~~☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting ~~company,”~~company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act):. Yes ☒☐ No ☐☒

AsThe number of ~~May 17, 2021, there were 30,000,000~~ shares of the registrant’s Class A ~~common stock,~~Common Stock, par value $0.0001 per share outstanding was 168,218,173, and ~~7,500,000~~the number of shares of the registrant’s Class ~~B common stock,~~X Common Stock, par value $0.0001 per share outstanding was 141,250,310, as of ~~the registrant issued and outstanding.~~November 10, 2021.

~~FOREST ROAD ACQUISITION CORP.~~
~~CONDENSED BALANCE SHEETS~~Condensed Consolidated Balance Sheets

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~(Unaudited)~~Unaudited Condensed Consolidated Statements of Comprehensive Loss

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~(Unaudited)~~Unaudited Condensed Consolidated Statements of Stockholders’ Equity

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Organization, Business and Summary of Accounting Policies

Organization

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Note 1 — Organization and Business Operations~~

~~Organization and General~~

On June 25, 2021 (the “Closing Date”), Forest Road Acquisition Corp. ~~(the “Company” or “Forest~~(“Forest Road”) ~~was incorporated in Delaware on September 24, 2020. The Company was formed for~~, a special purpose acquisition company, consummated the ~~purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses~~Business Combination Agreement (the “Business ~~Combination”~~Combination Agreement”). The Company is not limited to a specific industry or sector for purposes of consummating a Business Combination; however, the Company intends to concentrate its efforts on identifying businesses in the technology, media and telecommunications industry. The Company is an early stage and emerging growth company and, dated as ~~such, the Company is subject to all~~ of ~~the risks associated with early stage and emerging growth companies.~~

On February 9, 2021, ~~Forest Road entered into an Agreement~~by and Plan of Merger (the “Merger Agreement”) with BB Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of Forest Road, MFH Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary ofamong Forest Road, The Beachbody Company Group, LLC ~~a Delaware limited liability company,~~(“Old Beachbody”), BB Merger Sub, LLC, (“BB Merger Sub”), MFH Merger Sub, LLC (“Myx Merger Sub”), and Myx Fitness Holdings, LLC ~~a Delaware limited liability company.~~(“Myx”).

On February 9, 2021, Forest Road and certain investors entered into subscription agreements (the “Subscription Agreements”) pursuant to which such investors have agreed to purchase in connection with the Closing an aggregate of 22.5 million shares of Class A common stock for a purchase price of $10.00 per share, for an aggregate purchase price of $225 million (the “PIPE Investment”). The obligations of each party to consummate the PIPE Investment are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement.

~~As of March 31, 2021 and December 31, 2020, the Company had not yet commenced any operations. All activity through March 31, 2021, relates~~Pursuant to the ~~Company’s formation and the initial public offering (“IPO”) described below. The Company will not generate any operating revenues until after the completion~~terms of ~~its initial business combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO.~~

The Company’s sponsor is Forest Road Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s IPO was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on November 24, 2020 (the “Effective Date”). On November 30, 2020, the Company consummated the IPO of 30,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), including the issuance of 3,900,000 Units as a result of the underwriters’ partial exercise of their over-allotment option. Each Unit consists of one share of Class A common stock, $0.0001 par value, and one-third of one redeemable warrant entitling its holder to purchase one share of Class A common stock at a price of $11.50 per share. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $300,000,000 (Note 3).

Simultaneously with the closing of the IPO, the Company consummated the private placement (“Private Placement”) with the Sponsor of an aggregate of 5,333,333 warrants (“Private Placement Warrants”) to purchase Class A common stock, each at a price of $1.50 per Private Placement Warrant, generating total proceeds of $8,000,000 (Note 4).

~~Transaction costs amounted to $16,979,438, consisting of $6,000,000 of underwriting discount, $10,500,000 of deferred underwriters’ fee and $479,438 of other offering costs.~~

~~Trust Account~~

Following the closing of the IPO on November 30, 2020, an amount of $300,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrants was placed in a trust account (“Trust Account”) which was invested in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act, which invest only in direct U.S. government treasury obligations, until the earlier of (a) the completion of the Company’s initial Business Combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s certificate of incorporation, or (c) the redemption of the Company’s public shares if the Company is unable to complete the initial Business Combination within 24 months from the closing of the IPO, or November 30, 2022 (the “Combination Period”).

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Initial Business Combination~~

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination with one or more operating businesses or assets that together have an aggregate fair market value equal to at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting commissions) at the time of the Company’s signing a definitive agreement in connection with its initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires an interest in the target business or assets sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination Agreement, BB Merger Sub merged with and into Old Beachbody, with Old Beachbody surviving as a wholly-owned subsidiary of Forest Road (the “Surviving Beachbody Entity”); (2) Myx Merger Sub merged with and into Myx, with Myx surviving as a wholly-owned subsidiary of Forest Road; and (3) the Surviving Beachbody Entity merged with and into Forest Road, with Forest Road surviving such merger (the “Surviving Company”, and such mergers the “Business Combination”). On the Closing Date, the Surviving Company changed its name to The Beachbody Company, Inc. (the “Company”, “Beachbody”, “we” or ~~(ii) by means~~“us”).

Business

Beachbody is a leading subscription health and wellness company. Beachbody is focused on digital platform development, fitness content and brand creation, proprietary nutritional product formulation and connected fitness across three brands: Beachbody, Openfit and Myx. The Beachbody On Demand streaming service with workouts from Beachbody’s programs such as P90X, Insanity, and 21 Day Fix, and Openfit, that includes live trainer-led workouts and personalized nutrition, are each available as an app on iOS and Android mobile devices; a streaming channel on OTT devices such as Apple TV, Roku, Amazon Fire, and Chromecast; and online. Myx’s interactive fitness platform provides commercial grade stationary bikes and accessories and on-demand subscription-based instructor-led fitness classes that enable customers to have an all-in-one home fitness studio. Beachbody’s revenue is primarily generated through a network of ~~a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination~~independent distributors (“Coaches” or ~~conduct a tender offer will be made by the Company. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then~~“micro-influencers”), internet marketing channels, and direct response advertising. Beachbody markets and sells its products primarily in the ~~Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account~~United States, United Kingdom, and ~~not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion~~Canada, and approximately 30% of ~~a Business Combination with respect to the Company’s warrants.~~

The Company will only proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by applicable law or stock exchange rules and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing a Business Combination.

If, however, stockholder approval of the transaction is required by applicable law or stock exchange rules, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5), and any Public Shares purchased during or after the IPO in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or do not vote at all.

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to stockholders’ rights (including redemption rights) or pre-initial business combination activity, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period. The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the IPO, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period.

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (1) $10.00 per Public Share and (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Liquidity~~

~~As of March 31, 2021, the Company had cash outside the Trust Account of $730,435 available for working capital needs. All remaining cash held in the Trust Account is generally unavailable~~Beachbody’s revenues for the ~~Company’s use, prior~~three and nine months ended September 30, 2021 are attributable to ~~an initial Business Combination, and is restricted for use either in a Business Combination or to redeem common stock. As~~Shakeology, Beachbody’s premium nutritional shake.

Summary of ~~March 31, 2021, none of the amount in the Trust Account was available to be withdrawn as described above.~~

Through March 31, 2021, the Company’s liquidity needs were satisfied through receipt of $25,000 from the sale of the founder shares, advances from the Sponsor in an aggregate amount of $141,881 and the remaining net proceeds from the IPO and the sale of Private Placement Warrants.

The Company anticipates that the $730,435 outside of the Trust Account as of March 31, 2021 will be sufficient to allow the Company to operate for at least the next 12 months from the issuance of the unaudited condensed financial statements, assuming that a Business Combination is not consummated during that time. Until consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 5) from the initial stockholders, the Company’s officers and directors, or their respective affiliates (which is described in Note 5), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.

The Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating its business. However, if the Company’s estimates of the costs of undertaking in-depth due diligence and negotiating business combination is less than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to the business combination. Moreover, the Company will need to raise additional capital through loans from its Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors is under any obligation to advance funds to, or to invest in, the Company. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Risks and Uncertainties~~

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s financial position will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s financial position may be materially adversely affected. Additionally, the Company’s ability to complete an initial Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination in a timely manner. The Company’s ability to consummate an initial business combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.

~~Note 2 —~~ Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The ~~accompanying unaudited condensed~~Company prepares its consolidated financial statements ~~have been prepared~~ in ~~accordance~~conformity with accounting principles generally accepted in the United States of America (“GAAP”) ~~for interim financial information~~as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and ~~in accordance with~~pursuant to the ~~instructions to Form 10-Q and Regulation S-X~~regulations of the ~~SEC. Certain information or footnote disclosures normally included in financial statements prepared~~U.S. Securities and Exchange Commission (“SEC”).

The merger between BB Merger Sub and Old Beachbody was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”). Under this method of accounting, Forest Road is treated as the acquired company and Old Beachbody is treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Old Beachbody issuing stock for the net assets of Forest Road, accompanied by a recapitalization. The net assets of Forest Road are stated at historical cost, with no goodwill or other intangible assets recorded, see Note 2.

Old Beachbody was determined to be the accounting acquirer based on the following predominant factors:



Old Beachbody’s shareholders have ~~been condensed or omitted, pursuant to~~ the ~~rules and regulations~~largest portion of the ~~SEC for interim financial reporting. Accordingly, they do not include all~~voting rights in the ~~information~~Company;



the Board and ~~footnotes necessary for a complete presentation~~Management are primarily composed of ~~financial position,~~individuals associated with Old Beachbody; and



Old Beachbody was the larger entity based on historical operating activity and Old Beachbody had the larger employee base at the time of the Business Combination.

The consolidated assets, liabilities and results of operations ~~or cash flows. In~~prior to the ~~opinion~~Reverse Recapitalization are those of ~~management,~~Old Beachbody. The shares and corresponding capital amounts and income (losses) per share, prior to the ~~accompanying unaudited condensed~~Business Combination, have been retroactively restated based on shares reflecting the exchange ratio established in the Business Combination.

Old Beachbody was determined to be the accounting acquirer in the acquisition of Myx. As such, the acquisition is considered a business combination under ASC 805, Business Combinations, and was accounted for using the acquisition method of accounting. Beachbody recorded the fair value of assets acquired and liabilities assumed from Myx, see Note 9. The presented financial ~~statements include all adjustments, consisting of a normal recurring nature, which are necessary~~information for ~~a fair presentation of~~the nine months ended September 30, 2021 includes the financial ~~position, operating results~~information and ~~cash flows~~activities for ~~the periods presented.~~

~~The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as amended, as of December 31, 2020 and~~Myx for the period from June 26, 2021 to September ~~24, 2020 (inception) through December 31, 2020 as filed with the SEC on May 3, 2021, which contains the audited~~30, 2021.

The unaudited condensed consolidated financial statements ~~and notes thereto. The interim results for~~include the ~~three months ended March 31, 2021 are not necessarily indicative~~accounts of the ~~results to be expected for the year ending December 31, 2021 or for any future interim periods.~~

~~Emerging Growth~~ Company ~~Status~~

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its ~~periodic reports~~controlled subsidiaries. All intercompany transactions and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those thatbalances have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

9been eliminated.

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Significant estimates include, but are not limited to, the valuation of acquired intangible assets, revenue arrangements with multiple performance obligations, equity-based compensation, amortization of content assets, impairment of goodwill, and the useful lives and recoverability of long-lived assets. The Company bases these estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgements about the carrying amounts of assets and ~~liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period.~~liabilities. Actual results could differ from those estimates.

Unaudited Interim Condensed Financial Statements

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, include all adjustments consisting of only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of September 30, 2021, its results of operations for the three and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 30, 2021 and 2020. The financial data and other financial information disclosed in the notes to these condensed consolidated financial statements related to the three- and nine-month periods are also unaudited. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results expected for the full fiscal year or any other period.

~~Cash~~These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and ~~Cash Equivalents~~the related notes included in the Company’s annual financial statements as of and for the fiscal year ended December 31, 2020.

Fair Value Option

The guidance in ASC 825, Financial Instruments, provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument-by-instrument basis, must be applied to an entire instrument, and is irrevocable once elected. The Company elected to measure the investment in the convertible instrument from Myx using the fair value option at each reporting date. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in the unaudited condensed consolidated balance sheets or the footnotes from those instruments using another measurement method.

Fair Value

The Company applies fair value accounting for assets and liabilities measured on a recurring and nonrecurring basis. For assets and liabilities that are measured using quoted prices in active markets for identical assets or liabilities, the total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs (Level 1). Assets and liabilities that are measured using significant other observable inputs are valued by reference to similar assets or liabilities, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data (Level 2). For all remaining assets and liabilities for which there are no significant observable inputs, fair value is derived using an assessment of various discount rates, default risk, credit quality, and the overall capital market liquidity (Level 3). These valuations require significant judgment.

Accounts Receivable, Net

The Company provides credit in the normal course of business to its customers. Accounts receivable consists primarily of credit card receivables arising from the sale of products to customers on an installment basis, which generally have payment terms ranging from one to three months. Receivables are individually insignificant and are due from a large number of geographically dispersed customers. Accounts receivable is reported net of allowances for doubtful accounts which were approximately zero as of September 30, 2021 and December 31, 2020. The allowance for doubtful accounts is evaluated and adjusted to reflect the Company’s expected credit losses based on collection history and an analysis of the accounts receivable aging. The change in the allowance for doubtful accounts during the three and nine months ended September 30, 2021 and 2020 is as follows (in thousands):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021		2020
Balance, beginning of period	$	16	$	41		$	16	$	69
Charges		0		45			0		77
Write-offs		—		(56	)		—		(116	)
Balance, end of period	$	16	$	30		$	16	$	30

Business Combinations

The Company accounts for business combinations under the acquisition method of accounting. The cost of an acquired company is assigned to the tangible and identifiable assets purchased and the liabilities assumed on the basis of their fair values at the date of acquisition. Any excess of the purchase price over the fair value of tangible and intangible assets acquired is assigned to goodwill. The transaction costs associated with business combinations are expensed as they are incurred.

Common Stock Warrant Liability

The Company assumed 10,000,000 warrants originally issued in Forest Road’s initial public offering (the “Public Warrants”) and 5,333,333 warrants issued in a private placement that closed concurrently with Forest Road’s initial public offering, (the “Private Placement Warrants”) upon the Business Combination. The Public and Private Placement Warrants entitle the holder to purchase 1 share of Class A Common Stock at an exercise price of $11.50 per share. All of the Public and Private Placement Warrants remained outstanding as of September 30, 2021. The Public Warrants are publicly traded and become exercisable on November 30, 2021 provided that the Company has an effective registration statement and are exercisable for cash unless certain conditions occur, such as the failure to have an effective registration statement related to the shares issuable upon exercise or redemption by the Company under certain conditions, at which time the warrants may be cashless exercised. The Private Placement Warrants are transferable, assignable or salable in certain limited exceptions. The Private Placement Warrants were not transferable, assignable or salable until July 25, 2021, subject to certain limited exceptions. The Private Placement Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will cease to be Private Placement Warrants, and become Public Warrants and will be redeemable by the Company and exercisable by such holders on the same basis as the other Public Warrants.

The Company evaluated the Public and Private Placement Warrants under ASC 815, Derivatives and Hedging—Contracts in Entity’s Own Equity, and concluded they do not meet the criteria to be classified in stockholders’ equity. Specifically, the exercise of the Public and Private Placement Warrants may be settled in cash upon the occurrence of a tender offer or exchange that involves 50% or more of our Class A stockholders. Because not all of the voting stockholders need to participate in such tender offer or exchange to trigger the potential cash settlement and the Company does not control the occurrence of such an event, the Company concluded that the Public and Private Placement Warrants do not meet the conditions to be classified in equity. Since the Public and Private Placement Warrants meet the definition of a derivative under ASC 815, the Company recorded these warrants as liabilities in the unaudited condensed consolidated balance sheets at fair value, with subsequent changes in their respective fair values recognized in the change in fair value of warrant liabilities within the unaudited condensed consolidated statements of operations at each reporting date. The Public Warrants were publicly traded and thus had an observable market price to estimate fair value. The Private Placement Warrants were valued using a Black-Scholes option-pricing model as described in Note 4 to the unaudited condensed consolidated financial statements.

Investment in Convertible Instrument

In December 2020, the Company purchased a $10.0 million convertible instrument from Myx. The convertible instrument was scheduled to mature 18 months from issuance and bore interest of 11% per annum. The principal and accrued interest on the convertible instrument was to automatically convert into preferred shares upon the closing by Myx of a convertible preferred equity financing with gross proceeds of at least $35.0 million (a “Qualified Financing”) at a conversion price equal to 85% of the lowest price per unit paid in cash by investors in such Qualified Financing. Upon a change in control involving the Company and a special purpose acquisition company, immediately prior to the change in control transaction, the principal and accrued interest was to be automatically converted into preferred equity units of Myx at a conversion price equal to 85% of the price per unit contemplated in the change of control transaction. Such preferred equity units were to automatically convert into common shares of the surviving entity.

