at its discretion. Dividend equivalents shall not be paid on a RSU during the period it is unvested. The RSUs granted by the Company are subject to service vesting conditions. RSUs also provide for accelerated vesting in certain circumstances as defined in the plans and related grant agreements.

As of March 31, 2023, the total number of shares subject to outstanding RSUs was 2,637,923. The Company withheld 187,205 shares of common stock related to net share settlement of restricted stock units vested during the three months ended March 31, 2023.

The Company uses the closing stock price on the grant date to estimate the fair value of service-based RSUs. The Company estimates the fair value of RSUs subject to performance-adjusted vesting conditions using the closing stock price on the grant date.

A summary of RSUs activity is as follows:

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			Shares (in thousands)			Weighted - Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2022			3,088			$	5.93
Granted			—			—
Vested			(416)			6.97
Forfeited			(34)			2.02
Outstanding as of March 31, 2023			2,638			$	5.81

The total grant date fair value of RSUs vested during the three months ended March 31, 2023 was $2.9 million. No RSUs vested during the three months ended March 31, 2022. During the three months ended March 31, 2023 and 2022, total recognized pre-tax stock-based compensation expense related to non-vested RSUs was $2.1 million and less than $0, respectively, which was included in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss. As of March 31, 2023, total unrecognized pre-tax stock-based compensation expense related to non-vested RSUs was $13.0 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.16 years. The maximum contractual term of RSUs is approximately 4.0 years.

Restricted stock awards

Subject to the terms and provisions of the plan, the Company, at any time and from time to time, may grant shares of restricted stock to service providers in such amounts as the Company, in its sole discretion, will determine. During the period of restriction, service providers holding shares of restricted stock may exercise full voting rights and will be entitled to receive all dividends and other distributions paid with respect to such shares, unless the Company determines otherwise. If any such dividends or distributions are paid in shares, the shares will be subject to the same restrictions on transferability and forfeitability as the shares of restricted stock with respect to which they were paid. The RSAs granted by the Company are subject to service vesting conditions. As of March 31, 2023, the total number of shares subject to outstanding RSAs was 232,478.

The Company estimates the fair value of RSAs subject to performance-adjusted vesting conditions using the closing stock price on the grant date.

A summary of RSAs activity is as follows:

			Shares (in thousands)			Weighted - Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2022			361			$	4.44
Granted			—			—
Vested			(129)			4.68
Forfeited			—			—
Outstanding as of March 31, 2023			232			$	4.30

The total grant date fair value of RSAs vested during the three months ended March 31, 2023 and 2022 was $0.6 million and $0.1 million, respectively. For the three months ended March 31, 2023 and 2022, total recognized pre-tax stock-based compensation expense related to non-vested RSAs was $0.4 million and $0.5 million, respectively, which was included in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss. Total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards was $0.3 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.3 years. The maximum contractual term of the RSAs is approximately one year.

Non-employee promotional agreements

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Liability-classified awards

As described in Note 15—Commitments and contingencies, the Company entered into promotional agreements with ABG-Shark, DB Ventures, MJE, and CDP which included RSUs that contain equity-based payments, which have performance, market and service conditions. On October 17, 2022, the Company entered into a mutual termination agreement with CDP in which the promotional agreement was terminated.

The Company determined that the RSUs are liability-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 of March 31, 2023, the market conditions have not been met on the ABG-Shark, DB Ventures, or MJE promotional agreements. The Company began recognizing stock-based compensation expense ratably over the requisite service period when the performance condition was met through the achievement of the IPO on July 15, 2021. The stock-based compensation expense related to the RSUs are recognized ratably over the requisite service period in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss.

Equity-classified awards

The promotional agreement with TK included RSAs that contain equity-based payment, which has a service condition. The Company determined that the RSAs granted to TK are equity based awards that contains a service condition to vest. The stock-based compensation expense related to the RSAs are recognized ratably over the requisite service period in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss.

Note 17—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 Months Ended March 31,
															2023						2022 (As Restated)
Numerator:
Net loss attributable to common stockholders—basic and diluted															$	(22,653)					$	(9,478)
Denominator:
Weighted average common shares outstanding—basic and diluted															96,884,584						95,709,671
Net loss per share:
Basic and diluted net loss per share															$	(0.23)					$	(0.10)
Anti-dilutive securities excluded from diluted loss per share:
Unvested restricted stock units															2,851,416						—
Unvested restricted stock awards															295,156						—
Stock options to purchase common stock															2,088,306						662,935
Total															5,234,878						662,935

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Note 18—Segment and geographic area information

The Company’s operating segments align with how the Company manages its business and interacts with its franchisees on a geographic basis. F45 is organized by geographic regions 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 “United States” as the operations in the United States and South America. 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, its principal executive officer and principal financial officer. The Company identified changes to the CODM group with the appointments of Robert Madore as Interim Chief Financial Officer and Tom Dowd as Interim Chief Executive Officer on February 13, 2023 and March 29, 2023, respectively. Further, on July 13, 2023, the Board appointed Patrick Grosso as Interim Chief Financial Officer, in light of the vacancy created by Robert Madore’s resignation as Interim Chief Financial Officer on July 9, 2023. There was no change in our operating or reportable segments as a result of the change in CODM. Messrs. Madore and Dowd served as the CODM that reviewed 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 (in thousands):

			For the Three Months Ended March 31, 2023																		For the Three Months Ended March 31, 2022 (As Restated)
			Revenue						Cost of revenue						Gross profit						Revenue						Cost of revenue						Gross profit
United States:
Franchise			$	8,893					$	2,093					$	6,800					$	12,401					$	1,037					$	11,364
Equipment and merchandise			2,013						2,208						(195)						5,864						3,808						2,056
			$	10,906					$	4,301					$	6,605					$	18,265					$	4,845					$	13,420
Australia:
Franchise			$	2,765					$	122					$	2,643					$	3,448					$	173					$	3,275
Equipment and merchandise			374						449						(75)						1,394						1,547						(153)
			$	3,139					$	571					$	2,568					$	4,842					$	1,720					$	3,122
Rest of World:
Franchise			$	2,951					$	109					$	2,842					$	4,011					$	97					$	3,914
Equipment and merchandise			584						871						(287)						2,270						1,758						512
			$	3,535					$	980					$	2,555					$	6,281					$	1,855					$	4,426
Consolidated:
Franchise			$	14,609					$	2,324					$	12,285					$	19,860					$	1,307					$	18,553
Equipment and merchandise			2,971						3,528						(557)						9,528						7,113						2,415
			$	17,580					$	5,852					$	11,728					$	29,388					$	8,420					$	20,968

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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 net loss is as follows (in thousands):

			For the Three Months Ended March 31,
			2023						2022 (As Restated)
Segment gross profit			$	11,728					$	20,968
Selling, general and administrative expenses			31,504						32,116
Interest expense, net			3,231						126
Other (income) expense, net			(554)						622
Provision (benefit) for income taxes			200						(2,418)
Net loss			$	(22,653)					$	(9,478)

As of March 31, 2023, the Company had property and equipment of $8.4 million and $1.1 million in the United States and Australia segments, respectively. As of December 31, 2022, the Company had property and equipment of $8.7 million and $1.1 million in the United States and Australia segments, respectively. No segment other than the United States and Australia segments accounted for more than 10% of total property and equipment, net as of March 31, 2023 and December 31, 2022.

Note 19—Subsequent events

The Company has evaluated subsequent events from March 31, 2023 through November 7, 2023, the date on which the March 31, 2023 unaudited interim condensed consolidated financial statements were available for issuance, and has determined that there are no subsequent events requiring adjustments to our disclosures in the unaudited interim condensed consolidated financial statements, other than as discussed below.

Amendment to Side Letter

On July 13, 2023, the Company affiliates of KLIM entered into an Amendment to the Side Letter to extend the time period provided to the Company to identify a permanent Chief Financial Officer candidate.

Consents Under Credit Agreements

On each of August 31, 2023, September 15, 2023 and September 29, 2023, the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent and Australian security trustee, entered into a Consent under Amended and Restated Credit Agreement (the “JPM Consents”), under the Senior Credit Agreement. Pursuant to the JPM Consents, the lenders agreed to extend the deadlines under the Senior Credit Agreement with respect to delivery of (i) the Company’s audited financial statements for the fiscal year ended December 31, 2022 (the “2022 Financial Statements”), together with the accompanying compliance certificate, to October 20, 2023, and (ii) the Company’s financial statements for the first and second quarters ended March 31, 2023 and June 30, 2023 (together with the 2022 Financial Statements, the “Financial Statements”) together with the accompanying compliance certificates, to October 24, 2023, in each case subject to the terms and conditions set forth in the JPM Consents.

On each of August 31, 2023, September 15, 2023 and September 29, 2023, the Company as borrower, the lenders party thereto and Alter Domus (US) LLC as administrative agent, entered into a Consent Under Subordinated Credit Agreement (the “Subordinated Credit Agreement Consents”) under the Subordinated Credit Agreement. Pursuant to the Subordinated Credit Agreement Consent, the lenders have agreed to extend the deadlines under the Subordinated Credit Agreement with respect to delivery of (i) the 2022 Financial Statements, together with the accompanying compliance certificate, to October 20, 2023, and (ii) the Company’s financial statements for the first and second quarters ended March 31, 2023

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and June 30, 2023, together with the accompanying compliance certificates, to October 24, 2023, in each case subject to the terms and conditions set forth in the Subordinated Credit Agreement Consent.

Amendment to Subordinated Credit Agreement and Senior Credit Agreement

October 20, 2023, the Company entered into an Amendment to the Subordinated Credit Agreement. Pursuant to the amendment, the lenders agreed, subject to the satisfaction of certain conditions precedent to extend credit in the form of an incremental loan in an original aggregate principal amount equal to $40.0 million, upon the same terms as the original loan amount, which the Company received on October 23, 2023, provide delayed draw commitments in an aggregate principal amount of up $10 million, and extend the deadline under the Subordinated Credit Agreement with respect to the delivery of the Company’s quarterly financial statements for the first and second fiscal quarters of 2023, together with the accompanying compliance certificate, to November 8, 2023. The delayed draw commitments are available to be drawn until the date that is fifteen months following the effective date of the Amendment to the Subordinated Credit Agreement. The incremental term loans and delayed draw loans will accrue interest at a rate of 12.00% per annum, payable in kind, and will mature on August 13, 2028.

On October 20, 2023, Company entered into a Fifth Amendment to the Senior Credit Agreement (the “Fifth Amendment”). Pursuant to the Fifth Amendment, the lenders agreed to permit the incremental loans and delayed draw commitments under the Subordinated Credit Agreement, and extend the deadline under the Senior Credit Agreement with respect to delivery of the Company’s quarterly financial statements for the first and second fiscal quarters of 2023, together with the accompanying compliance certificate, to November 8, 2023. In addition, the minimum liquidity covenant was amended to require that, as of the end of each fiscal month, the Company will not permit the sum of (i) Unrestricted Cash (as defined in the Senior Credit Agreement) and (ii) any undrawn commitments under the Specified Secured Subordinated Debt (as defined in the Senior Credit Agreement) to be less than $10 million, provided, however, that at no time shall the sum of (A) Unrestricted Cash and (B) any undrawn commitments under the Specified Secured Subordinated Debt be less than $7.5 million. The Fifth Amendment also required that that $5.0 million in term loans under the Senior Credit Agreement be repaid, which the Company repaid on October 23, 2023.

Side Letter

In connection with the Amendment to the Subordinated Credit Agreement, the Company and affiliates of KLIM entered into a letter agreement, dated as of October 20, 2023, with respect to certain governance matters and agreed to further extend the deadline for the Company to identify a permanent Chief Financial Officer candidate.

Departures and Appointments in Executive Roles

On March 30, 2023, Ben Coates stepped down as Chief Executive Officer of the Company. On April 29, 2023, in connection with the resignation of Mr. Coates, the Company’s former President and Chief Executive Officer, the Company entered into a separation agreement (the” Separation Agreement”) with Mr. Coates. Pursuant to the terms of the Separation Agreement, Mr. Coates was eligible to receive payment of base salary from April 1, 2023 through July 31, 2023, in the total amount of $0.5 million paid in a lump sum and the vesting of the portion of Mr. Coates’ unvested monthly restricted stock unit award granted August 18, 2022 that was scheduled to vest on March 31, 2023. On March 29, 2023, Company’s Board of Directors appointed Tom Dowd and President and Chief Executive Officer effective March 30, 2023 and entered into an employment agreement dated as of March 30, 2023. On March 29, 2023, the Company’s Board of Directors appointed Mark Wahlberg Chief Brand Officer and entered into a letter agreement dated March 30, 2023.

Sublease of Headquarter Office Space

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On September 22, 2023, the Company entered into an agreement with Kouto Inc. to sublease 23.6% of the Company’s office space at its global headquarters location in Austin, Texas.

Release Agreement

On October 31, 2023, the Company entered into a mutual termination and release agreement with Hillcrest Health LLC in connection with a multi-unit franchise agreement dated March 31, 2022, whereby both parties were released from all future obligations pursuant to that agreement and 84 equipment packs purchased pursuant to that agreement were returned to the Company.

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v3.23.3

Cover - shares	3 Months Ended
	Mar. 31, 2023	Nov. 06, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-36773
Entity Registrant Name	F45 Training Holdings Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	84-2529722
Entity Address, Address Line One	3601 South Congress Avenue
Entity Address, Address Line Two	Building E
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
Title of 12(b) Security	Common stock, par value $0.00005
Trading Symbol	FXLV
Entity Current Reporting Status	No
Entity Interactive Data Current	No
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		97,516,791
Entity Central Index Key	0001788717
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1

v3.23.3

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 53,730	$ 5,265
Restricted cash	68	69
Accounts receivable, net	4,101	9,929
Inventories	43,058	42,497
Deferred costs	1,891	1,886
Prepaid expenses	6,698	7,850
Other current assets	6,485	6,279
Total current assets	116,146	75,444
Lease right-of-use asset	13,905	14,258
Property and equipment, net	9,665	10,035
Goodwill	2,110	2,145
Intangible assets, net	6,269	6,262
Deferred costs, net of current portion	10,601	10,916
Other long-term assets	21,386	23,646
Total assets	180,082	142,706
Current liabilities:
Accounts payable and accrued expenses	44,217	48,485
Other current liabilities	3,298	2,559
Deferred revenue	14,190	15,929
Interest payable	464	384
Current portion of long-term debt	2,096	106
Income taxes payable	4,845	5,102
Total current liabilities	69,110	72,565
Deferred revenue, net of current portion	3,824	2,980
Long-term derivative liabilities	23,532	0
Lease liabilities, net of current portion	16,855	17,184
Long-term debt, net of current portion	125,060	88,341
Other long-term liabilities	4,502	4,548
Total liabilities	242,883	185,618
Commitments and contingencies (Note 15)
Stockholders’ deficit
Common stock, $0.00005 par value; 97,063,323 and 96,705,318 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	6	6
Additional paid-in capital	684,909	681,338
Accumulated other comprehensive loss	(2,233)	(1,426)
Accumulated deficit	(570,763)	(548,110)
Less: Treasury stock	(174,720)	(174,720)
Total stockholders' deficit	(62,801)	(42,912)
Total liabilities and stockholders' deficit	180,082	142,706
Related Party
Current assets:
Due from related parties, net	$ 115	$ 1,669

v3.23.3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Stockholders’ deficit
Common stock, par value (in dollars per share)	$ 0.00005	$ 0.00005
Common stock, shares issued (in shares)	97,063,323	96,705,318
Common stock, shares outstanding (in shares)	97,063,323	96,705,318

v3.23.3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues:
Revenue	$ 17,580	$ 29,388
Costs and operating expenses:
Cost of revenue	5,852	8,420
Selling, general and administrative expenses	31,504	32,116
Total costs and operating expenses	37,356	40,536
Loss from operations	(19,776)	(11,148)
Interest expense, net	3,231	126
Other (income) expense, net	(554)	622
Loss before income taxes	(22,453)	(11,896)
Provision (benefit) for income taxes	200	(2,418)
Net loss	(22,653)	(9,478)
Other comprehensive (loss) income
Foreign currency translation adjustment, net of tax	(807)	1,016
Comprehensive loss	$ (23,460)	$ (8,462)
Net loss per share
Basic (in dollars per share)	$ (0.23)	$ (0.10)
Diluted (in dollars per share)	$ (0.23)	$ (0.10)
Shares used in computing net loss per share
Basic (in shares)	96,884,584	95,709,671
Diluted (in shares)	96,884,584	95,709,671
Franchise
Revenues:
Revenue	$ 14,609	$ 19,860
Costs and operating expenses:
Cost of revenue	2,324	1,307
Equipment and merchandise
Revenues:
Revenue	2,971	9,528
Costs and operating expenses:
Cost of revenue	$ 3,528	$ 7,113

v3.23.3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues:
Revenue	$ 17,580	$ 29,388
Franchise
Revenues:
Revenue	14,609	19,860
Franchise | Related Party
Revenues:
Revenue	305	2,616
Equipment and merchandise
Revenues:
Revenue	2,971	9,528
Equipment and merchandise | Related Party
Revenues:
Revenue	265	7
Costs and operating expenses:
Related parties amount in cost of sales	$ 404	$ 951

v3.23.3

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2021		95,806,063
Beginning balance at Dec. 31, 2021	$ 120,071	$ 5	$ 662,946	$ (174,720)	$ 1,151	$ (369,311)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	487		487
Shares withheld related to net share settlement of equity awards (in shares)		(1,045,661)
Shares withheld related to net share settlement of equity awards	(10,991)		(10,991)
Vested restricted stock units to be issued in association with promotional agreement (in shares)		914,692
Vested restricted stock units to be issued in association with promotional agreement	2,964	$ 1	2,963
Vested restricted stock awards (in shares)		7,739
Net loss	(9,478)					(9,478)
Cumulative translation adjustment, net of tax	1,016				1,016
Ending balance (in shares) at Mar. 31, 2022		95,682,833
Ending balance at Mar. 31, 2022	$ 104,069	$ 6	655,405	(174,720)	2,167	(378,789)
Beginning balance (in shares) at Dec. 31, 2022	96,705,318	96,705,318
Beginning balance at Dec. 31, 2022	$ (42,912)	$ 6	681,338	(174,720)	(1,426)	(548,110)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	4,087		4,087
Issuance of common stock upon exercise of stock options (in shares)		1,366
Issuance of common stock related to settlement of RSUs (in shares)		415,639
Issuance of common stock related to settlement of RSUs	0	$ 0	0
Shares withheld related to net share settlement of equity awards (in shares)		(187,205)
Shares withheld related to net share settlement of equity awards	(516)		(516)
Vested restricted stock awards (in shares)		128,205
Net loss	(22,653)					(22,653)
Cumulative translation adjustment, net of tax	$ (807)				(807)
Ending balance (in shares) at Mar. 31, 2023	97,063,323	97,063,323
Ending balance at Mar. 31, 2023	$ (62,801)	$ 6	$ 684,909	$ (174,720)	$ (2,233)	$ (570,763)

