~~☒ 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,” 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 ☐☒

~~As of May 17, 2021, there~~There were ~~30,000,000~~169,506,288 shares of the registrant’s Class A ~~common stock,~~Common Stock, par value $0.0001 per share, and ~~7,500,000~~141,250,310 shares of the registrant’s Class ~~B common stock,~~X Common Stock, par value $0.0001 per share, outstanding as of ~~the registrant issued and outstanding.~~May 5, 2022.

~~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.

Forest Road Acquisition Corp. (the “Company” or “Forest Road”) was incorporated in Delaware on September 24, 2020. The Company was formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). 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, 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 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 of Forest Road, The Beachbody Company, ~~Group, LLC,~~Inc.

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

3. 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):


	March 31, 2022
	Level 1		Level 2		Level 3

Assets
Derivative assets	$	—	$	109	$	—
Total assets	$	—	$	109	$	—

Liabilities
Public warrants	$	2,650	$	—	$	—
Private placement warrants		—		—		1,920
Total liabilities	$	2,650	$	—	$	1,920

	December 31, 2021
	Level 1		Level 2		Level 3

Assets
Derivative assets	$	—	$	314	$	—
Total assets	$	—	$	314	$	—

Liabilities
Public warrants	$	2,701	$	—	$	—
Private placement warrants		—		—		2,133
Total liabilities	$	2,701	$	—	$	2,133

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. 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 are classified within Level 3 of the fair value hierarchy because their fair values are based on significant inputs that are unobservable in the market.

Private Placement Warrants

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 Class A Common Stock. Volatility was based on the implied volatility derived from the ~~Trust Account~~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 ~~pay its tax obligations.~~

~~Concentration~~the warrants’ expected life. The significant unobservable input used in the fair value measurement of ~~Credit Risk~~

~~Financial instruments that potentially subject~~ the ~~Company to concentrations of credit risk consist of a cash account~~private placement warrants is the implied volatility. Significant changes in the implied volatility would result in a ~~financial institution, which, at times, may exceed~~significantly higher or lower fair value measurement, respectively.

The following table presents significant assumptions utilized in the ~~Federal Depository Insurance Corporation limit~~valuation of ~~$250,000. At~~the private placement warrants on March 31, ~~2021~~2022 and December 31, ~~2020,~~2021:



	March 31, 2022			December 31, 2021

Risk-free rate		2.4	%		1.2	%
Dividend yield rate		—			—
Volatility		65.0	%		65.0	%
Contractual term (in years)		4.24			4.49
Exercise price	$	11.50		$	11.50

The following table presents changes in the ~~Company has not experienced losses on this account 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 and are measured at fair ~~value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control~~value of the holder or subject to redemption upon the occurrence 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, 2021 and December 31, 2020, 23,718,818 and 25,377,874 shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity section 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 not considered the effect of warrants sold in the IPO and private placement to purchase 15,333,333 of Class A common stock in the calculation of diluted income (loss) per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.

The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” The Company’s statements of operations include a presentation of income (loss) per share for common stock subject to possible redemption 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 $4,432Private Placement Warrants 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.2022:


	Three Months Ended March 31,
	2022
Balance, beginning of period	$	2,133
Change in fair value		(213	)
Balance, end of period	$	1,920

~~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 of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.

~~Income Taxes~~

The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying 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 to 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.

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 does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.

~~Note 3 — Initial 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 whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $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”). 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,~~2022, the change in the fair value of private placement warrants resulted from the change in price of the Company’s Class A Common Stock, remaining contractual term, and risk-free rate. 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 and in the unaudited condensed consolidated balance sheets as other liabilities.

4. Inventory, Net

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


	March 31, 2022		December 31, 2021

Raw materials and work in process	$	22,809	$	24,436
Finished goods		77,184		108,294
Total inventory, net	$	99,993	$	132,730

Adjustments to the carrying value of excess inventory and inventory on hand to net realizable value were $16.9 million and $2.0 million during the three months ended March 31, 2022 and 2021, respectively. These adjustments are included in the unaudited condensed consolidated statements of operations as a component of connected fitness cost of revenue and nutrition and other cost of revenue.

5. Other Current Assets

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


	March 31, 2022		December 31, 2021
Deferred coach costs	$	33,523	$	30,928
Deposits		3,617		8,915
Accounts receivable, net		1,296		1,225
Other		2,539		2,659
Total other current assets	$	40,975	$	43,727

6. Property and Equipment, Net

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



	March 31, 2022			December 31, 2021

Computer software and web development	$	252,276		$	231,943
Computer equipment		23,552			23,691
Buildings		5,158			5,158
Leasehold improvements		4,600			5,157
Furniture, fixtures and equipment		2,164			2,442
Computer software and web development projects in-process		10,225			26,490
Property and equipment, gross		297,975			294,881
Less: Accumulated depreciation		(194,997	)		(181,783	)
Total property and equipment, net	$	102,978		$	113,098

All of the Company’s property and equipment is located in the U.S. 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 March 31,
	2022		2021

Cost of revenue	$	9,081	$	3,738
Selling and marketing		279		451
Enterprise technology and development		7,449		7,311
General and administrative		192		646
Total depreciation	$	17,001	$	12,146

7. Acquisition

On June 25, 2021, the Company ~~has paid $30,000~~acquired 100% of ~~administrative fees.~~the equity of Myx pursuant to the Business Combination Agreement. The Company recognized the acquired assets and assumed liabilities of Myx based on estimates of their acquisition date fair values. There were 0 adjustments to the purchase price allocations during the three months ended March 31, 2022.

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, 2021. The unaudited 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 period presented, nor should it be taken as indication of the Company’s future consolidated results of operations.