In March 2021, the Company increased the principal of the convertible instrument from Myx from $10.0 million to $15.0 million.

In connection with the Business Combination, the principal and interest were effectively settled at a fair value of $18.4 million. As of December 31, 2020, the convertible instrument was included within other assets in the consolidated balance sheets.

Prior to the Business Combination, the Company elected to measure the investment in convertible instrument from Myx using the fair value option at each reporting date. Under the fair value option, bifurcation of an embedded derivative was not necessary, and all related gains and losses on the host contract and derivative due to change in the fair value was reflected in other income, net in the condensed consolidated statements of operations.

Other Investment

As of September 30, 2021, the Company has an investment in equity securities of $5.0 million, with no readily determinable fair value. This equity investment is reported within other assets on the unaudited condensed consolidated balance sheets. The Company uses the measurement alternative for this investment, and its carrying value is reported at cost, adjusted for impairments or any observable price changes in ordinary transaction with identical or similar instruments. As of September 30, 2021, 0 adjustments to the carrying value of this investment were made.

Revenue Recognition

The Company’s primary sources of revenue are from sales of digital subscriptions, nutritional products and connected fitness equipment. The Company records revenue when it fulfills its performance obligation to transfer control of the goods or services to its customer. Control of shipped items is generally transferred when the product is delivered to the customer.

The amount of revenue recognized is the consideration that the Company expects it will be entitled to receive in exchange for transferring goods or services to its customers. Control of services, which are primarily digital subscriptions, transfers over time, and as such, revenue is recognized ratably over the subscription period (up to 12 months), using a mid-month convention. The Company sells a variety of bundled products that combine digital subscriptions, nutritional products, and/or other fitness products. The Company considers these sales to be revenue arrangements with multiple performance obligations and allocates the transaction price to each performance obligation based on its relative stand-alone selling price. The Company defers revenue when it receives payments in advance of delivery of products or the performance of services.

Revenue is recorded net of expected returns, discounts, and credit card chargebacks, which are estimated using the Company’s historical experience. Revenue is presented net of sales taxes and value added taxes (VAT and GST/HST) which are collected from customers and remitted to applicable government agencies.

The Company is the principal in all ~~short-term investments~~its relationships where third parties sell or distribute the Company’s goods or services. Payments made to the third parties are recorded in selling and marketing expenses within the unaudited condensed consolidated statements of operations.

Recently Adopted Accounting Pronouncements or Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes specific exceptions to the general principles in Topic 740 in addition to simplifying other areas of Topic 740. The guidance in this update is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and is effective for all other entities for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2019-12 in the first quarter of 2021, and the adoption had no material impact to the Company’s unaudited condensed consolidated financial statements.

Business Combination

As discussed in Note 1, on June 25, 2021, the Company consummated the Business Combination Agreement dated February 9, 2021, with Old Beachbody surviving the merger as a wholly-owned subsidiary of the Company.

At the effective time of the Merger (the “Effective Time”), and subject to the terms and conditions of the Business Combination Agreement, each equity unit of Old Beachbody, other than those held by Carl Daikeler and certain of his affiliated and related entities, was canceled and converted into the right to receive 3.359674941 shares (the “Exchange Ratio”) of the Company’s Class A Common Stock, $0.0001 par value per share (the “Class A Common Stock”), and each equity unit of Old Beachbody held by Carl Daikeler and certain of his affiliated and related entities was canceled and converted into the right to receive the number of shares of the Company’s Class X Common Stock, par value $0.0001 per share, (the “Class X Common Stock,” and, together with the Class A Common Stock, the “Common Stock”) equal to the Exchange Ratio.

Pursuant to the Business Combination Agreement, 3,750,000 shares held by Forest Road Acquisition Sponsor LLC (the “Sponsor”) will be unvested and are subject to forfeiture if certain earnout conditions are not satisfied (“Forest Road Earn-out Shares”). Subject to certain other terms and conditions, the Forest Road Earn-out Shares will vest, in equal tranches of 10% each, commencing on December 22, 2021, upon the occurrence of the Company’s last sale price on the New York Stock Exchange (“NYSE”) exceeding each of the following price-per-share thresholds for any 20 trading days within any consecutive 30-day trading period,: $12.00, $13.00, $14.00, $15.00 and $16.00. Any Sponsor Shares that do not vest within 10 years after Closing will be forfeited. The Forest Road Earn-out Shares are accounted for as equity-classified equity instruments, were included as merger consideration as part of the Reverse Recapitalization, and recorded in additional paid-in capital. As of September 30, 2021, all Forest Road Earn-out Shares are unvested.

Upon the closing of the Business Combination, the Company’s certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 2,000,000,000 shares, $0.0001 par value per share, of which, 1,600,000,000 shares are designated as Class A Common Stock, 200,000,000 shares are designated as Class X Common Stock, 100,000,000 shares are designated as Class C Common Stock and 100,000,000 shares are designated as Preferred Stock. The holder of each share of Class A Common Stock is entitled to one vote, the holder of each share of Class X Common Stock is entitled to ten votes and except as otherwise required by law, the holder of each share of Class C Common Stock is not entitled to any voting powers.

In connection with the Business Combination, a number of subscribers purchased an ~~original~~aggregate of 22,500,000 shares of Class A Common Stock (the “PIPE”) from the Company, for a purchase price of $10.00 per share and an aggregate purchase price of $225.0 million (the “PIPE Shares”), pursuant to separate subscription agreements entered into effective as of February 9, 2021.

At the Effective Time, and subject to the terms and conditions of the Business Combination Agreement, each Myx equity unit was canceled and converted into the right to receive approximately 13.5 million shares of Class A Common Stock; provided, however, that certain holders of Myx units received an amount in cash equal to the value of such shares not to exceed $37.7 million.

The following table reconciles the elements of the Business Combination to the unaudited condensed consolidated statement of cash flows and the unaudited condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2021 (in thousands):


	Recapitalization
Cash- Forest Road trust and cash, net of redemptions	$	216,444
Cash- PIPE Financing		225,000
Less: Non-cash net assets assumed from Forest Road		293
Less: Fair value of Public and Private Warrants		(60,900	)
Less: Transaction costs and advisory fees for Beachbody allocated to equity		(19,923	)
Less: Transaction costs and advisory fees for Forest Road		(27,059	)
Net Business Combination		333,855
Less: Non-cash net assets assumed from Forest Road		(293	)
Less: Transaction costs and advisory fees for Beachbody allocated to warrants		(5,337	)
Add: Non-cash fair value of Forest Road warrants		60,900
Net cash contributions from Business Combination	$	389,125

The Company recorded transaction costs and advisory fees allocated to warrants as a component of change in fair value of warrant liabilities in the unaudited condensed consolidated statements of operations.

The number of shares of common stock issued immediately following the consummation of the Business Combination:


Common stock of Forest Road, net of redemptions			21,616,515
Forest Road shares held by the Sponsor (1)			7,500,000
Shares issued in PIPE Financing			22,500,000
Business Combination and PIPE Financing shares - Class A common stock			51,616,515
Myx equity units- Class A common stock			13,546,503
Old Beachbody equity units - Class A Common Stock (2)			101,762,614
Old Beachbody equity units - Class X Common Stock (3)			141,250,310
Total shares of common stock immediately after Business Combination			308,175,942

(1)

Includes 3,750,000 Forest Road Earn-out Shares.

(2)

The number of Old Beachbody equity units - Class A Common Stock was determined from 20,220,589 common units and 10,068,841 preferred units of Old Beachbody outstanding immediately prior to the closing of the Business Combination converted at the Exchange Ratio.

(3)

The number of Old Beachbody equity units - Class X Common Stock was determined from 42,042,850 common units of Old Beachbody outstanding immediately prior to the closing of the Business Combination converted at the Exchange Ratio.

Revenue

The Company’s revenue disaggregated by revenue type and geographic region is as follows (in thousands):


	Reportable Segment
	Beachbody		Other		Total
Three Months Ended September 30, 2021
Revenue Type:
Digital	$	86,879	$	7,193	$	94,072
Connected fitness		—		5,927		5,927
Nutrition and other		107,411		642		108,053
Total revenue	$	194,290	$	13,762	$	208,052

Geographic region:
United States	$	173,935	$	13,762	$	187,697
Rest of world1		20,355		—		20,355
Total revenue	$	194,290	$	13,762	$	208,052


	Reportable Segment
	Beachbody		Other		Total
Three Months Ended September 30, 2020
Revenue Type:
Digital	$	95,950	$	3,132	$	99,082
Nutrition and other		152,318		79		152,397
Total revenue	$	248,268	$	3,211	$	251,479

Geographic region:
United States	$	225,533	$	3,211	$	228,744
Rest of world1		22,735		—		22,735
Total revenue	$	248,268	$	3,211	$	251,479


	Reportable Segment
	Beachbody		Other		Total
Nine Months Ended September 30, 2021
Revenue Type:
Digital	$	268,812	$	14,735	$	283,547
Connected fitness		—		5,937		5,937
Nutrition and other		365,835		2,060		367,895
Total revenue	$	634,647	$	22,732	$	657,379

Geographic region:
United States	$	566,210	$	22,732	$	588,942
Rest of world1		68,437		—		68,437
Total revenue	$	634,647	$	22,732	$	657,379


	Reportable Segment
	Beachbody		Other		Total
Nine Months Ended September 30, 2020
Revenue Type:
Digital	$	233,746	$	6,218	$	239,964
Nutrition and other		399,255		80		399,335
Total revenue	$	633,001	$	6,298	$	639,299

Geographic region:
United States	$	577,478	$	6,298	$	583,776
Rest of world1		55,523		—		55,523
Total revenue	$	633,001	$	6,298	$	639,299

(1)

Consists of Canada, United Kingdom and France.

Deferred Revenue

Deferred revenue is recorded for nonrefundable cash payments received for the Company’s performance obligation to transfer, or stand ready to transfer, goods or services in the future. Deferred revenue consists of subscription fees billed that have not been recognized and physical products sold that have not yet been delivered. During the three and nine months ended September 30, 2021, the Company recognized $11.3 million and $90.5 million, respectively, of revenue that was included in the deferred revenue balance as of December 31, 2020. During the three and nine months ended September 30, 2020, the Company recognized $8.5 million and $64.7 million, respectively, of revenue that was included in the deferred revenue balance as of December 31, 2019.

Fair Value Measurements

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):


	September 30, 2021
	Level 1		Level 2		Level 3
Assets
Derivative assets	$	—	$	187	$	—
Total Assets	$	—	$	187	$	—

Liabilities
Common stock warrants (Public)	$	11,900	$	—	$	—
Common stock warrants (Private Placement)		—		—		8,000
Total Liabilities	$	11,900	$	—	$	8,000


	December 31, 2020
	Level 1		Level 2		Level 3
Assets
Derivative assets	$	—	$	164	$	—
Investment in convertible instrument		—		—		10,288
Total Assets	$	—	$	164	$	10,288

Fair values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate the recorded value due to the short period of time to maturity. The fair value of the Public Warrants, which trade in active markets, is based on quoted market prices for identical instruments. The fair value of derivative instruments is based on Level 2 inputs such as observable forward rates, spot rates, and foreign currency exchange rates. The Company’s Private Placement warrants and investment in the convertible instrument are classified within Level 3 of the fair value hierarchy because their fair values are is based on significant inputs that are unobservable in the market. The fair value of goodwill and intangible assets is based on a valuation performed by a third-party using Level 3 inputs.

The valuation of the Private Placement Warrants and, prior to the Business Combination, the investment in convertible instrument use assumptions and estimates the Company believes would be made by a market participant in making the same valuations. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained.

The Company determined the fair value of the Private Placement Warrants using a Black-Scholes option-pricing model and the quoted price of the Company’s common stock. Volatility was based on the implied volatility derived from the average of the actual market activity of the Company’s peer group. The expected life was based on the remaining contractual term of the Private Placement Warrants, and the risk-free interest rate was based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the warrants’ expected life. The significant unobservable input used in the fair value measurement of the Private Placement Warrants is the implied volatility. Significant changes in the implied volatility would result in a significantly higher or lower fair value measurement, respectively.

The following table presents significant assumptions utilized in the valuation of the Private Placement Warrants on the Closing Date of the Business Combination and at September 30, 2021:


	As of September 30,			As of June 25,
	2021			2021
Risk-free rate		0.9	%		0.9	%
Dividend yield rate		0.0	%		0.0	%
Volatility		55.0	%		45.0	%
Contractual term (in years)		4.74			5.00
Exercise price	$	11.50		$	11.50

The following table presents changes in the fair value of the Private Placement Warrants for the three and nine months ended September 30, 2021:


	Three Months Ended September 30, 2021			Nine Months Ended September 30, 2021
Balance, beginning of period	$	20,373		$	0
Assumed in Business Combination		—			26,400
Change in fair value		(12,373	)		(18,400	)
Balance, end of period	$	8,000		$	8,000

For the three and nine months ended September 30, 2021, the change in the fair value of Private Placement Warrants resulted from the change in fair value of the Company’s Class A Common Stock. The changes in fair value are included in the unaudited condensed consolidated statements of operations as a component of change in fair value of warrant liabilities.

Prior to the Business Combination and as of December 31, 2020, the convertible instrument was valued using a scenario-based analysis. Two primary scenarios were considered to arrive at the valuation conclusion for the convertible instrument. The first scenario considers the probability-weighted value of conversion at the stated discount to the issue price in a change in control event. The second scenario considers the probability-weighted value of conversion at the stated discount to the issue price in a Qualified Financing event. As of the date of the investment in the convertible instrument, an implied yield was calculated such that the sum of the value of the straight debt and the value of the conversion feature was equal to the principal investment amount. The implied yield of the investment is carried forward with a market adjustment and used as the primary discount rate for subsequent valuation dates.

The significant unobservable inputs used in the fair value measurement of the Company’s investment in convertible instrument are the probabilities of Myx closing a future Qualified Financing or change of control, which would trigger conversion of the convertible instrument, probabilities as to the periods in which the outcomes are expected to be achieved and discount rate. Significant changes in the probabilities of the completion of the future Qualified Financing or change in control would result in a significantly higher or lower fair value measurement, respectively. Significant changes in the probabilities as the period in which outcomes will be achieved would result in a significantly lower or higher fair value measurement, respectively.

The following table presents changes in the Level 3 investment in convertible instrument from Myx measured at fair value for the nine months ended September 30, 2021:


	Nine Months Ended September 30, 2021
Balance, beginning of period	$	10,288
Investment in convertible note		5,000
Change in fair value		3,114
Conversion of investment		(18,402	)
Balance, end of period	$	0

For the nine months ended September 30, 2021, the change in the fair value of the investment in convertible instrument resulted from the effective settlement of the instrument. The changes in fair value are included in the unaudited condensed consolidated statements of operations as a component of other income, net. There was 0 change in the fair value of the investment in convertible instrument from Myx for the three months ended September 30, 2021.

Inventory, net

Inventory, net consists of the following (in thousands):


	September 30,		December 31,
	2021		2020
Raw materials and work in process	$	28,675	$	26,480
Finished goods		112,464		38,874
Total inventory	$	141,139	$	65,354

Adjustments to change the carrying value of excess and obsolete inventory to the lower of cost or ~~less when purchased~~net realizable value were $1.6 million and $4.4 million during the three and nine months ended September 30, 2021, respectively and $1.2 million and $1.1 million during the three and nine months ended September 30, 2020, respectively. These adjustments are included in the unaudited condensed consolidated statements of operations as a component of nutrition and other cost of revenue.

Other Current Assets

Other current assets consist of the following (in thousands):


	September 30,		December 31,
	2021		2020
Deferred coach costs	$	32,287	$	29,967
Deposits		12,087		3,035
Other		4,182		4,362
Total other current assets	$	48,556	$	37,364

Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):


	September 30,			December 31,
	2021			2020
Computer software	$	225,721		$	194,314
Leasehold improvements		24,197			24,197
Computer equipment		23,307			21,172
Computer software and web development projects in-process		24,373			12,380
Furniture, fixtures and equipment		6,978			7,016
Buildings		5,158			—
Property and equipment, gross		309,734			259,079
Less: Accumulated depreciation		(194,396	)		(178,910	)
Property and equipment, net	$	115,338		$	80,169

The Company recorded depreciation expense related to property and equipment in the following expense categories of its unaudited condensed consolidated statements of operations as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenue	$	4,375	$	3,568	$	12,259	$	9,644
Selling and marketing		323		566		1,163		1,634
Enterprise technology and development		6,055		5,435		18,706		15,649
General and administrative		533		784		1,796		2,404
Total depreciation	$	11,286	$	10,353	$	33,924	$	29,331

Content Assets, Net

Content assets, net consist of the following (in thousands):


	September 30,		December 31,
	2021		2020
Released, less amortization	$	26,237	$	17,306
In production		8,549		2,131
Content assets, net	$	34,786	$	19,437

The Company expects $16.8 million of content assets to be amortized during the next 12 months and 100% of the balance within four years. The Company recorded amortization expense for content assets of $3.9 million and $10.0 million during the three and nine months ended September 30, 2021, respectively and $1.9 million and $5.1 million during the three and nine months ended September 30, 2020, respectively.

