Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 13, 2019 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | YOGA | |
Entity Registrant Name | YogaWorks, Inc. | |
Entity Central Index Key | 0001703497 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 17,063,972 | |
Entity Shell Company | false | |
Entity File Number | 001-38151 | |
Entity Tax Identification Number | 47-1219105 | |
Entity Address, Address Line One | 5780 Uplander Way | |
Entity Address, City or Town | Culver City | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90230 | |
City Area Code | 310 | |
Local Phone Number | 664-6470 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | DE | |
Title of 12(b) Security | common stock, par value $0.001 per share | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 4,282,182 | $ 11,447,318 |
Inventories | 734,711 | 1,148,449 |
Prepaid expenses and other current assets | 773,842 | 936,757 |
Total current assets | 5,790,735 | 13,532,524 |
Property and equipment, net | 9,124,246 | 10,225,944 |
Intangible assets, net | 11,444,453 | 13,291,502 |
Goodwill | 663,954 | |
Other non-current assets | 999,655 | 1,327,775 |
Total assets | 27,359,089 | 39,041,699 |
Current liabilities | ||
Accounts payable and accrued expenses | 3,128,439 | 4,905,204 |
Accrued compensation | 1,533,685 | 1,802,047 |
Deferred revenue | 6,705,808 | 7,276,578 |
Related party convertible note - net of debt issuance costs | 4,986,815 | |
Current portion of deferred rent | 166,191 | 124,319 |
Total current liabilities | 16,520,938 | 14,108,148 |
Deferred rent, net of current portion | 3,032,712 | 3,975,391 |
Total liabilities | 19,553,650 | 18,083,539 |
Commitments and Contingencies (Note 11) | ||
Stockholders’ equity | ||
Common stock $0.001 par value; 50,000,000 shares authorized, 17,052,340 issued and 16,832,593 outstanding at September 30, 2019 and 50,000,000 shares authorized, 16,639,586 issued and 16,494,838 outstanding at December 31, 2018 | 16,833 | 16,496 |
Additional paid in capital | 114,124,195 | 113,260,161 |
Accumulated deficit | (106,335,589) | (92,318,497) |
Total stockholders’ equity | 7,805,439 | 20,958,160 |
Total liabilities and stockholders’ equity | $ 27,359,089 | $ 39,041,699 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 17,052,340 | 16,639,586 |
Common stock, shares outstanding | 16,832,593 | 16,494,838 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Net revenues | $ 16,528,694 | $ 15,150,692 | $ 46,133,728 | $ 45,550,867 |
Cost of revenues and operating expenses | ||||
Cost of revenues | 5,800,070 | 6,212,640 | 17,290,385 | 17,892,463 |
Center operations | 6,802,923 | 7,179,487 | 20,552,361 | 21,012,976 |
General and administrative expenses | 5,586,593 | 4,158,868 | 14,456,557 | 12,617,813 |
Depreciation and amortization | 969,348 | 1,874,008 | 4,018,048 | 6,471,036 |
Goodwill impairment | 663,954 | 5,550,000 | 663,954 | 8,024,819 |
Asset impairment | 1,363,822 | 4,118,939 | 1,538,547 | 4,118,939 |
Total cost of revenues and operating expenses | 21,186,710 | 29,093,942 | 58,519,852 | 70,138,046 |
Loss from operations | (4,658,016) | (13,943,250) | (12,386,124) | (24,587,179) |
Interest income | (4,970) | (46,613) | (67,317) | (96,886) |
Net loss before income taxes | (4,653,046) | (13,896,637) | (12,318,807) | (24,490,293) |
(Benefit)/provision for income taxes | (1,419) | 2,667 | 10,375 | 20,580 |
Net loss | $ (4,651,627) | $ (13,899,304) | $ (12,329,182) | $ (24,510,873) |
Basic and diluted net loss per share attributable to common stockholders | $ (0.28) | $ (0.84) | $ (0.74) | $ (1.49) |
Weighted-average number of shares used in calculating loss per share attributable to common stockholders: | ||||
Basic and diluted common shares | 16,807,366 | 16,468,085 | 16,649,375 | 16,401,589 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance at Dec. 31, 2017 | $ 54,535,177 | $ 16,333 | $ 111,650,415 | $ (57,131,571) |
Beginning balance, Shares at Dec. 31, 2017 | 16,332,510 | |||
Vesting of restricted stock units | 0 | $ 186 | (186) | |
Vesting of restricted stock units, Shares | 186,102 | |||
Repurchase of shares to satisfy tax withholding | (97,151) | $ (41) | (97,110) | |
Repurchase of shares to satisfy tax withholding, Shares | (40,937) | |||
Stock-based compensation | 1,284,099 | 1,284,099 | ||