v3.23.3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities
Net loss	$ (22,653)	$ (9,478)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	336	286
Amortization of intangible assets	529	888
Amortization of deferred costs	933	626
Amortization of debt issuance costs and debt discount	207	0
Bad debt expense	5,514	1,464
Stock-based compensation	4,087	2,073
Non-cash lease expense	550	0
Provision for inventories	(17)	(52)
In-kind marketing	0	57
Unrealized foreign currency transaction gains	14	360
Impairment expense	18	0
Changes in operating assets and liabilities:
Due from related parties	0	(294)
Accounts receivable, net	2,116	(12,498)
Inventories	(572)	(9,262)
Prepaid expenses	1,148	(20,085)
Other current assets	(8,433)	(6,197)
Deferred costs	(685)	(806)
Other long-term assets	9,580	(5,375)
Accounts payable and accrued expenses	(3,774)	10,278
Deferred revenue	(1,115)	(774)
Interest payable	1,280	(104)
Income taxes payable	(310)	(2,346)
Other long-term liabilities	730	5,405
Lease liabilities	(481)	0
Net cash used in operating activities	(10,998)	(45,834)
Cash flows from investing activities
Purchases of property and equipment	(600)	(2,117)
Disposal of property and equipment	134	0
Purchases of intangible assets	(180)	(1,296)
Net cash used in investing activities	(646)	(3,413)
Cash flows from financing activities
Deferred financing costs	(5,662)	0
Borrowings under KLIM Term Loan	87,300	31,600
Repayments of revolving facility	(20,100)	0
Taxes paid related to net share settlement of equity awards	(516)	(10,991)
Net cash provided by financing activities	61,022	20,609
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(914)	626
Net change in cash, cash equivalents, and restricted cash	48,464	(28,012)
Cash and cash equivalents at beginning of period	5,265	42,004
Restricted cash at beginning of period	69	0
Cash, cash equivalents, and restricted cash at beginning of period	5,334	42,004
Cash and cash equivalents at end of period	53,730	13,992
Restricted cash at end of period	68	0
Cash, cash equivalents, and restricted cash at end of period	53,798	13,992
Supplemental disclosure of noncash financing and investing activities:
Property and equipment included in accounts payable and accrued expenses	20	1,008
Intangible assets included in accounts payable and accrued expenses	453	184
Operating lease ROU assets obtained in exchange for operating lease liabilities	$ 164	$ 0

v3.23.3

Nature of the business and basis of presentation	3 Months Ended
	Mar. 31, 2023
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. and its subsidiaries (“F45 Training Holdings”, the “Company”, or “F45”) are a global fitness franchisor engaged in franchising and licensing the F45 Training, FS8, and Vive Active brands to fitness facilities in multiple countries across the globe. The Company was incorporated in the State of Delaware on March 12, 2019. The Company is headquartered in Austin, Texas. Joint Venture with Club Sports Group LLC On May 16, 2022, the Company announced the formation of a joint venture with Club Sports Group LLC, a Delaware limited liability company (“CSG”), to, among other things, make, hold and monetize certain loans to prospective franchisees of the Company who have prior military service, with such loans secured by first priority senior liens on the equity interests of such franchisees and all or substantially all of the assets of such franchisees and its subsidiaries (if applicable). The joint venture will be conducted through FAFC LLC, a newly-formed Delaware limited liability company (“FAFC”). CSG is wholly owned by Kennedy Lewis Management LP, a significant stockholder of the Company which beneficially owns directly or indirectly through funds it manages, as of the date hereof, in excess of 14% of the Company’s outstanding common stock, and its related affiliates, and has the right to nominate a majority of the Company’s board of directors. As of March 31, 2023, no activity has occurred through FAFC. Basis of presentation The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) and applicable regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting, and include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company consolidates variable interest entities (“VIE”) in which it is the primary beneficiary and has a controlling financial interest, which is defined as (i) the power to direct the activities of a VIE that most significantly affect the entity’s economic performance and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The Company has determined it possesses a variable interest in certain franchisee entities to which the Company provides a lease guaranty or financing (see Note 15—Commitments and contingencies) but lacks the characteristics of having a controlling financial interest. As our franchisee entities provide our franchisee the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might be a VIE. The Company, therefore, is not deemed to be the primary beneficiary for these franchise entities and, as a result, does not include them in the Company’s consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the applicable required disclosures and regulations of the SEC. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Use of estimates The preparation of unaudited 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 unaudited interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Key estimates and judgments relied upon in preparing these unaudited interim condensed consolidated financial statements include revenue recognition, allowance for credit losses, depreciation of long-lived assets, internally developed software, amortization of intangible assets, valuation of inventory, fair value of derivative instruments, valuation of stock-based compensation, 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. Going Concern The accompanying unaudited interim condensed consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company currently funds its operations primarily from cash on hand, credit facilities and operating cash flow. The Company has historically incurred losses and negative cash flows from operations. The Company’s forecast for the twelve months from the date of these unaudited interim condensed consolidated financial statements could result in the possibility of insufficient resources to meet its ongoing obligations and maintain compliance with the minimum liquidity requirement of $10 million in its credit agreement. The Company has determined that these circumstances represent conditions regarding the Company’s ability to continue as a going concern before consideration of management’s plans. In response to these conditions, the Company obtained additional financing and intends to implement the following to reduce the demands on future Company resources: i) eliminate costs associated with being a public registrant with the SEC by the filing of Form-15 as soon as it is able to; and ii) manage the cash flows associated with non-recurring expenditures, including legal fees, certain professional services fees, and others. The NYSE filed a Form 25 with the SEC on August 25, 2023 with respect to the Company to effect the withdrawal of the listing of its common stock from the NYSE and the deregistration of its common stock under Section 12(b) of the Exchange Act (which became effective on September 5, 2023), and the Company intends to file a Form 15 as soon as practicable after the Company’s outstanding filings with the SEC have been filed. Additionally, management believes that they will be successful in limiting the Company’s non-recurring expenditures and managing the timing of such expenditures for at least twelve months from the date these unaudited interim condensed consolidated financial statements are issued. As a result, the Company’s management believes that the Company will be able to continue as a going concern for at least twelve months from the date these unaudited interim condensed consolidated financial statements are issued. The unaudited interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Subordinated Credit Agreement On February 14, 2023, the Company entered into a credit agreement (as amended, the “Subordinated Credit Agreement”) with certain subsidiaries of the Company party thereto as guarantors (the “Guarantors”), Alter Domus (US) LLC, as administrative Agent and Australian security trustee, and the lenders party thereto. The lender group consists of existing stockholders of the Company led by affiliates of Kennedy Lewis Investment Management LP (“KLIM”), the investment manager to significant stockholders of the Company and party to the Company’s Third Amended and Restated Stockholders’ Agreement. The Subordinated Credit Agreement provides for a $90.0 million, five-and-a-half-year term loan facility (the “KLIM Term Loan”) at an original issue discount of 3.00% payable in kind. The proceeds from the KLIM Term Loan were used by the Company to pay down $20.1 million of existing indebtedness and accrued interest and fees on its existing credit facility with JPMorgan Chase Bank, N.A., and to pay down other liabilities of the Company and for general corporate purposes. The obligations under the Subordinated Credit Agreement are secured by substantially all of the assets of the Company and the Guarantors. Amounts outstanding under the Subordinated Credit Agreement accrue interest at a rate of 12.00% per annum, payable in kind. Upon repayment or acceleration of the KLIM Term Loan (including in connection with a change of control), the Company is required to pay an exit fee equal to: (i) 35% of the then-current principal balance of the KLIM Term Loan during the first 12 months following closing of the KLIM Term Loan; (ii) 25% of the then-current principal balance of the KLIM Term Loan during the next 12 months; and (iii) 10% of the then-current principal balance of the KLIM Term Loan thereafter. Amendment to Subordinated Credit Agreement On October 20, 2023, the Company entered into an Amendment to the Subordinated Credit Agreement. Pursuant to the amendment, the lenders agreed to extend credit in the form of an incremental loan in an original aggregate principal amount equal to $40.0 million, upon the same terms as the original loan amount. Approximately $5.0 million of the proceeds were used to pay down a portion of the loan outstanding on the Company’s existing credit facility with JPMorgan Chase Bank, N.A. In addition, the lenders provided the Company with a delayed draw facility of up to $10 million.

v3.23.3

Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements	3 Months Ended
	Mar. 31, 2023
Statement of Financial Position [Abstract]
Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements	Note 2—Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements As previously described in Part II Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Company restated its consolidated financial statements as of and for the year ended December 31, 2021. The errors underlying the restatement also impacted the unaudited interim condensed consolidated financial statements for each of the interim periods within the year ended December 31, 2022. Description of Restatement Errors The errors identified as of and for the three months ended March 31, 2022 are as follows: •Equipment and merchandise revenue - The Company prematurely recognized Equipment and merchandise revenue before the criteria under ASC 606, Revenue from Contracts with Customers (“ASC 606”) had been met. In particular, errors resulted from incorrect conclusions regarding (i) the identification and recognition of performance obligations for customer contracts and (ii) the assessment of criteria of a contract under ASC 606. The restatement resulted in a change in the timing of the recognition of revenue and deferred revenue until such transactions meet all the criteria for revenue recognition. •Cost of equipment and merchandise - The associated Cost of equipment and merchandise for each equipment and merchandise revenue sales order was also recognized in the incorrect period. •Vendor rebate - The Company incorrectly recognized a rebate received from a vendor. •Income taxes - The Company recalculated its income tax expense on an annual and quarterly basis to account for the identified restatement adjustments. •Other errors - There are other restatement errors otherwise not described in the restatement errors listed above. These errors and related restatement adjustments were not material for the three months ended March 31, 2022. The following table presents the impact of the restatement to the unaudited interim condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2022: Three Months Ended March 31, 2022 As Previously Reported Restatement Adjustments As Restated Revenues: Franchise $ 19,860  $ —  $ 19,860  Equipment and merchandise 30,148  (20,620) 9,528  Total revenues 50,008  (20,620) 29,388  Costs and operating expenses: Cost of franchise revenue 1,231  76  1,307  Cost of equipment and merchandise 10,943  (3,830) 7,113  Selling, general and administrative expenses 32,090  26  32,116  Total costs and operating expenses 44,264  (3,728) 40,536  Income (loss) from operations 5,744  (16,892) (11,148) Interest expense, net 126  —  126  Other expense, net 570  52  622  Income (loss) before income taxes 5,048  (16,944) (11,896) Provision (benefit) for income taxes 2,536  (4,954) (2,418) Net income (loss) $ 2,512  $ (11,990) $ (9,478) Other comprehensive income (loss) Foreign currency translation adjustment, net of tax 906  110  1,016  Comprehensive income (loss) $ 3,418  $ (11,880) $ (8,462) Per share data: Earnings (loss) per share Basic and diluted $ 0.03  $ (0.13) $ (0.10) Shares used in computing earnings (loss) per share Basic 95,709,671  —  95,709,671  Diluted 96,687,283  (977,612) 95,709,671  The following table presents the impact of the restatement to the unaudited interim condensed consolidated statement of cash flows for the three months ended March 31, 2022: Three Months Ended March 31, 2022 As Previously Reported Restatement Adjustments As Restated Cash flows from operating activities Net income (loss) $ 2,512  $ (11,990) $ (9,478) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 286  —  286  Amortization of intangible assets 888  —  888  Amortization of deferred costs 626  —  626  Bad debt expense 1,464  —  1,464  Stock-based compensation 2,073  —  2,073  In-kind marketing 57  —  57  Provision for inventories (52) —  (52) Unrealized foreign currency transaction gains 381  (21) 360  Changes in operating assets and liabilities: Due from related parties (294) —  (294) Accounts receivable, net (16,413) 3,915  (12,498) Inventories (4,160) (5,102) (9,262) Prepaid expenses (20,085) —  (20,085) Other current assets (12,498) 6,301  (6,197) Deferred costs (1,194) 388  (806) Other long-term assets (8,068) 2,693  (5,375) Accounts payable and accrued expenses 1,963  8,315  10,278  Deferred revenue 3,527  (4,301) (774) Interest payable (104) —  (104) Income taxes payable 3,149  (5,495) (2,346) Other long-term liabilities 952  4,453  5,405  Net cash used in operating activities $ (44,990) $ (844) $ (45,834) Cash flows from investing activities Purchases of property and equipment (2,117) —  (2,117) Purchases of intangible assets (1,296) —  (1,296) Net cash used in investing activities $ (3,413) $ —  $ (3,413) Cash flows from financing activities Borrowings under revolving facility 31,600  —  31,600  Taxes paid related to net share settlement of equity awards (10,991) —  (10,991) Net cash provided by financing activities $ 20,609  $ —  $ 20,609  Effect of exchange rate changes on cash and cash equivalents (218) 844  626  Net increase (decrease) in cash, cash equivalents, and restricted cash (28,012) —  (28,012) Cash and cash equivalents at beginning of period 42,004  —  42,004  Cash and cash equivalents at end of period $ 13,992  $ —  $ 13,992

v3.23.3

Summary of significant accounting policies	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Summary of significant accounting policies	There were no changes to the significant accounting policies or recent accounting pronouncements that were disclosed in Note 3—Summary of significant accounting policies to the audited consolidated financial statements of the Company as of and for the years ended December 31, 2022 and 2021, other than as discussed below. Concentration of credit risk One of the Company’s customers accounted for approximately 37% of the Company’s Accounts receivable as of March 31, 2023. No customer accounted for more than 10% of the Company’s Accounts receivable as of December 31, 2022. No customer accounted for more than 10% of the Company’s total revenues for the three months ended March 31, 2023 or 2022. Credit losses The Company’s accounts and notes receivable are recorded at net realizable value, which includes an allowance for estimated credit losses. The Company estimates credit losses based on historical collections, age of receivable balances, the customer’s financial condition, and current economic trends, all of which are subject to change. The Company’s payment terms on its accounts receivable from franchisees are generally 30 days. The change in the Company’s allowance for credit losses is as follows (in thousands): For the Three Months Ended March 31, 2023 2022 Balance at beginning of period $ 16,043  $ 8,132  Provisions for bad debts, included in Selling, general and administrative 5,514  1,464  Uncollectible receivables written off (2,449) (4,230) Balance at end of period $ 19,108  $ 5,366  Debt issuance costs and debt discount The Company records debt issuance costs as a reduction to the carrying value of the related debt on the condensed consolidated balance sheets. Debt issuance costs and debt discount are amortized over the term of the related debt using the straight-line method of amortization, which approximates the effective interest method. Amortization of debt issuance costs are included in Interest expense, net on the unaudited condensed consolidated statements of operations and comprehensive loss. Derivative instruments Embedded derivatives When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative liability. The estimated fair value of the derivative feature is recorded as a liability in the consolidated balance sheets, separate from the carrying value of the host contract. Subsequent changes in the estimated fair value of the embedded derivatives are recorded as a gain or loss in within Loss on derivative liabilities in the Company’s condensed consolidated statements of operations and comprehensive loss. The Company estimates the fair value of the embedded derivatives through a “with-and-without method” that isolates the value of the embedded derivatives by measuring the difference between the host contract’s value “with” and “without” the embedded derivatives. This method utilizes the following inputs: (i) the expected term in years, (ii) the probability of a change in control event, (iii) an exit fee, (iv) the make-whole premium discount rate, and (v) the implied discount rate. These inputs are considered Level 3 inputs in the fair value hierarchy. The host contract’s value with the embedded derivatives involves the application of an implied discount rate based on repayment and prepayment scenarios upon the estimated timing and probability weighted expected change in control events. Valuations derived from this method are subject to ongoing internal and external verification review. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. Recently issued accounting pronouncements Under the Jumpstart Our Business Startups Act (“JOBS Act”), the Company meets the definition of an emerging growth company (“EGC”). The Company has elected to take advantage of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. Recently Adopted Accounting Standards 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. 2019-05, Targeted Transition Relief; ASU No. 2019-10, Effective Dates, ASU No. 2019-11, Codification Improvements, 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 ASU 2016-02, and ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures. 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 adoption of this accounting standard on January 1, 2023 did not have a material impact on the Company's unaudited interim condensed consolidated financial statements. Accounting Standards Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (“ASU 2020-04”), which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (LIBOR). In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.” ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company is currently evaluating the impact of ASU 2022-06 on its consolidated financial statements; however, the Company does not believe that adoption of ASU 2022-06 will materially impact its consolidated financial statements.

v3.23.3

Other current assets	3 Months Ended
	Mar. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Other current assets	Note 4—Other current assets Other current assets consists of the following as of March 31, 2023 and December 31, 2022 (in thousands): March 31, 2023 December 31, 2022 Unbilled receivables, current $ 4,873  $ 5,205  Rebate receivables 937  348  Prepaid taxes 407  483  Other 268  243  Total $ 6,485  $ 6,279

v3.23.3

Property and equipment, net	3 Months Ended
	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Property and equipment, net	Note 5—Property and equipment, net Property and equipment, net, consists of the following as of March 31, 2023 and December 31, 2022 (in thousands): Estimated Useful Life March 31, 2023 December 31, 2022 (years) Vehicles 5 $ 112  $ 246  Furniture and fixtures 7 1,116  1,105  Office and other equipment 5 1,199  1,190  Leasehold improvements Lesser of lease term or useful life 8,294  8,272  Construction in progress n/a 1,004  994  11,725  11,807  Less: accumulated depreciation (2,060) (1,772) Total property and equipment, net $ 9,665  $ 10,035  Construction in progress (“CIP”) consists of costs associated with the build-out of corporate-owned FS8 studios. Depreciation expense related to Property and equipment was approximately $0.3 million for each of the three months ended March 31, 2023 and 2022. Depreciation expense was recorded in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss

v3.23.3

Goodwill and intangible assets	3 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and intangible assets	Note 6—Goodwill and intangible assets The following table summarizes the useful lives and carrying values of intangible assets, including internal-use software (in thousands): As of March 31, 2023 As of December 31, 2022 Useful Life Gross Value Accumulated Amortization Net Value Gross Value Accumulated Amortization Net Value (in years) Goodwill n/a $ 2,110  $ —  $ 2,110  $ 2,145  $ —  $ 2,145  Internal-use software 3 $ 6,179  $ 3,433  $ 2,746  $ 5,852  $ 3,054  $ 2,798  Trade names & trademarks n/a 1,926  —  1,926  1,808  —  1,808  Customer contracts 7 721  59  662  733  30  703  Acquired software 3 - 6 962  27  935  966  13  953  Total intangible assets, net $ 9,788  $ 3,519  $ 6,269  $ 9,359  $ 3,097  $ 6,262  The amortization expense of intangible assets was $0.5 million and $0.9 million for the three months ended March 31, 2023 and 2022, respectively, and was recorded in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss. The weighted average remaining life of internal-use software was 1.9 years and 1.8 years as of March 31, 2023 and December 31, 2022, respectively. The weighted average remaining life of acquired software was 2.4 years and 2.3 years as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023, the expected amortization of intangible assets for future periods, excluding assets not yet placed in service of $0.1 million, is as follows (in thousands): Future Amortization Remainder of 2023 $ 1,330  2024 1,490  2025 942  2026 171  2027 162  Thereafter 99  Total $ 4,194

v3.23.3

Other long-term assets	3 Months Ended
	Mar. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Other long-term assets	Note 7—Other long-term assets Other long-term assets consist of unbilled receivables, right of return asset, debt issuance costs, investments in CLF High Street Limited, long-term accounts receivable and other long-term assets. The Company recorded a right of return asset related to World Packs that were sold to franchisees pursuant to multi-unit development agreements. These agreements did not meet the criteria of a contract with a customer under ASC 606. The Company intends to recover the World Packs that were delivered, for which it has not yet received payment. The amounts for delivered World Packs have been recorded as a right of return asset. The following table summarizes Other long-term assets as of March 31, 2023 and December 31, 2022 (in thousands): March 31, 2023 December 31, 2022 Unbilled receivables, net of current $ 9,771  $ 11,112  Right of return asset 8,239  8,224  Debt issuance costs(1) —  733  Investment in CLF High Street Limited 606  590  Long-term accounts receivable 1,900  2,135  Other long-term assets 870  852  Total $ 21,386  $ 23,646  (1) As of January 1, 2023, debt issuance costs and debt discount, net of accumulated amortization, were recorded as a reduction to the carrying value of the related debt within Long-term debt, net of current portion, on the unaudited interim condensed consolidated balance sheets. See Note 10—Debt for additional information.