(in thousands)	Three Months Ended
	March 31, 2021
Pro forma combined:
Revenue	$	243,257
Net loss		(42,385	)

~~Related Party Loans~~

8. Accrued Expenses

Accrued expenses consist of the followings (in thousands):


	March 31, 2022		December 31, 2021
Employee compensation and benefits	$	20,956	$	8,996
Coach costs		13,889		19,168
Inventory, shipping and fulfillment		12,891		14,360
Information technology		5,896		10,150
Sales and other taxes		5,013		5,097
Advertising		1,867		4,033
Customer service expenses		1,161		1,773
Other accrued expenses		8,224		10,948
Total accrued expenses	$	69,897	$	74,525

~~In addition,~~

9. Commitments and Contingencies

Inventory Purchase and Service Agreements

The Company has noncancelable inventory purchase and 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 noncancelable service and inventory purchase agreements for the periods succeeding March 31, 2022 are as follows (in thousands):


Nine months ending December 31, 2022	$	35,696
Year ending December 31, 2023		2,693
Year ending December 31, 2024		1,260
Year ending December 31, 2025		1,250
	$	40,899

The preceding table excludes royalty payments to fitness trainers, talent, and others that are based on future sales as such amounts cannot be reasonably estimated.

Contingencies

The Company is subject to litigation from time to time in ~~order to finance transaction costs in connection~~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 ~~Business Combination,~~loss has occurred and the ~~Sponsor may, but~~amount of the loss can be reasonable estimated. Although it is not ~~obligated~~possible to ~~loan~~predict how litigation and other claims will be resolved, 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~~believe that any currently identified claims or litigation matters will have a ~~portion~~material adverse effect on its consolidated financial position or results 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. operations.

10. Stockholders’ Equity

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~~2022, 2,000,000,000 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. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 12 months from the closing of the IPO and (b) 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 to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue any shares of Class A common stock upon exercise of a warrant unless the share of Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of 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, of the Class A common stock issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain 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.

~~FOREST ROAD ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

~~Redemption of warrants for cash. Once the warrants become exercisable, the Company may call 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.

If and when the warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

If the Company has not completed the initial Business Combination within the Combination Period and the Company liquidates the funds held 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 of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.~~

~~Note 8 — Stockholder’s Equity~~

~~Preferred Stock~~ ~~— The Company is authorized to issue a total of 1,000,000 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.

Accumulated Other Comprehensive Income (Loss)

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


	Unrealized Gain (Loss) on Derivatives			Foreign Currency Translation Adjustment		Total

Balances at December 31, 2020	$	(246	)	$	44	$	(202	)
Other comprehensive loss before reclassifications		(92	)		42		(50	)
Amounts reclassified from accumulated other comprehensive income (loss)		167			—		167
Tax effect		(17	)		—		(17	)
Balances at March 31, 2021	$	(188	)	$	86	$	(102	)


Balances at December 31, 2021	$	(32	)	$	11	$	(21	)
Other comprehensive loss before reclassifications		(162	)		4		(158	)
Amounts reclassified from accumulated other comprehensive income (loss)		69			—		69
Tax effect		(23	)		—		(23	)
Balances at March 31, 2022	$	(148	)	$	15	$	(133	)

11. Equity-Based Compensation

Equity Compensation Plans

A summary of the option activity under the Company's equity compensation plans is ~~authorized to issue a total of 300,000,000 shares of Class A common stock at par~~as follows:


	Options Outstanding
	Number of Options			Weighted-Average Exercise Price (per option)		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021		41,753,042		$	3.86		5.92	$	11,379
Granted		616,445			1.86
Exercised		(1,132,508	)		1.70
Forfeited		(2,562,902	)		5.86
Outstanding at March 31, 2022		38,674,077		$	3.76		5.52	$	8,992
Exercisable at March 31, 2022		23,452,472		$	2.22		3.56	$	8,432

The intrinsic value of $0.0001 each. At March 31, 2021 and December 31, 2020, there were 6,281,182 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 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 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 convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with a Business Combination, the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders), including the total number 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 the Company in connection with or in relation to the consummation of a Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable 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.

~~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-tier fair value hierarchy, which prioritizes 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.~~

The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at March 31, 2021 and indicates the fair value hierarchy 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. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. ~~As of March 31, 2021, the public warrants were valued using the actual closing trading price on March 31, 2021.~~

~~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~~exercised was $0.5 million for the three months ended March 31, 2022.

A summary of RSU activity is as follows:


	RSUs Outstanding
	Number of RSUs			Weighted-Average Fair Value (per RSU)
Outstanding at December 31, 2021		573,678		$	5.97
Granted		—			—
Forfeited		(251,082	)		4.62
Outstanding at March 31, 2022		322,596		$	7.03

On January 1, 2022, the number of shares available for issuance under the 2021 ~~other than~~Incentive Award Plan (the “2021 Plan”) increased by 15,479,188 pursuant to the ~~transfer~~terms of the ~~Public Warrants from Level 3 to Level 1.~~2021 Plan. As of March 31, 2022, 36,919,023 shares of Class A Common Stock were available for issuance under the 2021 Plan.

Equity-Based Compensation Expense

The fair value of each award as of the date of grant is estimated using a Black-Scholes option-pricing model. The following table ~~provides quantitative information regarding Level 3~~summarizes the weighted-average assumptions used to determine the fair value ~~measurements:~~of option grants:

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 March 31,
	2022			2021
Risk-free rate		1.7	%		0.7	%
Dividend yield rate		0			0
Volatility		52.3	%		53.9	%
Expected term (in years)		6.20			6.20
Weighted-average grant date fair value	$	0.95		$	16.50

~~Note 10 —~~15

Equity-based compensation expense for the three months ended March 31, 2022 and 2021 was as follows (in thousands):


	Three Months Ended March 31,
	2022		2021

Cost of revenue	$	335	$	91
Selling and marketing		1,639		1,717
Enterprise technology and development		927		306
General and administrative		1,663		459
Total equity-based compensation	$	4,564	$	2,573

As of March 31, 2022, the total unrecognized equity-based compensation expense was $50.7 million, which will be recognized over a weighted-average remaining period of 2.95 years.