Acquisitions

Myx

The Company acquired 100% of the equity of Myx pursuant to the Business Combination Agreement. The following summarizes the consideration transferred on the Closing Date for the Myx acquisition (in thousands):


Purchase Price
Cash consideration (1)	$	37,700
Share consideration (2)		162,558
Fair value of Myx instrument held by Old Beachbody (3)		18,402
Promissory note held by Old Beachbody (4)		4,216
Total consideration	$	222,876

(1)

Cash consideration includes, among other things, the payoff of certain of Myx’s existing debt obligations, payments of certain of Myx’s transaction expenses, and cash ~~equivalents.~~payments as consideration for certain Myx equity units.

(2)

Share consideration was calculated based on 13,546,503 shares of Class A Common Stock issued multiplied by the share closing price on the Closing Date of $12.00.

(3)

Fair value of Myx instrument held by Old Beachbody was effectively settled on the Closing Date, see Note 1.

(4)

In April and June 2021, Old Beachbody entered into promissory note agreements with Myx. Such promissory notes were effectively settled on the Closing Date.

The acquired assets and assumed liabilities of Myx were recorded at their preliminary acquisition date fair values. The purchase price allocations are subject to material change as the Company continues to gather information relevant to its determination of the fair value of the assets and liabilities acquired primarily related to, but not limited to, inventory, intangible assets, deferred revenue, and deferred income taxes. There were 0 adjustments to the purchase price allocations during the three months ended September 30, 2021.

~~Marketable Securities Held~~

Adjustments to the purchase price allocations will be made as soon as practicable but no later than one year from the acquisition date. The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of September 30, 2021 (in thousands):


Allocation
Goodwill	$	157,922
Intangible assets:
Trade name/ Trademark		43,700
Developed technology		14,000
Customer relationships		20,400
		78,100
Cash acquired		420
Inventory, net		11,447
Other assets		3,354
Content assets		3,400
Deferred revenue		(2,168	)
Other liabilities		(14,039	)
Deferred tax liabilities		(15,560	)
	$	222,876

The fair values of the trade name and trademark intangible assets were determined using an “income approach”, specifically, the relief-from royalty approach, which is a commonly accepted valuation approach. This approach is based on the assumption that in ~~Trust Account~~lieu of ownership, a firm would be willing to pay a royalty in order to exploit the related benefits of this asset. Therefore, a portion of Myx’s earnings, equal to the after-tax royalty that would have been paid for the use of the asset, can be attributed to the firm’s ownership. The fair value of the developed technology intangible asset was also determined by the relief-from-royalty approach. The fair values of the customer relationship intangible assets were determined by using an “income approach,” specifically a multi-period excess earnings approach, which is a commonly accepted valuation approach. Under this approach, the net earnings attributable to the asset or liability being measured are isolated using the discounted projected net cash flows. These projected cash flows are isolated from the projected cash flows of the combined asset group over the remaining economic life of the intangible asset or liability being measured. Both the amount and the duration of the cash flows are considered from a market participant perspective. Where appropriate, the net cash flows were adjusted to reflect the potential attrition of existing customers in the future, as existing customers are a “wasting” asset and are expected to decline over time.

The revenue and operating results from Myx included in the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021 is not discernible as the acquisition has been integrated within the Company's existing operations. During the three and nine months ended September 30, 2021, Company incurred $0.1 million and $1.9 million in transaction expenses associated with the Myx acquisition, which are included in general and administrative expenses in the unaudited condensed consolidated statements of operations.

~~At March 31,~~The following unaudited pro forma financial information presents the combined results of operations of the Company and Myx as if the companies had been combined as of January 1, 2020. The pro forma financial information includes the accounting effects of the business combination, including amortization of intangible assets. The unaudited pro forma financial information is presented for information purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented, nor should it be taken as indication of the Company’s future consolidated results of operations.


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020
Pro forma combined:
Revenue	$	208,052		$	260,603	$	688,595		$	651,378
Net income (loss)		(41,977	)		3,129		(109,725	)		(23,945	)

Ladder

On September 18, 2020, the Company acquired Ladder, a sports nutrition company, to enhance the Openfit platform by providing premium, NSF-certified supplements developed and endorsed by elite athletes.

The Company recognized the assets and liabilities of Ladder based on its estimates of their acquisition date fair values. The purchase price allocations were subject to change as the Company continued to gather information relevant to its determination of the fair value of the assets and liabilities acquired primarily related to, but not limited to, deferred income taxes. There were no adjustments to the purchase price allocations during the three and nine months ended September 30, 2021. The following table summarizes the components of consideration and the fair value estimates of assets acquired and liabilities assumed (in thousands):


Purchase Price
Common units issued in connection with acquisition (1)	$	27,889
Allocation
Goodwill	$	11,606
Intangible assets:
Trade name		7,500
Customer-related		300
Formulae		1,950
Talent and representation contracts		10,300
		20,050
Cash acquired		1,247
Other assets acquired		1,132
Liabilities acquired		(1,834	)
Deferred tax liabilities		(4,312	)
	$	27,889

(1)

The fair value of common units issued in connection with the acquisition was calculated based on 1,449,537 common units of Old Beachbody multiplied by the estimated fair value per unit of $19.24.

The excess of the purchase price over the estimated fair values of the net assets acquired, including identifiable intangible assets, is recorded as goodwill. Goodwill is primarily attributable to the assembled workforce of Ladder and expected synergies from combining operations. Goodwill recognized was allocated to the Company’s Other operating segment and is generally not deductible for tax purposes. The revenue from Ladder included in the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021 was $0.7 million and $1.2 million, respectively. The operating loss from Ladder included in the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021 was $0.5 million and $1.0 million, respectively.

The following unaudited pro forma financial information presents the combined results of operations as if Ladder had been combined with the Company as of January 1, 2020. The pro forma financial information includes the accounting effects of the business combination, including amortization of intangible assets. The unaudited pro forma financial information is presented for information purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented, nor should it be taken as indication of the Company’s future consolidated results of operations.


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020		2020
Pro forma combined:
Revenue	$	252,230	$	641,474
Net (loss) income		9,599		(12,401	)

10.

Goodwill and Acquired Intangible Assets

Goodwill

Changes in goodwill for the nine months ended September 30, 2021 is as follows (in thousands):


	September 30,
	2021
Goodwill, beginning of period	$	18,981
Acquisition of Myx		157,922
Goodwill, end of period	$	176,903

Intangible Assets, Net

Intangible assets as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):


	September 30, 2021							December 31, 2020
	Acquired Intangibles, Gross		Accumulated Amortization			Acquired Intangibles, Net		Acquired Intangibles, Gross		Accumulated Amortization			Acquired Intangibles, Net		Weighted-Average Remaining Useful Life (years)
Contract-based	$	300	$	(225	)	$	75	$	300	$	(150	)	$	150		0.8
Customer-related		21,100		(2,344	)		18,756		700		(337	)		363		2.7
Technology-based		20,200		(7,124	)		13,076		6,200		(4,650	)		1,550		2.6
Talent and representation contracts		10,300		(2,575	)		7,725		10,300		(644	)		9,656		3.0
Formulae		1,950		(195	)		1,755		1,950		(49	)		1,901		9.0
Trade name		51,200		—			51,200		7,500		—			7,500	Indefinite
	$	105,050	$	(12,463	)	$	92,587	$	26,950	$	(5,830	)	$	21,120

Amortization expense for acquired intangible assets ~~held~~was $3.3 million and $6.6 million during the three and nine months ended September 30, 2021 and $0.9 million and $2.6 million during the three and nine months ended September 30, 2020, respectively.

The estimated future amortization expense of acquired intangible assets as of September 30, 2021 is as follows (in thousands):


Three months ended December 31, 2021	$	3,330
Year ended December 31, 2022		13,233
Year ended December 31, 2023		13,070
Year ended December 31, 2024		8,932
Year ended December 31, 2025		1,896
Thereafter		926
	$	41,387

11.

Accrued Expenses

Accrued expenses consist of the followings (in thousands):


	September 30,		December 31,
	2021		2020

Coach costs	$	19,077	$	19,126
Advertising		10,924		3,626
Employee compensation and benefits		10,968		28,855
Information technology		15,725		5,621
Inventory, shipping and fulfillment		16,733		10,244
Sales and income taxes		4,173		4,132
Other accrued expenses		12,244		8,351
Total accrued expenses	$	89,844	$	79,955

12.

Credit Facility

In December 2018, Beachbody, LLC, as borrower, and Old Beachbody and certain of Beachbody, LLC’s subsidiaries, as guarantors, entered into a credit agreement with Bank of America, N.A., as lender, administrative agent and letter of credit issuer for a $35 million revolving credit facility with a $10 million sublimit for letters of credit (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Facility”).

The Credit Facility was amended in April 2020 to extend the maturity date to December 2021, amend certain pricing provisions and financial covenants, and amend other provisions including the definition of applicable rates based on consolidated EBITDA pricing levels. The Credit Facility was further amended in September 2020, whereby Old Beachbody assumed the Company’s obligations under the Credit Facility, and in March 2021 to extend the maturity date to June 2022, amend financial covenants, and temporarily increase the Credit Facility by $20 million for a period of either 90 days, or until the consummation of the Business Combination.

In connection with the transactions contemplated by the Business Combination Agreement, on June 23, 2021, the Credit Facility was amended, which, among other things, (a) permitted the consummation of the Business Combination and certain other transactions contemplated by the Business Combination Agreement, and (b) amended certain terms of the Credit Facility to, among other things, (i) enable Old Beachbody and Beachbody, LLC to consummate the Business Combination and certain other transactions contemplated by the Business Combination Agreement, (ii) require that the Company join the Credit Facility as a parent guarantor thereunder, and (iii) require that Myx join the Credit Facility as a subsidiary guarantor thereunder.

Borrowings may be either Bloomberg Short-Term Bank Yield Index (“BSBY”) rate loans or base rate loans at the Company’s election. BSBY rate loans bear interest at an annual rate equal to the BSBY rate plus 1.75% to 2.25%. Base rate loans are at the base rate, as defined in the ~~Trust Account were money market funds. During~~amended Credit Facility, plus 0.75% to 1.25%. The Company also pays a 1.75% to 2.25% fee on the letters of credit outstanding and a 0.375% to 0.5% commitment fee on the unused Credit Facility. The Company incurred approximately 0 and $0.3 million of interest and approximately 0 and $0.1 million of fees under the Credit Facility during the three and nine months ended ~~March~~September 30, 2021 and approximately 0 and $0.2 million of interest and approximately 0 and $0.1 million of fees under the Credit Facility during the three and nine months ended September 30, 2020.

As of September 30, 2021 and December 31, 2020, there were 0 borrowings outstanding, and a letter of credit was issued under the Credit Facility for $3.0 million.

In November 2021, the Company ~~did not withdraw any interest income from~~terminated the ~~Trust Account to pay its tax obligations.~~Credit Facility and will maintain a compensating cash balance for the $3.0 million letter of credit.

13.

Leases

The Company leases facilities under noncancelable operating leases expiring through 2025, with payments due through 2024, and certain equipment under a finance lease expiring in 2024.

~~Concentration of Credit Risk~~

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation limit of $250,000. At ~~March 31,~~September 30, 2021 and December 31, 2020, the Company ~~has not experienced losses on this account~~had operating lease liabilities of $33.5 million and ~~management believes the Company is not exposed to significant risk on such accounts.~~

~~Common Stock Subject to Possible Redemption~~

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standard Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) are classified as a liability instrument$41.2 million, respectively, and ~~are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control~~right-of-use assets of ~~the holder or subject to redemption upon the occurrence~~$27.1 million and $32.9 million, respectively. As of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of March 31,September 30, 2021 and December 31, 2020, ~~23,718,818~~the Company had finance lease liabilities $0.3 million and ~~25,377,874 shares~~$0.4 million, respectively, and right-of-use assets of ~~Class A common stock subject to possible redemption are presented at redemption~~$0.3 million and $0.4 million, respectively.

The Company’s leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value ~~as temporary equity, outside of the stockholders’ equity section~~guarantees. Certain of the Company’s ~~condensed balance sheet.~~

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Net Income (Loss) per Common Stock~~

~~Net income (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of common stock outstanding for the period. The Company has~~leases include renewal options and escalation clauses; renewal options have not ~~considered the effect of warrants sold in the IPO and private placement to purchase 15,333,333 of Class A common stock~~been included in the calculation of ~~diluted income (loss) per~~lease liabilities and right-of-use assets as the Company is not reasonably certain to exercise these options. Variable expenses generally represent the Company’s share ~~since the exercise~~ of the ~~warrants~~landlord operating expenses.

The following summarizes the Company’s leases (in thousands):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020
Finance lease costs:
Amortization of right-of-use assets	$	37		$	37	$	110		$	110
Interest on lease liabilities		3			5		11			16
Operating lease costs		2,342			2,390		7,245			7,309
Short-term lease costs		32			28		54			160
Variable lease costs		196		��	191		532			78
Sublease income		(22	)		—		(22	)		—
Total lease costs	$	2,588		$	2,651	$	7,930		$	7,673


	Nine Months Ended September 30,
	2021			2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	11		$	19
Operating cash flows from operating leases		9,226			9,192
Financing cash flows from finance leases		110			105
Right-of-use asset obtained in exchange for new finance lease liabilities		—			—
Right-of-use asset obtained in exchange for new operating lease liabilities		—			421
Weighted-average remaining lease term - finance leases		2.6			3.5
Weighted-average remaining lease term - operating leases		3.3			4.2
Weighted-average discount rate - finance leases		4.0	%		4.0	%
Weighted-average discount rate - operating leases		5.5	%		5.5	%

Maturities of our operating and finance lease liabilities, excluding short-term leases, are ~~contingent upon~~as follows (in thousands):


	Operating Leases			Finance Leases			Total
Three Months Ended December 31, 2021	$	1,278		$	40		$	1,318
Year ended December 31, 2022		11,183			161			11,344
Year ended December 31, 2023		11,780			123			11,903
Year ended December 31, 2024		12,616			3			12,619
Total		36,857			327			37,184
Less present value discount		(3,349	)		(13	)		(3,362	)
Lease liabilities at September 30, 2021	$	33,508		$	314		$	33,822

As the ~~occurrence~~Company’s lease agreements do not provide an implicit rate, the discount rates used to determine the present value of ~~future events and~~lease payments are generally based on the ~~inclusion~~Company’s estimated incremental borrowing rate for a secured borrowing of ~~such warrants would be anti-dilutive.~~a similar term as the lease.

~~The~~In November 2021, the Company ~~complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” The Company’s statements~~entered into an agreement to assign the lease of ~~operations include a presentation of income (loss) per share for common stock subject~~its Santa Monica office to ~~possible redemption~~another party in January 2022. This assignment will result in a manner similar to the two-class method of income (loss) per share. Net income per share of common stock, basic and diluted for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account (totaling $4,432 for the three months ended March 31, 2021) by the weighted average number of Class A redeemable common stock outstanding since original issuance. Net loss per share of common stock, basic and diluted for Class B non-redeemable common stock is calculated by dividing the net income, adjusted for income attributable to Class A redeemable common stock, by the weighted average number of Class B non-redeemable common stock outstanding for the period. Class B non-redeemable common stock includes the Founder Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account. The Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.

~~Warrant liabilities~~

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

The Company accounts for its 15,333,333 common stock warrants issued in connection with its IPO (10,000,000) and Private Placement (5,333,333) as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. The fair value of warrants issued by the Company in connection with the IPO and Private Placement has been estimated using Monte Carlo simulations at each measurement date.

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Fair Value of Financial Instruments~~

~~The fair value~~modification of the Company’s lease term and is expected to reduce right-of-use assets by $22.6 million and lease liabilities by $28.5 million and increase operating income by $2.7 million, which ~~qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements~~is net of brokers' commissions and ~~Disclosures,” approximates the carrying amounts represented in the balance sheet.~~accelerated depreciation of leasehold improvements and furniture, fixtures and equipment.

14.

Commitments and Contingencies

Inventory Purchase and Service Agreements

~~Income Taxes~~

The Company ~~follows the asset~~has noncancelable inventory purchase and ~~liability method of accounting for income taxes~~service agreements with multiple service providers which expire at varying dates through 2025. Service agreement obligations include amounts related to fitness and nutrition trainers, future events, information systems support, and other technology projects.

Future minimum payments under ~~ASC 740, “Income Taxes.” Deferred tax assets~~noncancelable service and ~~liabilities are recognized~~inventory purchase agreements for the ~~estimated~~periods succeeding September 30, 2021 are as follows (in thousands):


Three Months Ended December 31, 2021	$	58,646
Year ended December 31, 2022		16,466
Year ended December 31, 2023		1,932
Year ended December 31, 2024		1,250
Year ended December 31, 2025		1,250
	$	79,544

The preceding table excludes royalty payments to fitness trainers, talent, and others that are based on future ~~tax consequences attributable to differences between the financial statements carrying~~sales as such amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected tocannot be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.reasonably estimated.