v3.23.3

Accounts payable and accrued expenses	3 Months Ended
	Mar. 31, 2023
Payables and Accruals [Abstract]
Accounts payable and accrued expenses	Note 8—Accounts payable and accrued expenses Accounts payable and accrued expenses were comprised of the following (in thousands): March 31, 2023 December 31, 2022 Accounts payable $ 17,995  $ 21,767  Accrued sales tax 5,576  6,329  Accrued payroll and benefits 3,207  3,281  Accrued litigation expenses 2,525  9,613  Accrued professional fees 8,312  3,557  Accrued inventory purchases and storage costs 975  3,089  Other payables 5,627  849  Total $ 44,217  $ 48,485

v3.23.3

Deferred revenue	3 Months Ended
	Mar. 31, 2023
Revenue from Contract with Customer [Abstract]
Deferred revenue	Note 9—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. During the three months ended March 31, 2023, the Company recognized approximately $4.0 million of revenue that was included in the Deferred revenue balance at the beginning of the period. The following tables reflect the change in Deferred revenue during the three months ended March 31, 2023 and 2022 (in thousands): Deferred Revenue Balance at December 31, 2022 $ 18,909  Net change (895) Balance at March 31, 2023 $ 18,014  Deferred Revenue Balance at December 31, 2021 $ 22,366  Net change (673) Balance at March 31, 2022 (As Restated) $ 21,693  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 non-current. 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. As of March 31, 2023, remaining performance obligations were $18.0 million of which the Company expects to recognize approximately $14.2 million as revenue over the next 12 months.

v3.23.3

Debt	3 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
Debt	Note 10—Debt The following table provides a summary of the Company’s outstanding debt as of March 31, 2023 and December 31, 2022 (in thousands): March 31, 2023 December 31, 2022 Term loan $ 66,000  $ —  Revolving facility 2,000  88,100  Subordinated second lien PIK loan 88,530  —  Other debt 336  347  Total debt, excluding deferred financing costs and discounts 156,866  88,447  Deferred financing costs, net (6,353) (733) Discount on debt, net (23,357) —  Total debt $ 127,156  $ 87,714  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”). 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 further amended the Secured Credit Agreement, pursuant to which amendment, the Company agreed to convert $8.0 million of the amount outstanding under 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 $5.0 million of the principal amount of the Revolving Facility outstanding. On July 19, 2021, the Company repaid in full all outstanding indebtedness and terminated all commitments and obligations under the Term 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. On August 13, 2021, the Company entered into an amended and restated credit agreement (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “Senior Credit Agreement”), which amended and restated the Secured Credit Agreement dated September 18, 2019. The Senior Credit Agreement provided for a $90.0 million five-year senior secured revolving facility (“Facility”). The Senior Credit Agreement also provided that, under certain circumstances, the Company may increase the aggregate principal amount of revolving commitments by an aggregate amount of up to $35.0 million. On May 13, 2022, the Company entered into a second amendment (the “Second Amendment”) to the Senior Credit Agreement. Pursuant to the Second Amendment, certain terms of the Senior Credit Agreement were amended to permit the execution of the Fortress Credit Agreement (including establishing the securitization of the franchisee loans described below) and the issuance of warrants pursuant to the Warrant Purchase Agreement. On July 25, 2022, the Company entered into a Waiver Under Credit Agreement (the “Senior Credit Agreement Waiver”) with JPMorgan Chase Bank, N.A., as administrative agent and Australian Security Trustee. Pursuant to the Senior Credit Agreement Waiver, certain lenders party to the Credit Agreement agreed to waive certain defaults under the Senior Credit Agreement related to cross-default provisions associated with required minimum market capitalization thresholds under the Company’s Fortress Credit Agreement. On February 14, 2023, the Company entered into a third amendment (the “Third Amendment”) to the Senior Credit Agreement. Pursuant to the Third Amendment, certain amendments were made to the terms of the Senior Credit Agreement to permit the execution of a $90.0 million, five-and-a-half-year term loan facility with a lender group consisting of existing stockholders of the Company led by affiliates of Kennedy Lewis Investment Management LP. In addition, a $20.1 million repayment to the Lender was required to facilitate the carve out of a $66.0 million term loan (“Term Loan”) on the Facility, with an interest rate of the Secured Overnight Financing Rate) (“SOFR”) plus 550 basis points per annum and a two-year term, and a $2.0 million revolving credit facility (“New Revolving Facility”) (10.46% as of March 31, 2023). In connection with the New Revolving Facility, the Lender issued standby letters of credit on behalf of the Company associated with our corporate headquarters. The outstanding commitments under these letters of credit as of March 31, 2023 totaled $1.6 million, all of which have expiration dates in less than one year. The amount of borrowings available at any time under the New Revolving Facility is reduced by the amount of letters of credit outstanding. As a result of the reduction in borrowing capacity on the Facility with the Third Amendment, the Company, in proportion to the decrease in borrowing capacity, performed a write-off of debt issuance costs of $0.2 million during the three months ended March 31, 2023 which is included in Interest expense, net. Additionally, the Company has capitalized all new lender and third party fees paid and recognizes these fees as part of interest expense over the life of the modified debt in accordance with the effective interest method. The unamortized debt issuance cost in connection to the Facility as of March 31, 2023 and December 31, 2022 was $0.7 million and $0.7 million, respectively. The availability on the Facility as of March 31, 2023 and December 31, 2022 was $0.4 million and $0.3 million, respectively. Subordinated Second Lien PIK Credit Agreement On February 14, 2023, the Company entered into a subordinated credit agreement (the “Subordinated Credit Agreement”) with certain subsidiaries of the Company party thereto as guarantors (the “Guarantors”), Alter Domus (US) LLC, as administrative Agent and Australian security trustee, and the lenders party thereto. The lender group consists of existing stockholders of the Company led by affiliates of Kennedy Lewis Investment Management LP (“KLIM”), the investment manager to significant stockholders of the Company and party to the Company’s Third Amended and Restated Stockholders’ Agreement. The Subordinated Credit Agreement provides for a $90.0 million, five-and-a-half-year term loan facility (the “KLIM Term Loan”) at an original issue discount of 3.00% payable in kind. The proceeds from the KLIM Term Loan were used by the Company to pay down $20.1 million of outstanding amounts owed on the existing credit facility with JPMorgan Chase Bank, N.A., to pay down other liabilities of the Company and for general corporate purposes. The obligations under the Subordinated Credit Agreement are secured by substantially all of the assets of the Company and the Guarantors. Amounts outstanding under the KLIM Term Loan accrue interest at a rate of 12.00% per annum, payable in kind. The outstanding balance on the loan facility as of March 31, 2023 was $88.5 million, which included $90.0 million of principal, $2.7 million in a paid-in-kind (“PIK”) fee taking the form of original issue discount, and $1.2 million of PIK interest accrued. Certain features of the Subordinated Credit Agreement, specifically the exit fee and applicable premium, as described below, were identified as embedded derivatives and require bifurcation and separate valuation. Exit Fee - The terms of the Subordinated Credit Agreement state that upon repayment or acceleration of the KLIM Term Loan, including in connection with a change of control, optional prepayment, or Event of Default, as defined under the Subordinated Credit Agreement, the Company is required to pay an exit fee (“Exit Fee”) equal to: (i) 35% of the then-current principal balance of the Subordinated Credit Agreement during the first 12 months following closing of the Subordinated Credit Agreement; (ii) 25% of the then-current principal balance of the Subordinated Credit Agreement during the next 12 months; and (iii) 10% of the then-current principal balance of the Subordinated Credit Agreement thereafter. Applicable Premium - The terms of the Subordinated Credit Agreement state that in the event that a change in control shall occur, the Company shall prepay all of the outstanding KLIM Term Loan on the change in control date. The Company is also required to pay the Applicable Premium should the change in control date occur on or prior to the third anniversary of the effective date of the Subordinated Credit Agreement. The Applicable Premium is either a Make-Whole Premium, if the change in control date is prior to or on the first anniversary of the effective date of the Subordinated Credit Agreement, or a Prepayment Premium, if the change in control date occurs after the first anniversary of the effective date through the third anniversary of the effective date of the Subordinated Credit Agreement. The Make-Whole Premium is the present value of all required interest payments from the prepayment date through the first anniversary of the effective date of the Subordinated Credit Agreement. The present value is to be calculated using a discount rate equal to the Treasury Rate plus 50 basis points, plus an additional 2% of the then-current principal amount. The Prepayment Premium is 2% of the then-current principal amount if the prepayment date is after the first anniversary of the effective date but on or prior to the second anniversary of the effective date of the Subordinated Credit Agreement, or 1% of the then-current principal amount if the prepayment date is after the second anniversary of the effective date but on or prior to the third anniversary of the effective date of the Subordinated Credit Agreement, or 0% afterwards. In accordance with ASC 815, Derivatives and Hedging, the Company identified embedded derivatives relating to the Exit Fee and Applicable Premium requiring bifurcation. See Note 11—Derivative instruments for further discussion on the Company’s accounting for the embedded derivatives. In connection with issuing of the KLIM Term Loan, the Company repaid the Lender $20.1 million on the Facility and $5.7 million in third party fees. 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 straight-line method of amortization, which approximates the effective interest method. March 2023 Consents under Credit Agreements On March 31, 2023, the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and Australian Security Trustee, entered into a Consent Under Amended and Restated Credit Agreement, dated March 31, 2023 (the “JPM Credit Agreement Consent”) under the Senior Credit Agreement. In addition, on March 31, 2023, the Company, as borrower, the lenders party thereto and Alter Domus (US) LLC, entered into a Consent Under Subordinated Credit Agreement, dated March 31, 2023 (collectively with the JPM Credit Agreement Consent, the “March 2023 Consents”) under the Subordinated Credit Agreement (collectively with the Senior Credit Agreement, the “Credit Agreements”). Pursuant to the March 2023 Consents, the parties to the Credit Agreements agreed to waive certain defaults under the Credit Agreements with respect to the Company’s delayed audited financial statements for the year ended December 31, 2022 up until May 15, 2023, subject to the terms and conditions set forth in the March 2023 Consents. Amendment of Letter Agreement In connection with the entry into the Subordinated Credit Agreement, the Company and affiliates of KLIM entered into a letter agreement, dated as of February 14, 2023 (the “Side Letter”), as previously disclosed in the Company’s Current Report on Form 8-K, filed with the SEC on February 15, 2023. On April 14, 2023, the Company and such affiliates of KLIM entered into an Amendment to the Side Letter, to extend the time period provided to the Company to identify a permanent Chief Financial Officer candidate. May 2023 Consents Under Credit Agreements On May 12, 2023, the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and Australian Security Trustee, entered into a Consent Under Amended and Restated Credit Agreement, dated May 12, 2023 (the “JPM Credit Agreement Consent”) under the Senior Credit Agreement. In addition, on May 12, 2023, the Company, as borrower, the lenders party thereto and Alter Domus (US) LLC, entered into a Consent Under Subordinated Credit Agreement, dated May 12, 2023 (collectively with the JPM Credit Agreement Consent, the “May 2023 Consents”) under the Subordinated Credit Agreements. Pursuant to the May 2023 Consents, the parties to the Credit Agreements agreed to extend the deadlines under the Credit Agreements with respect to delivery of the Company’s audited financial statements for the year ended December 31, 2022 and unaudited interim condensed consolidated financial statements for the quarters ended March 31, 2023 (collectively, the “Financial Statements”), together with the accompanying compliance certificates, subject to the terms and conditions set forth in the May 2023 Consents. Fourth Amendment to Senior Credit Agreement On June 30, 2023, the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and Australian Security Trustee, entered into a Fourth Amendment to Amended and Restated Credit Agreement, dated June 30, 2023 (the “Fourth Amendment”), amending the Senior Credit Agreement. Pursuant to the Fourth Amendment, the lenders agreed to extend the deadlines under the Senior Credit Agreement with respect to delivery of the Financial Statements and unaudited interim condensed consolidated financial statements for the quarter ended June 30, 2023, together with the accompanying compliance certificates, and financial projections, to August 31, 2023, subject to the terms and conditions set forth in the Fourth Amendment. June 2023 Consent Under Subordinated Credit Agreement On June 30, 2023, the Company, as borrower, the lenders party thereto and Alter Domus (US) LLC as administrative agent, entered into a Consent Under Subordinated Credit Agreement, dated June 30, 2023 (the “June 2023 Consent”) under the Subordinated Credit Agreement. Pursuant to the June 2023 Consent, the lenders agreed to extend the deadlines under the Subordinated Credit Agreement with respect to delivery of the Company’s Financial Statements and unaudited interim condensed consolidated financial statements for the quarter ended June 30, 2023, together with the accompanying compliance certificates, and financial projections, to August 31, 2023, subject to the terms and conditions set forth in the June 2023 Consent. Further Amendment of Side Letter Agreement On July 13, 2023, the Company and affiliates of KLIM further amended the Side Letter to extend the time period provided to the Company to identify a permanent Chief Financial Officer candidate. Additional Consents Under Credit Agreements On each of August 31, 2023, September 15, 2023 and September 29, 2023, the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent and Australian security trustee, entered into a Consent under Amended and Restated Credit Agreement (the “JPM Consents”), under the Senior Credit Agreement. Pursuant to the JPM Consents, the lenders agreed to extend the deadlines under the Senior Credit Agreement with respect to delivery of (i) the Company’s audited financial statements for the fiscal year ended December 31, 2022 (the “2022 Financial Statements”), together with the accompanying compliance certificate, to October 20, 2023, and (ii) the Company’s unaudited interim condensed consolidated financial statements for the first and second quarters ended March 31, 2023 and June 30, 2023 (together with the 2022 Financial Statements, the “Financial Statements”) together with the accompanying compliance certificates, to October 24, 2023, in each case subject to the terms and conditions set forth in the JPM Consents. On each of August 31, 2023, September 15, 2023 and September 29, 2023, the Company as borrower, the lenders party thereto and Alter Domus (US) LLC as administrative agent, entered into a Consent Under Subordinated Credit Agreement (the “Subordinated Credit Agreement Consents”) under the Subordinated Credit Agreement. Pursuant to the Subordinated Credit Agreement Consent, the lenders have agreed to extend the deadlines under the Subordinated Credit Agreement with respect to delivery of (i) the 2022 Financial Statements, together with the accompanying compliance certificate, to October 20, 2023, and (ii) the Company’s unaudited interim condensed consolidated financial statements for the first and second quarters ended March 31, 2023 and June 30, 2023, together with the accompanying compliance certificates, to October 24, 2023, in each case subject to the terms and conditions set forth in the Subordinated Credit Consents. Amendment to Subordinated Credit Agreement and Senior Credit Agreement On October 20, 2023, the Company entered into an Amendment to the Subordinated Credit Agreement. Pursuant to the amendment, the lenders agreed, subject to the satisfaction of certain conditions precedent, to extend credit in the form of an incremental loan in an original aggregate principal amount equal to $40.0 million, upon the same terms as the original loan amount, which the Company received on October 23, 2023, provide delayed draw commitments in an aggregate principal amount of up $10 million, and extend the deadline under the Subordinated Credit Agreement with respect to the delivery of the Company’s quarterly financial statements for the first and second fiscal quarters of 2023, together with the accompanying compliance certificate, to November 8, 2023. The delayed draw commitments are available to be drawn until the date that is fifteen months following the effective date of the Amendment to the Subordinated Credit Agreement. The incremental term loans and delayed draw loans will accrue interest at a rate of 12.00% per annum, payable in kind, and will mature on August 13, 2028. On October 20, 2023, the Company entered into a Fifth Amendment to the Senior Credit Agreement (the “Fifth Amendment”). Pursuant to the Fifth Amendment, the lenders agreed to permit the incremental loans and delayed draw commitments under the Subordinated Credit Agreement, and extend the deadline under the Senior Credit Agreement with respect to delivery of the Company’s quarterly financial statements for the first and second fiscal quarters of 2023, together with the accompanying compliance certificate, to November 8, 2023. In addition, the minimum liquidity covenant was amended to require that, as of the end of each fiscal month, the Company will not permit the sum of (i) Unrestricted Cash (as defined in the Senior Credit Agreement) and (ii) any undrawn commitments under the Specified Secured Subordinated Debt (as defined in the Senior Credit Agreement) to be less than $10 million, provided, however, that at no time shall the sum of (A) Unrestricted Cash and (B) any undrawn commitments under the Specified Secured Subordinated Debt be less than $7.5 million. The Fifth Amendment also required that that $5.0 million in term loans under the Senior Credit Agreement be repaid, which the Company repaid on October 23, 2023. Interest expense Interest expense recorded on the debt facilities was $3.2 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively. The weighted-average interest rate on the Company’s outstanding debt as of March 31, 2023 was 11.36%.

v3.23.3

Derivative instruments	3 Months Ended
	Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative instruments	Note 11—Derivative instruments Embedded Derivatives As discussed in Note 10—Debt, in February 2023, the Company entered into the Subordinated Credit Agreement. The Company has analyzed the embedded features of the Subordinated Credit 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) the Exit Fee and (ii) the Applicable Premium. The $23.5 million initial fair value of the embedded derivatives for the Subordinated Credit Agreement has been recorded as a debt discount along with a corresponding liability on the Company’s condensed consolidated balance sheets. The initial debt discount is not subsequently revalued and is being amortized using the straight-line method, which approximates the effective interest method over the life of the Subordinated Credit Agreement. 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 at each reporting period with changes in fair value recorded within Loss on derivative liabilities in the Company’s unaudited interim condensed consolidated statements of operations and comprehensive loss. The Company valued the embedded derivatives using a “with-and-without method” where the value of the KLIM Term Loan including the embedded derivatives were defined as the “with” and the value of the KLIM Term Loan excluding the embedded derivatives were defined as the “without.” This method estimates the fair value of the embedded derivatives as the difference between the KLIM Term Loan value with and without the embedded derivatives. The fair value of the embedded derivative liabilities associated with the KLIM Term Loan was estimated using a probability weighted discounted cash flow model to measure the fair value. This involves significant Level 3 inputs and assumptions including an (i) estimated probability and timing of a change in control and (ii) our risk-adjusted discount rate. The following table sets forth the inputs to the “with-and-without method” that was used to value the embedded derivatives based on potential change in control scenarios with different probabilities and a maturity scenario that would not result in a change in control event: As of March 31, 2023 Expected term in years 1.13 Exit fee “with” the embedded derivatives 10.00% - 35.00% Make-whole premium discount rate(1) 5.49% Implied discount rate 45.00% (1) The make-whole premium discount rate is the 1-year constant maturity Treasury rate plus 50 basis points as of March 31, 2023 and would not be applicable if the loan fully matures without a change in control event.