12. Derivative Financial Instruments

As of March 31, 2022 and December 31, 2021, the notional amount of the Company’s outstanding foreign exchange options was $21.5 million and $30.4 million, respectively. There were 0 outstanding forward contracts as of March 31, 2022 and December 31, 2021.

The following table shows the pre-tax effects of the Company’s derivative instruments on its unaudited condensed consolidated statements of operations (in thousands):


		Three Months Ended March 31,
	Financial Statement Line Item	2022			2021

Unrealized losses	Other comprehensive income (loss)	$	(162	)	$	(92	)

Losses reclassified from accumulated other	Cost of revenue	$	(30	)	$	(73	)
comprehensive loss into net loss	General and administrative		(39	)		(94	)
Total amounts reclassified		$	(69	)	$	(167	)

Losses recognized on derivatives not designated as hedging instruments	Cost of revenue	$	(51	)	$	(21	)

13. Strategic Realignment

In January 2022, the Company commenced a strategic alignment initiative to consolidate its streaming fitness offerings into a single Beachbody platform. The Company recognized restructuring costs of $7.2 million during the three months ended March 31, 2022, comprised primarily of termination benefits related to headcount reductions, of which $4.6 million is included in accrued expenses in the unaudited condensed consolidated balance sheets. In accordance with GAAP, employee termination benefits were recognized at the date employees were notified and post-employment benefits were accrued as the obligation was probable and estimable. Benefits for employees who provide future service greater than 60 days from the date of notification will be recognized ratably over the future service period.

The following table summarizes the Company’s restructuring costs activity (in thousands):


	Restructuring Charges		Payments / Utilizations			Liability at March 31, 2022
Employee-related costs	$	7,223	$	(2,605	)	$	4,618
Total costs	$	7,223	$	(2,605	)	$	4,618

During the three months ended March 31, 2022, the Company determined that the useful life of certain computer software and web development assets and content assets would end upon the completion of its platform consolidation. The Company accelerated depreciation of these computer software and web development assets and recorded $2.2 million, or $0.01 per share, of additional depreciation expense as a component of digital cost of revenue, and nutrition and other cost of revenue during the three months ended March 31, 2022. The Company also accelerated amortization of these content assets and recorded $1.1 million, or $0.00 per share, of additional amortization as a component of digital cost of revenue during the three months ended March 31, 2022.

14. Income Taxes

The Company recorded a benefit for income taxes of $0.7 million for the three months ended March 31, 2022 and $0.4 million for the three months ended March 31, 2021. The effective benefit tax rate was 1.0% for the three months ended March 31, 2022 and 1.3% for the three months ended March 31, 2021.

The tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items arising in that quarter. The Company’s effective tax rate differs from the U.S. statutory tax rate in the three months ended March 31, 2022 primarily due to changes in valuation allowances on deferred tax assets as it is more likely than not that some or all of the Company’s deferred tax assets will not be realized.

The Company evaluates its tax positions on a quarterly basis and revises its estimate accordingly. There are no material changes to the Company’s uncertain tax positions, interest, or penalties during the three months ended March 31, 2022.

15. Earnings (Loss) per Share

The computation of loss per share of Class A and Class X Common Stock is as follows (in thousands, except share and per share information):


	Three Months Ended March 31,
	2022			2021

Numerator:
Net loss	$	(73,533	)	$	(30,058	)

Denominator:
Weighted-average common shares outstanding, basic and diluted		306,362,730			243,012,924

Net loss per common share, basic and diluted	$	(0.24	)	$	(0.12	)

Basic net loss per common share is the same as dilutive net loss per common share for each of the three months ended March 31, 2022 and 2021as the inclusion of all potential common shares would have been antidilutive.

The following table presents the common shares that are excluded from the computation of diluted net loss per common share as of the periods presented because including them would have been antidilutive:


	Three Months Ended March 31,
	2022		2021

Options		38,674,077		34,635,709
RSUs		322,596		—
Compensation warrants		3,980,656		3,980,656
Public and private placement warrants		15,333,333		—
Preferred units		—		33,828,033
Earn-out shares		3,750,000		—
		62,060,662		72,444,398

16. Segment Information

The Company applies ASC 280, Segment Reporting, in determining reportable segments for financial statement disclosure. Segment information is presented based on the financial information the Company uses to manage the business which is organized around the Company's digital platforms. The Company has 2 operating segments, Beachbody and Other, and 1 reportable segment, Beachbody. The Beachbody segment primarily derives revenue from BOD and BODi digital subscriptions, nutritional products, connected fitness equipment (bikes and accessories), and other fitness-related products. Other derives revenue primarily from Openfit digital subscriptions, nutritional products, and connected fitness equipment. The Company uses contribution as a measure of profit or loss, defined as revenue less directly attributable cost of revenue and certain selling and marketing expenses including media, Coach and social influencer compensation, royalties, and third-party sales commissions. Contribution does not include allocated costs as described below as the CODM does not include these costs in assessing performance. There are no inter-segment transactions. The Company manages its assets on a consolidated basis, and, as such, does not report asset information by segment.