Contingencies

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to ~~income tax examinations by major taxing authorities since inception.~~

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Recent Accounting Standards~~

~~Management~~litigation from time to time in the ordinary course of business. Such claims typically involve its products, intellectual property, and relationships with suppliers, customers, distributors, employees, and others. Contingent liabilities are recorded when it is both probable that a loss has occurred and the amount of the loss can be reasonable estimated. Although it is not possible to predict how litigation and other claims will be resolved, the Company does not believe that any ~~recently issued, but not effective, accounting standards, if~~ currently ~~adopted, would~~identified claims or litigation matters will have a material adverse effect on ~~the Company’s unaudited condensed~~its consolidated financial ~~statements.~~position or results of operations.

15.

Common Stock Warrant Liability

At September 30, 2021, there were 10,000,000 Public Warrants and 5,333,333 Private Placement Warrants outstanding.

~~Note 3 — Initial~~As part of Forest Road’s initial public offering, 10,000,000 Public ~~Offering~~

On November 30, 2020, the Company sold 30,000,000 Units at a price of $10.00 per Unit, including the issuance of 3,900,000 Units as a result of the underwriters’ partial exercise of their over-allotment option. Each Unit consists of one share of Class A common stock, par value $0.0001 per share and one-third of one redeemable warrant (each, a “Public Warrant”). Each wholeWarrants were sold. The Public ~~Warrant entitles~~Warrants entitle the holder thereof to purchase one share of Class A ~~common stock~~Common Stock at a price of ~~$11.50~~$11.50 per share, subject to ~~adjustment (see Note 8).~~

~~Note 4 — Private Placement~~

Simultaneously with the closing of the IPO, the Sponsor purchased an aggregate of 5,333,333 Private Placement Warrants, at a price of $1.50 per unit, for an aggregate purchase price of $8,000,000. A portion of the proceeds from the Private Placement Warrants was added to the net proceeds from the IPO held in the Trust Account. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at $11.50 per share. A portion of the proceeds from the Private Placement Warrants will be added to the proceeds from the IPO to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire worthless.

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Note 5 — Related Party Transactions~~

~~Founder Shares~~

~~On September 29, 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration of 7,187,500 shares of the Company’s Class B common stock (the “Founder Shares”).~~adjustments. The Founder Shares included an aggregate of up to 937,500 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment option was not exercised in full. On November 24, 2020, as part of an upsizing of the IPO, the Sponsor was issued an additional 316,250 Founder Shares by the Company, resulting in a increase in the total number of shares of Class B common stock outstanding from 7,187,500 to 7,503,750 (of which 978,750 were subject to surrender for no consideration depending on the extent to which the underwriters exercised their over-allotment option). On November 30, 2020, the underwriters partially exercised their over-allotment option and forfeited the remaining over-allotment option, hence, 975,000 Founder Shares were no longer subject to forfeiture and 3,750 Founder Shares were forfeited, resulting in an aggregate of 7,500,000 Founder Shares outstanding at March 31, 2021 and December 31, 2020.

~~Promissory Note — Related Party~~

The Sponsor had agreed to loan the Company an aggregate of up to $300,000 to be used for the payment of costs related to the IPO. The promissory note was non-interest bearing, unsecured and was due on the earlier of June 30, 2021 and the closing of the IPO. The promissory note was paid in full out of the IPO proceeds on November 30, 2020, As of March 31, 2021 and December 31, 2020, there was no balance outstanding under the promissory note.

~~Administrative Service Fee~~

The Company has agreed, commencing on the effective date of the IPO through the earlier of the Company’s consummation of a Business Combination or its liquidation, to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, administrative and support services. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three months ended March 31, 2020, the Company has paid $30,000 of administrative fees.

~~Related Party Loans~~

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor may, but is not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans, other than the interest on such proceeds that may be released for working capital purposes. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. As of March 31, 2021 and December 31, 2020, no Working Capital Loans were outstanding.

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Note 6 — Commitments & Contingencies~~

~~Registration Rights~~

The holders of the Founder Shares, Private Placement Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights agreement signed on the effective date of the IPO requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short-form registration demands, that the Company register such securities. In addition, the holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Underwriters Agreement~~

On November 30, 2020, the underwriters were paid a cash underwriting fee of 2% of the gross proceeds of the IPO, totaling $6,000,000. In addition, $0.35 per unit, or approximately $10,500,000 in the aggregate, will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

~~Note 7 — Warrants~~

Public Warrants may only be exercised for a whole number of ~~shares.~~shares of Class A Common Stock. No fractional ~~warrants~~shares will be issued upon ~~separation~~exercise of the ~~Units and only whole warrants will trade.~~warrants. The Public Warrants will become exercisable on ~~the later of (a) 12 months from the closing of the IPO and (b)~~November 30, days after the completion of a Business Combination. The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to2021, provided that the Company ~~satisfying its obligations~~has an effective registration statement.

Simultaneously with ~~respect to registration. No~~Forest Road’s initial public offering, Forest Road consummated a private placement of 5,333,333 Private Placement Warrants with Forest Road’s sponsor. Each Private Placement warrant ~~will be~~is exercisable ~~and the Company will not be obligated to issue any shares of Class A common stock upon exercise of a warrant unless the~~for one share of Class A ~~common stock issuable upon such warrant exercise has been registered, qualified or deemed~~Common Stock at a price of $11.50 per share, subject to ~~be exempt under~~adjustment.

The Private Placement Warrants are identical to the ~~securities laws of~~Public Warrants, except that the state of residence of the registered holder of the warrants. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, it will use its best efforts to file with the SEC a registration statement registering the registration, under the Securities Act, ofPrivate Placement Warrants and the Class A ~~common stock~~Common Stock issuable upon exercise of the ~~warrants. The~~Private Placement Warrants were not transferable, assignable or salable until July 25, 2021, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than the initial shareholders or their permitted transferees, the Private Placement Warrants will be redeemable by the Company ~~will use its best efforts to cause~~and exercisable by such holders on the same ~~to become effective and to maintain~~basis as the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its best efforts to qualify the shares under applicable blue sky laws to the extent an exemption is not available.Public Warrants.

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Redemption of warrants for cash.~~ Once the warrants become exercisable, the Company may ~~call~~redeem the Public Warrants:



in whole and not in part;



at a price of $0.01 per warrant;



upon not less than 30 days’ prior written notice of redemption to each warrant holder; and



if, and only if, the closing price of Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

The Company will not redeem the warrants ~~for redemption:~~

●

~~in whole and not in part;~~

●

~~at a price of $0.01 per warrant;~~

●

~~upon not less than 30 days’ prior written notice of redemption to each warrant holder; and~~

●

if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of our initial business combination) for any 20 trading days within a 30-trading day period ending three business days before we send to the notice of redemption to the warrant holders.

as described above unless an effective registration statement under the Securities Act covering the Class A Common Stock issuable upon exercise of the warrants is effective and a current prospectus relating to those Class A Common Stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable, by

the Company it may exercise its redemption right even if ~~the Company~~it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

The exercise price and number of shares of common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances, including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation.

If the Company ~~has not completed~~calls the ~~initial~~Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. In no event will the Company be required to net cash settle any warrant.

The Company concluded the Public Warrants and Private Placement Warrants meet the definition of a derivative under ASC 815 (as described in Note 1) and are recorded as liabilities. Upon consummation of the Business Combination, ~~within~~ the ~~Combination Period~~fair value of the Public Warrants and ~~the Company liquidates the funds held~~Private Placement Warrants were recorded in the ~~Trust Account, holders of warrants will not receive any of such funds~~ ~~with respect to~~ ~~their warrants, nor will they receive any distribution from the Company’s assets held outside~~unaudited condensed consolidated balance sheets. The fair value of the ~~Trust Account with~~Public Warrants and Private Placement Warrants was remeasured as of September 30, 2021, resulting in a $30.3 million and $41.0 million non-cash change in fair value in the ~~respect~~unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021, respectively. Transaction costs and advisory fees allocated to ~~such warrants. Accordingly,~~ the ~~warrants may expire worthless.~~

~~Note 8 — Stockholder’s Equity~~

~~Preferred Stock~~ ~~— The Company is authorized to issue~~issuance of the Public and Private Placement Warrants of $5.3 million were also recorded as a ~~total~~component of ~~1,000,000~~change in fair value of warrant liabilities in the unaudited condensed consolidated statements of operations, resulting in a net change in fair value of warrant liabilities of $35.7 million for the nine months ended September 30, 2021.

16.

Stockholders’ Equity

As of September 30, 2021, 2,000,000,000 shares, ~~of preferred stock at~~$0.0001 par value per share are authorized, of ~~$0.0001 each. At March 31, 2021 and December 31, 2020, there were no~~which, 1,600,000,000 shares ~~of preferred stock issued or outstanding.~~

are designated as Class A Common Stock, — 200,000,000 shares are designated as Class X Common Stock, 100,000,000 shares are designated as Class C Common Stock and 100,000,000 shares are designated as Preferred Stock.

Common Stock

Holders of each share of Class A Common Stock are entitled to dividends when, as and if declared by the Company’s board of directors, subject to the rights and preferences of any holders of outstanding series of Preferred Stock holders. As of September 30, 2021, the Company had 0t declared any dividends. The holder of each Class A Common Stock is entitled to one vote, the holder of each share of Class X Common Stock is entitled to ten votes and except as otherwise required by law, the holder of each share of Class C Common Stock is not entitled to any voting powers.

Old Beachbody

Prior to the Business Combination, Old Beachbody’s preferred units were convertible into common units, at the option of the holders at any time, with no additional consideration required. The preferred units were to convert to common units at a rate of 1-for-1, subject to adjustment for certain events including unit split, unit dividend or recapitalization. The preferred units were subject to automatic conversion if the Company ~~is authorized~~consummates an initial public offering that meets certain criteria.

The holders could redeem the preferred units at any time after December 14, 2024, at a price equal to ~~issue~~the greater of (i) the fair market value of the common units into which such preferred units are convertible or (ii) approximately $9.93 per unit, or $100.0 million in aggregate (the “Capital Contribution”), reduced by general distributions previously made to the holders plus any declared but unpaid distributions as of the date of the redemption notice.

The holders were entitled to distributions, in the amount, if any, of available cash flows, as determined by a ~~total~~majority of ~~300,000,000~~the Board of Managers. Distributions were to be made to common unit members and preferred unit members in proportion to their percentage of ownership interests, with priority to certain tax distributions and distributions to reimburse Beachbody Holdings and the holders for certain third-party expenses that have not been previously paid.

The redemption by the holders or the completion of an initial public offering was not solely within the control of Old Beachbody, and as such, the preferred units were classified as mezzanine members’ equity. In connection with the Business Combination, 10,068,841 preferred units were converted into 33,828,030 shares of Class A ~~common stock at par value~~Common Stock.

As of ~~$0.0001 each. At March 31, 2021 and~~ December 31, 2020, ~~there~~100,000,000 common units of Old Beachbody were ~~6,281,182~~authorized, and ~~4,622,126 shares issued and outstanding, respectively (excluding 23,718,818 and 25,377,874 shares, respectively on such dates, subject to possible redemption).~~

~~Class B Common Stock~~ ~~— The Company is authorized to issue a total~~62,263,439 common units were outstanding. In connection with the Business Combination, 62,263,439 common units of ~~20,000,000 shares of Class B common stock at par value of $0.0001 each. At March 31, 2021 and December 31, 2020, there~~Old Beachbody were ~~7,500,000 shares of Class B common stock issued or outstanding.~~

Holders of Class A common stock and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders except as required by law. The shares of Class B common stock will automatically convertconverted into67,934,584 shares of Class A Common Stock and 141,250,310 shares of Class X Common Stock.

Old Beachbody members’ personal liability for the obligations or debts of the Company were limited. The Company’s operating agreement called for the Company to be dissolved and terminated upon the earliest occurrence of the following events: bankruptcy of the Company, decision by a majority of both the common ~~stock~~and preferred unit holders to dissolve the Company, or the date the Company may otherwise be dissolved by operation of law or judicial decree.

Accumulated Other Comprehensive Income (Loss)

The following tables summarize changes in accumulated other comprehensive income (loss), net of tax (in thousands):


				Foreign
	Unrealized			Currency
	Gain (Loss) on			Translation
	Derivatives			Adjustment			Total
Balances at December 31, 2019	$	(99	)	$	111		$	12
Other comprehensive income (loss) before reclassifications		(12	)		(275	)		(287	)
Amounts reclassified from accumulated other comprehensive income (loss)		31			—			31
Tax effect		(4	)		—			(4	)
Balances at September 30, 2020	$	(84	)	$	(164	)	$	(248	)
Balances at December 31, 2020	$	(246	)	$	44		$	(202	)
Other comprehensive income (loss) before reclassifications		(187	)		14			(173	)
Amounts reclassified from accumulated other comprehensive income (loss)		481			—			481
Tax effect		(91	)		—			(91	)
Balances at September 30, 2021	$	(43	)	$	58		$	15

17.

Equity-Based Compensation

Equity Compensation Plans

Prior to the Business Combination, the Company maintained its 2020 Beachbody Company Group LLC Equity Compensation Plan (the “2020 Plan”), under which, grants were awarded to certain employees, consultants, and members of the Company’s board of directors through the granting of one or more of the following types of awards: (a) nonqualified unit options, (b) unit awards, and (c) unit appreciation rights. The Company granted nonqualified unit options with vesting periods ranging from three to five years.

Upon closing of the Business Combination, awards under the 2020 Plan were converted at the ~~time~~Exchange Ratio, and the Company’s board of ~~a Business Combination on a one-for-one basis, subject~~directors approved the 2021 Incentive Award Plan (the “2021 Plan”). The 2021 Plan provides for the grant of stock options, including ISOs and nonqualified stock options (“NSOs”), SARs, restricted stock, dividend equivalents, restricted stock units (“RSUs”) and other stock or cash-based awards.

Under the 2021 Plan, up to ~~adjustment. In the case that additional~~30,442,594 shares of Class A ~~common stock or equity-linked securities are issued or deemed issued in connection with a Business Combination,~~Common Stock will be available for issuance under the Plan. In addition, the number of shares of Class A ~~common stock issuable upon conversion~~Common Stock available for issuance under the 2021 Plan will be increased on January 1 of ~~all Founder Shares will~~each calendar year beginning in 2022 and ending in 2031 by an amount equal into the ~~aggregate, on an as-converted basis, 20%~~lesser of (i) five percent (5%) of the total number of shares of Class A ~~common stock~~and Class X Common Stock outstanding ~~after such conversion (after giving effect to any redemptions~~on the final day of the immediately preceding calendar year and (ii) the number of shares determined by the Company’s board of directors. As of September 30, 2021, 21,730,778 shares of Class A ~~common stock by public stockholders), including~~Common Stock are available for issuance under the ~~total number~~2021 Plan.

All options and awards typically expire ten years from the date of ~~shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by~~grant if not exercised. In the ~~Company in connection with or in relation to the consummation~~event of a ~~Business Combination, excluding~~termination of employment, all unvested options are forfeited immediately. Generally, any ~~shares~~vested options may be exercised within three months, depending upon the circumstances of ~~Class~~ termination, except for instances of termination “with cause” whereby any vested options or awards are forfeited immediately.

A ~~common stock or equity-linked securities or rights exercisable~~summary of the activity under the plans are as follows:


	Options Outstanding
							Weighted-
				Weighted-			Average
				Average			Remaining
				Exercise			Contractual Term
	Number of			Price			Term
	Options			(per option)			(in years)
Outstanding at December 31, 2020 (as previously reported)		10,170,288		$	7.04			5.70
Conversion of awards due to recapitalization		23,998,437			(4.94	)
Outstanding at December 31, 2020, effect of reverse acquisition		34,168,725		$	2.10
Granted		9,321,807			9.82
Exercised		(1,292,541	)		1.02
Forfeited		(490,662	)		2.48
Outstanding at September 30, 2021		41,707,329		$	3.86			6.11
Exercisable at September 30, 2021		23,788,979		$	1.97			4.04

The intrinsic value of options exercised was $7.3 million for ~~or convertible into shares of Class A common stock issued, or to be issued, to any seller in a Business Combination and any Private Placement Warrants issued to~~ the ~~Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.~~

nine months ended September 30, 2021.