v3.23.3

Fair Value	3 Months Ended
	Mar. 31, 2023
Fair Value Disclosures [Abstract]
Fair Value	Note 12—Fair value Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows: •Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. •Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. •Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amount of Cash and cash equivalents, Restricted cash, Accounts receivable, Inventory, and Accounts payable and accrued expenses, as reflected on the unaudited interim condensed consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments. These estimated fair values may not be representative of actual values of the financial instruments that could have been realized or that will be realized in the future. The promotional agreements (see Note 15—Commitments and contingencies) and derivative instruments (see Note 11—Derivative instruments) are Level 3 instruments and use internal models to estimate fair value using certain significant unobservable inputs which require determination of relevant inputs and assumptions. Accordingly, changes in these unobservable inputs may have a significant impact on fair value. Such inputs include risk-free interest rate, expected dividend yield, expected volatility, and expected vesting date. The Level 3 liabilities generally decrease (increase) in value based upon an increase (decrease) in risk-free interest rate, expected vesting date, and expected dividend yield. Conversely, the fair value of these Level 3 liabilities generally increases (decreases) if the expected volatility were to increase (decrease). The inputs for determining fair value of the embedded Exit Fee and Applicable Premium are Level 3 instruments. Refer to Note 11—Derivative instruments for further discussion related to the inputs and accounting for these instruments. The following table summarizes the Company’s total Level 3 liability activity for the three months ended March 31, 2023 (in thousands): Derivative Liability Total Level 3 Liabilities Fair value as of January 1, 2023 $ —  $ —  Initial measurement on February 14, 2023 23,532  23,532  Fair value as of March 31, 2023 $ 23,532  $ 23,532  The following table summarizes the Company’s total Level 3 liability activity for the three months ended March 31, 2022 (in thousands): Promotional Agreements Total Level 3 Liabilities Fair value as of January 1, 2022 $ 4,474  $ 4,474    Change in valuation of promotional agreements 1,588  1,588    Issuance of common stock pursuant to promotional agreement awards (2,963) (2,963) Fair value as of March 31, 2022 $ 3,099  $ 3,099

v3.23.3

Income taxes	3 Months Ended
	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Income taxes	Note 13—Income taxes The effective income tax rate was a provision rate of negative 0.9% and positive 20.3% for the three months ended March 31, 2023 and 2022, respectively. The income tax expense for the interim period was computed using the effective tax rate estimated to be applicable for the full year. The effective tax rate reflects the tax effect of the establishment of a valuation allowance against the Company’s deferred tax assets in the second quarter of tax year 2022, and the effect of not recognizing the benefit of the losses incurred in 2023 and 2022 in jurisdictions where the Company concluded it is more likely than not that such benefits would not be realized. The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As a result of this assessment during the second quarter of 2022, the Company concluded that it was more likely than not that the Company would not realize its deferred tax assets. For the period ended March 31, 2023, the Company considered cumulative losses as a significant source of negative evidence and maintained the valuation allowance against the Company’s deferred tax attributes in the U.S. and foreign jurisdictions. As of March 31, 2023, the Company had $15.2 million of gross unrecognized tax benefits primarily related to marketing service awards that are not more-likely-than-not to be realized due to insufficient evidence to support payment of the service awards.

v3.23.3

Related party transactions	3 Months Ended
	Mar. 31, 2023
Related Party Transactions [Abstract]
Related party transactions	Note 14—Related party transactions During each of the three months ended March 31, 2023 and 2022, the Company recognized less than $0.1 million of Franchise revenue and Equipment and merchandise revenue from studios owned by Mark Wahlberg, Chief Brand Officer and Director of the Company, and Michael Raymond, Director of the Company. With respect to these transactions, the Company has presented the revenue recognized during these periods in Franchise revenue in the unaudited interim condensed consolidated statements of operations and comprehensive loss. As of March 31, 2023 and December 31, 2022, the Company had no outstanding receivables from these studios. These amounts are included in Due from related parties on the unaudited interim condensed consolidated balance sheets. During each of the three months ended March 31, 2023 and 2022, the Company recognized less than $0.1 million of Franchise revenue from studios owned by an entity in which an existing stockholder that is an executive officers. With respect to these transactions, the Company has presented the revenue recognized during these periods in Franchise revenue in the unaudited interim condensed consolidated statements of operations and comprehensive loss. As of each of March 31, 2023 and December 31, 2022, the Company had less than $0.1 million outstanding receivables from these studios. These amounts are included in Due from related parties on the unaudited condensed consolidated balance sheets. During the three months ended March 31, 2023 and 2022, the Company incurred expenses totaling approximately $0.4 million and $1.0 million, respectively, in connection with certain shipping and logistic services from a third-party vendor that is owned by an immediate family member of a former executive officer of the Company (who was an executive officer of the Company during this time period). The Company has presented the expenses incurred during these periods in Cost of equipment and merchandise in the unaudited interim condensed consolidated statements of operations and comprehensive loss. As of March 31, 2023 and December 31, 2022, the Company had approximately $2.3 million and $2.2 million, respectively, of outstanding payables to the third-party vendor. These amounts are included in Accounts payable and accrued expenses on the unaudited interim condensed consolidated balance sheets. During the first quarter of 2022, the Company entered into a development agreement with an existing multi-unit franchisee to open approximately 87 studios. Following the execution of this agreement, the Company entered into an employment agreement and contractor agreement with two individuals who hold an equity ownership in the franchisee entity. As a result of the employment agreements, the Company determined the development agreement and studios operating under ownership of its franchisee now represent related party transactions. During the three months ended March 31, 2023, the Company recognized Franchise revenue and Equipment and merchandise revenue totaling $0.1 million from studios under the development agreement. The Company has presented the expenses incurred during these periods in Cost of equipment and merchandise in the unaudited interim condensed consolidated statements of operations and comprehensive loss. The development agreement required payment for equipment delivered during the first quarter of 2022 to be made at the earlier of opening of the underlying studio or 12 months from the date of the purchase of the equipment. The Company is currently assessing alternatives to the current agreement, including potentially amending the agreements to provide for no further development of studios or termination of the agreements; however, it cannot be certain that a solution will be reached. As of March 31, 2023 and December 31, 2022, the Company had receivables outstanding related to amounts due under the development agreement of $0.2 million and $0.6 million, respectively. These amounts are included in Due from related parties on the unaudited interim condensed consolidated balance sheets. U.S. Development Agreement Transaction with Club Franchise Group LLC On June 15, 2021, the Company entered into a long-term multi-unit studio agreement, with Club Franchise Group LLC (“Club Franchise”), an affiliate of KLIM, the investment manager to significant stockholders of the Company, an affiliate of lenders under the Company’s KLIM Credit Agreement and party to the Company’s Third Amended and Restated Stockholders’ Agreement. Pursuant to the term multi-unit studio agreement, the Company granted to Club Franchise the right to, and Club Franchise agreed to, open at least 300 studios in certain territories in the U.S. over 36 months, with the first 150 studios to be open within 18 months of the date of the multi-unit studio agreement, or December 15, 2022. Club Franchise had 24 studios opened as of March 31, 2023 under the multi-unit studio agreement. Club Franchise is obligated to pay to the Company the same general fees as other franchisees in the U.S., and to enter into a franchise agreement in respect of each studio upon approval by the Company of the studio site. Consistent with some of the franchise agreements in the United States entered into since July 2019, Club Franchise is required to pay the Company a monthly franchise fee based on the greater of a fixed monthly franchise fee of $2,500 per month or 7% of gross monthly studio revenue regardless of whether such studios are open. Club Franchise has also agreed to pay the Company an upfront establishment fees of $7.5 million as follows: (i) $1.9 million upon execution of the multi-unit studio agreement (which amount had been paid as of December 31, 2021); (ii) $1.9 million by June 2022; (iii) $1.9 million by December 2022; and (iv) $1.9 million by December 2023. Club Franchise is required to pay monthly franchise fees to the Company in respect of additional studios with monthly franchise fees for 150 studios being payable by December 2022. With respect to the remaining 150 studios, the Company and Club Franchise have agreed to negotiate a payment schedule that provides for the monthly franchise fees in respect of such studios to commence no later than 12 months after the opening date of the relevant studio. Like other franchisees, Club Franchise is also obligated to pay the Company other fees, including fees related to marketing and equipment and merchandise, some of which the Company has agreed to provide at a discounted rate. During the fourth quarter of 2022, the Company determined that Club Franchise was no longer in compliance with the multi-unit studio agreement as a result of outstanding franchise fee invoices as well as delays related to required studio openings in accordance with development schedules. As a result of the non-compliance and subsequent discussions with Club Franchise management, the Company determined that collections related to approximately 280 studios under the agreement were no longer probable based on their expected opening date. The Company recognized $0.2 million and $2.3 million, respectively, of Franchise revenue and Equipment and merchandise revenue in conjunction with the transaction with Club Franchise Group LLC during the three months ended March 31, 2023 and 2022. There was less than $0.1 million and $3.2 million outstanding receivable balance owed by Club Franchise as of March 31, 2023 and December 31, 2022, respectively. European Master Franchise Agreement Transaction with Club Sports Group, LLC On October 26, 2022, the Company entered into a Master Franchise Agreement (“MFA”) with Club Sports Group, LLC (“Club Sports”), an affiliate of KLIM, pursuant to which the Company granted Club Sports the master franchise rights to sell F45 licenses to franchisees in certain territories as defined in the agreement, including Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. In exchange, the Company will receive certain fees and royalties, including a percentage of the revenue generated by franchise agreements signed under the MFA. In accordance with the MFA, F45 will assign existing franchise agreement rights to approximately 103 studios previously signed by the Company. Subsequent to the original signing of the MFA, the MFA was modified to include an additional 71 franchise agreements. The term of the MFA provides for a ten-year period for Club Sports to sell licenses to franchisees with the option to renew the MFA for two additional ten-year periods at the then current master franchise fee rate. The MFA expires at the expiration or termination of the last franchise agreement sold by Club Sports. At signing of the MFA, Club Sports was required to make an upfront master franchise fee payment of $1.5 million on the effective date of the MFA as well as purchase 40 equipment packs to be sold to sub-franchisees under the MFA. The Company recognized Equipment and merchandise revenue of less than $0.1 million during the three months ended March 31, 2023 as a result of these orders. No franchise revenues were recognized under the MFA during the three months ended March 31, 2023 as it was determined that Club Sports had not taken over master franchising activities, including marketing of sale of new franchise agreements and general and administrative activities over the franchise agreements as of March 31, 2023. Related party franchise arrangements were transacted at arm’s length pricing with standard contractual terms.

v3.23.3

Commitments and contingencies	3 Months Ended
	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and contingencies	Litigation Where appropriate, the Company establishes accruals in accordance with FASB guidance over loss contingencies in accordance with ASC 450, Contingencies. As of March 31, 2023 and December 31, 2022, the Company had established a litigation accrual of $2.5 million and $9.6 million, respectively, in Accounts payable and accrued expenses for claims brought against the Company in the ordinary course of business. Subsequent to year end 2022, the Company resolved certain legal claims for approximately $6.6 million, which was included in the litigation accrual as of December 31, 2022, and paid during the first half of 2023. Our accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. The Company does not presently believe that the ultimate resolution of the matters for which accruals have been established 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 lease portfolio consists of office buildings, a company-owned studio, and warehouse space in the United States, England, and Australia. Certain lease agreements contain options that allow the Company to extend the lease agreement. All of the Company’s leases are classified as operating leases on the unaudited interim condensed consolidated balance sheets. As of March 31, 2023, the Company had outstanding guaranties of $2.6 million for lease payments related to 8 franchisee studio leases in the states of California, Maryland, and Virginia. These leases have non-cancelable remaining lease periods ranging from 1 to 10 years. Promotional agreements Liability-classified awards On October 15, 2020, the Company entered into a promotional agreement with ABG-Shark, LLC (“ABG-Shark”). Pursuant to this agreement, Greg Norman agreed to provide certain promotional services to the Company in exchange for annual compensation. In connection with the Company becoming publicly traded on July 15, 2021, ABG-Shark became 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 agreed to provide certain promotional and marketing services to the Company in exchange for equity compensation equal to 15% of the fair market value of Malibu Crew, Inc. (“Malibu Crew”). Both of these promotional agreements expire on October 14, 2025. On November 24, 2020, the Company entered into a promotional agreement with DB Ventures Limited (“DB Ventures”). Pursuant to this agreement, David Beckham agreed to provide certain promotional services to the Company in exchange for annual compensation. In connection with the Company becoming publicly traded on July 15, 2021, DB Ventures became entitled to receive the greater of 1% of the Company’s issued and outstanding common stock or $5.0 million on the six- and 12-month anniversaries of the Company becoming publicly traded. This agreement expires on December 5, 2025. The Company has been recognizing expenses related to the promotional activities and image rights under this agreement ratably over the five-year 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. In December 2021, the Company invested in a joint venture with 75% ownership in the newly incorporated CLF High Street Limited that operates the DB studios and provided $0.5 million of cash for equipment and other studio opening costs. For the three months ended March 31, 2022, the Company recorded $1.4 million in expense related to this agreement. During the three months ended March 31, 2022, 914,692 of common shares vested under this agreement as a result of meeting the six-month anniversary of the Company becoming publicly traded. On October 19, 2022, DB Ventures and ABG-Shark filed a complaint (‘the complaint”) against the Company alleging breach of contract in connection with these promotional agreements. Prior to the filing of the complaint, the Company recognized expenses associated with the DB Ventures promotional agreement over the service period which was to run through December 5, 2025. As a result of the complaint, the Company determined it was no longer probable that any future services would be provided by the promoters under the agreements and for the year ended December 31, 2022, accelerated recognition of $5.6 million of additional marketing expenses equal to the fair value of 914,692 common shares vested and issued under the promotional agreement with DB Ventures which were previously expected to be recognized over the service period of the promotional agreement. The Company disputes the claims filed under the complaint and intends to vigorously defend itself. As the litigation is preliminary in nature and involves substantial uncertainties, no additional amounts have been accrued as a result of the complaint. On April 12, 2021, the Company entered into a promotional agreement with Magic Johnson Entertainment (“MJE”). Pursuant to this agreement, MJE agreed to provide certain promotional services to the Company in exchange for compensation. In connection with the Company becoming publicly traded on July 15, 2021, MJE agreed to a cash payment of $4.0 million in lieu of equity compensation that MJE was entitled to receive as a result of the IPO. The prepayment of $4.0 million was recorded as Prepaid expenses in the condensed consolidated balance sheets and the amount is amortized ratably over the service period. Additionally, in connection with the Company becoming publicly traded on July 15, 2021, the Company became obligated to grant MJE a number of shares of common stock equal to the result of $5.0 million divided by the Average Trading Price upon each occurrence of a vesting event based on increases in the Company’s market capitalization as defined in the agreement. The agreement between the Company and MJE terminates on January 23, 2026. On June 25, 2021, the Company entered into a promotional agreement with Craw Daddy Productions (“CDP”). Pursuant to this agreement, effective July 1, 2021, Cindy Crawford agreed to provide certain promotional services to the Company in exchange for annual compensation. In connection with the Company becoming publicly traded on July 15, 2021, the Company became obligated to grant CDP a number of shares of common stock equal to the result of $5.0 million divided by the Average Trading Price upon each occurrence of a Vesting Event which is based on increases in the Company’s market capitalization as defined in the agreement. On the same date, Avalon House, a subsidiary of the Company, also entered into a promotional agreement with Cindy Crawford, whereby she agreed to 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. On October 17, 2022, the Company entered into a mutual termination agreement with CDP pursuant to which both promotional agreements were terminated in exchange for a cash payment of $0.3 million. On September 24, 2021, the Company entered into a promotional agreement with Big Sky, Inc. (“Big Sky”). Pursuant to this agreement, Joe Montana agreed to provide certain promotional services to the Company in exchange for annual compensation. On the same date, Malibu Crew also entered into a promotional agreement with Big Sky, whereby Joe Montana agreed to provide certain promotional and marketing services to the Company in exchange for equity compensation equal to 1% of the fair market value of Malibu Crew. As part of the agreement, the Company is obligated to provide franchise rights to five Malibu Crew studios and cover costs associated with start-up of the studios, subject to the Company’s ability to recoup these start-up costs over a negotiated period of time to be defined in the underlying franchise agreements. On March 13, 2023, the Company entered into a mutual termination agreement with Big Sky in which both promotional agreements were terminated in exchange for a cash payment of $0.2 million. No stock-based compensation expense was recognized in connection with the aforementioned promotional agreements for the three months ended March 31, 2023 as a result of reductions in the fair value of the liability-classified awards. The Company recognized total stock-based compensation expense of $1.4 million in connection with such promotional agreements for the three months ended March 31, 2022. The Company determined that the common stock to be issued upon settlement of the remaining promotional agreements with ABG-Shark and MJE are liability-classified awards. As of March 31, 2023 and December 31, 2022, the Company recorded less than $0.1 million of stock-based compensation liability in Other long-term liabilities in the condensed consolidated balance sheets. The Company estimates the fair value of its liability-classified awards using a Monte-Carlo simulation model at each reporting period until settlement. The other significant assumptions used in the analysis as of March 31, 2023 were as follows: As of March 31, 2023 Risk-free interest rate 4.20% Expected dividend yield — Expected term in years 2.04 - 2.31 Expected volatility 26.40% - 42.14% Equity-classified awards On December 17, 2021, the Company entered into a promotional agreement with Timothy Kennedy (“TK”). Pursuant to this agreement, effective December 30, 2021, TK agreed to provide certain promotional services to the Company in exchange for annual compensation and $0.1 million of the Company’s Restricted Stock Awards (“RSAs”) for each 12-month period of service. RSAs will vest 100% upon each of the first four one-year anniversaries of the services being provided. The agreement between the Company and TK terminates on December 16, 2026. The Company determined that the RSAs granted to TK are equity-classified awards. The stock-based compensation expense related to the RSAs is recognized ratably over the requisite service period in Selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. See Note 16—Stock-based compensation for discussion on the stock option activities and total stock-based compensation expense for the three months ended March 31, 2023 and March 31, 2022, respectively.