Net loss | (24,510,873) | (24,510,873) | ||
Ending balance at Sep. 30, 2018 | 31,211,252 | $ 16,478 | 112,837,218 | (81,642,444) |
Ending balance, Shares at Sep. 30, 2018 | 16,477,675 | |||
Beginning balance at Jun. 30, 2018 | 44,789,554 | $ 16,461 | 112,516,233 | (67,743,140) |
Beginning balance, Shares at Jun. 30, 2018 | 16,460,501 | |||
Vesting of restricted stock units | 0 | $ 26 | (26) | |
Vesting of restricted stock units, Shares | 25,569 | |||
Repurchase of shares to satisfy tax withholding | (13,488) | $ (9) | (13,479) | |
Repurchase of shares to satisfy tax withholding, Shares | (8,395) | |||
Stock-based compensation | 334,490 | 334,490 | ||
Net loss | (13,899,304) | (13,899,304) | ||
Ending balance at Sep. 30, 2018 | 31,211,252 | $ 16,478 | 112,837,218 | (81,642,444) |
Ending balance, Shares at Sep. 30, 2018 | 16,477,675 | |||
Beginning balance at Dec. 31, 2018 | 20,958,160 | $ 16,496 | 113,260,161 | (92,318,497) |
Beginning balance, Shares at Dec. 31, 2018 | 16,494,838 | |||
Vesting of restricted stock units | 0 | $ 406 | (406) | |
Vesting of restricted stock units, Shares | 406,486 | |||
Repurchase of shares to satisfy tax withholding | (40,061) | $ (69) | (39,992) | |
Repurchase of shares to satisfy tax withholding, Shares | (68,731) | |||
Stock-based compensation | 904,432 | 904,432 | ||
Impact of Adopting Topic 606 | (1,687,910) | (1,687,910) | ||
Net loss | (12,329,182) | (12,329,182) | ||
Ending balance at Sep. 30, 2019 | 7,805,439 | $ 16,833 | 114,124,195 | (106,335,589) |
Ending balance, Shares at Sep. 30, 2019 | 16,832,593 | |||
Beginning balance at Jun. 30, 2019 | 12,231,110 | $ 16,775 | 113,898,297 | (101,683,962) |
Beginning balance, Shares at Jun. 30, 2019 | 16,774,440 | |||
Vesting of restricted stock units | 0 | $ 65 | (65) | |
Vesting of restricted stock units, Shares | 65,222 | |||
Repurchase of shares to satisfy tax withholding | (1,569) | $ (7) | (1,562) | |
Repurchase of shares to satisfy tax withholding, Shares | (7,069) | |||
Stock-based compensation | 227,525 | 227,525 | ||
Net loss | (4,651,627) | (4,651,627) | ||
Ending balance at Sep. 30, 2019 | $ 7,805,439 | $ 16,833 | $ 114,124,195 | $ (106,335,589) |
Ending balance, Shares at Sep. 30, 2019 | 16,832,593 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Cash flows from operating activities | |||||
Net loss | $ (12,329,182) | $ (24,510,873) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation and amortization | 4,018,048 | 6,471,036 | |||
Goodwill impairment | $ 663,954 | $ 5,550,000 | 663,954 | 8,024,819 | $ 12,700,000 |
Asset impairment | 1,363,822 | 4,118,939 | 1,538,547 | 4,118,939 | |
Deferred tax | 2,402 | ||||
Interest expense on convertible note | 6,667 | 6,667 | |||
Stock-based compensation expense | 904,432 | 1,284,099 | |||
Changes to operating assets and liabilities, net of effects from acquisitions: | |||||
Inventories | 413,738 | 4,470 | |||
Prepaid expenses and other current assets | 162,915 | 245,137 | |||
Other non-current assets | 328,120 | (919) | |||
Accounts payable and accrued expenses | (1,951,142) | (186,078) | |||
Accrued compensation | (268,362) | (743,893) | |||
Deferred revenue | (2,258,680) | (1,154,686) | |||
Deferred rent and other non-current liabilities | (900,807) | 71,943 | |||
Net cash used in operating activities | (9,671,752) | (6,373,604) | |||
Cash flows from investing activities | |||||
Purchases of property, equipment, and intangible assets | (2,440,138) | (1,079,543) | |||
Acquisition earnout and holdback payments | (643,694) | ||||
Cash paid for acquisitions, net of earnouts | (721,930) | (721,930) | |||
Net cash used in investing activities | (2,440,138) | (2,445,167) | |||
Cash flows from financing activities | |||||
Repurchase of shares to satisfy tax withholding | (1,569) | (13,488) | (40,061) | (97,151) | |
Proceeds from issuance of related party convertible note | 4,986,815 | ||||
Net cash from (used in) financing activities | 4,946,754 | (97,151) | |||
Decrease in cash and cash equivalents | (7,165,136) | (8,915,922) | |||
Cash and cash equivalents, beginning of period | 11,447,318 | 22,095,216 | 22,095,216 | ||
Cash and cash equivalents, end of period | $ 4,282,182 | $ 13,179,294 | 4,282,182 | 13,179,294 | $ 11,447,318 |