Summary information by segment is as follows (in thousands):


	Segment
	Beachbody		Other			Consolidated

Three Months Ended March 31, 2022
Revenue	$	186,107	$	12,815		$	198,922
Contribution		28,091		(1,376	)		26,715

Three Months Ended March 31, 2021
Revenue	$	221,750	$	4,469		$	226,219
Contribution		46,475		(5,135	)		41,340

Reconciliation of consolidated contribution to loss before income taxes (in thousands):


	Three Months Ended March 31,
	2022			2021

Consolidated contribution	$	26,715		$	41,340
Amounts not directly related to segments:
Cost of revenue (1)		13,823			7,843
Selling and marketing (2)		26,319			20,091
Enterprise technology and development		33,697			27,089
General and administrative		20,073			17,946
Restructuring		7,223			—
Change in fair value of warrant liabilities		(264	)		—
Interest expense		19			123
Other expense (income), net		64			(1,299	)
Loss before income taxes	$	(74,239	)	$	(30,453	)

(1)

Cost of revenue not directly related to segments includes certain allocated costs related to management, facilities, and personnel-related expenses associated with quality assurance and supply chain. Depreciation of certain software and production equipment and amortization of formulae and technology-based intangible assets are also included in this line.

(2)

Selling and marketing not directly related to segments includes indirect selling and marketing expenses and certain allocated personnel-related expenses for employees and consultants. Depreciation of certain software and amortization of contract-based intangible assets and an acquired trade name are also included in this line.

17. 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.

~~References to the “Company,” “us,” “our” or “we” refer Forest Road Acquisition Corp.~~ The following discussion and analysis ~~of our financial condition and results of operations~~ should be read in conjunction with our ~~audited~~ financial statements and related notes included ~~herein.~~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.

~~Cautionary Note Regarding~~ Forward-Looking Statements

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“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.

~~All~~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 ~~than~~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 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, and enterprise technology and development 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 liquidity and ability to raise financing in the future;

•

our success in retaining or 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;

•

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 ~~historical fact~~this Report or to reflect the occurrence of unanticipated events.

Overview

Beachbody is a leading subscription health and wellness company. We focus primarily on digital content, supplements, connected fitness, and consumer health and wellness. Our goal is to continue to provide holistic health and wellness content and subscription-based solutions. We are the creator of some of the world’s most popular fitness programs, including P90X, Insanity, and 21 Day Fix, which transformed the at-home fitness market and disrupted the global fitness industry by making it accessible for people to get results—anytime, anywhere. Our comprehensive nutrition-first programs, Portion Fix and 2B Mindset, teach healthy eating habits and promote healthy, sustainable weight loss. These fitness and nutrition programs are available through our Beachbody On Demand and Beachbody On Demand Interactive streaming services, and in January 2022, we began the process of consolidating our Openfit streaming fitness offerings onto a single Beachbody platform.

We offer nutritional products such as Shakeology nutrition shakes, BEACHBAR snack bars, and Ladder premium supplements as well a professional-grade stationary cycle with a 360-degree touch screen tablet and connected fitness software. Leveraging our history of fitness content creation, nutrition innovation, and our network of micro-influencers, whom we call Coaches, we plan to continue market penetration into connected fitness to reach a wider health, wellness and fitness audience.

Historically, our revenue has been generated primarily through our network of micro-influencers, social media marketing channels, and direct response advertising. Components of revenue include recurring digital subscription revenue, connected fitness revenue, and revenue from the sale of nutritional and other products. In addition to selling individual products on a one-time basis, we bundle digital and nutritional products together at discounted prices.

For the three months ended March 31, 2022, as compared to the three months ended March 31, 2021:

•

Total revenue was $198.9 million, a 12% decrease;

•

Digital revenue was $81.7 million, a 14% decrease;

•

Connected fitness revenue was $19.5 million;

•

Nutrition and other revenue was $97.7 million, a 25% decrease;

•

Net loss was $73.5 million, compared to net loss of $30.1 million; and

•

Adjusted EBITDA was ($19.1) million, compared to ($11.7) million.

See “Non-GAAP Information” below for information regarding our use of Adjusted EBITDA and a reconciliation of net loss to Adjusted EBITDA.

Key Operational and Business Metrics

We use the following key operational and business metrics to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions.


	March 31, 2022		March 31, 2021

Digital Subscriptions (millions)		2.46		2.74
Nutritional Subscriptions (millions)		0.30		0.42


	Three Months Ended March 31,
	2022			2021

Average Digital Retention		95.6	%		95.8	%
Total Streams (millions)		38.2			56.0
DAU/MAU		31.6	%		35.1	%

Revenue (millions)	$	198.9		$	226.2
Gross profit (millions)	$	93.0		$	158.1
Gross margin		47	%		70	%

Net loss (millions)	$	(73.5	)	$	(30.1	)
Adjusted EBITDA (millions)	$	(19.1	)	$	(11.7	)

Please see “Non-GAAP Information” below 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 BOD, BODi, and Openfit subscriptions. Digital subscriptions include paid and free-to-pay subscriptions, with free-to-pay subscriptions representing approximately 1% of total digital subscriptions on average. Digital subscriptions are inclusive of all billing plans, currently for annual, semi-annual, quarterly and monthly billing intervals.

Nutritional Subscriptions

Nutritional subscriptions include monthly subscriptions of nutritional products such as Shakeology, Beachbody Performance, BEACHBAR, Bevvy and Ladder Supplements. We also package and bundle the content experience of digital subscriptions with nutritional subscriptions to optimize customer results.

Average Digital Retention

We use month-over-month digital subscription retention, which we define as the average rate at which a subscription renews for a new billing cycle, to measure customer retention.

Total Streams

We use 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 any of our digital platforms, a program must be viewed for a minimum of 25% of the total running time.

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.

Non-GAAP Information

We use Adjusted EBITDA, which is a non-GAAP performance measure, 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 tax provision (benefit), 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, and net realizable value adjustment) 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 loss, the closest GAAP measure, for the periods indicated:


	Three Months Ended March 31,
(in thousands)	2022			2021

Net loss	$	(73,533	)	$	(30,058	)
Adjusted for:
Depreciation and amortization		21,587			13,726
Amortization of capitalized cloud computing implementation costs		168			168
Amortization of content assets		6,164			2,817
Interest expense		19			123
Income tax benefit		(706	)		(395	)
Equity-based compensation		4,564			2,573
Inventory net realizable value adjustment (1)		14,934			—
Transaction costs		2			633
Restructuring and platform consolidation costs (2)		7,887			—
Change in fair value of warrant liabilities		(264	)		—
Non-operating (3)		70			(1,331	)
Adjusted EBITDA	$	(19,108	)	$	(11,744	)

(1)

Represents a non-cash expense to reduce the carrying value of our connected fitness inventory and related future commitments. This adjustment is included because of its unusual magnitude due to disruptions in the connected fitness market.