v3.23.3

Stock-based compensation	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Stock-based compensation	Note 16—Stock-based compensation 2021 Incentive Plan The Company’s stock-based compensation plan, which became effective at the IPO date, includes equity incentive compensation plans under which three types of share-based compensation plans are granted to the employees, directors and consultants of the Company, which are stock options (“SOs”), restricted stock units (“RSUs”) and restricted stock awards (“RSAs”). The purpose of the plan is to assist the Company in securing and retaining the service of eligible award recipients, to provide incentives to employees, directors and consultants and promote the long-term financial success of the Company and thereby increase stockholder value. In accordance with the 2021 Incentive Plan, subject to adjustment for certain dilutive or related events, the maximum aggregate number of shares that may be subject to stock awards and sold under this plan is 5,000,000 shares, or the share reserve (“Share Reserve”). Beginning on January 1, 2022 and ending on January 1, 2031, the Share Reserve will automatically increase on January 1 of each year during the term of the 2021 Incentive Plan in an amount equal to 5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; provided, however, that the Company’s board of directors may provide that there will not be a January 1 increase in the Share Reserve in a given year or that the increase will be less than 5% of the shares of common stock outstanding on the preceding December 31. Employees meeting certain employment qualifications are eligible to receive stock-based awards. In accordance with the Company’s accounting policy, forfeitures of SOs, RSUs and RSAs are accounted for as they occur. Stock options SOs granted under the incentive equity plans are generally non-statutory stock options, but the incentive equity plans permit some options granted to qualify as incentive stock options under the U.S. Internal Revenue Code. SOs generally vest over one to three years from the grant date. The exercise price of a stock option is equal to the closing price of the Company’s stock on the option grant date. The majority of SOs issued by the Company are subject to only service vesting conditions. A summary of option activity under the employee share option plan as of March 31, 2023, and changes during the period then ended, is presented below: Shares (in thousands) Weighted - Average Exercise Price Weighted - Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2022 2,191 $ 4.43  10.42 $ 1,160  Granted —  —  Exercised (1) 2.02  Forfeited, expired, or canceled (197) 11.32  Outstanding as of March 31, 2023 1,993 $ 3.75  10.21 $ —  Vested and Exercisable 1,272 $ 3.15  9.55 $ —  Expected to Vest 721 $ 4.80  11.38 $ —  The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that option holders would have realized had all option holders exercised their options on the last trading day of the quarter ended March 31, 2023. The aggregate intrinsic value of vested and unvested options as of March 31, 2023 was $0, since the options were out-of-the-money. The total grant date fair value of the options vested during the three months ended March 31, 2023 and 2022 was $0.4 million and $0, respectively. As of March 31, 2023, the total unrecognized pre-tax stock-based compensation expense related to non-vested stock options was $1.2 million, which is expected to be recognized over a weighted-average vesting period of 1.9 years. Restricted stock units RSUs may be granted at any time and from time to time as determined by the Company. The Company will set vesting criteria at its discretion, which, depending on the extent to which the criteria are met, will determine the number of RSUs that will be paid out to the participant. The Company may set vesting criteria based upon the passage of time, the achievement of target levels of performance, or the occurrence of other events or any combination thereof as determined by the Company at its discretion. Dividend equivalents shall not be paid on a RSU during the period it is unvested. The RSUs granted by the Company are subject to service vesting conditions. RSUs also provide for accelerated vesting in certain circumstances as defined in the plans and related grant agreements. As of March 31, 2023, the total number of shares subject to outstanding RSUs was 2,637,923. The Company withheld 187,205 shares of common stock related to net share settlement of restricted stock units vested during the three months ended March 31, 2023. The Company uses the closing stock price on the grant date to estimate the fair value of service-based RSUs. The Company estimates the fair value of RSUs subject to performance-adjusted vesting conditions using the closing stock price on the grant date. A summary of RSUs activity is as follows: Shares (in thousands) Weighted - Average Grant Date Fair Value Per Share Outstanding as of December 31, 2022 3,088  $ 5.93  Granted —  —  Vested (416) 6.97  Forfeited (34) 2.02  Outstanding as of March 31, 2023 2,638  $ 5.81  The total grant date fair value of RSUs vested during the three months ended March 31, 2023 was $2.9 million. No RSUs vested during the three months ended March 31, 2022. During the three months ended March 31, 2023 and 2022, total recognized pre-tax stock-based compensation expense related to non-vested RSUs was $2.1 million and less than $0, respectively, which was included in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss. As of March 31, 2023, total unrecognized pre-tax stock-based compensation expense related to non-vested RSUs was $13.0 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.16 years. The maximum contractual term of RSUs is approximately 4.0 years. Restricted stock awards Subject to the terms and provisions of the plan, the Company, at any time and from time to time, may grant shares of restricted stock to service providers in such amounts as the Company, in its sole discretion, will determine. During the period of restriction, service providers holding shares of restricted stock may exercise full voting rights and will be entitled to receive all dividends and other distributions paid with respect to such shares, unless the Company determines otherwise. If any such dividends or distributions are paid in shares, the shares will be subject to the same restrictions on transferability and forfeitability as the shares of restricted stock with respect to which they were paid. The RSAs granted by the Company are subject to service vesting conditions. As of March 31, 2023, the total number of shares subject to outstanding RSAs was 232,478. The Company estimates the fair value of RSAs subject to performance-adjusted vesting conditions using the closing stock price on the grant date. A summary of RSAs activity is as follows: Shares (in thousands) Weighted - Average Grant Date Fair Value Per Share Outstanding as of December 31, 2022 361  $ 4.44  Granted —  —  Vested (129) 4.68  Forfeited —  —  Outstanding as of March 31, 2023 232  $ 4.30  The total grant date fair value of RSAs vested during the three months ended March 31, 2023 and 2022 was $0.6 million and $0.1 million, respectively. For the three months ended March 31, 2023 and 2022, total recognized pre-tax stock-based compensation expense related to non-vested RSAs was $0.4 million and $0.5 million, respectively, which was included in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss. Total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards was $0.3 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.3 years. The maximum contractual term of the RSAs is approximately one year. Non-employee promotional agreements Liability-classified awards As described in Note 15—Commitments and contingencies, the Company entered into promotional agreements with ABG-Shark, DB Ventures, MJE, and CDP which included RSUs that contain equity-based payments, which have performance, market and service conditions. On October 17, 2022, the Company entered into a mutual termination agreement with CDP in which the promotional agreement was terminated. The Company determined that the RSUs are liability-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 of March 31, 2023, the market conditions have not been met on the ABG-Shark, DB Ventures, or MJE promotional agreements. The Company began recognizing stock-based compensation expense ratably over the requisite service period when the performance condition was met through the achievement of the IPO on July 15, 2021. The stock-based compensation expense related to the RSUs are recognized ratably over the requisite service period in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss. Equity-classified awards The promotional agreement with TK included RSAs that contain equity-based payment, which has a service condition. The Company determined that the RSAs granted to TK are equity based awards that contains a service condition to vest. The stock-based compensation expense related to the RSAs are recognized ratably over the requisite service period in Selling, general and administrative expenses in the unaudited interim condensed consolidated statements of operations and comprehensive loss.

v3.23.3

Basic and diluted net loss per share	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Basic and diluted net loss per share	Note 17—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 Months Ended March 31, 2023 2022 (As Restated) Numerator: Net loss attributable to common stockholders—basic and diluted $ (22,653) $ (9,478) Denominator: Weighted average common shares outstanding—basic and diluted 96,884,584  95,709,671  Net loss per share: Basic and diluted net loss per share $ (0.23) $ (0.10) Anti-dilutive securities excluded from diluted loss per share: Unvested restricted stock units 2,851,416  —  Unvested restricted stock awards 295,156  —  Stock options to purchase common stock 2,088,306  662,935  Total 5,234,878  662,935  The contingently issuable shares in relation to the promotional agreements with ABG-Shark and MJE are not included in the diluted loss per share computation as the market conditions have not been met to be vested as of March 31, 2023. The contingently issuable shares in relation to the promotional agreements with ABG-Shark, MJE, and CDP were not included in the diluted loss per share computation as the market conditions had not been met to be vested during the three months ended March 31, 2022.

v3.23.3

Segment and geographic area information	3 Months Ended
	Mar. 31, 2023
Segment Reporting [Abstract]
Segment and geographic area information	Note 18—Segment and geographic area information The Company’s operating segments align with how the Company manages its business and interacts with its franchisees on a geographic basis. F45 is organized by geographic regions 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 “United States” as the operations in the United States and South America. 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, its principal executive officer and principal financial officer. The Company identified changes to the CODM group with the appointments of Robert Madore as Interim Chief Financial Officer and Tom Dowd as Interim Chief Executive Officer on February 13, 2023 and March 29, 2023, respectively. Further, on July 13, 2023, the Board appointed Patrick Grosso as Interim Chief Financial Officer, in light of the vacancy created by Robert Madore’s resignation as Interim Chief Financial Officer on July 9, 2023. There was no change in our operating or reportable segments as a result of the change in CODM. Messrs. Madore and Dowd served as the CODM that reviewed 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 (in thousands): For the Three Months Ended March 31, 2023 For the Three Months Ended March 31, 2022 (As Restated) Revenue Cost of revenue Gross profit Revenue Cost of revenue Gross profit United States: Franchise $ 8,893  $ 2,093  $ 6,800  $ 12,401  $ 1,037  $ 11,364  Equipment and merchandise 2,013  2,208  (195) 5,864  3,808  2,056  $ 10,906  $ 4,301  $ 6,605  $ 18,265  $ 4,845  $ 13,420  Australia: Franchise $ 2,765  $ 122  $ 2,643  $ 3,448  $ 173  $ 3,275  Equipment and merchandise 374  449  (75) 1,394  1,547  (153) $ 3,139  $ 571  $ 2,568  $ 4,842  $ 1,720  $ 3,122  Rest of World: Franchise $ 2,951  $ 109  $ 2,842  $ 4,011  $ 97  $ 3,914  Equipment and merchandise 584  871  (287) 2,270  1,758  512  $ 3,535  $ 980  $ 2,555  $ 6,281  $ 1,855  $ 4,426  Consolidated: Franchise $ 14,609  $ 2,324  $ 12,285  $ 19,860  $ 1,307  $ 18,553  Equipment and merchandise 2,971  3,528  (557) 9,528  7,113  2,415  $ 17,580  $ 5,852  $ 11,728  $ 29,388  $ 8,420  $ 20,968  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 net loss is as follows (in thousands): For the Three Months Ended March 31, 2023 2022 (As Restated) Segment gross profit $ 11,728  $ 20,968  Selling, general and administrative expenses 31,504  32,116  Interest expense, net 3,231  126  Other (income) expense, net (554) 622  Provision (benefit) for income taxes 200  (2,418) Net loss $ (22,653) $ (9,478) As of March 31, 2023, the Company had property and equipment of $8.4 million and $1.1 million in the United States and Australia segments, respectively. As of December 31, 2022, the Company had property and equipment of $8.7 million and $1.1 million in the United States and Australia segments, respectively. No segment other than the United States and Australia segments accounted for more than 10% of total property and equipment, net as of March 31, 2023 and December 31, 2022.

v3.23.3

Subsequent events	3 Months Ended
	Mar. 31, 2023
Subsequent Events [Abstract]
Subsequent events	Note 19—Subsequent events The Company has evaluated subsequent events from March 31, 2023 through November 7, 2023, the date on which the March 31, 2023 unaudited interim condensed consolidated financial statements were available for issuance, and has determined that there are no subsequent events requiring adjustments to our disclosures in the unaudited interim condensed consolidated financial statements, other than as discussed below. Amendment to Side Letter On July 13, 2023, the Company affiliates of KLIM entered into an Amendment to the Side Letter to extend the time period provided to the Company to identify a permanent Chief Financial Officer candidate. Consents Under Credit Agreements On each of August 31, 2023, September 15, 2023 and September 29, 2023, the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent and Australian security trustee, entered into a Consent under Amended and Restated Credit Agreement (the “JPM Consents”), under the Senior Credit Agreement. Pursuant to the JPM Consents, the lenders agreed to extend the deadlines under the Senior Credit Agreement with respect to delivery of (i) the Company’s audited financial statements for the fiscal year ended December 31, 2022 (the “2022 Financial Statements”), together with the accompanying compliance certificate, to October 20, 2023, and (ii) the Company’s financial statements for the first and second quarters ended March 31, 2023 and June 30, 2023 (together with the 2022 Financial Statements, the “Financial Statements”) together with the accompanying compliance certificates, to October 24, 2023, in each case subject to the terms and conditions set forth in the JPM Consents. On each of August 31, 2023, September 15, 2023 and September 29, 2023, the Company as borrower, the lenders party thereto and Alter Domus (US) LLC as administrative agent, entered into a Consent Under Subordinated Credit Agreement (the “Subordinated Credit Agreement Consents”) under the Subordinated Credit Agreement. Pursuant to the Subordinated Credit Agreement Consent, the lenders have agreed to extend the deadlines under the Subordinated Credit Agreement with respect to delivery of (i) the 2022 Financial Statements, together with the accompanying compliance certificate, to October 20, 2023, and (ii) the Company’s financial statements for the first and second quarters ended March 31, 2023 and June 30, 2023, together with the accompanying compliance certificates, to October 24, 2023, in each case subject to the terms and conditions set forth in the Subordinated Credit Agreement Consent. Amendment to Subordinated Credit Agreement and Senior Credit Agreement October 20, 2023, the Company entered into an Amendment to the Subordinated Credit Agreement. Pursuant to the amendment, the lenders agreed, subject to the satisfaction of certain conditions precedent to extend credit in the form of an incremental loan in an original aggregate principal amount equal to $40.0 million, upon the same terms as the original loan amount, which the Company received on October 23, 2023, provide delayed draw commitments in an aggregate principal amount of up $10 million, and extend the deadline under the Subordinated Credit Agreement with respect to the delivery of the Company’s quarterly financial statements for the first and second fiscal quarters of 2023, together with the accompanying compliance certificate, to November 8, 2023. The delayed draw commitments are available to be drawn until the date that is fifteen months following the effective date of the Amendment to the Subordinated Credit Agreement. The incremental term loans and delayed draw loans will accrue interest at a rate of 12.00% per annum, payable in kind, and will mature on August 13, 2028. On October 20, 2023, Company entered into a Fifth Amendment to the Senior Credit Agreement (the “Fifth Amendment”). Pursuant to the Fifth Amendment, the lenders agreed to permit the incremental loans and delayed draw commitments under the Subordinated Credit Agreement, and extend the deadline under the Senior Credit Agreement with respect to delivery of the Company’s quarterly financial statements for the first and second fiscal quarters of 2023, together with the accompanying compliance certificate, to November 8, 2023. In addition, the minimum liquidity covenant was amended to require that, as of the end of each fiscal month, the Company will not permit the sum of (i) Unrestricted Cash (as defined in the Senior Credit Agreement) and (ii) any undrawn commitments under the Specified Secured Subordinated Debt (as defined in the Senior Credit Agreement) to be less than $10 million, provided, however, that at no time shall the sum of (A) Unrestricted Cash and (B) any undrawn commitments under the Specified Secured Subordinated Debt be less than $7.5 million. The Fifth Amendment also required that that $5.0 million in term loans under the Senior Credit Agreement be repaid, which the Company repaid on October 23, 2023. Side Letter In connection with the Amendment to the Subordinated Credit Agreement, the Company and affiliates of KLIM entered into a letter agreement, dated as of October 20, 2023, with respect to certain governance matters and agreed to further extend the deadline for the Company to identify a permanent Chief Financial Officer candidate. Departures and Appointments in Executive Roles On March 30, 2023, Ben Coates stepped down as Chief Executive Officer of the Company. On April 29, 2023, in connection with the resignation of Mr. Coates, the Company’s former President and Chief Executive Officer, the Company entered into a separation agreement (the” Separation Agreement”) with Mr. Coates. Pursuant to the terms of the Separation Agreement, Mr. Coates was eligible to receive payment of base salary from April 1, 2023 through July 31, 2023, in the total amount of $0.5 million paid in a lump sum and the vesting of the portion of Mr. Coates’ unvested monthly restricted stock unit award granted August 18, 2022 that was scheduled to vest on March 31, 2023. On March 29, 2023, Company’s Board of Directors appointed Tom Dowd and President and Chief Executive Officer effective March 30, 2023 and entered into an employment agreement dated as of March 30, 2023. On March 29, 2023, the Company’s Board of Directors appointed Mark Wahlberg Chief Brand Officer and entered into a letter agreement dated March 30, 2023. Sublease of Headquarter Office Space On September 22, 2023, the Company entered into an agreement with Kouto Inc. to sublease 23.6% of the Company’s office space at its global headquarters location in Austin, Texas. Release Agreement On October 31, 2023, the Company entered into a mutual termination and release agreement with Hillcrest Health LLC in connection with a multi-unit franchise agreement dated March 31, 2022, whereby both parties were released from all future obligations pursuant to that agreement and 84 equipment packs purchased pursuant to that agreement were returned to the Company.

v3.23.3

Summary of significant accounting policies (Policies)	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Basis of presentation	Basis of presentationThe accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) and applicable regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting, and include the Company and its wholly owned subsidiaries.
Consolidation	All intercompany balances and transactions have been eliminated in consolidation.
Use of estimates	Use of estimates The preparation of unaudited 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 unaudited interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Key estimates and judgments relied upon in preparing these unaudited interim condensed consolidated financial statements include revenue recognition, allowance for credit losses, depreciation of long-lived assets, internally developed software, amortization of intangible assets, valuation of inventory, fair value of derivative instruments, valuation of stock-based compensation, 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.
Going Concern	Going Concern The accompanying unaudited interim condensed consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company currently funds its operations primarily from cash on hand, credit facilities and operating cash flow. The Company has historically incurred losses and negative cash flows from operations. The Company’s forecast for the twelve months from the date of these unaudited interim condensed consolidated financial statements could result in the possibility of insufficient resources to meet its ongoing obligations and maintain compliance with the minimum liquidity requirement of $10 million in its credit agreement. The Company has determined that these circumstances represent conditions regarding the Company’s ability to continue as a going concern before consideration of management’s plans. In response to these conditions, the Company obtained additional financing and intends to implement the following to reduce the demands on future Company resources: i) eliminate costs associated with being a public registrant with the SEC by the filing of Form-15 as soon as it is able to; and ii) manage the cash flows associated with non-recurring expenditures, including legal fees, certain professional services fees, and others. The NYSE filed a Form 25 with the SEC on August 25, 2023 with respect to the Company to effect the withdrawal of the listing of its common stock from the NYSE and the deregistration of its common stock under Section 12(b) of the Exchange Act (which became effective on September 5, 2023), and the Company intends to file a Form 15 as soon as practicable after the Company’s outstanding filings with the SEC have been filed. Additionally, management believes that they will be successful in limiting the Company’s non-recurring expenditures and managing the timing of such expenditures for at least twelve months from the date these unaudited interim condensed consolidated financial statements are issued. As a result, the Company’s management believes that the Company will be able to continue as a going concern for at least twelve months from the date these unaudited interim condensed consolidated financial statements are issued. The unaudited interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Concentration of credit risk	Concentration of credit risk One of the Company’s customers accounted for approximately 37% of the Company’s Accounts receivable as of March 31, 2023. No customer accounted for more than 10% of the Company’s Accounts receivable as of December 31, 2022. No customer accounted for more than 10% of the Company’s total revenues for the three months ended March 31, 2023 or 2022. Credit losses The Company’s accounts and notes receivable are recorded at net realizable value, which includes an allowance for estimated credit losses. The Company estimates credit losses based on historical collections, age of receivable balances, the customer’s financial condition, and current economic trends, all of which are subject to change. The Company’s payment terms on its accounts receivable from franchisees are generally 30 days.
Debt issuance costs and debt discount	Debt issuance costs and debt discount The Company records debt issuance costs as a reduction to the carrying value of the related debt on the condensed consolidated balance sheets. Debt issuance costs and debt discount are amortized over the term of the related debt using the straight-line method of amortization, which approximates the effective interest method. Amortization of debt issuance costs are included in Interest expense, net on the unaudited condensed consolidated statements of operations and comprehensive loss.
Derivative instruments	Derivative instruments Embedded derivatives When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative liability. The estimated fair value of the derivative feature is recorded as a liability in the consolidated balance sheets, separate from the carrying value of the host contract. Subsequent changes in the estimated fair value of the embedded derivatives are recorded as a gain or loss in within Loss on derivative liabilities in the Company’s condensed consolidated statements of operations and comprehensive loss. The Company estimates the fair value of the embedded derivatives through a “with-and-without method” that isolates the value of the embedded derivatives by measuring the difference between the host contract’s value “with” and “without” the embedded derivatives. This method utilizes the following inputs: (i) the expected term in years, (ii) the probability of a change in control event, (iii) an exit fee, (iv) the make-whole premium discount rate, and (v) the implied discount rate. These inputs are considered Level 3 inputs in the fair value hierarchy. The host contract’s value with the embedded derivatives involves the application of an implied discount rate based on repayment and prepayment scenarios upon the estimated timing and probability weighted expected change in control events. Valuations derived from this method are subject to ongoing internal and external verification review. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors.
Recently issued accounting pronouncements	Recently issued accounting pronouncements Under the Jumpstart Our Business Startups Act (“JOBS Act”), the Company meets the definition of an emerging growth company (“EGC”). The Company has elected to take advantage of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. Recently Adopted Accounting Standards 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. 2019-05, Targeted Transition Relief; ASU No. 2019-10, Effective Dates, ASU No. 2019-11, Codification Improvements, 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 ASU 2016-02, and ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures. 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 adoption of this accounting standard on January 1, 2023 did not have a material impact on the Company's unaudited interim condensed consolidated financial statements. Accounting Standards Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (“ASU 2020-04”), which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (LIBOR). In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.” ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company is currently evaluating the impact of ASU 2022-06 on its consolidated financial statements; however, the Company does not believe that adoption of ASU 2022-06 will materially impact its consolidated financial statements.