Supplemental cash flow information | |||||
Effect of the adoption of Topic 606 on deferred revenue | 1,687,910 | ||||
Non-cash investing activities: | |||||
Purchases of property and equipment financed by accounts payable and accrued expenses | $ 167,710 | ||||
Purchase consideration liabilities related to acquisitions | $ 159,000 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation General YogaWorks, Inc., a Delaware corporation, and its wholly-owned subsidiaries (collectively referred to as “we”, “us”, “our”, and the “Company”) are primarily engaged in operating yoga studios. Our Company was formerly known as YWX Holdings, Inc. and we changed our name to YogaWorks, Inc. on April 10, 2017. We operate under the brand names YogaWorks, Yoga Tree and certain other local brands for a period of time following the acquisition of studios. We primarily offer yoga classes, workshops, teacher training programs, and yoga-related retail merchandise across our studios. In addition to our studio locations, we offer online yoga instruction and programming through our MyYogaWorks.com web platform, which provides subscribers with a highly curated library of over 1,200 yoga classes. NASDAQ Listing The Company’s 7,300,000 shares of common stock (“Common Stock”) sold on our initial public offering (“IPO”) were traded on the Nasdaq Global Market. On May 3, 2019, our Company’s securities were transferred from the Nasdaq Global Market to the Nasdaq Capital Market (“NASDAQ”). On July 25, 2019, we filed a Form 25, Notification of Removal From Listing and/or Registration Under Section 12(b) of the Securities Exchange Act of 1934, with the Securities and Exchange Commission to delist the Company’s common stock from NASDAQ. On August 1, 2019, NASDAQ permanently suspended the trading of our common stock. On August 5, 2019, we filed a Form 15, Certification and Notice of Termination of Registration Under Section 12(g) of the Securities Exchange Act of 1934 or Suspension of Duty to File Reports Under Sections 13 and 15(d) of the Securities Exchange Act of 1934. Markets We operate in regional markets across the United States (“U.S.”). As a result of the clustering of our studios in key geographic markets, and the flexibility offered to students to use different studios in a regional market, we do not report net revenues on an individual studio basis or report same studio sales. We prefer to analyze financial results on a regional market basis. Given the focus on acquisitions, we may acquire studios in an existing regional market to capture more regional market share, which may take some market share from our existing studios. As of September 30, 2019, we owned and operated 63 yoga studios in nine regional markets. The following table illustrates the studio locations by regional market: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Regional Market Number of Studios(1) Percentage of Net Revenues(2) Number of Studios(1) Percentage of Net Revenues(2) Number of Studios(1) Percentage of Net Revenues(2) Number of Studios(1) Percentage of Net Revenues(2) Los Angeles 16 34 % 17 33 % 16 34 % 17 33 % Northern California 13 24 % 13 23 % 13 23 % 13 22 % Houston 7 8 % 7 8 % 7 8 % 7 9 % New York City 3 7 % 5 10 % 3 8 % 5 10 % Baltimore 7 6 % 7 6 % 7 7 % 7 6 % Boston 5 6 % 7 6 % 5 6 % 7 5 % Orange County (California) 4 6 % 4 6 % 4 6 % 4 6 % Washington, D.C. 4 5 % 6 4 % 4 5 % 6 5 % Atlanta 4 4 % 4 4 % 4 3 % 4 4 % Total Studios 63 70 63 70 (1) Number of studios as of September 30, 2019 and 2018. (2) For the three and nine months ended September 30, 2019 and 2018, assumes that any net revenues for teacher training, workshops and MyYogaWorks.com for such period are allocated to the regional markets on a proportional basis based on the market’s share of total studio net revenues for such period. We operate in a number of regional operating segments; however, we meet the aggregation criteria of Accounting Standards Codification (“ASC”) 280, Segment Reporting, and therefore report as one Liquidity and Going Concern We have a history of operating losses and an accumulated deficit of $106.3 million as of September 30, 2019. In addition, we had negative working capital of $10.7 million and $0.6 million at September 30, 2019 and December 31, 