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Note 9 — Fair Value Measurements~~

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tierThe fair value ~~hierarchy, which prioritizes~~of each award as of the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

	●	~~Level 1 - defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;~~

	●	Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

	●	Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

~~At March 31, 2021, there were 10,000,000 Public Warrants and 5,333,333 Private Placement Warrants outstanding.~~

date of grant is estimated using a Black-Scholes option-pricing model. The following table ~~presents information about~~summarizes the ~~Company’s assets that are measured at fair value on a recurring basis at March 31, 2021 and indicates~~assumptions used to determine the fair value ~~hierarchy~~of option grants:


	Nine Months Ended September 30,
	2021			2020
Risk-free rate		1.0	%		0.5	%
Dividend yield rate		0.0	%		0.0	%
Volatility		53.6	%		55.0	%
Expected term (in years)		6.21			6.23
Weighted-average exercise price	$	9.82		$	8.44

The vesting periods are based on the terms of the ~~valuation inputs the Company utilized to determine such fair value:~~

March 31, Quoted
Prices In
Active
Markets Significant
Other
Observable
Inputs Significant
Other
Unobservable
Inputs
2021 (Level 1) (Level 2) (Level 3)
Description
Warrant Liability – Public Warrants $ 26,900,000 $ 26,900,000 $ - $ -
Warrant Liability – Private Warrants $ 18,705,664 $ - $ - $ 18,705,664
$ 45,605,664 $ 26,900,000 $ - $ 18,705,664

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

The Company utilizes a Monte Carlo simulation model to value the warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the warrant liability is determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its shares of common stock based on historical volatility that matches the expected remaining life of the warrants.option grant agreements. The risk-free interest ~~rate is~~rates are based on the U.S. Treasury ~~zero-coupon yield curve~~rates as of the grant dates for the expected terms of the options. Given the lack of public market for the Company’s common units prior to the Business Combination and minimal history as a public company subsequent to the Business Combination, the price volatilities represent calculated values based on the historical price volatilities of publicly traded companies within the Company’s industry group over the options’ expected terms. The expected terms of the options granted were estimated using the simplified method by taking an average of the vesting periods and the original contractual terms. Prior to the Business Combination, the exercise prices represent the estimated fair values of one common unit of the Company’s equity on the grant ~~date for a maturity similar~~dates. Subsequent to the ~~expected remaining life~~Business Combination, the fair value of the ~~warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate~~Common Stock is based on the ~~historical rate,~~closing market price on the date of grant.

A summary of the unvested option activity is as follows:


				Weighted-
				Average
				Grant Date
	Number of			Fair Value
	Options			(per option)
Unvested at December 31, 2020 (as previously reported)		3,701,114		$	4.34
Conversion of awards due to recapitalization		8,733,309			(3.05	)
Unvested at December 31, 2020, effect of reverse acquisition		12,434,423		$	1.29
Granted		9,321,807			5.03
Vested		(3,347,219	)		1.25
Forfeited		(490,661	)		1.19
Unvested at September 30, 2021		17,918,350		$	3.24

The fair value of options granted during the nine months ended September 30, 2021 and 2020 was $46.9 million (or $5.03 weighted average per option) and $5.5 million (or $4.34 weighted average per option), respectively. The total fair value of awards which vested during the nine months ended September 30, 2021 and 2020 was $4.2 million and $3.7 million, respectively.

A summary of RSU activity is as follows:


	RSUs Outstanding
			Weighted-
			Average		Aggregate
	Number of		Fair Value		Intrinsic Value
	RSUs		(per RSU)		(in thousands)
Outstanding at December 31, 2020		—	$	—
Granted		280,309		7.67
Outstanding at September 30, 2021		280,309	$	7.67	$	1,553

Compensation Warrants

During the year ended December 31, 2020, the Company ~~anticipates to remain~~issued warrants for the purchase of 1,184,834 of Old Beachbody’s common units at ~~zero~~. an exercise price of $8.44 per unit. The warrants vest 25% at the grant date and 25% at each of the first, second, and third anniversaries of the grant date. The warrants have a 10-year contractual term. In connection with the Business Combination, the Old Beachbody warrants were exchanged for 3,980,656 warrants for the purchase of the Company’s Class A Common Stock at an exercise price of $2.52 per share.

As of ~~March 31,~~September 30, 2021, ~~the public~~1,990,328 warrants were ~~valued using~~exercisable. Compensation cost associated with the ~~actual closing trading price on March 31, 2021.~~warrants will be recognized over the requisite service period, which is 4.25 years.

Equity-Based Compensation Expense

~~The aforementioned warrant liabilities are not subject to qualified hedge accounting.~~

~~Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period. There were no transfers between levels~~Equity-based compensation expense for the three and nine months ended ~~March~~September 30, 2021 and 2020 was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenue	$	385	$	68	$	567	$	174
Selling and marketing		2,359		290		5,692		683
Enterprise technology and development		919		410		1,582		1,004
General and administrative		2,081		493		2,998		1,308
Total equity-based compensation	$	5,744	$	1,261	$	10,839	$	3,169

As of September 30, 2021, the total unrecognized equity-based compensation expense was $67.3 million and has a weighted-average recognition period of 3.29 years.

23.

Subsequent Events

The Company has evaluated subsequent events ~~and transactions that occurred after the balance sheet date up to~~through the date ~~that~~ the unaudited condensed consolidated financial statements were issued. ~~Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations.

The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this “Report”) and the section entitled “Risk Factors.” Unless otherwise indicated, the terms “Beachbody,” “we,” “us,” or “our” refer to The Beachbody Company, Inc., a Delaware corporation, together with its consolidated subsidiaries.

~~References~~Forward-Looking Statements

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act), including statements about and the financial condition, results of operations, earnings outlook and prospects of the Company. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on our current expectations as applicable and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to the ~~“Company,” “us,” “our”~~following:


our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit, operating expenses including changes in selling and marketing, general and administrative expenses (including any components of the foregoing), Adjusted EBITDA (as defined below) and our ability to achieve and maintain future profitability;


our anticipated growth rate and market opportunity;


our ability to raise financing in the future;


our success in retaining or ~~“we” refer~~recruiting, or changes required in, officers, key employees or directors;


our warrants are accounted for as liabilities and changes in the value of such warrants could have a material effect on our financial results;


our ability to effectively compete in the fitness and nutrition industries;


our ability to successfully acquire and integrate new operations;


our reliance on a few key products;


market conditions and global and economic factors beyond our control;


intense competition and competitive pressures from other companies worldwide in the industries in which we will operate;


litigation and the ability to adequately protect our intellectual property rights;


costs related to the Business Combination and the failure to realize anticipated benefits of the Business Combination or to realize any financial projections or estimated pro forma results and the related underlying assumptions; and


other risk and uncertainties set forth in this Report under the heading “Risk Factors.”

Should one or more of these risks or uncertainties materialize or should any of the assumptions made by management prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events.

Overview of Our Business

We are the creator of some of the world’s most popular fitness programs, including P90X®, Insanity® and 21 Day Fix®, which transformed the in-home fitness market and disrupted the global fitness industry by making it accessible for people to get results—anytime, anywhere. We have also developed comprehensive nutrition-first programs, Portion Fix® and 2B Mindset®, which teach

healthy eating habits and promote healthy, sustainable weight loss. All fitness and nutrition programs are available through our Beachbody On Demand ® streaming service. In addition, we offer nutritionals such as Shakeology® nutrition shakes and BEACHBAR® snack bars.
In the health, wellness and fitness industry, we focus primarily on digital content, connected fitness and consumer health & wellness. Our goal is to continue to provide leading holistic health and wellness content and subscription-based solutions. Leveraging our history of fitness content creation and our network of micro-influencers, whom we call Coaches, we have been successful in identifying market trends and expanding our market share. With our 2021 expansion into connected fitness, through the integration of Myx’s professional grade stationery cycle and 360-degree touch screen tablet connected fitness software, weights, and accessories, we plan to leverage our distribution, marketing and content creation capabilities to reach a wider health, wellness and fitness audience.
Historically, our revenue has primarily been generated through a network of micro-influencers, social media marketing channels and direct response advertising. Components of revenue include recurring digital subscription revenue and revenue from the sale of nutritional and other products. In addition to selling individual products on a one-time basis, we also bundle fitness and nutrition products together at discounted prices.
On June 25, 2021 we consummated the Business Combination by and among Forest Road, ~~Acquisition Corp.~~Old Beachbody and Myx. The Business Combination resulted in cash proceeds, net of issuance costs and cash paid for the acquisition of Myx, net of cash acquired of approximately $351.8. In addition it drove increases of $78.1 million in intangible assets and $157.9 million in goodwill as of September 30, 2021, compared to our balance sheet as of December 31, 2020. The following financial information for the three months and nine months ended September 30, 2021 includes the financial information and activities for Myx for the period from June 26, 2021 to September 30, 2021.
For the three months ended September 30, 2021, as compared to the three months ended September 30, 2020:

Total revenue was $208.1 million, a 17% decrease;

Digital revenue was $94.1 million, a 5% decrease;

Connected fitness revenue was $5.9 million;

Nutrition and other revenue was $108.1 million, a 29% decrease;

Net loss was $39.9 million, compared to net income of $13.8 million; and

Adjusted EBITDA was ($43.4) million, compared to $31.4 million.
For the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020:

Total revenue was $657.4 million, a 3% increase;

Digital revenue was $283.5 million, an 18% increase;

Connected fitness revenue was $5.9 million;

Nutrition and other revenue was $367.9 million, an 8% decrease;

Net loss was $82.4 million, compared to a net loss of $4.6 million; and

Adjusted EBITDA was ($59.5) million, compared to $34.9 million.
For a definition of digital subscriptions see the section titled “—Key Operational and Business Metrics.”
See the section titled “—Non-GAAP Information” for information regarding our use of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.
Impact of COVID-19
The novel coronavirus continues to have a significant impact on most businesses, including Beachbody. During the year ended December 31, 2020, we saw strong demand for our digital subscriptions as the government ordered closures and restrictions on gyms and as consumers were reluctant to return to gyms as the COVID-19 pandemic continued. We also experienced modestly slower product fulfillment to customers and supply chain delays. During the second and third quarters of 2021, the pandemic has resulted in higher shipping, freight, and fulfillment costs and the cancellation of certain Coach events.
33
The ultimate impact of COVID-19 on our financial and operating results is unknown and will depend on the length of time that these restrictions continue and whether the demand for many of our digital subscriptions continue. COVID-19 has had a significant impact and may continue to have a significant impact, the full extent of which is unknown, but which could be material. Although COVID-19 increased consumer demand for our digital solutions, we believe the structural shift towards wellness and fitness solutions like our platform existed before the impact of COVID-19, and we anticipate that this structural change to the fitness industry will continue after COVID-19.
Beachbody has business continuity programs in place to ensure that employees are safe and that the businesses continue to function while employees are working remotely. We have been closely monitoring the impact of working from home and the potential strain on internet connectivity but have not seen any adverse impact on the ability of the businesses to function and we have not seen any network connectivity issues that would have an adverse impact on our customers’ ability to access our product offerings.
Non-GAAP Information
This Report includes Adjusted EBITDA, which is a non-GAAP performance measure that we use to supplement our results presented in accordance with GAAP. We believe Adjusted EBITDA is useful in evaluating our operating performance, as it is similar to measures reported by our public competitors and is regularly used by security analysts, institutional investors and other interested parties in analyzing operating performance and prospects. Adjusted EBITDA is not intended to be a substitute for any GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry.
We define and calculate Adjusted EBITDA as net income (loss) adjusted for depreciation and amortization, amortization of capitalized cloud computing implementation costs, amortization of content assets, interest expense, income taxes, equity-based compensation, and other items that are not normal, recurring, operating expenses necessary to operate the Company’s business as described in the reconciliation below.
We include this non-GAAP financial measure because it is used by management to evaluate Beachbody’s core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. Adjusted EBITDA excludes certain expenses that are required in accordance with GAAP because they are non-cash (for example, in the case of depreciation and amortization, equity-based compensation) or are not related to our underlying business performance (for example, in the case of interest income and expense).
The table below presents our Adjusted EBITDA reconciled to our net income (loss), the closest GAAP measure, for the periods indicated:
(in thousands)

Three Months Ended September 30,
Nine Months Ended September 30,

2021

2020

2021

2020

Net income (loss)

$
(39,922
)

$
13,771

$
(82,420
)

$
(4,560
)
Adjusted for:

Depreciation and amortization

14,616

11,203

40,557

31,881

Amortization of capitalized cloud computing implementation costs

168

—

504

—

Amortization of content assets

3,889

1,907

10,008

5,103

Interest expense

62

89

490

432

Income tax (benefit) provision

(1,487
)

4,129

(12,739
)

(161
)
Equity-based compensation

5,744

1,261

10,839

3,169

Transaction costs

677

612

2,819

612

Restructuring gain

—

(1,677
)

—

(1,677
)
Change in fair value of warrant liabilities

(30,274
)

—

(35,664
)

—

Other adjustment items (1)

3,044

—

9,082

—

Non-operating items (2)

71

77

(3,017
)

131

Adjusted EBITDA

$
(43,412
)

$
31,372

$
(59,541
)

$
34,930

(1)
Other adjustment items includes incremental costs associated with COVID-19.
(2)
Non-operating primarily includes interest income and gain on investment on the Myx convertible instrument.
34
Key Operational and Business Metrics
In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following key operational and business metrics to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions.

As of September 30,

2021

2020

Digital Subscriptions (millions)

2.64

2.61

Nutritional Subscriptions (millions)

0.34

0.44

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Average Digital Retention

95.6
%

95.1
%

95.5
%

95.4
%
Total Streams (millions)

35.9

48.5

136.4

137.2

DAU/MAU

29.6
%

32.1
%

32.1
%

31.9
%

Revenue (millions)

$
208.1

$
251.5

$
657.4

$
639.3

Gross profit (millions)

$
135.0

$
180.6

$
447.4

$
460.1

Gross margin

65
%

72
%

68
%

72
%

Net income (loss) (millions)

$
(39.9
)

$
13.8

$
(82.4
)

$
(4.6
)
Adjusted EBITDA (millions) (1)

$
(43.4
)

$
31.4

$
(59.5
)

$
34.9

(1)
Please see the section titled “—Non-GAAP Information” for a reconciliation of net loss to Adjusted EBITDA and an explanation for why we consider Adjusted EBITDA to be a helpful metric for investors.
Digital Subscriptions
Our ability to expand the number of digital subscriptions is an indicator of our market penetration and growth. Digital subscriptions include Beachbody On Demand, Nutrition+, and Openfit subscriptions. Digital subscriptions include paid and free-to-pay subscriptions. Free-to-pay subscriptions, on average, represent less than 2% of total digital subscriptions. Digital subscriptions are inclusive of all billing plans, currently for annual, semi-annual, quarterly and monthly billing intervals.
Nutritional Subscriptions
We package and synthesize the content experience of digital subscriptions with nutritional subscriptions that work together. Nutritional Subscriptions are monthly subscriptions to nutritional products such as, Shakeology, Beachbody Performance, BEACHBAR, Bevvy and Ladder Supplements.
Average Digital Retention
We use month over month digital subscription retention to measure the retention of our digital subscriptions. We define digital subscription retention as the average rate at which a subscription renews for a new billing cycle.
Total Streams
We measure streams and total streams to quantify the number of fitness or nutrition programs viewed per subscription which is a leading indicator of customer engagement and retention. While the measure of a digital stream may vary across companies, to qualify as a stream on either our Beachbody on Demand or Openfit platforms, a program must be viewed for a minimum of 25% of the total running time.
35
Daily Active Users to Monthly Active Users (DAU/MAU)
We use the ratio of daily active users to monthly active users to measure how frequently digital subscribers are utilizing our service in a given month. We define a daily active user as a unique user streaming content on our platform in a given day. We define a monthly active user as a unique user streaming content on our platform in that same month.
Components of our Operating Results and Results of Operations
We operate and manage our business in two operating segments, Beachbody and Other. For financial reporting purposes, we have one reportable segment, Beachbody. We identified the reportable segment based on the information used by management to monitor performance and make operating decisions. See Notes 1 and 22 of the notes to our unaudited condensed consolidated financial statements included elsewhere in this Report for additional information regarding our reportable segment. The following discussion of our results and operations is on a consolidated basis as the Other non-reportable operating segment is not material to the understanding of our business taken as a whole.
(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Revenue:

Digital

$
94,072

$
99,082

$
283,547

$
239,964

Connected fitness

5,927

—

5,937

—

Nutrition and other

108,053

152,397

367,895

399,335

Total revenue

208,052

251,479

657,379

639,299

Cost of revenue:

Digital

12,124

9,843

34,858

27,507

Connected fitness

10,261

—

10,417

—

Nutrition and other

50,682

61,082

164,679

151,654

Total cost of revenue

73,067

70,925

209,954

179,161

Gross profit

134,985

180,554

447,425

460,138

Operating expenses:

Selling and marketing

153,782

123,980

438,672

352,872

Enterprise technology and development

29,680

23,852

83,718

67,558

General and administrative

23,346

16,523

58,523

46,229

Restructuring gain

—

(1,677
)

—

(1,677
)
Total operating expenses

206,808

162,678

580,913

464,982

Operating income (loss)

(71,823
)

17,876

(133,488
)

(4,844
)
Change in fair value of warrant liabilities

30,274

—

35,664

—

Interest expense

(62
)

(89
)

(490
)

(432
)
Other income, net

202

113

3,155

555

Income (loss) before income taxes

(41,409
)

17,900

(95,159
)

(4,721
)
Income tax benefit (provision)

1,487

(4,129
)

12,739

161

Net income (loss)

$
(39,922
)

$
13,771

$
(82,420
)

$
(4,560
)
Revenue
Revenue includes digital subscriptions, nutritional supplement subscriptions, one-time nutritional sales, connected fitness products and other fitness-related products. Subscription revenue is recognized ratably over the subscription period (up to 12 months). We often sell bundled products that combine digital subscriptions, nutritional products, and/or other fitness and nutritional programs. We consider these sales to be revenue arrangements with multiple performance obligations and allocate the transaction price to each performance
36
obligation based on its relative stand-alone selling price. We defer revenue when we receive payments in advance of delivery of products or the performance of services.