(2)

Includes restructuring expense and non-recurring personnel costs associated with the consolidation of our digital platforms.

(3)

Includes interest income, and during the three months ended March 31, 2021, also includes the gain on investment on the Myx convertible instrument.

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 Note 16, Segment Information, 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 March 31,
	2022			2021

Revenue:
Digital	$	81,745		$	95,150
Connected fitness		19,513			—
Nutrition and other		97,664			131,069
Total revenue		198,922			226,219
Cost of revenue:
Digital		16,425			11,122
Connected fitness		44,706			—
Nutrition and other		44,774			56,995
Total cost of revenue		105,905			68,117
Gross profit		93,017			158,102
Operating expenses:
Selling and marketing		106,444			144,696
Enterprise technology and development		33,697			27,089
General and administrative		20,073			17,946
Restructuring		7,223			—
Total operating expenses		167,437			189,731
Operating loss		(74,420	)		(31,629	)
Other income (expense)
Change in fair value of warrant liabilities		264			—
Interest expense		(19	)		(123	)
Other income (expense), net		(64	)		1,299
Loss before income taxes		(74,239	)		(30,453	)
Income tax benefit		706			395
Net loss	$	(73,533	)	$	(30,058	)

Revenue

Revenue includes digital subscriptions, nutritional supplement subscriptions, one-time nutritional sales, connected fitness products, our Coach business management online platform, preferred customer program memberships, and other fitness-related products. Digital subscription revenue is recognized ratably over the subscription period of up to 12 months. We often sell 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 allocate 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.


	Three Months Ended March 31,
	2022		2021		$ Change			% Change
	(dollars in thousands)
Revenue
Digital	$	81,745	$	95,150	$	(13,405	)		(14	%)
Connected fitness		19,513		—		19,513		NM
Nutrition and other		97,664		131,069		(33,405	)		(25	%)
Total revenue	$	198,922	$	226,219	$	(27,297	)		(12	%)

NM = not meaningful

The decrease in digital revenue for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, was primarily due to $8.7 million of revenue associated with our preferred customer membership program, which is included in nutrition and other revenue since its Q4 2021 launch. Previously, these customers were classified as Coaches and paid for access to our proprietary Coach business management online platform, which was included in digital revenue. The change in digital revenue was also due to a $3.0 million decrease in revenue generated from our Coach business management platform as a result of fewer coaches and a $1.6 million decrease in VIP early access revenue, where subscribers pay for advanced access to programs not yet released to the BOD library.

There was no connected fitness revenue for periods prior to the acquisition of Myx in June 2021.

The decrease in nutrition and other revenue for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, was primarily due to $33.8 million decrease in revenue from nutritional products and a $4.5 million decrease in associated shipping revenue as we ended Q1 2022 with 29% fewer nutritional subscriptions compared to Q1 2021. These decreases were partially offset by the additional $8.7 million of revenue associated with our preferred customer membership program, which launched in Q4 2021.

Cost of Revenue

Digital Cost of Revenue

Digital cost of revenue includes costs associated with digital content creation including amortization and revision of content assets, depreciation of streaming platforms, digital streaming costs, and amortization of acquired digital platform intangible assets. It also includes customer service costs, payment 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 bike and tablet hardware costs, duties and other applicable importing costs, shipping and handling costs, warehousing and logistics costs, costs associated with service calls and repairs of products under 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 payment 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 March 31,
	2022			2021			$ Change			% Change
	(dollars in thousands)
Cost of revenue
Digital	$	16,425		$	11,122		$	5,303			48	%
Connected fitness		44,706			—			44,706		NM
Nutrition and other		44,774			56,995			(12,221	)		(21	%)
Total cost of revenue	$	105,905		$	68,117		$	37,788			55	%

Gross profit
Digital	$	65,320		$	84,028		$	(18,708	)		(22	%)
Connected fitness		(25,193	)		—			(25,193	)	NM
Nutrition and other		52,890			74,074			(21,184	)		(29	%)
Total gross profit	$	93,017		$	158,102		$	(65,085	)		(41	%)

Gross margin
Digital		80	%		88	%
Connected fitness		(129	%)	NM
Nutrition and other		54	%		57	%

The increase in digital cost of revenue for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, was primarily driven by a $3.3 million increase in the amortization of content assets related to BODi which launched in the fourth quarter of 2021 and content acquired from Myx in June 2021. The change in digital cost of revenue was also due to $3.2 million increase in depreciation expense primarily related to a change in useful life of certain assets in connection with our digital platform consolidation. These increases were partially offset by a decrease in variable costs of digital revenue as a result of the decrease in digital revenue. The decrease in digital gross margin for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily the result of the deleveraging of higher fixed content assets amortization and depreciation on digital revenue.

There was no connected fitness cost of revenue prior to the acquisition of Myx in June 2021. The negative connected fitness gross margin for the three months ended March 31, 2022 was primarily due to a $14.9 million net realizable value adjustment to inventory, higher product, freight, and shipping costs due to supply chain surcharges and constraints, and lower pricing in line with a highly-competitive connected fitness market. Despite the market pressure and cost inflation we have experienced and which we expect to persist in the near-term, we do not expect the negative connected fitness gross margin to continue in the long-term.