2018, respectively. As disclosed in our most recent Annual Report on Form 10-K, the Company needs additional financing to fund its operations. These conditions raise substantial doubt about our ability to continue as a going concern. Historically, we have satisfied our liquidity needs primarily through cash generated from financing activities, which includes proceeds from debt. Our principal liquidity needs include cash used for operations (such as rent and labor costs), acquisitions, capital expenditures necessary to improve existing studios, primarily leasehold improvements and additional furniture and fixtures. We have suspended acquiring or developing new studios to reduce our liquidity needs. The accompanying interim unaudited Basis of Presentation The accompanying unaudited condensed consolidated financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, normal recurring adjustments considered necessary for a fair presentation have been reflected in these condensed consolidated financial statements. The consolidated balance sheet as of December 31, 2018 has been derived from the audited financial statements for the fiscal year then ended included in our Annual Report on Form 10-K filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on March 27, 2019 (the “10-K”), but does not include all of the information and notes required by GAAP for complete financial statements. The financial information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements as of and for the fiscal year ended December 31, 2018 and the related notes thereto included in the 10-K. Effective January 1, 2019, the Company adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, as discussed further in Note 2. All amounts and disclosures set forth in this Quarterly Report on Form 10-Q have been updated to comply with this new standard with results for reporting periods beginning after January 1, 2019 presented under ASU No. 2014-09, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company has corrected an immaterial misstatement in the September 30, 2018 Statement of Cash Flows. The Company has reclassified $643,694 of cash paid related to acquisition holdback and earnouts from investing activities to financing activities. There was no impact on the cash flow from operating activities or net change in total cash flows. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Except for changes to the Company’s revenue recognition policy, there have been no changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 27, 2019. See below for additional accounting policy and transition disclosures. In June 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-07, Compensation – Stock Compensation (“Topic 718”): Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this ASU provide guidance on accounting for share-based payment transactions for acquiring goods and services from nonemployees. This ASU was effective for fiscal years beginning after December 15, 2018. We adopted this ASU as of January 1, 2019 noting no material impact to the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (“Topic 230”): Classification of Certain Cash Receipts and Cash Payments. The update provides guidance on classification for cash receipts and payments related to eight specific issues. This ASU was effective for fiscal years beginning after December 15, 2018. We adopted this ASU as of January 1, 2019 noting no material impact to the consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”). This ASU supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition, and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Subsequently, the FASB issued several standards related to ASU 2014-09 (collectively, the “New Revenue Standard”), including the most recent ASU, ASU 2017-14, Income Statement - Reporting Comprehensive Income (“Topic 220”), Revenue Recognition (“Topic 605”), and Topic 606, which was issued in November 2017. We adopted the requirements of Topic 606 utilizing the modified retrospective method of transition to contracts as of January 1, 2019. The accumulated deficit balance was increased; thus, stockholders’ equity was decreased by $1.7 million as of January 1, 2019 due to the cumulative impact of adopting Topic 606. The impact was primarily