v3.23.3

Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements (Tables)	3 Months Ended
	Mar. 31, 2023
Statement of Financial Position [Abstract]
Schedule Of Condensed Income Statement	The following table presents the impact of the restatement to the unaudited interim condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2022: Three Months Ended March 31, 2022 As Previously Reported Restatement Adjustments As Restated Revenues: Franchise $ 19,860  $ —  $ 19,860  Equipment and merchandise 30,148  (20,620) 9,528  Total revenues 50,008  (20,620) 29,388  Costs and operating expenses: Cost of franchise revenue 1,231  76  1,307  Cost of equipment and merchandise 10,943  (3,830) 7,113  Selling, general and administrative expenses 32,090  26  32,116  Total costs and operating expenses 44,264  (3,728) 40,536  Income (loss) from operations 5,744  (16,892) (11,148) Interest expense, net 126  —  126  Other expense, net 570  52  622  Income (loss) before income taxes 5,048  (16,944) (11,896) Provision (benefit) for income taxes 2,536  (4,954) (2,418) Net income (loss) $ 2,512  $ (11,990) $ (9,478) Other comprehensive income (loss) Foreign currency translation adjustment, net of tax 906  110  1,016  Comprehensive income (loss) $ 3,418  $ (11,880) $ (8,462) Per share data: Earnings (loss) per share Basic and diluted $ 0.03  $ (0.13) $ (0.10) Shares used in computing earnings (loss) per share Basic 95,709,671  —  95,709,671  Diluted 96,687,283  (977,612) 95,709,671
Schedule Of Condensed Cash Flow Statement	The following table presents the impact of the restatement to the unaudited interim condensed consolidated statement of cash flows for the three months ended March 31, 2022: Three Months Ended March 31, 2022 As Previously Reported Restatement Adjustments As Restated Cash flows from operating activities Net income (loss) $ 2,512  $ (11,990) $ (9,478) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 286  —  286  Amortization of intangible assets 888  —  888  Amortization of deferred costs 626  —  626  Bad debt expense 1,464  —  1,464  Stock-based compensation 2,073  —  2,073  In-kind marketing 57  —  57  Provision for inventories (52) —  (52) Unrealized foreign currency transaction gains 381  (21) 360  Changes in operating assets and liabilities: Due from related parties (294) —  (294) Accounts receivable, net (16,413) 3,915  (12,498) Inventories (4,160) (5,102) (9,262) Prepaid expenses (20,085) —  (20,085) Other current assets (12,498) 6,301  (6,197) Deferred costs (1,194) 388  (806) Other long-term assets (8,068) 2,693  (5,375) Accounts payable and accrued expenses 1,963  8,315  10,278  Deferred revenue 3,527  (4,301) (774) Interest payable (104) —  (104) Income taxes payable 3,149  (5,495) (2,346) Other long-term liabilities 952  4,453  5,405  Net cash used in operating activities $ (44,990) $ (844) $ (45,834) Cash flows from investing activities Purchases of property and equipment (2,117) —  (2,117) Purchases of intangible assets (1,296) —  (1,296) Net cash used in investing activities $ (3,413) $ —  $ (3,413) Cash flows from financing activities Borrowings under revolving facility 31,600  —  31,600  Taxes paid related to net share settlement of equity awards (10,991) —  (10,991) Net cash provided by financing activities $ 20,609  $ —  $ 20,609  Effect of exchange rate changes on cash and cash equivalents (218) 844  626  Net increase (decrease) in cash, cash equivalents, and restricted cash (28,012) —  (28,012) Cash and cash equivalents at beginning of period 42,004  —  42,004  Cash and cash equivalents at end of period $ 13,992  $ —  $ 13,992

v3.23.3

Summary of significant accounting policies (Tables)	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Schedule of Accounts, Notes, Loans and Financing Receivable	The change in the Company’s allowance for credit losses is as follows (in thousands): For the Three Months Ended March 31, 2023 2022 Balance at beginning of period $ 16,043  $ 8,132  Provisions for bad debts, included in Selling, general and administrative 5,514  1,464  Uncollectible receivables written off (2,449) (4,230) Balance at end of period $ 19,108  $ 5,366

v3.23.3

Other current assets (Tables)	3 Months Ended
	Mar. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Schedule of Other Current Assets	Other current assets consists of the following as of March 31, 2023 and December 31, 2022 (in thousands): March 31, 2023 December 31, 2022 Unbilled receivables, current $ 4,873  $ 5,205  Rebate receivables 937  348  Prepaid taxes 407  483  Other 268  243  Total $ 6,485  $ 6,279

v3.23.3

Property and equipment, net (Tables)	3 Months Ended
	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Schedule of Property and Equipment, Net	Property and equipment, net, consists of the following as of March 31, 2023 and December 31, 2022 (in thousands): Estimated Useful Life March 31, 2023 December 31, 2022 (years) Vehicles 5 $ 112  $ 246  Furniture and fixtures 7 1,116  1,105  Office and other equipment 5 1,199  1,190  Leasehold improvements Lesser of lease term or useful life 8,294  8,272  Construction in progress n/a 1,004  994  11,725  11,807  Less: accumulated depreciation (2,060) (1,772) Total property and equipment, net $ 9,665  $ 10,035

v3.23.3

Goodwill and intangible assets (Tables)	3 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Useful Lives and Carrying Values of Indefinite-Lived Intangible Assets	The following table summarizes the useful lives and carrying values of intangible assets, including internal-use software (in thousands): As of March 31, 2023 As of December 31, 2022 Useful Life Gross Value Accumulated Amortization Net Value Gross Value Accumulated Amortization Net Value (in years) Goodwill n/a $ 2,110  $ —  $ 2,110  $ 2,145  $ —  $ 2,145  Internal-use software 3 $ 6,179  $ 3,433  $ 2,746  $ 5,852  $ 3,054  $ 2,798  Trade names & trademarks n/a 1,926  —  1,926  1,808  —  1,808  Customer contracts 7 721  59  662  733  30  703  Acquired software 3 - 6 962  27  935  966  13  953  Total intangible assets, net $ 9,788  $ 3,519  $ 6,269  $ 9,359  $ 3,097  $ 6,262
Schedule of Useful Lives and Carrying Values of Finite-Lived Intangible Assets	The following table summarizes the useful lives and carrying values of intangible assets, including internal-use software (in thousands): As of March 31, 2023 As of December 31, 2022 Useful Life Gross Value Accumulated Amortization Net Value Gross Value Accumulated Amortization Net Value (in years) Goodwill n/a $ 2,110  $ —  $ 2,110  $ 2,145  $ —  $ 2,145  Internal-use software 3 $ 6,179  $ 3,433  $ 2,746  $ 5,852  $ 3,054  $ 2,798  Trade names & trademarks n/a 1,926  —  1,926  1,808  —  1,808  Customer contracts 7 721  59  662  733  30  703  Acquired software 3 - 6 962  27  935  966  13  953  Total intangible assets, net $ 9,788  $ 3,519  $ 6,269  $ 9,359  $ 3,097  $ 6,262
Schedule of Expected Amortization of Intangible Assets for Future Periods	As of March 31, 2023, the expected amortization of intangible assets for future periods, excluding assets not yet placed in service of $0.1 million, is as follows (in thousands): Future Amortization Remainder of 2023 $ 1,330  2024 1,490  2025 942  2026 171  2027 162  Thereafter 99  Total $ 4,194

v3.23.3

Other long-term assets (Tables)	3 Months Ended
	Mar. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Schedule of Other Assets, Noncurrent	The following table summarizes Other long-term assets as of March 31, 2023 and December 31, 2022 (in thousands): March 31, 2023 December 31, 2022 Unbilled receivables, net of current $ 9,771  $ 11,112  Right of return asset 8,239  8,224  Debt issuance costs(1) —  733  Investment in CLF High Street Limited 606  590  Long-term accounts receivable 1,900  2,135  Other long-term assets 870  852  Total $ 21,386  $ 23,646  (1) As of January 1, 2023, debt issuance costs and debt discount, net of accumulated amortization, were recorded as a reduction to the carrying value of the related debt within Long-term debt, net of current portion, on the unaudited interim condensed consolidated balance sheets. See Note 10—Debt for additional information.

v3.23.3

Accounts payable and accrued expenses (Tables)	3 Months Ended
	Mar. 31, 2023
Payables and Accruals [Abstract]
Schedule of Accounts Payable and Accrued Expenses	Accounts payable and accrued expenses were comprised of the following (in thousands): March 31, 2023 December 31, 2022 Accounts payable $ 17,995  $ 21,767  Accrued sales tax 5,576  6,329  Accrued payroll and benefits 3,207  3,281  Accrued litigation expenses 2,525  9,613  Accrued professional fees 8,312  3,557  Accrued inventory purchases and storage costs 975  3,089  Other payables 5,627  849  Total $ 44,217  $ 48,485

v3.23.3

Deferred revenue (Tables)	3 Months Ended
	Mar. 31, 2023
Revenue from Contract with Customer [Abstract]
Schedule of Deferred Revenue and Contract Assets	The following tables reflect the change in Deferred revenue during the three months ended March 31, 2023 and 2022 (in thousands): Deferred Revenue Balance at December 31, 2022 $ 18,909  Net change (895) Balance at March 31, 2023 $ 18,014  Deferred Revenue Balance at December 31, 2021 $ 22,366  Net change (673) Balance at March 31, 2022 (As Restated) $ 21,693

v3.23.3

Debt (Tables)	3 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
Schedule of Contractually Schedule Maturities of Consolidated Debt Obligations Outstanding	The following table provides a summary of the Company’s outstanding debt as of March 31, 2023 and December 31, 2022 (in thousands): March 31, 2023 December 31, 2022 Term loan $ 66,000  $ —  Revolving facility 2,000  88,100  Subordinated second lien PIK loan 88,530  —  Other debt 336  347  Total debt, excluding deferred financing costs and discounts 156,866  88,447  Deferred financing costs, net (6,353) (733) Discount on debt, net (23,357) —  Total debt $ 127,156  $ 87,714

v3.23.3

Derivative instruments (Tables)	3 Months Ended
	Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]
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 “with-and-without method” that was used to value the embedded derivatives based on potential change in control scenarios with different probabilities and a maturity scenario that would not result in a change in control event: As of March 31, 2023 Expected term in years 1.13 Exit fee “with” the embedded derivatives 10.00% - 35.00% Make-whole premium discount rate(1) 5.49% Implied discount rate 45.00% (1) The make-whole premium discount rate is the 1-year constant maturity Treasury rate plus 50 basis points as of March 31, 2023 and would not be applicable if the loan fully matures without a change in control event.

v3.23.3

Fair Value (Tables)	3 Months Ended
	Mar. 31, 2023
Fair Value Disclosures [Abstract]
Schedule of Fair Value, Liabilities Measured on Recurring Basis	The following table summarizes the Company’s total Level 3 liability activity for the three months ended March 31, 2023 (in thousands): Derivative Liability Total Level 3 Liabilities Fair value as of January 1, 2023 $ —  $ —  Initial measurement on February 14, 2023 23,532  23,532  Fair value as of March 31, 2023 $ 23,532  $ 23,532  The following table summarizes the Company’s total Level 3 liability activity for the three months ended March 31, 2022 (in thousands): Promotional Agreements Total Level 3 Liabilities Fair value as of January 1, 2022 $ 4,474  $ 4,474    Change in valuation of promotional agreements 1,588  1,588    Issuance of common stock pursuant to promotional agreement awards (2,963) (2,963) Fair value as of March 31, 2022 $ 3,099  $ 3,099

v3.23.3

Commitments and contingencies (Tables)	3 Months Ended
	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Summary of Share Based Payment Award Liability Classified tock Options Valuation Assumptions	The Company estimates the fair value of its liability-classified awards using a Monte-Carlo simulation model at each reporting period until settlement. The other significant assumptions used in the analysis as of March 31, 2023 were as follows: As of March 31, 2023 Risk-free interest rate 4.20% Expected dividend yield — Expected term in years 2.04 - 2.31 Expected volatility 26.40% - 42.14%

v3.23.3

Stock-based compensation (Tables)	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Share-based Payment Arrangement, Option, Activity	A summary of option activity under the employee share option plan as of March 31, 2023, and changes during the period then ended, is presented below: Shares (in thousands) Weighted - Average Exercise Price Weighted - Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2022 2,191 $ 4.43  10.42 $ 1,160  Granted —  —  Exercised (1) 2.02  Forfeited, expired, or canceled (197) 11.32  Outstanding as of March 31, 2023 1,993 $ 3.75  10.21 $ —  Vested and Exercisable 1,272 $ 3.15  9.55 $ —  Expected to Vest 721 $ 4.80  11.38 $ —
Schedule of Nonvested Restricted Stock Units Activity	A summary of RSUs activity is as follows: Shares (in thousands) Weighted - Average Grant Date Fair Value Per Share Outstanding as of December 31, 2022 3,088  $ 5.93  Granted —  —  Vested (416) 6.97  Forfeited (34) 2.02  Outstanding as of March 31, 2023 2,638  $ 5.81
Schedule of Nonvested Restricted Stock Shares Activity	A summary of RSAs activity is as follows: Shares (in thousands) Weighted - Average Grant Date Fair Value Per Share Outstanding as of December 31, 2022 361  $ 4.44  Granted —  —  Vested (129) 4.68  Forfeited —  —  Outstanding as of March 31, 2023 232  $ 4.30

v3.23.3

Basic and diluted net loss per share (Tables)	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Schedule of Computation of Net Income (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 Months Ended March 31, 2023 2022 (As Restated) Numerator: Net loss attributable to common stockholders—basic and diluted $ (22,653) $ (9,478) Denominator: Weighted average common shares outstanding—basic and diluted 96,884,584  95,709,671  Net loss per share: Basic and diluted net loss per share $ (0.23) $ (0.10) Anti-dilutive securities excluded from diluted loss per share: Unvested restricted stock units 2,851,416  —  Unvested restricted stock awards 295,156  —  Stock options to purchase common stock 2,088,306  662,935  Total 5,234,878  662,935

v3.23.3

Segment and geographic area information (Tables)	3 Months Ended
	Mar. 31, 2023
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment	The following is key financial information by reportable segment which is used by management in evaluating performance and allocating resources (in thousands): For the Three Months Ended March 31, 2023 For the Three Months Ended March 31, 2022 (As Restated) Revenue Cost of revenue Gross profit Revenue Cost of revenue Gross profit United States: Franchise $ 8,893  $ 2,093  $ 6,800  $ 12,401  $ 1,037  $ 11,364  Equipment and merchandise 2,013  2,208  (195) 5,864  3,808  2,056  $ 10,906  $ 4,301  $ 6,605  $ 18,265  $ 4,845  $ 13,420  Australia: Franchise $ 2,765  $ 122  $ 2,643  $ 3,448  $ 173  $ 3,275  Equipment and merchandise 374  449  (75) 1,394  1,547  (153) $ 3,139  $ 571  $ 2,568  $ 4,842  $ 1,720  $ 3,122  Rest of World: Franchise $ 2,951  $ 109  $ 2,842  $ 4,011  $ 97  $ 3,914  Equipment and merchandise 584  871  (287) 2,270  1,758  512  $ 3,535  $ 980  $ 2,555  $ 6,281  $ 1,855  $ 4,426  Consolidated: Franchise $ 14,609  $ 2,324  $ 12,285  $ 19,860  $ 1,307  $ 18,553  Equipment and merchandise 2,971  3,528  (557) 9,528  7,113  2,415  $ 17,580  $ 5,852  $ 11,728  $ 29,388  $ 8,420  $ 20,968
Reconciliation of Operating Profit (Loss) from Segments to Consolidated	The reconciliation between reportable segment gross profit to net loss is as follows (in thousands): For the Three Months Ended March 31, 2023 2022 (As Restated) Segment gross profit $ 11,728  $ 20,968  Selling, general and administrative expenses 31,504  32,116  Interest expense, net 3,231  126  Other (income) expense, net (554) 622  Provision (benefit) for income taxes 200  (2,418) Net loss $ (22,653) $ (9,478)

v3.23.3

Nature of the business and basis of presentation (Details) - USD ($) $ in Thousands	Oct. 20, 2023	Feb. 14, 2023	Oct. 23, 2023	Mar. 31, 2023	Dec. 31, 2022	May 16, 2022
Schedule of Equity Method Investments [Line Items]
Liquidity requirement				$ 10,000
Long-term debt				$ 127,156	$ 87,714
Convertible Subordinated Debt Second Lien Term Loan
Schedule of Equity Method Investments [Line Items]
Term loan facility amount		$ 66,000
Revolving facility
Schedule of Equity Method Investments [Line Items]
Payment for debt extinguishment or debt prepayment cost		20,100
Revolving facility | Convertible Subordinated Debt Second Lien Term Loan
Schedule of Equity Method Investments [Line Items]
Term loan facility amount		$ 2,000
Convertible Subordinated Debt | Convertible Subordinated Debt Second Lien Term Loan
Schedule of Equity Method Investments [Line Items]
Accrued interest rate		12.00%
Current principal balance percentage		35.00%
Current principal balance percentage term loan		25.00%
Current principal balance percentage thereafter		10.00%
Convertible Subordinated Debt | Subsequent Event | Convertible Subordinated Debt Second Lien Term Loan
Schedule of Equity Method Investments [Line Items]
Accrued interest rate			12.00%
Convertible Subordinated Debt Second Lien Term Loan | Convertible Subordinated Debt
Schedule of Equity Method Investments [Line Items]
Term loan facility amount		$ 90,000
Long term debt bearing fixed interest rate		3.00%
First Lien Credit Agreement | Subsequent Event | New Credit Agreement
Schedule of Equity Method Investments [Line Items]
Term loan facility amount	$ 40,000		$ 10,000
Extinguishment of debt, amount	5,000
Maximum borrowing capacity	$ 10,000
F45 Training Holdings | Club Sports Group, LLC | Shareholder | Lewis Management, LP
Schedule of Equity Method Investments [Line Items]
Noncontrolling interest, ownership interest (percent)						14.00%