The decrease in nutrition and other cost of revenue for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, was primarily due to $11.5 million decrease in product, freight, and shipping expense as the result of the decrease in nutrition and other revenue and a $2.5 million decrease in customer service as nutrition and other comprises less of our revenue. These were partially offset by a $2.1 million increase in depreciation expense. Nutrition and other gross margin decreased primarily as a result of the deleveraging of fixed depreciation expense.

Operating Expenses

Selling and Marketing

Selling and marketing expenses primarily include the cost of Coach compensation, advertising, royalties, promotions and events, and third-party sales commissions as well as the related personnel expenses for employees and consultants. Selling and marketing expense as a percentage of total revenue may fluctuate from period to period based on total revenue, timing of new content and nutritional product launches, and the timing of our media investments to build awareness around launch activity.


	Three Months Ended March 31,
	2022			2021			$ Change			% Change
	(dollars in thousands)

Selling and marketing	$	106,444		$	144,696		$	(38,252	)		(26	%)
As a percentage of total revenue		53.5	%		64.0	%

The decrease in selling and marketing expense for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, was primarily due to a $29.7 million decrease in online and television media expense and a $17.3 million decrease in Coach compensation, which was in line with the decrease in commissionable revenue. These decreases were partially offset by a $4.6 million increase in personnel-related expenses, a $2.9 million increase in amortization of intangible assets due to the acquisition of Myx in June 2021, and a $2.7 million increase in costs associated with Coach events.

Selling and marketing expense as a percentage of total revenue decreased by 1050 basis points primarily due to the decrease in media investments compared to the three months ended March 31, 2021. We have reduced our media as part of our strategic realignment and in an effort to use our cash in the manner that has the highest probability of return on investment.

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 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 March 31,
	2022			2021			$ Change		% Change
	(dollars in thousands)

Enterprise technology and development	$	33,697		$	27,089		$	6,608		24	%
As a percentage of total revenue		16.9	%		12.0	%

The increase in enterprise technology and development expense for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, was primarily due to a $6.2 million increase in personnel-related expenses related to certain technology initiatives.

Enterprise technology and development expense as a percentage of total revenue increased by 490 basis points due to the deleveraging of higher fixed personnel-related costs.

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 March 31,
	2022			2021			$ Change		% Change
	(dollars in thousands)

General and administrative	$	20,073		$	17,946		$	2,127		12	%
As a percentage of total revenue		10.1	%		7.9	%

The increase in general and administrative expense for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, was primarily due to a $2.4 million increase in personnel-related expenses ($1.2 million in equity-based compensation and $1.2 million in wages and benefits) and a $1.9 million increase in insurance expense as a result of operating as a public company. These increases were partially offset by a $1.5 million decrease in rent expense due to our Santa Monica lease assignment, $0.6 million decrease in transaction costs as there was no acquisition activity in Q1 2022, and a $0.5 million decrease in recruiting expenses due to fewer headcount additions in Q1 2022.

General and administrative expense as a percentage of total revenue increased by 220 basis points due to the deleveraging of higher fixed costs on revenue.

Restructuring

Restructuring charges relate to our strategic alignment initiative to consolidate our streaming fitness and nutrition offerings into a single Beachbody platform. The charges incurred primarily relate to employee termination costs.


	Three Months Ended March 31,
	2022		2021		$ Change		% Change
	(dollars in thousands)

Restructuring	$	7,223	$	—	$	7,223	NM

Other Income (Expense)

The change in fair value of warrant liabilities consists of the fair value changes of the public and private placement warrants. Interest expense primarily consists of interest expense associated with our borrowings and amortization of debt issuance costs for our Credit Facility in 2021. Other income (expense), net, consists of interest income earned on investments and gains (losses) on foreign currency.


	Three Months Ended March 31,
	2022			2021			$ Change			% Change
	(dollars in thousands)

Change in fair value of warrant liabilities	$	264		$	—		$	264		NM
Interest expense		(19	)		(123	)		104			(85	%)
Other income (expense), net		(64	)		1,299			(1,363	)		(105	%)

The change in fair value of warrant liabilities of $0.3 million during the three months ended March 31, 2022 primarily resulted from a decline in our stock price from $2.37 to $2.27 during the quarter. The decrease in interest expense was due to no borrowings outstanding during the three months ended March 31, 2022 compared to $20.0 million during the three months ended March 31, 2021. The decrease

in other income (expense), 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 in 2022.

Income Tax Benefit

Income tax benefit consists of income taxes related to U.S. federal and state jurisdictions as well as those foreign jurisdictions where we have business operations.


	Three Months Ended March 31,
	2022		2021		$ Change		% Change
	(dollars in thousands)

Income tax benefit	$	706	$	395	$	311		79	%

The income tax benefit increase during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, was primarily driven by a change in our projected net deferred tax liabilities which resulted in a higher deferred income tax benefit.

Liquidity and Capital Resources


	Three Months Ended March 31,
	2022			2021
	(dollars in thousands)

Net cash used in operating activities	$	(33,371	)	$	(8,880	)
Net cash used in investing activities		(12,403	)		(18,299	)
Net cash provided by financing activities		1,923			17,758

As of March 31, 2022, we had cash and cash equivalents totaling $63.4 million.

Net cash used in operating activities was $33.4 million for the three months ended March 31, 2022 compared to $8.9 million for the three months ended March 31, 2021. The increase in cash used in operating activities during the three months ended March 31, 2022, compared to the prior year quarter, was primarily due to the following:

•

an increase in net loss;

•

payments for 2021 payables, including connected fitness inventory, freight and duties, and media;

•

a decrease in subscription revenue receipts from customers in advance of service or product delivery; partially offset by

•

an increase in cash received from inventory sold.

We expect to reduce our cash used in operating activities over the next year. During the three months ended March 31, 2022, we returned to a performance marketing model which drives in-quarter or next-quarter payback and which reduced media spend by approximately $16.5 million in the quarter compared to the prior year. Beginning in the third quarter of 2022, we expect to achieve operating efficiencies and at least $29.0 million in annualized cost savings from the first quarter’s 2022 strategic realignment and restructuring process.