related to: • $1.7 million increase in deferred revenue related to the Company’s loyalty program. Topic 606 requires us to allocate and defer a portion of revenue attributable to loyalty points earned. The deferred revenue on the loyalty program is recognized as revenue upon redemption of the points or upon breakage. Previously, the Company was recognizing loyalty points under the incremental cost method. • $0.1 million reduction in deferred revenue related to class packages. Topic 606 requires us to recognize revenue upon redemption of the class packages for a class or upon breakage. The expected breakage amount is recognized as revenue in proportion to the pattern of rights exercised by the customer. Previously, class packages were recognized as revenue based on aggregate use pattern and breakage was recognized upon expiration of the class packages. • $0.1 million increase in deferred revenue related to paid in full memberships. Due to the Company’s general cancellation policy in its membership agreement, under Topic 606 the contract duration ends when the stand-ready obligation is revoked, regardless of the contract’s stated contractual term. As such, revenue is recognized on a daily basis over the membership period. Previously, revenue was recognized ratably over the contract duration. • The adoption had no impact to net cash provided by or used in operating, investing or financing activities in the Company’s Condensed Consolidated Statements of Cash Flows. Impact of New Standard on Financial Statement Line Items The following tables summarize the effect of the adoption of Topic 606 on the Company’s select line items, included in the unaudited condensed consolidated financial statements as of and for the quarter ended September 30, 2019, as if the previous accounting was in effect. As of September 30, 2019 As Reported (ASC 606) Impacts of Adoption Without Adoption (ASC 605) Liabilities Deferred revenue $ 6,705,808 $ 320,786 $ 7,026,594 Stockholders’ Equity Accumulated deficit (106,335,589 ) (320,786 ) (106,656,375 ) Three Months Ended September 30, 2019 As Reported (ASC 606) Impacts of Adoption Without Adoption (ASC 605) Net revenues $ 16,528,694 $ (1,804,352 ) $ 14,724,342 Cost of revenues and operating expenses 21,186,710 — 21,186,710 Loss from Operations (4,658,016 ) (1,804,352 ) (6,462,368 ) Interest income, net 4,970 — 4,970 Net loss before income taxes (4,653,046 ) (1,804,352 ) (6,457,398 ) Provision for income taxes (1,419 ) — (1,419 ) Net Loss $ (4,651,627 ) $ (1,804,352 ) $ (6,455,979 ) Net loss per share, basic and diluted $ (0.28 ) $ (0.38 ) Weighted average common stock outstanding, basic and diluted 16,807,366 16,807,366 Nine Months Ended September 30, 2019 As Reported (ASC 606) Impacts of Adoption Without Adoption (ASC 605) Net revenues $ 46,133,728 $ (2,100,339 ) $ 44,033,389 Cost of revenues and operating expenses 58,519,852 — 58,519,852 Loss from Operations (12,386,124 ) (2,100,339 ) (14,486,463 ) Interest income, net 67,317 — 67,317 Net loss before income taxes (12,318,807 ) (2,100,339 ) (14,419,146 ) Provision for income taxes 10,375 — 10,375 Net Loss $ (12,329,182 ) $ (2,100,339 ) $ (14,429,521 ) Net loss per share, basic and diluted $ (0.74 ) $ (0.87 ) Weighted average common stock outstanding, basic and diluted 16,649,375 16,649,375 Summary of Significant Accounting Policies Revenue Recognition after the adoption of Topic 606 beginning January 1, 2019 Our Company generates revenues primarily from the sale of yoga classes, workshops, teacher training programs and yoga-related retail merchandise, net of discounts, refunds and returns at the time they are granted. Membership, class package, workshop and teacher training revenues are generally paid in advance. Classes and workshops Classes are principally sold in two formats—class packages and memberships. Workshops are sold as a single class or as a class pack. Class packages are based on a fixed number of classes, while memberships provide unlimited classes over a certain time period. Class package revenue is recognized when the performance obligation is satisfied upon transfer of a promised service to a student or upon the redemption of a class pack for a class or upon breakage. The expected breakage amount is recognized