v3.23.3

Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements - Income Statement (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues:
Total revenues	$ 17,580	$ 29,388
Costs and operating expenses:
Cost of revenue	5,852	8,420
Selling, general and administrative expenses	31,504	32,116
Total costs and operating expenses	37,356	40,536
Income (loss) from operations	(19,776)	(11,148)
Interest expense, net	3,231	126
Other expense, net	(554)	622
Loss before income taxes	(22,453)	(11,896)
Provision (benefit) for income taxes	200	(2,418)
Net loss	(22,653)	(9,478)
Other comprehensive (loss) income
Foreign currency translation adjustment, net of tax	(807)	1,016
Comprehensive loss	$ (23,460)	$ (8,462)
Per share data:
Earnings (loss) per share - Basic (in dollars per share)	$ (0.23)	$ (0.10)
Earnings (loss) per share - Diluted (in dollars per share)	$ (0.23)	$ (0.10)
Shares used in computing earnings (loss) per share
Weighted average common shares outstanding - Basic (in shares)	96,884,584	95,709,671
Weighted average common shares outstanding - diluted (in shares)	96,884,584	95,709,671
Previously Reported
Revenues:
Total revenues		$ 50,008
Costs and operating expenses:
Selling, general and administrative expenses		32,090
Total costs and operating expenses		44,264
Income (loss) from operations		5,744
Interest expense, net		126
Other expense, net		570
Loss before income taxes		5,048
Provision (benefit) for income taxes		2,536
Net loss		2,512
Other comprehensive (loss) income
Foreign currency translation adjustment, net of tax		906
Comprehensive loss		$ 3,418
Per share data:
Earnings (loss) per share - Basic (in dollars per share)		$ 0.03
Earnings (loss) per share - Diluted (in dollars per share)		$ 0.03
Shares used in computing earnings (loss) per share
Weighted average common shares outstanding - Basic (in shares)		95,709,671
Weighted average common shares outstanding - diluted (in shares)		96,687,283
Revision of Prior Period, Adjustment
Revenues:
Total revenues		$ (20,620)
Costs and operating expenses:
Selling, general and administrative expenses		26
Total costs and operating expenses		(3,728)
Income (loss) from operations		(16,892)
Interest expense, net		0
Other expense, net		52
Loss before income taxes		(16,944)
Provision (benefit) for income taxes		(4,954)
Net loss		(11,990)
Other comprehensive (loss) income
Foreign currency translation adjustment, net of tax		110
Comprehensive loss		$ (11,880)
Per share data:
Earnings (loss) per share - Basic (in dollars per share)		$ (0.13)
Earnings (loss) per share - Diluted (in dollars per share)		$ (0.13)
Shares used in computing earnings (loss) per share
Weighted average common shares outstanding - Basic (in shares)		0
Weighted average common shares outstanding - diluted (in shares)		(977,612)
Franchise
Revenues:
Total revenues	$ 14,609	$ 19,860
Costs and operating expenses:
Cost of revenue	2,324	1,307
Franchise | Previously Reported
Revenues:
Total revenues		19,860
Costs and operating expenses:
Cost of revenue		1,231
Franchise | Revision of Prior Period, Adjustment
Revenues:
Total revenues		0
Costs and operating expenses:
Cost of revenue		76
Equipment and merchandise
Revenues:
Total revenues	2,971	9,528
Costs and operating expenses:
Cost of revenue	$ 3,528	7,113
Equipment and merchandise | Previously Reported
Revenues:
Total revenues		30,148
Costs and operating expenses:
Cost of revenue		10,943
Equipment and merchandise | Revision of Prior Period, Adjustment
Revenues:
Total revenues		(20,620)
Costs and operating expenses:
Cost of revenue		$ (3,830)

v3.23.3

Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements - Cashflows (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities
Net loss	$ (22,653)	$ (9,478)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	336	286
Amortization of intangible assets	529	888
Amortization of deferred costs	933	626
Provisions for bad debts, included in Selling, general and administrative	5,514	1,464
Stock-based compensation	4,087	2,073
In-kind marketing	0	57
Provision for inventories	(17)	(52)
Unrealized foreign currency transaction gains	14	360
Changes in operating assets and liabilities:
Due from related parties	0	(294)
Accounts receivable, net	2,116	(12,498)
Inventories	(572)	(9,262)
Prepaid expenses	1,148	(20,085)
Other current assets	(8,433)	(6,197)
Deferred costs	(685)	(806)
Other long-term assets	9,580	(5,375)
Accounts payable and accrued expenses	(3,774)	10,278
Deferred revenue	(1,115)	(774)
Interest payable	1,280	(104)
Income taxes payable	(310)	(2,346)
Other long-term liabilities	730	5,405
Net cash used in operating activities	(10,998)	(45,834)
Cash flows from investing activities
Purchases of property and equipment	(600)	(2,117)
Purchases of intangible assets	(180)	(1,296)
Net cash used in investing activities	(646)	(3,413)
Cash flows from financing activities
Borrowings under KLIM Term Loan	87,300	31,600
Payment, Tax Withholding, Share-Based Payment Arrangement		(10,991)
Net cash provided by financing activities	61,022	20,609
Effect of exchange rate changes on cash and cash equivalents	(914)	626
Net change in cash, cash equivalents, and restricted cash	48,464	(28,012)
Cash and cash equivalents	$ 53,730	13,992	$ 5,265	$ 42,004
Previously Reported
Cash flows from operating activities
Net loss		2,512
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		286
Amortization of intangible assets		888
Amortization of deferred costs		626
Provisions for bad debts, included in Selling, general and administrative		1,464
Stock-based compensation		2,073
In-kind marketing		57
Provision for inventories		(52)
Unrealized foreign currency transaction gains		381
Changes in operating assets and liabilities:
Due from related parties		(294)
Accounts receivable, net		(16,413)
Inventories		(4,160)
Prepaid expenses		(20,085)
Other current assets		(12,498)
Deferred costs		(1,194)
Other long-term assets		(8,068)
Accounts payable and accrued expenses		1,963
Deferred revenue		3,527
Interest payable		(104)
Income taxes payable		3,149
Other long-term liabilities		952
Net cash used in operating activities		(44,990)
Cash flows from investing activities
Purchases of property and equipment		(2,117)
Purchases of intangible assets		(1,296)
Net cash used in investing activities		(3,413)
Cash flows from financing activities
Borrowings under KLIM Term Loan		31,600
Payment, Tax Withholding, Share-Based Payment Arrangement		(10,991)
Net cash provided by financing activities		20,609
Effect of exchange rate changes on cash and cash equivalents		(218)
Net change in cash, cash equivalents, and restricted cash		(28,012)
Cash and cash equivalents		13,992		42,004
Revision of Prior Period, Adjustment
Cash flows from operating activities
Net loss		(11,990)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		0
Amortization of intangible assets		0
Amortization of deferred costs		0
Provisions for bad debts, included in Selling, general and administrative		0
Stock-based compensation		0
In-kind marketing		0
Provision for inventories		0
Unrealized foreign currency transaction gains		(21)
Changes in operating assets and liabilities:
Due from related parties		0
Accounts receivable, net		3,915
Inventories		(5,102)
Prepaid expenses		0
Other current assets		6,301
Deferred costs		388
Other long-term assets		2,693
Accounts payable and accrued expenses		8,315
Deferred revenue		(4,301)
Interest payable		0
Income taxes payable		(5,495)
Other long-term liabilities		4,453
Net cash used in operating activities		(844)
Cash flows from investing activities
Purchases of property and equipment		0
Purchases of intangible assets		0
Net cash used in investing activities		0
Cash flows from financing activities
Borrowings under KLIM Term Loan		0
Payment, Tax Withholding, Share-Based Payment Arrangement		0
Net cash provided by financing activities		0
Effect of exchange rate changes on cash and cash equivalents		844
Net change in cash, cash equivalents, and restricted cash		0
Cash and cash equivalents		$ 0		$ 0

v3.23.3

Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements - Narratives (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022
Accumulated deficit	$ (570,763)	$ (548,110)
Accumulated other comprehensive loss	$ (2,233)	$ (1,426)
Revision of Prior Period, Adjustment
Accumulated deficit			$ (22,700)
Accumulated other comprehensive loss			$ 700

v3.23.3

Summary of significant accounting policies - Narrative (Details)	3 Months Ended
	Mar. 31, 2023
Customer Concentration Risk | Accounts receivable | One customer
Unusual or Infrequent Item, or Both [Line Items]
Revenue concentration by customer (in percentage)	37.00%

v3.23.3

Summary of significant accounting policies - Change in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance as of beginning of the year	$ 16,043	$ 8,132
Provisions for bad debts, included in Selling, general and administrative	5,514	1,464
Uncollectible receivables written off	(2,449)	(4,230)
Balance as of end of the year	$ 19,108	$ 5,366

v3.23.3

Other current assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Unbilled receivables, current	$ 4,873	$ 5,205
Rebate receivables	937	348
Prepaid taxes	407	483
Other	268	243
Total	$ 6,485	$ 6,279

v3.23.3

Property and equipment, net - Summary (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 11,725	$ 11,807
Less: accumulated depreciation	(2,060)	(1,772)
Total property and equipment, net	$ 9,665	10,035
Vehicles
Property, Plant and Equipment [Line Items]
Estimated Useful Life	5 years
Property and equipment, gross	$ 112	246
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Estimated Useful Life	7 years
Property and equipment, gross	$ 1,116	1,105
Office and other equipment
Property, Plant and Equipment [Line Items]
Estimated Useful Life	5 years
Property and equipment, gross	$ 1,199	1,190
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	8,294	8,272
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,004	$ 994

v3.23.3

Property and equipment, net - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Property, Plant and Equipment [Abstract]
Depreciation	$ 336	$ 286

v3.23.3

Goodwill and intangible assets - Summary of Useful Lives and Carrying Value of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 2,110	$ 2,145
Gross Value	9,788	9,359
Accumulated Amortization	3,519	3,097
Net Value	6,269	6,262
Trade names & trademarks
Finite-Lived Intangible Assets [Line Items]
Gross Value	1,926	1,808
Accumulated Amortization	0	0
Net Value	$ 1,926	1,808
Internal-use software
Finite-Lived Intangible Assets [Line Items]
Useful Life	3 years
Gross Value	$ 6,179	5,852
Accumulated Amortization	3,433	3,054
Net Value	$ 2,746	2,798
Customer contracts
Finite-Lived Intangible Assets [Line Items]
Useful Life	7 years
Gross Value	$ 721	733
Accumulated Amortization	59	30
Net Value	662	703
Acquired software
Finite-Lived Intangible Assets [Line Items]
Gross Value	962	966
Accumulated Amortization	27	13
Net Value	$ 935	$ 953
Acquired software | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful Life	3 years
Acquired software | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful Life	6 years

v3.23.3

Goodwill and intangible assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 529	$ 888
Internal-use software
Finite-Lived Intangible Assets [Line Items]
Weighted average remaining life of intangible assets	1 year 10 months 24 days		1 year 9 months 18 days
Acquired software
Finite-Lived Intangible Assets [Line Items]
Weighted average remaining life of intangible assets	2 years 4 months 24 days		2 years 3 months 18 days

v3.23.3

Goodwill and intangible assets - Expected Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 529	$ 888
Finite-Lived Intangible Assets [Line Items]
Amortization of assets not yet placed in service	100
Future Amortization
Net Value	6,269		$ 6,262
Finite Lived Intangible Assets Excluding Assets Not Yet In Service
Future Amortization
Remainder of 2023	1,330
2024	1,490
2025	942
2026	171
2027	162
Thereafter	99
Net Value	$ 4,194

v3.23.3

Other long-term assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Unbilled receivables, net of current	$ 9,771	$ 11,112
Right of return asset	8,239	8,224
Debt issuance costs	0	733
Investment in CLF High Street Limited	606	590
Long-term accounts receivable	1,900	2,135
Other long-term assets	870	852
Total	$ 21,386	$ 23,646

v3.23.3

Accounts payable and accrued expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Accounts payable	$ 17,995	$ 21,767
Accrued sales tax	5,576	6,329
Accrued payroll and benefits	3,207	3,281
Accrued litigation expenses	2,525	9,613
Accrued professional fees	8,312	3,557
Accrued inventory purchases and storage costs	975	3,089
Other payables	5,627	849
Total	$ 44,217	$ 48,485

v3.23.3

Deferred revenue - Changes in Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenue from Contract with Customer [Abstract]
Revenue included in deferred revenue	$ 4,000
Contract with Customer, Liability [Roll Forward]
Beginning balance	18,909
Beginning balance		$ 22,366
Net change	(895)	(673)
Ending balance		$ 21,693
Ending balance	$ 18,014

v3.23.3

Deferred revenue - Remaining Performance Obligation Narrative (Details) $ in Millions	Mar. 31, 2023 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 14.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 18.0
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months

v3.23.3

Debt - Schedule of Contractually Schedule Maturities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Total debt, excluding deferred financing costs and discounts	$ 156,866	$ 88,447
Deferred financing costs, net	(6,353)	(733)
Discount on debt, net	(23,357)	0
Total debt	127,156	87,714
Revolving facility
Debt Instrument [Line Items]
Total debt, excluding deferred financing costs and discounts	2,000	88,100
Subordinated second lien PIK loan
Debt Instrument [Line Items]
Total debt, excluding deferred financing costs and discounts	88,530	0
Term loan
Debt Instrument [Line Items]
Total debt, excluding deferred financing costs and discounts	66,000	0
Other debt
Debt Instrument [Line Items]
Total debt, excluding deferred financing costs and discounts	$ 336	$ 347

v3.23.3

Debt - Narratives (Details) - USD ($) $ in Thousands						3 Months Ended
	Oct. 23, 2023	Oct. 20, 2023	Feb. 14, 2023	Jul. 19, 2021	Jun. 23, 2020	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022	Aug. 13, 2021	Sep. 18, 2019
Debt Instrument [Line Items]
Long-term debt						$ 127,156	$ 87,714
Repaid line of credit facility			$ 20,100
Derivative, term of contract			2 years
Deferred financing costs and discount on debt, net of accumulated amortization						6,353	733
Interest and debt expense						$ 3,200		$ 100
Long term debt weighted average rate of interest over a period of time						11.36%
Term loan
Debt Instrument [Line Items]
In-kind marketing						$ 2,700
PIK accrual						$ 1,200
Convertible Subordinated Debt Second Lien Term Loan | Second Amendment To The Secured Credit Agreement
Debt Instrument [Line Items]
Long term debt bearing fixed interest rate						10.46%
Convertible Subordinated Debt | Convertible Subordinated Debt Second Lien Term Loan
Debt Instrument [Line Items]
Term loan facility amount			$ 90,000
Credit facility term			5 years 6 months
Long term debt bearing fixed interest rate			3.00%
Jp Morgan Chase Bank | Term loan | Second Amendment To The Secured Credit Agreement | Secured Credit Agreement First Lien Loan
Debt Instrument [Line Items]
Deferred financing costs and discount on debt, net of accumulated amortization						$ 700	700
Secured Credit Agreement First Lien Loan | Jp Morgan Chase Bank | Term loan | Second Amendment To The Secured Credit Agreement
Debt Instrument [Line Items]
Prospective conversion of revolving credit facility into term loan					$ 8,000
Amount agreed to be repaid under revolving credit facility					$ 5,000
Third Amendment
Debt Instrument [Line Items]
Write off of debt issuance cost							200
Convertible Subordinated Debt Second Lien Term Loan
Debt Instrument [Line Items]
Term loan facility amount			$ 66,000
Convertible Subordinated Debt Second Lien Term Loan | SOFR
Debt Instrument [Line Items]
Spread on variable rate (in percentage)			5.50%
Convertible Subordinated Debt Second Lien Term Loan | Term loan
Debt Instrument [Line Items]
Repayments of debt				$ 31,100
Convertible Subordinated Debt Second Lien Term Loan | Convertible Subordinated Debt
Debt Instrument [Line Items]
Accrued interest rate			12.00%
Debt instrument, exit fee percent, year one			35.00%
Debt instrument, exit fee percent, year two			25.00%
Debt instrument, exit fee percent, after year two			10.00%
Accrued interest rate			12.00%
Convertible Subordinated Debt Second Lien Term Loan | Convertible Subordinated Debt | Subsequent Event
Debt Instrument [Line Items]
Accrued interest rate	12.00%
New Credit Agreement
Debt Instrument [Line Items]
Spread on variable rate (in percentage)						2.00%
Basis spread on variable rate (in percentage)						0.50%
New Credit Agreement | First Lien Credit Agreement | Subsequent Event
Debt Instrument [Line Items]
Term loan facility amount	$ 10,000	$ 40,000
Delayed draw term	15 months
Maximum allowed unrestricted cash and undrawn commitments		10,000
Maximum allowed undrawn secured debt commitments		7,500
First Anniversary
Debt Instrument [Line Items]
Debt instrument premium percentage						0.02
Second Anniversary
Debt Instrument [Line Items]
Fixed rate						1.00%
Third Anniversary
Debt Instrument [Line Items]
Fixed rate						0.00%
Senior Credit Agreement | Subsequent Event
Debt Instrument [Line Items]
Repayments of debt		$ 5,000
Revolving facility
Debt Instrument [Line Items]
Outstanding balance						$ 1,600
Payment for debt extinguishment or debt prepayment cost			$ 20,100
Third party fess						5,700
Revolving facility | Secured Credit Agreement First Lien Loan
Debt Instrument [Line Items]
Line of credit facility, remaining borrowing capacity						$ 400	$ 300
Revolving facility | Secured Credit Agreement First Lien Loan | Term loan
Debt Instrument [Line Items]
Term loan facility amount										$ 30,000
Revolving facility | Secured Credit Agreement First Lien Loan | Jp Morgan Chase Bank
Debt Instrument [Line Items]
Term loan facility amount										$ 20,000
Revolving facility | Convertible Subordinated Debt Second Lien Term Loan
Debt Instrument [Line Items]
Term loan facility amount			$ 2,000
Repayments of debt				$ 7,000
Five year Senior Secured Revolving Facility | Secured Credit Agreement First Lien Loan | Term loan
Debt Instrument [Line Items]
Term loan facility amount									$ 35,000
Outstanding balance									$ 90,000
Variable-rate term									5 years

v3.23.3

Derivative instruments (Details) $ in Millions	Mar. 31, 2023 USD ($)
New Credit Agreement
Derivative [Line Items]
Aggregate notional amount	$ 23.5

v3.23.3

Derivative instruments - Summary of Fair Values the Embedded Derivatives Using the Bond Plus Black-Scholes Option Pricing Model (Detail)	Mar. 31, 2023
Expected term in years
Derivative [Line Items]
Expected term in years	1 year 1 month 17 days
Exit fee “with” the embedded derivatives | Minimum
Derivative [Line Items]
Inputs used to value the embedded derivatives based on potential change in control scenario	0.1000
Exit fee “with” the embedded derivatives | Maximum
Derivative [Line Items]
Inputs used to value the embedded derivatives based on potential change in control scenario	0.3500
Make-whole premium discount rate
Derivative [Line Items]
Inputs used to value the embedded derivatives based on potential change in control scenario	0.0549
Implied discount rate
Derivative [Line Items]
Inputs used to value the embedded derivatives based on potential change in control scenario	0.4500