Net cash used in investing activities was $12.4 million and $18.3 million for the three months ended March 31, 2022 and 2021, respectively. The decrease was primarily due to a $0.9 million decrease in capital expenditures and a $5.0 million decrease in other investments. We continue to expect lower capital expenditures during the next 12 months compared to prior year due to the completion of significant projects at the end of 2021.

Net cash provided by financing activities was $1.9 millionand $17.8 millionfor the three months ended March 31, 2022 and 2021, respectively. The decrease was primarily due to borrowings outstanding on our Credit Facility during the three months ended March 31, 2021; we had no similar debt during the three months ended March 31, 2022.

Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth and overall economic conditions. See Note 9, Commitments and Contingencies, for discussion of our contractual commitments and purchase obligations that are primarily due in the next twelve months. We continue to assess and efficiently manage our working capital, and expect to generate additional liquidity through continued cost control initiatives. We are currently exploring

additional equity or debt financing to supplement our anticipated working capital balances and further strengthen our financial position, but do not at this ~~report including, without limitation, statements~~time know which form it will take or what the terms will be. 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. The sale of additional equity would result in additional dilution to our shareholders. There can be no assurances that we would be able to raise additional capital in amounts or on terms acceptable to us. We believe that existing cash and cash equivalents, cost control initiatives, and access to capital markets will provide the Company with sufficient liquidity to meet our anticipated cash needs for the next twelve months.

Critical Accounting Policies and Estimates

There have been no material changes to the Company’s critical accounting policies and estimates discussed in the 2021 Annual Report on Form 10-K in Item 7 under ~~“Management’s~~the heading Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations” regarding~~Operations – Critical Accounting Policies and Estimates.

Recent Accounting Pronouncements

See Note 1, Description of Business and Summary of Significant Accounting Policies, of 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 relatenotes to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward- looking statements as a result 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~~unaudited condensed consolidated financial statements ~~and the notes thereto contained~~included elsewhere in this ~~report. Certain information contained in the discussion~~Report for recently adopted accounting pronouncements and ~~analysis set forth below includes forward-looking statements that involve risks and uncertainties.~~recently issued accounting pronouncements not yet adopted.

~~Results of Operations and Known Trends or Future Events~~29

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 of approximately $13,870,243.

~~Liquidity 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 either in a business combination or to redeem common stock.

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 initial public offering and the sale of private placement warrants.

The Company anticipates that the $730,735 of cash held 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, assuming that a business combination is not consummated during that time. Until consummation of our 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 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.

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 are 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.

~~Derivative Warrant Liabilities~~

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 as liabilities at fair value 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. The fair value of warrants issued in connection with our initial public offering and private placement has been estimated using Monte Carlo simulations at each measurement date.

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 three months ended March 31, 2022 and 2021, approximately 10% 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 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 record 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 due to the derivative instruments we use to hedge any foreign currency exposure.

The aggregate notional amount of foreign exchange derivative instruments at March 31, 2022 and December 31, 2021 was $21.5 million and $30.4 million, respectively.

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 March 31, 2022. 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 judgements 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 have been no material changes from the information previously reported under Part I, Item 3 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

~~None.~~30

Item 1A. Risk Factors.

There have been no material ~~changes from the risk factors previously disclosed in our Amendment No. 1~~developments with respect to the ~~annual report~~information previously reported under Part I, Item 1A of our Annual Report on Form ~~10-K/A filed with~~10-K for the ~~SEC on May 3, 2021 and in our Form S-4, initially filed on February 16, 2021, as amended.~~fiscal year ended December 31, 2021.

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

Unregistered Sales of Equity Securities and Use of ~~Proceeds~~Proceeds.

None.

~~On November 30, 2020, we consummated our initial public offering~~Issuer Repurchase 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.Equity Securities.

None.

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.

~~None.~~

Item 4. Mine Safety ~~Disclosures.~~Disclosure.

None.

~~Not Applicable.~~

Item 5. Other Information.

None.

~~None.~~31

Item 6. ~~Exhibits~~Exhibits.


Exhibit		Incorporated by Reference				Filed or Furnished herewith
Exhibit			Form	Exhibit	Filing Date	Filed or Furnished herewith	File No.

2.1	Agreement and Plan of Merger, dated as of February 9, 2021, by and among Forest Road Acquisition Corp., BB Merger Sub, Inc., Myx Merger Sub, LLC, The Beachbody Company Group, LLC, And Myx Fitness Holdings, LLC.	8-K/A	2.1	2/16/2021	001-39735
3.1	Amended and Restated Certificate of Incorporation of The Beachbody Company, Inc.	8-K	3.1	7/1/2021	001-39735
3.2	Amended and Restated Bylaws of The Beachbody Company, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed July 1, 2021).	8-K	3.2	7/1/2021	001-39735
10.1	Offer of Employment Letter, dated as of April 15, 2022, by and between Beachbody, LLC and Marc Suidan.					*
10.2	Separation, General Release and Independent Contractor Services Agreement, dated April 19, 2022, by and among Beachbody, LLC, The Beachbody Company, Inc. and Sue Collyns.					*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a)					*

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a)					*

32.1	Certification of Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350					**

101.INS	XBRL Instance Document					*

101.SCH	XBRL Taxonomy Extension Schema Document					*

101.CAL	XBRL Taxonomy Calculation Linkbase Document					*

101.DEF	XBRL Taxonomy Definition Linkbase Document					*

101.LAB	XBRL Taxonomy Extension Label Linkbase Document					*

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document					*
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~The following exhibits are filed as part of,~~* Filed herewith

** Furnished herewith.

^ Indicates management contract or ~~incorporated by reference into, this Quarterly Report on Form 10-Q.~~compensatory plan.

