Restructuring |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Restructuring On July 26, 2022, the Board of Directors of the Company initiated a reduction in force, reducing its number of employees by approximately 110 employees, which represented approximately 45% of the Company’s total employees globally. This decision was made in light of ongoing macroeconomic uncertainty in order to best position itself to achieve sustained growth over the near and long-term, as well as the loss of growth capital as a result of the termination of the Company’s $150 million credit agreement, dated as of May 13, 2022, with Fortress Credit Group. Additionally, the Company entered into a separation agreement with its Chief Executive Officer and amended the employment agreement with its Chief Financial Officer (these actions are collectively referenced as “the Restructuring Plan”). The Company anticipates the Restructuring Plan to be substantially complete by the end of the 2022 fiscal year. Due to the actions taken as a result of the Restructuring Plan and the revision of guidance issued in our Form 8-K filed July 26, 2022, the Company tested certain fixed and intangible assets for recoverability by comparing the carrying value of the asset group to an estimate of the future undiscounted cash flows. Based on the results of the recoverability test, the Company determined that as of September 30, 2022, the undiscounted cash flows of certain asset groups were below the carrying values, indicating impairments. As a result, the assets were written down to their estimated fair value based on their expected liquidation value. Charges incurred during the three and nine months ended September 30, 2022 primarily relate to severance and personnel costs which includes employee termination costs, costs associated the separation agreement signed between the Company and former Chief Executive Officer Adam J. Gilchrist, and costs incurred associated with the amendment to the employment agreement between the Company and Chief Financial Officer Chris Payne; financing related charges associated with the termination of the Company’s $150 million credit agreement (“the Fortress credit facility”), dated as of May 13, 2022 with a newly created subsidiary of the Company, F45 SPV Finance Company, LLC as “Borrower” and Fortress Credit Group, as administrative agent, collateral agent, and lender; professional fees incurred as a result of the restructuring; and impairment charges associated with the write-off of assets. These charges were partially offset by a change in in fair value on outstanding warrant liabilities issued in conjunction with the Fortress credit facility. The following table presents a summary of restructuring related charges incurred for the periods presented:
The following table summarizes the changes in the Company’s restructuring-related liabilities, which are included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets:
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