Three Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Revenue

Digital

$
94,072

$
99,082

$
(5,010
)

(5%)

Connected fitness

5,927

—

5,927

—

Nutrition and other

108,053

152,397

(44,344
)

(29%)

Total revenue

$
208,052

$
251,479

$
(43,427
)

(17%)

The decrease in digital revenue for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, was primarily due to lower growth in our digital subscriptions as the demand for at-home fitness slowed.
The increase in connected fitness revenue for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, was due to the acquisition of Myx in June 2021.
The decrease in nutrition and other revenue for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, was primarily due to a $33.6 million decrease in revenue from nutritionals primarily driven by the decrease in nutritional subscriptions and lower customer acquisition and a $4.3 million decrease in shipping revenue due to a sales composition shift from nutritional to digital.

Nine Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Revenue

Digital

$
283,547

$
239,964

$
43,583

18
%
Connected fitness

5,937

—

5,937

—

Nutrition and other

367,895

399,335

(31,440
)

(8%)

Total revenue

$
657,379

$
639,299

$
18,080

3
%
The increase in digital revenue for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was primarily attributable to year-over-year growth in digital subscriptions during the first half of 2021.
The increase in connected fitness revenue for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was due to the acquisition of Myx in June 2021.
The decrease in nutrition and other revenue for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was primarily due to the decrease in revenue from nutritionals as a result of lower demand experienced during the third quarter of 2021.
Cost of Revenue
Digital Cost of Revenue
Digital cost of revenue includes costs associated with digital content creation including amortization and revisions of content assets, depreciation of streaming platforms and e-commerce websites, digital streaming costs, and amortization of acquired digital platform intangible assets. It also includes customer service costs, credit card processing fees, depreciation of production equipment, live trainer costs, facilities, and related personnel expenses.
Connected Fitness Cost of Revenue
Connected Fitness cost of revenue consists of product costs, including hardware costs, duties and other applicable importing costs, shipping and handling costs, warehousing and logistics costs, costs associated with service calls and repairs of the product under
37
warranty, payment processing and financing fees, customer service expenses, and personnel-related expenses associated with supply chain and logistics.
Nutrition and Other Cost of Revenue
Nutrition and other cost of revenue includes product costs, shipping and handling, fulfillment and warehousing, customer service, and credit card processing fees. It also includes depreciation of nutrition-related e-commerce websites and social commerce platforms, amortization of acquired formulae intangible assets, facilities, and related personnel expenses.

Three Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Cost of revenue

Digital

$
12,124

$
9,843

$
2,281

23
%
Connected fitness

10,261

—

10,261

—

Nutrition and other

50,682

61,082

(10,400
)

(17%)

Total cost of revenue

$
73,067

$
70,925

$
2,142

3
%

Gross profit

Digital

$
81,948

$
89,239

$
(7,291
)

(8%)

Connected fitness

(4,334
)

—

(4,334
)

—

Nutrition and other

57,371

91,315

(33,944
)

(37%)

Total gross profit

$
134,985

$
180,554

$
(45,569
)

(25%)

Gross margin

Digital

87
%

90
%

Connected fitness

(73
%)

—

Nutrition and other

53
%

60
%

The increase in digital cost of revenue for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, was primarily driven by a $2.0 million increase in content assets amortization due to a content asset library (new and existing content) with higher costs being amortized during the three months ended September 30, 2021 compared to the three months ended September 30, 2020. The digital gross margin was lower for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 primarily due to higher content assets amortization and higher customer service expenses as more contacts were related to digital products, partially offset by lower credit card processing as we achieved rate-reducing initiatives.
The increase in connected fitness cost of revenue for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, was primarily driven by the acquisition of Myx in June 2021.
The decrease in nutrition and other cost of revenue for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, was primarily due to a $8.7 million decrease in product costs, $2.1 million decrease in shipping costs, and $0.6 million decrease in customer service expense as the result of lower nutrition and other revenue. These decreases were partially offset by a $1.1 million increase in freight and fulfillment expense. Despite the decrease in product costs, shipping and customer service costs, nutrition and other gross margin decreased as a result of a higher reserve for excess and obsolete inventory, higher
38
freight and shipping rates due to COVID-19, and the deleveraging of fixed costs such as depreciation and personnel-related expenses on lower revenue.

Nine Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Cost of revenue

Digital

$
34,858

$
27,507

$
7,351

27
%
Connected fitness

10,417

—

10,417

—

Nutrition and other

164,679

151,654

13,025

9
%
Total cost of revenue

$
209,954

$
179,161

$
30,793

17
%

Gross profit

Digital

$
248,689

$
212,457

$
36,232

17
%
Connected fitness

(4,480
)

—

(4,480
)

—

Nutrition and other

203,216

247,681

(44,465
)

(18%)

Total gross profit

$
447,425

$
460,138

$
(12,713
)

(3%)

Gross margin

Digital

88
%

89
%

Connected fitness

(75
%)

—

Nutrition and other

55
%

62
%

The increase in digital cost of revenue for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was primarily driven by a $4.9 million increase in content assets amortization due to a content asset library (new and existing content) with higher costs being amortized during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Additional customer service expense of $1.0 million, depreciation of $0.9 million, credit card processing expense of $0.5 million, and Openfit live training costs of $0.2 million were attributable to the increase in revenue. The slight decrease in digital gross margin from the nine months ended September 30, 2020 to the nine months ended September 30, 2021 was primarily due to higher program amortization, partially offset by lower streaming costs and lower credit card processing due to rate-reducing initiatives.
The increase in connected fitness cost of revenue for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was primarily driven by the acquisition of Myx in June 2021.
The increase in nutrition and other cost of revenue for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was due to a $5.7 million increase in product costs, $3.2 million increase in shipping costs, $1.7 million increase in depreciation, $1.5 million increase in fulfillment, and $1.1 million in personnel-related expenses. Nutrition and other gross margin decreased during the nine months ended September 30, 2021 as a result of higher freight and shipping rates, a higher reserve for excess and obsolete inventory, and increases in personnel-related costs and depreciation expense for which there is no commensurate revenue.
Operating Expenses
Selling and Marketing
Selling and marketing expenses primarily include the cost of micro-influencer compensation, advertising, royalties, content revisions, promotions and events, and third-party sales commissions as well as the related personnel expenses for employees and consultants.
39
We intend to continue to invest in our selling and marketing capabilities and expect this expense to increase in future periods as we release new products and expand internationally. Selling and marketing expense as a percentage of total revenue may fluctuate from period to period based on total revenue and the timing of our media investments.

Three Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Selling and marketing

$
153,782

$
123,980

$
29,802

24
%
As a percentage of total revenue

73.9
%

49.3
%

The increase in selling and marketing expense for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, was primarily due an increase in television media and online advertising expenses in line with our strategic focus to invest in building brand awareness and driving customer acquisition.
Selling and marketing expense increased, as a percentage of total revenue, due to increased media investments which were less effective at acquiring new customers as compared to the three months ended September 30, 2020.

Nine Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Selling and marketing

$
438,672

$
352,872

$
85,800

24
%
As a percentage of total revenue

66.7
%

55.2
%

The increase in selling and marketing expense for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was primarily due to a $54.8 million increase in media costs to build awareness and customer acquisition. Additional increases were $16.9 million in expenses for personnel and systems that support customer acquisition activities, $4.4 million in Coach events expenses, $3.1 million in intangible assets amortization, $2.6 million in production of marketing materials, and $0.9 million in royalties.
Selling and marketing expense increased, as a percentage of total revenue, primarily due to increased media investments on lower revenue.
Enterprise Technology and Development
Enterprise technology and development expenses relate primarily to enterprise systems applications, hardware and software that serve as the technology infrastructure for the Company and are not directly related to services provided or tangible goods sold. This includes maintenance and enhancements of the Company’s enterprise resource planning (ERP) system, which is the core of our accounting, procurement, supply chain and other business support systems. Enterprise technology and development also includes reporting and business analytics tools, security systems such as identity management and payment card industry compliance, office productivity software, research and development tracking tools, and other non—customer facing applications. Enterprise technology and development expenses include personnel-related expenses for employees and consultants who create improvements to and maintain technology systems and are involved in the research and development of new and existing nutritional products, depreciation of enterprise technology-related assets, software licenses, hosting expenses, and technology equipment leases.

Three Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Enterprise technology and development

$
29,680

$
23,852

$
5,828

24
%
As a percentage of total revenue

14.3
%

9.5
%

The increase in enterprise technology and development expense for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, was primarily due to an increase in personnel and enterprise systems-related expenses.
40
Enterprise technology and development expense as a percentage of total revenue increased by 480 basis points due to the deleveraging of fixed costs, such as personnel-related expense and depreciation, on lower revenue.

Nine Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Enterprise technology and development

$
83,718

$
67,558

$
16,160

24
%
As a percentage of total revenue

12.7
%

10.6
%

The increase in enterprise technology and development expense for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was primarily due to a $13.0 million increase in personnel-related expenses and a $3.1 million increase in depreciation expense. Enterprise technology and development expense as a percentage of total revenue increased by 210 basis points due to the deleveraging of fixed costs, such as personnel-related expense and depreciation, on lower revenue.
General and Administrative
General and administrative expense includes personnel-related expenses and facilities-related costs primarily for our executive, finance, accounting, legal and human resources functions. General and administrative expense also includes fees for professional services principally comprised of legal, audit, tax, and insurance.

Three Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

General and administrative

$
23,346

$
16,523

$
6,823

41
%
As a percentage of total revenue

11.2
%

6.6
%

The increase in general and administrative expense for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, was primarily due to increases in personnel-related expenses and other general corporate expenses, including additional expenses as a result of operating as a public company. General and administrative expense as a percentage of total revenue increased by 460 basis points due to the deleveraging of costs on lower revenue.

Nine Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

General and administrative

$
58,523

$
46,229

$
12,294

27
%
As a percentage of total revenue

8.9
%

7.2
%

The increase in general and administrative expense for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was primarily due to increases in transaction costs related to the Business Combination, personnel-related expenses, and other general corporate expenses. General and administrative expense as a percentage of total revenue increased by 170 basis points primarily due to the deleveraging of transaction costs on lower revenue.
Restructuring
Restructuring charges relates to our 2017 and 2018 restructuring plans, which were initiated to realign business priorities and optimize operations to maximize digital subscription scale and growth. The charges incurred primarily relate to lease termination adjustments and employee-related costs, with the restructuring benefit related to lower final lease termination expenses compared to initial estimates.

Three Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Restructuring gain

$
—

$
(1,677
)

$
1,677

(100%)
41

Nine Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Restructuring gain

$
—

$
(1,677
)

$
1,677

(100%)
Restructuring gain for the three and nine months ended September 30, 2020 reflect adjustments to the estimated liability associated with the 2017 restructuring lease terminations.
Other Income (Expenses)
The change in fair value of warrant liabilities consists of the fair value changes of the Public Warrants and Private Warrants and the transaction costs and advisory fees for the Business Combination allocated to the warrants. Interest expense primarily consists of interest expense associated with our borrowings and amortization of debt issuance costs for our Credit Facility. Other income, net, consists of interest income earned on investments and gains (losses) on foreign currency.

Three Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Change in fair value of warrant liabilities

$
30,274

$
—

$
30,274

—

Interest expense

(62
)

(89
)

27

30
%
Other income, net

202

113

89

79
%
The change in fair value of warrant liabilities of $30.3 million during the three months ended September 30, 2021 primarily resulted from the decrease in our stock price during the third quarter of 2021. The decrease in interest expense for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, was primarily due to lower lease-related interest expense. The increase in other income, net was primarily due to foreign exchange rate fluctuations.

Nine Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Change in fair value of warrant liabilities

$
35,664

$
—

$
35,664

—

Interest expense

(490
)

(432
)

(58
)

-13
%
Other income, net

3,155

555

2,600

468
%
The change in fair value of warrant liabilities of $35.7 million during the nine months ended September 30, 2021 primarily resulted from the decrease in our stock price following consummation of the Business Combination on June 25, 2021, partially offset by the transaction costs and advisory fees for the Business Combination allocated to the warrants. The increase in interest expense for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was primarily due to higher outstanding borrowings and for a longer period in 2021 compared to 2020. The increase in other income, net was primarily due to the gain on the investment in the convertible instrument from Myx prior to June 25, 2021; there was no similar investment during the nine months ended September 30, 2020.
Income Tax Benefit (Provision)
Income tax benefit (provision) consists of income taxes related to US federal and state jurisdictions as well as those foreign jurisdictions where we have business operations.

Three Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Income tax benefit (provision)

$
1,487

$
(4,129
)

$
5,616

136
%
42
The income tax benefit during the three months ended September 30, 2021, as compared to the income tax provision during the three months ended September 30, 2020 was primarily due to a loss position in the third quarter of 2021 compared to a taxable income position in the third quarter of 2020. The effective benefit tax rate for the three months ended September 30, 2021 was 3.6% and differed from the federal statutory rate primarily because of valuation allowances and an increase in net benefits from discrete events. The effective tax rate for the three months ended September 30, 2020 was 23.1% and differed from the federal statutory rate primarily because of additional expense from discrete events.

Nine Months Ended September 30,

2021

2020

$ Change

% Change

(dollars in thousands)

Income tax benefit (provision)

$
12,739

$
161

$
12,578

7812
%
The increase in income tax benefit for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was primarily due to the increase in net benefits from discrete events, primarily related to the acquisition of Myx. The effective benefit tax rate was 13.4% for the nine months ended September 30, 2021 and 3.4% for the nine months ended September 20, 2020. The increase in the effective benefit tax rate was primarily related to the increase in net benefits from discrete events, partially offset by an increase in valuation allowances.
Liquidity and Capital Resources
Historically, our operations were financed primarily through cash flow from operating activities and borrowings under our Credit Facility. In connection with the Business Combination, we received cash proceeds, net of issuance costs and cash paid for the acquisition of Myx, net of cash acquired of approximately $351.8 million. As of September 30, 2021, we had cash and cash equivalents of $199.8 million and $32.0 million of borrowing capacity available under our Credit Facility (defined below).
We believe our existing cash and cash equivalent balances and cash flow from operations will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of growth initiatives, the expansion of selling and marketing activities, the timing of new nutrition product introductions, market acceptance of our nutrition products, and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our shareholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives.
Amended and Restated Credit Agreement
On December 14, 2018, Beachbody, LLC, as borrower, and Old Beachbody and certain of Beachbody, LLC’s subsidiaries, as guarantors, entered into a credit agreement with Bank of America, N.A., as lender, administrative agent and letter of credit issuer for a $35 million revolving credit facility with a $10 million sublimit for letters of credit (the “Credit Facility”). During the nine months ended September 30, 2021, the Credit Facility was amended to revise certain financial covenants, to extend the maturity date to June 2022, and temporarily increase the Credit Facility by $20 million for a period of either 90 days, or until the consummation of the Business Combination.
In connection with the transactions contemplated by the Business Combination Agreement, on June 23, 2021, the Credit Facility was amended, which, among other things, (a) permits the consummation of the Business Combination and certain other transactions contemplated by the Business Combination Agreement, and (b) amends certain terms of the Credit Facility to, among other things, (i) enable Old Beachbody and Beachbody, LLC to consummate the Business Combination and certain other transactions contemplated by the Business Combination Agreement, (ii) require that the Company join the Credit Facility as a parent guarantor thereunder, and (iii) require that Myx join the Credit Facility as a subsidiary guarantor thereunder.
As of September 30, 2021 and December 31, 2020, we had no borrowings outstanding under the Credit Facility and a letter of credit was issued for $3.0 million. Borrowings may be either Bloomberg Short-Term Bank Yield Index (“BSBY”) rate loans or base rate loans at our election. BSBY rate loans bear interest at an annual rate equal to the BSBY Rate plus 1.75% to 2.25%, with a minimum
43
BSBY of 0.75%. Base rate loans are at the base rate, as defined in the Credit Facility, plus 0.75% to 1.25%. We also pay a 1.75% to 2.25% fee on the letters of credit outstanding and a 0.375% to 0.5% commitment fee on the unused Credit Facility.
In November 2021, the Company terminated the Credit Facility and will maintain a compensating cash balance for the $3.0 million letter of credit.
Cash Flows
The following table summarizes our cash flows for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