~~No.~~		~~Description of Exhibit~~
~~2.1~~		~~Agreement and Plan of Merger, dated as of February 9, 2021, by and among the Company, Beachbody Merger Sub, Myx Merger Sub, Beachbody and Myx. (1)~~
~~10.1~~		~~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 Executive Officer~~ SIGNATURES 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~~
31.2*		~~Certification of Principal 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~~
32.1**		~~Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
32.2**		~~Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
101.INS*		~~XBRL Instance Document~~
101.CAL*		~~XBRL Taxonomy Extension Calculation Linkbase Document~~
101.SCH*		~~XBRL Taxonomy Extension Schema Document~~
101.DEF*		~~XBRL Taxonomy Extension Definition Linkbase Document~~
101.LAB*		~~XBRL Taxonomy Extension Labels Linkbase Document~~
101.PRE*		~~XBRL Taxonomy Extension Presentation Linkbase Document~~

*	~~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~~

~~In accordance with~~ 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.~~

		The Beachbody Company, Inc.

Date: May ~~17, 2021~~9, 2022	~~By:~~	By:	/s/ ~~Keith L. Horn~~Carl Daikeler
	~~Name:~~	~~Keith L. Horn~~	Carl Daikeler
	~~Title:~~		Chief Executive Officer ~~and Secretary~~
			(Principal Executive Officer)

Date: May ~~17, 2021~~9, 2022	~~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.)

400 Continental Blvd, Suite 400 El Segundo,California	90245
(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 ☐

		~~Page~~
~~PART 1 – FINANCIAL INFORMATION~~ Part I.	Financial Information	3
Item 1.	Financial Statements	3
~~Item 1.~~	~~Financial Statements~~Condensed Consolidated Balance Sheets	3
	Unaudited Condensed Consolidated Statements of Operations	4
	Unaudited Condensed ~~Balance Sheet (unaudited)~~Consolidated Statements of Comprehensive Loss	1 5
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity	6
	Unaudited Condensed ~~Statement of Operations (unaudited)~~	2

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

	~~Condensed Statement~~Consolidated Statements of Cash Flows ~~(unaudited)~~	4 7
	Notes to Unaudited Condensed Consolidated Financial Statements	9
	~~Notes to Condensed Financial Statements (unaudited)~~	5

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

Item 3.	Quantitative and Qualitative Disclosures ~~about~~About Market Risk	20 30
Item 4.	Controls and Procedures	30
~~Item 4.~~ Part II.	~~Control and Procedures~~Other Information	20 30
Item 1.	Legal Proceedings	30
~~PART II – OTHER INFORMATION~~

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

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

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21 31

Item 3.	Defaults Upon Senior Securities	21 31

Item 4.	Mine Safety Disclosures	21 31
Item 5.	Other Information	31
Item 5.6.	~~Other Information~~Exhibits	21 32
Signatures
~~Item 6.~~	~~Exhibits~~	22

~~SIGNATURES~~		23 33

	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


☒	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


	March 31,			December 31,
	2022			2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	63,426		$	104,054
Restricted cash		-			3,000
Inventory, net		99,993			132,730
Prepaid expenses		16,154			15,861
Other current assets		40,975			43,727
Total current assets		220,548			299,372
Property and equipment, net		102,978			113,098
Content assets, net		39,749			39,347
Goodwill and intangible assets, net		166,947			171,533
Other assets		13,972			14,262
Total assets	$	544,194		$	637,612
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	25,626		$	48,379
Accrued expenses		69,897			74,525
Deferred revenue		108,977			107,095
Other current liabilities		5,785			6,233
Total current liabilities		210,285			236,232
Deferred tax liabilities		2,382			3,165
Other liabilities		13,300			12,830
Total liabilities		225,967			252,227
Commitments and contingencies (Note 9)

Stockholders’ equity:
Preferred stock, $0.0001 par value; 100,000,000 shares authorized, NaN issued and outstanding at March 31, 2022 and December 31, 2021		—			—
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);
Class A: 169,465,971 and 168,333,463 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively;		17			17
Class X: 141,250,310 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively;		14			14
Class C: 0 shares issued and outstanding at March 31, 2022 and December 31, 2021		—			—
Additional paid-in capital		616,905			610,418
Accumulated other comprehensive loss		(133	)		(21	)
Accumulated deficit		(298,576	)		(225,043	)
Total stockholders’ equity		318,227			385,385
Total liabilities and stockholders’ equity	$	544,194		$	637,612


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	)

	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	)



							Accumulated			Retained
					Additional		Other			Earnings			Total
	Common Stock				Paid-In		Comprehensive			(Accumulated)			Stockholders’
	Shares		Amount		Capital		Income (Loss)			(Deficit)			Equity

Balances at December 31, 2020		243,013	$	24	$	96,097	$	(202	)	$	3,339		$	99,258
Net loss		—		—		—		—			(30,058	)		(30,058	)
Other comprehensive income		—		—		—		100			—			100
Equity-based compensation		—		—		2,573		—			—			2,573
Balances at March 31, 2021		243,013	$	24	$	98,670	$	(102	)	$	(26,719	)	$	71,873




							Accumulated
					Additional		Other						Total
	Common Stock				Paid-In		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Loss			Deficit			Equity

Balances at December 31, 2021		309,584	$	31	$	610,418	$	(21	)	$	(225,043	)	$	385,385
Net loss		—		—		—		—			(73,533	)		(73,533	)
Other comprehensive loss		—		—		—		(112	)		—			(112	)
Equity-based compensation		—		—		4,564		—			—			4,564
Options exercised, net of tax withholdings		1,132		—		1,923		—			—			1,923
Balances at March 31, 2022		310,716	$	31	$	616,905	$	(133	)	$	(298,576	)	$	318,227

	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	%