v3.23.3

Fair Value - Liabilities Measured on Recurring Basis (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value beginning balance	$ 4,474
Change in fair valuation of promotional agreements	1,588
Issuance of common stock pursuant to promotional agreement awards	(2,963)
Fair value ending balance	3,099
Promotional Agreements
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value beginning balance	4,474
Change in fair valuation of promotional agreements	1,588
Issuance of common stock pursuant to promotional agreement awards	(2,963)
Fair value ending balance	$ 3,099

v3.23.3

Income taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate reconciliation, percent	0.90%	20.30%
Unrecognized Tax Benefits	$ 15.2

v3.23.3

Related party transactions (Details)			3 Months Ended		12 Months Ended
	Oct. 26, 2022 segment studio Extension	Jun. 15, 2021 USD ($) studio	Mar. 31, 2023 USD ($) studio equipmentPack	Mar. 31, 2022 USD ($) studio	Dec. 31, 2022 USD ($) studio
Related Party Transaction [Line Items]
Revenue			$ 17,580,000	$ 29,388,000
Accounts payable and accrued expenses			44,217,000		$ 48,485,000
Number of operating studios | studio				87
Other current liabilities			3,298,000		2,559,000
Franchise
Related Party Transaction [Line Items]
Revenue			14,609,000	$ 19,860,000
Franchise Equipment And Merchandise
Related Party Transaction [Line Items]
Revenue			100,000
Development Agreements
Related Party Transaction [Line Items]
Due from related parties, net			200,000		600,000
Master Franchise Agreement
Related Party Transaction [Line Items]
Franchise fee payment			1,500,000
Officer
Related Party Transaction [Line Items]
Revenue			100,000	100,000
Related Party
Related Party Transaction [Line Items]
Due from related parties, net			115,000		1,669,000
Related Party | Franchise
Related Party Transaction [Line Items]
Revenue			305,000	2,616,000
Related Party | Stockholder That Is An Executive Officer And Director
Related Party Transaction [Line Items]
Revenue			100,000	100,000
Related Party | Master Franchise Agreement | Franchise
Related Party Transaction [Line Items]
Revenue			0
Studios Owned By An Entity | Studios Owned By Group Training
Related Party Transaction [Line Items]
Due from related parties, net			100,000		100,000
Executive Officer | Shipping and Logistic Services
Related Party Transaction [Line Items]
Selling expense			$ 400,000	1,000,000
Accounts payable and accrued expenses					2,200,000
Affiliated Entity
Related Party Transaction [Line Items]
Number of studios opened | studio			24
Affiliated Entity | Asset Transfer And Licensing Agreement
Related Party Transaction [Line Items]
Number of studios to be opened | studio		300
Agreement term		36 months
Initial number of studios | studio		150
Initial term		18 months
Affiliated Entity | Long Term Multi Unit Studio Agreement
Related Party Transaction [Line Items]
Related party transaction amounts monthly fixed franchise fee		$ 2,500
Related party transaction percentage of gross monthly studio revenue		7.00%
Franchise establishment fee		$ 7,500,000
Proceeds from initial franchise establishment fee		$ 1,900,000
Number of studios monthly franchise fees | studio		150
Number of months commence		12 months
Other current liabilities					$ 3,200,000
Affiliated Entity | Long Term Multi Unit Studio Agreement | June 2022
Related Party Transaction [Line Items]
Franchise establishment fee		$ 1,900,000
Affiliated Entity | Long Term Multi Unit Studio Agreement | December 2022
Related Party Transaction [Line Items]
Franchise establishment fee		1,900,000
Affiliated Entity | Long Term Multi Unit Studio Agreement | December 2023
Related Party Transaction [Line Items]
Franchise establishment fee		$ 1,900,000
Affiliated Entity | Long Term Multi Unit Studio Agreement | Franchise
Related Party Transaction [Line Items]
Revenue				$ 2,300,000
Affiliated Entity | Master Franchise Agreement
Related Party Transaction [Line Items]
Additional franchise rights | studio	103
Number of franchise agreement | segment	71
License term	10 years
Number of additional year | Extension	2
Club Franchise Group Llc | Long Term Multi Unit Studio Agreement
Related Party Transaction [Line Items]
Number of studios opened | studio					280
MFA | Master Franchise Agreement
Related Party Transaction [Line Items]
Number of equipment packs | equipmentPack			40

v3.23.3

Commitments and contingencies - Narrative (Details) $ in Thousands					1 Months Ended	3 Months Ended		12 Months Ended
	Dec. 30, 2021 USD ($) anniversary	Sep. 24, 2021 USD ($) studio	Jun. 25, 2021 USD ($)	Apr. 12, 2021 USD ($)	Dec. 31, 2021 USD ($)	Mar. 31, 2023 USD ($) lease	Mar. 31, 2022 USD ($) shares	Dec. 31, 2022 USD ($) shares	Nov. 08, 2023 USD ($)	Nov. 24, 2020 USD ($) studio	Oct. 15, 2020
Loss Contingencies [Line Items]
Litigation accrual						$ 2,500		$ 9,600
Franchisee studios | lease						8
Vested restricted stock awards (in shares) | shares							914,692
Prepaid expenses						$ 6,698		7,850
Accrued payroll and benefits						3,207		$ 3,281
Subsequent Event
Loss Contingencies [Line Items]
Litigation accrual									$ 6,600
Other Noncurrent Liabilities
Loss Contingencies [Line Items]
Accrued payroll and benefits						$ 100
Liability Classified Awards
Loss Contingencies [Line Items]
Stock-based compensation expense							$ 1,400
Restricted stock units
Loss Contingencies [Line Items]
Company’s restricted stock awards	$ 100
Period of service	12 months
Percentage of vesting of award under share-based payment arrangement	100.00%
Number of anniversaries | anniversary	4
Weighted-average vesting period term	1 year
Db Ventures
Loss Contingencies [Line Items]
Other commitment					$ 500
Contractual obligation expenses							$ 1,400
Vested restricted stock awards (in shares) | shares								914,692
Marketing expense								$ 5,600
Db Ventures | CLF High Street Limited
Loss Contingencies [Line Items]
Ownership interest (percent)					75.00%
2020 Promotional Agreements | Big Sky Inc | Malibu Crew
Loss Contingencies [Line Items]
Commitment fee percentage		1.00%
Studios covered | studio		5
Cash payment exchanged		$ 200
2020 Promotional Agreements | Company Determined As Publicly Traded | Db Ventures
Loss Contingencies [Line Items]
Percentage of issued and outstanding common stock payable										1.00%
Contractual obligation										$ 5,000
Contractual term						5 years
Number of studios | studio										2
2020 Promotional Agreements | Company Determined As Publicly Traded | Magic Johnson Entertainment
Loss Contingencies [Line Items]
Contractual obligation				$ 5,000
Cash paid to settle liability for award under share-based payment arrangement				$ 4,000
Prepaid expenses						$ 4,000
2020 Promotional Agreements | Company Determined As Publicly Traded | Craw Daddy Productions
Loss Contingencies [Line Items]
Agreement termination amount			$ 5,000
Equity compensation as a percentage of fair market value of Avalon House (percent)			10.00%
Cash payment exchanged			$ 300
2020 Promotional Agreements | Gregnorman
Loss Contingencies [Line Items]
Commitment fee percentage											15.00%
Property Lease Guarantee
Loss Contingencies [Line Items]
Guarantee lease payments						$ 2,600
Property Lease Guarantee | Minimum
Loss Contingencies [Line Items]
Lease payment term						1 year
Property Lease Guarantee | Maximum
Loss Contingencies [Line Items]
Lease payment term						10 years

v3.23.3

Commitments and contingencies - Summary of Share Based Payment Award Liability Classified tock Options Valuation Assumptions (Details) - Liability Classified Awards - Two Thousand And Twenty One Promotional Agreements	3 Months Ended
	Mar. 31, 2023
Loss Contingencies [Line Items]
Risk-free interest rate	4.20%
Expected dividend yield	0.00%
Minimum
Loss Contingencies [Line Items]
Expected term in years	2 years 14 days
Expected volatility	26.40%
Maximum
Loss Contingencies [Line Items]
Expected term in years	2 years 3 months 21 days
Expected volatility	42.14%

v3.23.3

Stock-based compensation - Narrative (Details)		3 Months Ended
	Dec. 30, 2021	Mar. 31, 2023 USD ($) plan shares	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)	Jan. 01, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of plans | plan		3
Maximum number of shares available (in shares) | shares		5,000,000
2021 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock outstanding percentage (in percent)					5.00%
Share-based payment arrangement nonvested award option cost not yet recognized period for recognition		1 year 10 months 24 days
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average vesting period term	1 year
Restricted stock units | 2021 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares available (in shares) | shares		2,637,923
Share-based payment arrangement nonvested award option cost not yet recognized period for recognition		3 months 18 days
Shares withheld related to net share settlement of vested units (shares) | shares		187,205
Share based compensation arrangement by Share based payment award equity instruments other than options vested in period, fair value		$ 2,900,000	$ 0
Stock-based compensation expense		2,100,000	0
Share-based payment arrangement nonvested award excluding option cost not yet recognized amount		$ 13,000,000
Contractual term		4 years
Options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average vesting period term		1 year
Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average vesting period term		3 years
Incentive Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of vested and unvested option				$ 1,160,000
Incentive Stock Options | 2021 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of vested and unvested option		$ 0
Options vested in period fair value		400,000	0
Share-based payment arrangement nonvested award option cost not yet recognized amount		$ 1,200,000
Share-based payment arrangement nonvested award option cost not yet recognized period for recognition		1 year 1 month 28 days
Unvested restricted stock awards | 2021 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares available (in shares) | shares		232,478
Share based compensation arrangement by Share based payment award equity instruments other than options vested in period, fair value		$ 600,000	100,000
Stock-based compensation expense		400,000	$ 500,000
Share-based payment arrangement nonvested award excluding option cost not yet recognized amount		$ 300,000
Contractual term		1 year

v3.23.3

Stock-based compensation - Summary Of Stock Option Activity (Details) - Incentive Stock Options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Share-based compensation
Shares, Beginning (in shares)	2,191
Granted (in shares)	0
Exercised (in shares)	(1)
Forfeited, expired, or canceled (in shares)	(197)
Shares, Ending (in shares)	1,993	2,191
Vested and Exercisable (in shares)	1,272
Expected to Vest (in shares)	721
Weighted - Average Exercise Price
Weighted average exercise price, Beginning (in dollar per share)	$ 4.43
Weighted average exercise price, Granted (in dollar per share)	0
Weighted average exercise price, Exercised (in dollar per share)	2.02
Weighted average exercise price, Forfeited, expired, or canceled (in dollar per share)	11.32
Weighted average exercise price, End (in dollar per share)	3.75	$ 4.43
Weighted average exercise price, Vested and exercisable (in dollar per share)	3.15
Weighted average exercise price, Expected to vest (in dollar per share)	$ 4.80
Weighted - Average Remaining Contractual Term
Weighted average remaining contractual term, Expected to vest	10 years 2 months 15 days	10 years 5 months 1 day
Weighted average remaining contractual term, Vested and Exercisable	9 years 6 months 18 days
Weighted average remaining contractual term, Expected to Vest	11 years 4 months 17 days
Aggregate Intrinsic Value
Aggregate intrinsic value, Ending		$ 1,160
Aggregate intrinsic value, Vested and exercisable	$ 0
Aggregate intrinsic value, Expected to vest	$ 0

v3.23.3

Stock-based compensation - Summary of RSU Activity (Details) - Restricted stock units shares in Thousands	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Share-based Compensation
Shares, Beginning (in shares) | shares	3,088
Shares, Granted (in shares) | shares	0
Shares, Vested (in shares) | shares	(416)
Shares, Forfeited (in shares) | shares	(34)
Shares, Ending (in shares) | shares	2,638
Weighted - Average Grant Date Fair Value Per Share
Weighted average grant date fair value per share, Beginning (in dollars per share) | $ / shares	$ 5.93
Weighted average grant date fair value per share, Granted (in dollars per share) | $ / shares	0
Weighted average grant date fair value per share, Vested (in dollars per share) | $ / shares	6.97
Weighted average grant date fair value per share, Forfeited (in dollars per share) | $ / shares	2.02
Weighted average grant date fair value per share, Ending (in dollars per share) | $ / shares	$ 5.81

v3.23.3

Stock-based compensation - Summary of RSAs Activity (Details) - Unvested restricted stock awards shares in Thousands	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Share-based Compensation
Shares, Beginning (in shares) | shares	361
Shares, Granted (in shares) | shares	0
Shares, Vested (in shares) | shares	129
Shares, Forfeited (in shares) | shares	0
Shares, Ending (in shares) | shares	232
Weighted - Average Grant Date Fair Value Per Share
Weighted average grant date fair value per share, Beginning (in dollars per share) | $ / shares	$ 4.44
Weighted average grant date fair value per share, Granted (in dollars per share) | $ / shares	0
Weighted average grant date fair value per share, Vested (in dollars per share) | $ / shares	4.68
Weighted average grant date fair value per share, Forfeited (in dollars per share) | $ / shares	0
Weighted average grant date fair value per share, Ending (in dollars per share) | $ / shares	$ 4.30

v3.23.3

Basic and diluted net loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator:
Net loss attributable to common stockholders - basic	$ (22,653)	$ (9,478)
Net loss attributable to common stockholders - diluted	$ (22,653)	$ (9,478)
Denominator:
Weighted average common shares outstanding - basic (in shares)	96,884,584	95,709,671
Weighted average common shares outstanding - diluted (in shares)	96,884,584	95,709,671
Net loss per share:
Basis (in dollars per share)	$ (0.23)	$ (0.10)
Diluted (in dollars per share)	$ (0.23)	$ (0.10)
Anti-dilutive securities excluded from diluted loss per share:
Anti-dilutive securities excluded from diluted (loss) earnings per share, amount (in shares)	5,234,878	662,935
Unvested restricted stock units
Anti-dilutive securities excluded from diluted loss per share:
Anti-dilutive securities excluded from diluted (loss) earnings per share, amount (in shares)	2,851,416	0
Unvested restricted stock awards
Anti-dilutive securities excluded from diluted loss per share:
Anti-dilutive securities excluded from diluted (loss) earnings per share, amount (in shares)	295,156	0
Stock options to purchase common stock
Anti-dilutive securities excluded from diluted loss per share:
Anti-dilutive securities excluded from diluted (loss) earnings per share, amount (in shares)	2,088,306	662,935

v3.23.3

Segment and geographic area information - Narrative (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) officer segment	Dec. 31, 2022 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment	3
Number of executive officers | officer	2
Property and equipment, net	$ 9,665	$ 10,035
United States
Segment Reporting Information [Line Items]
Property and equipment, net	8,400	8,700
Australia
Segment Reporting Information [Line Items]
Property and equipment, net	$ 1,100	$ 1,100

v3.23.3

Segment and geographic area information - Segments by Reportable Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Segment Reporting Information [Line Items]
Revenue	$ 17,580	$ 29,388
Cost of revenue	5,852	8,420
Gross profit	11,728	20,968
Franchise
Segment Reporting Information [Line Items]
Revenue	14,609	19,860
Cost of revenue	2,324	1,307
Gross profit	12,285	18,553
Equipment and merchandise
Segment Reporting Information [Line Items]
Revenue	2,971	9,528
Cost of revenue	3,528	7,113
Gross profit	(557)	2,415
United States:
Segment Reporting Information [Line Items]
Revenue	10,906	18,265
Cost of revenue	4,301	4,845
Gross profit	6,605	13,420
United States: | Franchise
Segment Reporting Information [Line Items]
Revenue	8,893	12,401
Cost of revenue	2,093	1,037
Gross profit	6,800	11,364
United States: | Equipment and merchandise
Segment Reporting Information [Line Items]
Revenue	2,013	5,864
Cost of revenue	2,208	3,808
Gross profit	(195)	2,056
Australia:
Segment Reporting Information [Line Items]
Revenue	3,139	4,842
Cost of revenue	571	1,720
Gross profit	2,568	3,122
Australia: | Franchise
Segment Reporting Information [Line Items]
Revenue	2,765	3,448
Cost of revenue	122	173
Gross profit	2,643	3,275
Australia: | Equipment and merchandise
Segment Reporting Information [Line Items]
Revenue	374	1,394
Cost of revenue	449	1,547
Gross profit	(75)	(153)
Rest of World:
Segment Reporting Information [Line Items]
Revenue	3,535	6,281
Cost of revenue	980	1,855
Gross profit	2,555	4,426
Rest of World: | Franchise
Segment Reporting Information [Line Items]
Revenue	2,951	4,011
Cost of revenue	109	97
Gross profit	2,842	3,914
Rest of World: | Equipment and merchandise
Segment Reporting Information [Line Items]
Revenue	584	2,270
Cost of revenue	871	1,758
Gross profit	$ (287)	$ 512

v3.23.3

Segment and geographic area information - Reconciliation between Segment Gross Profit to Condensed Consolidated Net Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Segment Reporting [Abstract]
Segment gross profit	$ 11,728	$ 20,968
Selling, general and administrative expenses	31,504	32,116
Interest expense, net	3,231	126
Other (income) expense, net	(554)	622
Provision (benefit) for income taxes	200	(2,418)
Net loss	$ (22,653)	$ (9,478)

v3.23.3

Subsequent events (Details) - USD ($) $ in Millions	Oct. 23, 2023	Oct. 20, 2023	Sep. 22, 2023	Apr. 29, 2023	Feb. 14, 2023
Subsequent Event
Subsequent Event [Line Items]
Lease, operating lease, sublease percentage			23.60%
Subsequent Event | Mr. Coates | Chief Executive Officer
Subsequent Event [Line Items]
Payments for postemployment benefits				$ 0.5
Convertible Subordinated Debt Second Lien Term Loan
Subsequent Event [Line Items]
Term loan facility amount					$ 66.0
Convertible Subordinated Debt Second Lien Term Loan | Convertible Subordinated Debt
Subsequent Event [Line Items]
Accrued interest rate					12.00%
Convertible Subordinated Debt Second Lien Term Loan | Subsequent Event | Convertible Subordinated Debt
Subsequent Event [Line Items]
Accrued interest rate	12.00%
Senior Credit Agreement | Subsequent Event
Subsequent Event [Line Items]
Repayments of debt		$ 5.0
First Lien Credit Agreement | New Credit Agreement | Subsequent Event
Subsequent Event [Line Items]
Term loan facility amount	$ 10.0	40.0
Delayed draw term	15 months
Maximum allowed unrestricted cash and undrawn commitments		10.0
Maximum allowed undrawn secured debt commitments		$ 7.5

v3.23.3

Label	Element	Value
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationsRecurringBasisLiabilityValue	$ 0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationsRecurringBasisLiabilityValue	23,532,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationsRecurringBasisLiabilityValue	23,532,000
Derivative Liability [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationsRecurringBasisLiabilityValue	0
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationsRecurringBasisLiabilityValue	23,532,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value	us-gaap_FairValueMeasurementWithUnobservableInputsReconciliationsRecurringBasisLiabilityValue	$ 23,532,000

---