2021

2020

(dollars in thousands)

Net cash provided by (used in) operating activities

$
(139,259
)

$
72,340

Net cash used in investing activities

(108,345
)

(26,860
)
Net cash provided by financing activities

390,448

—

Operating Activities. Net cash used in operating activities of $139.3 million for the nine months ended September 30, 2021 was primarily due to the net loss of $82.4 million and the net change in operating assets and liabilities of $71.2 million, partially offset by non-cash adjustments of $14.4 million. Non-cash adjustments primarily consisted of depreciation and amortization of $40.6 million, change in fair value of warrant liabilities of ($35.7) million, deferred income taxes of ($13.0) million, equity-based compensation of $10.8 million, and amortization of content assets of $10.0 million. The change in net operating assets and liabilities was primarily due to a $68.8 million increase in inventory, $22.0 million increase in content assets, and a $5.6 million increase in other assets; partially offset by a $27.1 million increase in deferred revenue as a result of the increase in digital subscriptions and connected fitness hardware sold but not yet delivered.
Net cash provided by operating activities of $72.3 million for the nine months ended September 30, 2020 was primarily due to the net change in operating assets and liabilities of $35.2 million and non-cash adjustments of $41.7 million, partially offset by the net loss of $4.6 million. The increase in net operating assets and liabilities was primarily due to a $41.8 million increase in deferred revenue as a result of an increase in digital subscriptions, $29.0 million increase in accounts payable and accrued expenses related to increased expenditures to support general business growth; partially offset by a $17.5 million increase in inventory as a result of building up nutritional products and accessories, a $9.9 million increase in content assets and an increase other assets driven by general growth. Non-cash adjustments primarily consisted of depreciation and amortization of $31.9 million, amortization of content assets of $5.1 million, and equity-based compensation expense of $3.2 million.
Investing Activities. Net used in investing activities for the nine months ended September 30, 2021 of $108.3 million was related to $37.3 cash consideration for the acquisition of Myx, net of cash acquired, capital expenditures of $61.1 million, the investment in a convertible instrument of $5.0 million, and an equity investment of $5.0 million.
Net cash used in investing activities for the nine months ended September 30, 2020 of $26.9 million was related to capital expenditures, partially offset by cash acquired through the acquisition of Ladder.
Financing Activities. Net cash provided by financing activities of $390.4 million for the nine months ended September 30, 2021 was primarily related to the $389.1 million in net proceeds received from the Business Combination and $1.3 million of proceeds from stock option exercises, net of tax withholdings.
Net cash provided by financing activities was $0 for the nine months ended September 30, 2020. Gross borrowings and repayments under the Credit Facility were $32.0 million.
44
Contractual Obligations and Other Commitments
The following table summarizes our contractual cash obligations as of September 30, 2021:

Total

Less than
1 Year

1-3 Years

3-5 Years

More than
5 Years

(in thousands)

Operating lease obligations

$
36,857

$
1,278

$
22,963

$
12,616

$
—

Finance lease obligations

327

40

284

3

—

Noncancelable service and inventory
purchase obligations

79,544

58,646

18,398

2,500

—

Total

$
116,728

$
59,964

$
41,645

$
15,119

$
—

The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts.
In November 2021, the Company entered into an agreement to assign the lease of its corporate headquarters to another party in January 2022. This assignment will result in a modification of the Company’s lease term and is expected to reduce right-of-use assets by $22.6 million and lease liabilities by $28.5 million and increase operating income by $2.7 million, which is net of brokers' commissions and accelerated depreciation of leasehold improvements and furniture, fixtures and equipment.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2021.
Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations ~~should be read in conjunction with~~are based upon our ~~audited~~unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. In preparing the unaudited condensed consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders, revenue, expenses, and related ~~notes included herein.~~

~~Cautionary Note Regarding Forward-Looking Statements~~

All statements other than statements of historical fact included in this report including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statementsdisclosures. We re-evaluate our estimates on an on-going basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the ~~beliefs~~circumstances. Because of ~~management, as well as~~the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions ~~made by,~~or conditions. The critical accounting policies that reflect our more significant judgments and ~~information currently available~~estimates used in the preparation of our condensed consolidated financial statements include those noted below.

Revenue Recognition

We record revenue when we fulfill our performance obligation to transfer control of the goods or services to our customers. Control of shipped items is generally transferred when the product is delivered to the ~~Company’s management. Actual results could differ materially~~customer. The amount of revenue recognized is the consideration that we expect we will be entitled to receive in exchange for transferring goods or services to its customers. Control of services, which are primarily digital subscriptions, transfers over time, and as such, revenue is recognized ratably over the subscription period (up to 12 months), using a mid-month convention. We sell a variety of bundled products that combine digital subscriptions, nutritional products and/or other fitness products. We consider these sales to be revenue arrangements with multiple performance obligations and allocates the transaction price to each performance obligation based on its relative stand-alone selling price. We defer revenue when we receive payments in advance of delivery of products or the performance of services. Revenue is recorded net of expected returns, discounts and credit card chargebacks, which are estimated using our historical experience. Revenue is presented net of sales and value added taxes collected from ~~those contemplated by~~customers and remitted to applicable government agencies.

Goodwill and Intangible Assets

Goodwill represents the ~~forward- looking statements as a result~~excess of ~~certain factors detailed in our filings with~~ the ~~SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are qualified in their entirety by this paragraph.~~

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

~~Results of Operations and Known Trends or Future Events~~

We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities, those necessary to prepare for our initial public offering and identifying a target company for our initial business combination. We do not expect to generate any operating revenues until after completion of our initial business combination. We generate non-operating income in the form of interest income on cash and cash equivalents held in the trust account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended March 31, 2021, we had a net loss of $16,590,561. We incurred $2,724,770 of operating costs, consisting of public company operating expenses and costs related to preparing for the initial business combination. We had interest income of $20 of interest on the bank account and investment income of $4,432 from marketable securities held in trust account. For the three months ended March 31, 2021, the change in fair value of ~~warrants resulted in an increase in~~ the ~~liability~~consideration transferred over the fair value of ~~approximately $13,870,243.~~

~~Liquidity~~the underlying identifiable assets and ~~Capital Resources~~

As of March 31, 2021, we had cash outside the trust account of $730,435 available for working capital needs. All remaining cash held in the trust account are generally unavailable for the Company’s use, prior to an initial business combination, and is restricted for use eitherliabilities acquired in a business ~~combination~~combination. Goodwill and intangible assets deemed to have an indefinite life are not amortized, but instead are assessed for impairment annually in the fourth quarter as of October 1. Additionally, if an event or ~~to redeem common stock.~~

~~Through March 31, 2021,~~change in circumstances occurs that would more likely than not reduce the ~~Company’s liquidity needs were satisfied through receipt of $25,000 from the sale~~fair value of the ~~founder shares, advances from~~reporting unit below its carrying value, we would evaluate goodwill and other intangibles at that time.

In testing for goodwill impairment, we have the ~~sponsor in an aggregate amount~~option to first assess qualitative factors to determine whether the existence of ~~$141,881 and the remaining net proceeds from the initial public offering and the sale of private placement warrants.~~

~~The Company anticipates~~events or circumstances lead to a determination that it is more likely than not that the ~~$730,735 of cash held outside~~fair value of the ~~trust account as~~reporting unit is less than its carrying amount. If, after assessing the totality of ~~March 31, 2021, will be sufficient to allow the Company to operate for at least the next 12 months, assuming~~events and circumstances, we conclude that ~~a business combination~~it is not ~~consummated during~~more likely than not that ~~time. Until consummation~~the fair value of ~~our business combination,~~a reporting unit is less than its carrying amount, then performing the ~~Company will be using~~two-step impairment test is not required. If we conclude otherwise, we are required to perform the ~~funds~~two-step impairment test. The goodwill impairment test is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not ~~held in~~impaired. If the trust account, and any additional Working Capital Loans (as defined in Note 5 to our financial statements) from the initial stockholders, the Company’s officers and directors, or their respective affiliates (which is described in Note 5 to our financial statements), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination.

We also evaluate qualitative factors to determine whether or not its indefinite lived intangible assets have ~~insufficient funds available~~been impaired and then performs a quantitative test if required.

Intangible assets deemed to ~~operate its business prior~~have finite lives are amortized on a straight-line basis over their estimated useful lives, where the useful life is the period over which the asset is expected to ~~the business combination. Moreover, the Company will need~~contribute directly, or indirectly, to ~~raise additional capital through loans from its sponsor, officers, directors, or third parties. None~~our future cash flows.

Equity-Based Compensation

We measure and recognize expense for all equity-based awards based on their estimated fair values as of the ~~sponsor, officers or directors are under any obligation to advance funds to, or to invest in,~~grant date using the Company. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.

~~Derivative Warrant Liabilities~~

Black-Scholes option-pricing model. We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

We issued an aggregate of 15,333,333 warrants in connection with our initial public offering and private placement, which are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, we recognize the ~~warrants~~expense on a straight-line basis over the requisite service period, and forfeitures are accounted for as ~~liabilities at~~they occur. Equity-based compensation expense is included in cost of revenue, selling and marketing, enterprise technology and development, and general and administrative expense within the unaudited condensed consolidated statements of operations.

Equity-based compensation expense for options granted to nonemployees is measured based on the fair value of the options issued, which is more reliably determined than the value of goods and adjust the instruments to fair value at each reporting period. The liabilities are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations.services received. The fair value of ~~warrants~~the equity instruments issued is measured at the performance completion date.

Common Unit Valuations

Prior to the Business Combination, we granted common unit options at an exercise price equal to the fair value as determined by the Board of Managers on the date of grant. Given the absence of a public market for our common units, we were required to estimate the fair value of our common units at the time of each grant of an equity-based award. We utilized various valuation methodologies in ~~connection~~accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of our common units. These estimates and assumptions include numerous objective and subjective factors to determine the fair value of our common units at each grant date, including the following factors:



Relevant precedent transaction including our capital units;



the liquidation preferences, rights, preferences, and privileges of our preferred units relative to the common units;



our actual operating and financial performance;



current business conditions and projections;



our stage of development;



the likelihood and timing of achieving a liquidity event for the common units underlying the options, such as an initial public offering, given prevailing market conditions; any adjustment necessary to recognize a lack of marketability of the common units underlying the granted options;



the market performance of comparable publicly traded companies; and



U.S. and ~~private placement has~~global capital market conditions.

Subsequent to the Business Combination, the Board determines the fair value of the Common Stock based on the closing market price on or around the date of grant.

Income Taxes

Effective April 2, 2019, Old Beachbody made an election with the United States taxing authorities to change its entity status to a regarded C-Corporation from a regarded pass-through entity for income tax purposes. The consequences of this election were the

recognition of a tax provision on our net income earned after that date and the recording of a net deferred tax asset as of the election date of $16.6 million as a benefit for income taxes from operations. The accumulated deficit and other comprehensive loss as of the election date have been ~~estimated~~eliminated against common units and preferred units with the allocation determined in accordance with the terms of the Beachbody, LLC Operating Agreement.

We are subject to income taxes in the United States, Canada, and the United Kingdom. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities by using ~~Monte Carlo simulations at each measurement~~enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

In evaluating its ability to recover deferred tax assets, we consider all available positive and negative evidence, including historical and current operating results, ongoing tax planning, and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. Based on the level of losses, we have established a valuation allowance to reduce our net deferred tax assets to the amount that is more likely than not to be realized.

We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

We recognize interest and penalties related to unrecognized tax benefits in interest expense and other income, net, respectively, in the accompanying unaudited condensed consolidated statements of operations. Accrued interest and penalties are included in accrued expenses and other liabilities in the unaudited condensed consolidated balance sheets.

Recent Accounting Pronouncements

See Note 1, Organization, Business and Summary of Accounting Policies, of the notes to our unaudited condensed consolidated financial statements included elsewhere in this Report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.

Item 3. Quantitative and Qualitative Disclosures About Market ~~Risk~~Risk.

Quantitative and Qualitative Disclosure About Market Risk

~~Not required~~Foreign Currency Risk

We are exposed to foreign currency exchange risk related to transactions in currencies other than the U.S. Dollar, which is our functional currency. Our foreign subsidiaries, sales, certain inventory purchases and operating expenses expose us to foreign currency exchange risk. For the three and nine months ended September 30, 2021 approximately 10% of our revenue was in foreign currencies. For the three and nine months ended September 30, 2020 approximately 9% of our revenue was in foreign currencies. These sales were primarily denominated in Canadian dollars and British pounds.

We use derivative instruments to manage the effects of fluctuations in foreign currency exchange rates on our net cash flows. We primarily enter into option and forward contracts to hedge forecasted payments, typically for ~~smaller~~up to 12 months, for cost of revenue, selling and marketing expenses, general and administrative expenses and intercompany transactions not denominated in the local currencies of our foreign operations. We designate some of these instruments as cash flow hedges and records them at fair value as either assets or liabilities within the consolidated balance sheets. Some of these instruments are freestanding derivatives for which hedge accounting does not apply.

Changes in the fair value of cash flow hedges are recorded in accumulated other comprehensive income (loss) until the hedged forecasted transaction affects earnings. Deferred gains and losses associated with cash flow hedges of third-party payments are recognized in cost of revenue, selling and marketing or general and administrative expenses, as applicable, during the period when the hedged underlying transaction affects earnings. Changes in the fair value of certain derivatives for which hedge accounting does not apply are immediately recognized directly in earnings to cost of revenue.

A hypothetical 10% change in exchange rates, with the U.S. dollar as the functional and reporting ~~companies.~~currency, would not result in a material increase or decrease in cost of revenue and operating expenses.

The aggregate notional amount of foreign exchange derivative instruments at September 30, 2021 and December 31, 2020 was $32.6 million and $34.0 million, respectively.

Interest Rate Risk

We are primarily exposed to changes in short-term interest rates with respect to our cost of borrowing under our Credit Facility. We monitor our cost of borrowing under our facility, taking into account our funding requirements, and our expectations for short-term rates in the future. As of September 30, 2021, there were no outstanding borrowings under the Credit Facility, and a letter of credit was issued for $3.0 million. A hypothetical 10% change in the interest rate on our Credit Facility for all periods presented would not have a material impact on our financial statements.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition, and operating results.

Item 4. Controls and ~~Procedures~~Procedures.

Management’s Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our ~~principal executive officer~~Chief Executive Officer and ~~principal financial and accounting officer,~~Chief Financial Officer, we ~~conducted an evaluation of~~evaluated the effectiveness of our disclosure controls and procedures ~~as of the end of the fiscal quarter ended March 31, 2021, as such term is~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange ~~Act.~~Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2021. Based upon that evaluation, our ~~principal executive officer~~Chief Executive Officer and ~~principal financial and accounting officer~~Chief Financial Officer concluded that ~~solely due to the Company’s restatement of its financial statements to reclassify the Company’s warrants as described in the Form 10-K/A filed May 3, 2021, a material weakness existed and~~ our disclosure controls and procedures were ~~not~~ effective as of ~~March 31, 2021.~~

~~To remediate~~ the ~~material weakness pertaining to the presentation~~end of the ~~Company’s warrants as equity instead of liability, as disclosed in the Company’s Annual Report on Form 10-K, as amended on May 5, 2021, for the~~ period ~~ended December 31, 2021, the Company has reviewed its internal controls and enhanced the supervisory review of accounting procedures in~~covered by this ~~financial reporting area.~~report.

Changes in Internal Control ~~over~~Over Financial Reporting

~~During the most recently completed fiscal quarter ended March 31, 2021, there was~~There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, as specified above. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met.

PART ~~II -~~ II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are and, from time to time, we may become, involved in legal proceedings or be subject to claims arising in the ordinary course of our business. There are no material updates to our Form S-4 declared effective on May 27, 2021.

~~None.~~

Item 1A. Risk Factors.

There have been no material changes ~~from~~to the risk factors ~~previously~~as disclosed in Part II, Item 1A, Risk Factors in our ~~Amendment No. 1 to the annual report~~most recent Quarterly Report on Form ~~10-K/A filed with the SEC on May 3, 2021 and in our Form S-4, initially filed on February 16, 2021, as amended.~~10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

~~Use of Proceeds~~

On November 30, 2020, we consummated our initial public offering of 30,000,000 units, which included 3,900,000 units issued pursuant to the partial exercise by the underwriters of their over-allotment option. Each unit consists of one share of Class A common stock, par value $0.0001 per share, and one-third of one redeemable warrant, with each whole warrant entitling the holder thereof to purchase one share of Class A common stock for $11.50 per share. The units were sold at a price of $10.00 per unit, generating gross proceeds to us of $300,000,000.

Simultaneously with the closing of our initial public offering, we completed the private sale of an aggregate of 5,333,333 private placement warrants to Forest Road Acquisition Sponsor LLC, our sponsor, at a purchase price of $1.50 per private placement warrant, generating gross proceeds to us of $8,000,000. This issuance of private placement warrants was be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

A total of $300,000,000, comprised of $292,000,000 of the proceeds from our initial public offering (which amount includes $10,500,000 of the underwriters’ deferred discount) and $8,000,000 of the proceeds of the sale of the private placement warrants, was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee. The proceeds held in the trust account are invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations.

There has been no material change in the planned use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related to the Initial Public Offering.

~~Item 3. Defaults Upon Senior Securities.~~

~~None.~~

~~Item 4. Mine Safety Disclosures.~~

~~Not Applicable.~~

Item 5. Other Information.

~~None.~~In November 2021, the Company terminated the Credit Facility and will maintain a compensating cash balance for the $3.0 million letter of credit.

On November 11, 2021, at the request of Mr. Daikeler and Mr. Congdon, the Compensation Committee approved the reduction of base salaries of Mr. Daikeler and Mr. Congdon to $1 per year, effective November 15, 2021.
49

Item 6. ~~Exhibits~~Exhibits.

~~The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.~~

~~No.~~		~~Description of Exhibit~~
~~2.1~~ Exhibit Number		Incorporated by Reference				Filed or Furnished Herewith
~~2.1~~ Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed or Furnished Herewith

10.1	~~Agreement and Plan~~Offer of ~~Merger,~~Employment Letter, dated ~~as of February 9,~~September 27, 2021, by and ~~among the~~between The Beachbody Company ~~Beachbody Merger Sub, Myx Merger Sub, Beachbody~~ and ~~Myx. (1)~~Blake Bilstad					X
~~10.1~~ 31.1		~~Form of Subscription Agreement. (1)~~
~~10.2~~		~~Sponsor Agreement, dated as of February 9, 2021, by and among the Company, Forest Road Acquisition Sponsor LLC and Beachbody. (1)~~
~~10.3~~		~~Member Support Agreement, dated as of February 9, 2021, by and among the Company, Beachbody, and certain equityholders of Beachbody set forth therein. (1)~~
~~10.4~~		~~Myx Support Agreement, dated as of February 9, 2021, by and among the Company, Myx, Beachbody, and certain equityholders of Myx set forth therein. (1)~~
31.1*		Certification of ~~Principal~~Chief Executive Officer ~~Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted~~ Pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.					X
31.2*
31.2	Certification of ~~Principal~~Chief Financial Officer ~~Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted~~ Pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.					X
32.1**
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as ~~adopted~~Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~2002.					X
32.2**
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as ~~adopted~~Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~2002.					X
101.INS*
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.					X
101.CAL*
101.SCH	Inline XBRL Taxonomy Extension Schema Document.					X

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document~~Document.					X
101.SCH*		~~XBRL Taxonomy Extension Schema Document~~
101.DEF* 101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~Document.					X
101.LAB*
101.LAB	Inline XBRL Taxonomy Extension ~~Labels~~Label Linkbase ~~Document~~Document.					X
101.PRE*
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document~~Document.					X

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS).					X

*	~~Filed herewith.~~
**	~~Furnished herewith.~~

~~(1)~~

~~Incorporated by reference to the Company’s Form 8-K/A, filed with the SEC on February 16, 2021.~~

~~SIGNATURES~~

SIGNATURES

~~In accordance with~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~FOREST ROAD ACQUISITION CORP.~~

~~Date: May 17, 2021~~	~~By:~~	~~/s/ Keith L. Horn~~ The Beachbody Company
	~~Name:~~	~~Keith L. Horn~~
Date: November 15, 2021	~~Title:~~	By:	/s/ Carl Daikeler
			Carl Daikeler
			Chief Executive Officer ~~and Secretary~~
			(Principal Executive Officer)

Date: ~~May 17,~~November 15, 2021	~~By:~~	By:	/s/ ~~Salil Mehta~~Sue Collyns
	~~Name:~~	~~Salil Mehta~~	Sue Collyns
	~~Title:~~		President and Chief Financial Officer
			(Principal Financial ~~and Accounting~~ Officer)

~~Delaware~~		~~85-3222090~~
Delaware	85-3222090
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3301 Exposition Blvd, Santa Monica, California	90404
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading Symbol(s)	~~Trading Symbol(s)~~	Name of each exchange on which registered
~~Units, each consisting of one share of Class A Common Stock and one-third of one Redeemable Warrant~~		~~FRX.U~~	~~The New York Stock Exchange~~
Class A Common Stock, par value $0.0001 per share	BODY	~~FRX~~	The New York Stock Exchange
Redeemable ~~Warrants,~~warrants, each whole warrant exercisable for one ~~share of~~ Class A ~~Common Stock~~common stock at an exercise price of $11.50	BODY WS	~~FRXWS~~	The New York Stock Exchange

	~~☐ Large accelerated filer~~	~~☐ Accelerated filer~~
Large Accelerated Filer ☐	~~☒ Non-accelerated filer~~ Accelerated Filer ☐	Non-Accelerated Filer☒	Smaller ~~reporting company~~
Reporting Company ☐		☒ Emerging ~~growth company~~Growth Company ☒

	March 31, 2021 (Unaudited)			December 31, 2020
Assets
Current assets:
Cash	$	730,435		$	1,183,830
Prepaid expenses		254,931			294,383
Total current assets		985,366			1,478,213
Marketable Securities Held in Trust account		300,004,432			300,000,000
Total assets	$	300,989,798		$	301,478,213

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	2,675,348		$	409,896
Due to related party		20,600			—
Franchise tax payable		—			54,149
Total current liabilities		2,695,948			464,045
Warrant Liabilities		45,605,664			31,735,421
Deferred underwriters’ discount payable		10,500,000			10,500,000
Total liabilities		58,801,612			42,699,466

Commitments
Class A common stock subject to possible redemption, 23,718,818 and 25,377,874 shares at redemption value at March 31, 2021 and December 31, 2020, respectively		237,188,180			253,778,740

Stockholders’ equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding		—			—
Class A common stock, $0.0001 par value; 300,000,000 shares authorized; 6,281,182 shares and 4,622,126 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively (excluding 23,718,818 and 25,377,874 shares subject to possible redemption, respectively)		628			462
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 7,500,000 shares issued and outstanding at March 31, 2021 and December 31, 2020		750			750
Additional paid-in capital		29,506,028			12,915,634
Accumulated deficit		(24,507,400	)		(7,916,839	)
Total stockholders’ equity		5,000,006			5,000,007
Total liabilities and stockholders’ equity	$	300,989,798		$	301,478,213


(in thousands, except par value and share data)
	As of September 30,			As of December 31,
	2021			2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	199,839		$	56,827
Accounts receivable, net		1,378			855
Inventory, net		141,139			65,354
Prepaid expenses		14,014			8,650
Other current assets		48,556			37,364
Total current assets		404,926			169,050
Property and equipment, net		115,338			80,169
Content assets, net		34,786			19,437
Intangible assets, net		92,587			21,120
Goodwill		176,903			18,981
Right-of-use assets, net		27,434			33,272
Other assets		6,847			14,224
Total assets	$	858,821		$	356,253
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	48,298		$	28,981
Accrued expenses		89,844			79,955
Deferred revenue		126,894			97,504
Current portion of lease liabilities		9,977			10,371
Other current liabilities		2,656			3,106
Total current liabilities		277,669			219,917
Long-term lease liabilities, net		23,845			31,252
Deferred tax liabilities		6,415			3,729
Warrant liabilities		19,900			—
Other liabilities		5,362			2,097
Total liabilities		333,191			256,995
Commitments and contingencies (Note 14)
Stockholders' equity:
Preferred stock, $0.0001 par value; 100,000,000 shares authorized, NaN issued and outstanding as of September 30, 2021 and December 31, 2020		—			—
Common stock, $0.0001 par value, 1,900,000,000 shares authorized (1,600,000,000 Class A, 200,000,000 Class X and 100,000,000 Class C); 168,218,173 and 101,762,614 Class A shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively; 141,250,310 Class X shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively and 0 Class C shares issued and outstanding at September 30, 2021 and December 31, 2020		31			24
Additional paid-in capital		604,665			96,097
Accumulated other comprehensive income (loss)		15			(202	)
Retained earnings (accumulated deficit)		(79,081	)		3,339
Total stockholders’ equity		525,630			99,258
Total liabilities and stockholders' equity	$	858,821		$	356,253


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO Section 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		~~Page~~
~~PART 1 – FINANCIAL INFORMATION~~		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	1
	Unaudited Condensed ~~Balance Sheet (unaudited)~~Consolidated Statements of Operations	1 2
	Unaudited Condensed Consolidated Statements of Comprehensive Loss	3
	Unaudited Condensed ~~Statement~~Consolidated Statements of ~~Operations (unaudited)~~Stockholders’ Equity	2 4

	Unaudited Condensed ~~Statement of Changes in Stockholders’ Equity (unaudited)~~	3

	~~Condensed Statement~~Consolidated Statements of Cash Flows ~~(unaudited)~~	4 5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
	~~Notes to Condensed Financial Statements (unaudited)~~	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19 32

Item 3.	Quantitative and Qualitative Disclosures ~~about~~About Market Risk	20 47
Item 4.	Controls and Procedures	48
~~Item 4.~~ PART II.	~~Control and Procedures~~OTHER INFORMATION	20
Item 1.	Legal Proceedings	48
~~PART II – OTHER INFORMATION~~ Item 1A.	Risk Factors	48

~~Item 1.~~	~~Legal Proceedings~~	21

~~Item 1A.~~	~~Risk Factors~~	21

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21 48
Item 5.	Other Information	48
Item 3.6.	~~Defaults Upon Senior Securities~~Exhibits	21 50
Signatures
~~Item 4.~~	~~Mine Safety Disclosures~~	21

~~Item 5.~~	~~Other Information~~	21

~~Item 6.~~	~~Exhibits~~	22

~~SIGNATURES~~		23 51


Operating costs	$	2,724,770
Loss from operations		(2,724,770	)

Other Income (Expense)
Interest income		20
Change in fair value of warrant liabilities		(13,870,243	)
Interest income on marketable securities held in Trust account		4,432
Total other income (expense)		(13,865,791	)

Net loss	$	(16,590,561	)

Weighted average shares outstanding - Class A common stock		30,000,000
Basic and diluted net income per share of common stock – Class A common stock	$	0.00
Weighted average shares outstanding - Class B common stock		7,500,000
Basic and diluted net income per share of common stock – Class B common stock	$	(2.21	)


(in thousands, except per share data)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenue:
Digital	$	94,072		$	99,082		$	283,547		$	239,964
Connected fitness		5,927			0			5,937			0
Nutrition and other		108,053			152,397			367,895			399,335
Total revenue		208,052			251,479			657,379			639,299
Cost of revenue:
Digital		12,124			9,843			34,858			27,507
Connected fitness		10,261			0			10,417			0
Nutrition and other		50,682			61,082			164,679			151,654
Total cost of revenue		73,067			70,925			209,954			179,161
Gross profit		134,985			180,554			447,425			460,138
Operating expenses:
Selling and marketing		153,782			123,980			438,672			352,872
Enterprise technology and development		29,680			23,852			83,718			67,558
General and administrative		23,346			16,523			58,523			46,229
Restructuring gain		0			(1,677	)		0			(1,677	)
Total operating expenses		206,808			162,678			580,913			464,982
Operating income (loss)		(71,823	)		17,876			(133,488	)		(4,844	)
Other income (expense)
Change in fair value of warrant liabilities		30,274			0			35,664			0
Interest expense		(62	)		(89	)		(490	)		(432	)
Other income, net		202			113			3,155			555
Income (loss) before income taxes		(41,409	)		17,900			(95,159	)		(4,721	)
Income tax benefit (provision)		1,487			(4,129	)		12,739			161
Net income (loss)	$	(39,922	)	$	13,771		$	(82,420	)	$	(4,560	)
Net income (loss) per common share, basic	$	(0.13	)	$	0.06		$	(0.31	)	$	(0.02	)
Net income (loss) per common share, diluted	$	(0.13	)	$	0.05		$	(0.31	)	$	(0.02	)
Weighted-average common shares outstanding, basic		304,599			238,831			265,117			238,374
Weighted-average common shares outstanding, diluted		304,599			252,085			265,117			238,374

	Common Stock								Additional					Total
	Class A				Class B				Paid-In		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance as of December 31, 2020		4,622,126	$	462		7,500,000	$	750	$	12,915,634	$	(7,916,839	)	$	5,000,007
Change in Class A common stock subject to possible redemption		1,659,056		166		—		—		16,590,394		—			16,590,560
Net loss		—		—		—		—		—		(16,590,561	)		(16,590,561	)
Balance as of March 31, 2021		6,281,182	$	628		7,500,000	$	750	$	29,506,028	$	(24,507,400	)	$	5,000,006

Cash Flows from Operating Activities:
Net loss	$	(16,509,561	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of warrant liabilities		13,870,243
Interest income on trust account		(4,432	)
Changes in current assets and current liabilities:
Prepaid assets		39,452
Accounts payable and accrued expenses		2,265,452
Due to related party		20,600
Franchise tax payable		(54,149	)
Net cash used in operating activities		(453,395	)

Net Change in Cash		(453,395	)
Cash - Beginning		1,183,830
Cash - Ending	$	730,435

Supplemental Disclosure of Non-cash Financing Activities:
Change in value of Class A common stock subject to possible redemption	$	(16,590,560	)


(in thousands, except share data)
	Redeemable
	Convertible													Accumulated			Retained
	Series A										Additional			Other			Earnings			Total
	Preferred			Common			Common Stock				Paid-In			Comprehensive			(Accumulated			Stockholders'
	Units			Units			Shares		Amount		Capital			Income (Loss)			Deficit)			Equity
Balances at December 31, 2019, as previously reported	$	98,245		$	(35,626	)		—	$	—	$	—		$	12		$	24,771		$	(10,843	)
Retroactive application of recapitalization		(98,245	)		35,626			238,142,972		24		62,595			—			—			98,245
Balance at December 31, 2019, after effect of reverse acquisition		—			—			238,142,972		24		62,595			12			24,771			87,402
Net loss		—			—			—		—		—			—			(8,328	)		(8,328	)
Other comprehensive income		—			—			—		—		—			60			—			60
Equity-based compensation		—			—			—		—		895			—			—			895
Balances at March 31, 2020	$	—		$	—			238,142,972	$	24	$	63,490		$	72		$	16,443		$	80,029
Net loss		—			—			—		—		—			—			(10,003	)		(10,003	)
Other comprehensive loss		—			—			—		—		—			(241	)		—			(241	)
Equity-based compensation		—			—			—		—		1,013			—			—			1,013
Balances at June 30, 2020	$	—		$	—			238,142,972	$	24	$	64,503		$	(169	)	$	6,440		$	70,798
Net income		—			—			—		—		—			—			13,771			13,771
Other comprehensive loss		—			—			—		—		—			(79	)		—			(79	)
Tax asset contribution adjustment		—			—			—		—		(135	)		—			—			(135	)
Common shared issued in connection with acquisition		—			—			4,869,973		—		27,889			—			—			27,889
Equity-based compensation		—			—			—		—		1,261			—			—			1,261
Balances at September 30, 2020	$	—		$	—			243,012,945	$	24	$	93,518		$	(248	)	$	20,211		$	113,505

	March 31,		Quoted Prices In Active Markets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	2021		(Level 1)		(Level 2)		(Level 3)
Description
Warrant Liability – Public Warrants	$	26,900,000	$	26,900,000	$	-	$	-
Warrant Liability – Private Warrants	$	18,705,664	$	-	$	-	$	18,705,664
	$	45,605,664	$	26,900,000	$	-	$	18,705,664

	As of March 31, 2020			As of December 31, 2020
Stock price	$	10.12		$	10.50
Strike price	$	11.50		$	11.50
Term (in years)		5.0			5.0
Volatility		43.3	%		31.3	%
Risk-free rate		0.92	%		0.44	%
Dividend yield		0.0	%		0.0	%


		Three Months Ended September 30,						Nine Months Ended September 30,
	Financial Statement Line Item	2021			2020			2021			2020
Unrealized (losses) gains	Other comprehensive income (loss)	$	(17	)	$	(258	)	$	(187	)	$	(12	)
(Losses) gains reclassified from accumulated other comprehensive	Cost of revenue		(56	)		(27	)		(194	)		(14	)
income (loss) into net income (loss)	General and administrative		(86	)		(51	)		(287	)		(17	)
Total amounts reclassified			(142	)		(78	)		(481	)		(31	)
(Losses) gains recognized derivatives not designated as hedging instruments	Cost of revenue		(6	)		(69	)		(47	)		(38	)


	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
	(in thousands)
Operating lease obligations	$	36,857	$	1,278	$	22,963	$	12,616	$	—
Finance lease obligations		327		40		284		3		—
Noncancelable service and inventory purchase obligations		79,544		58,646		18,398		2,500		—
Total	$	116,728	$	59,964	$	41,645	$	15,119	$	—