as revenue in proportion to the pattern of rights exercised by the student. Memberships are offered to students in varying lengths. Membership revenue is recognized on a daily basis during the membership period. Teacher Training and Workshops Customers are offered teacher training and workshops in varying program formats and lengths. Revenue is recognized on a straight-line basis over the event period. MyYogaworks.com Subscription Subscription Revenue is recognized on a straight-line basis during the subscription period. Loyalty Program Revenue on its loyalty program is recognized when the performance obligation is satisfied upon the redemption of the loyalty points for retail products or classes, or upon breakage. Loyalty Points earned are valued at their relative standalone selling price that is calculated using the redemption value method adjusted to reflect the likelihood that some points will not be redeemed or breakage. The Company discontinued the loyalty program after September 30, 2019. Retail Revenue for retail merchandise is recognized at the time of sale when the customer receives and pays for the merchandise at the stores. Taxes collected from the customer are recorded on a net basis. Sales returns by customers for yoga-related retail merchandise sales have historically not been material. Our Company sells gift cards to our customers. The gift cards sold to customers have no stated expiration dates and are subject to actual and/or potential escheatment rights in several of the jurisdictions in which we operate. We recognize income from gift cards when redeemed by the customer or upon breakage. Practical Expedients For each revenue stream, excluding revenue from retail merchandise, the Company has elected the practical expedient to apply Topic 606 to a portfolio of similar contracts on each revenue stream, as it is not reasonably expected to result in materially different outcomes compared to individually accounting for the contracts. The services promised by the Company in exchange for consideration are identical with the only variability being the number of the memberships, number of class packs, and length or format of the training, respectively. In addition, the Company has elected the practical expedient that allows an entity to recognize revenue in the amount for which it has the right to invoice. The Company’s stand-ready obligation to provide access to its facilities for members to attend any class during the duration of their membership is a performance obligation satisfied over time, which can be measured using a time-based measurement. The Company bills the monthly membership fees and recognizes the revenue on a daily basis, which corresponds to the identified contractual period. Revenue Recognition prior to the adoption of Topic 606 on January 1, 2019 Our Company generates revenues primarily from the sale of yoga classes, workshops, teacher training programs and yoga-related retail merchandise, net of discounts, refunds and returns at the time they are granted. Yoga classes are principally sold in two formats—class packages and memberships. Class packages are based on a fixed number of classes, while memberships provide unlimited classes over a certain time period. Membership, class package, workshop and teacher training revenues are generally paid in advance. There are primarily two types of memberships, monthly memberships and paid-in-full memberships (for six or twelve months), and revenue is recognized over the membership period. Class package revenue is recognized based on aggregate usage patterns. Workshop and teacher training revenue is deferred until the date of the event or is recognized over the period the event takes place. The deferred revenue balance is reduced by refunds in the reporting period which results in less revenue recognized over the service term than originally anticipated. Revenue for retail merchandise is recognized at the time of sale when the customer receives and pays for the merchandise at the stores. Taxes collected from the customer are recorded on a net basis. Sales returns by customers for yoga-related retail merchandise sales have historically not been material. Our Company sells gift cards to our customers. The gift cards sold to customers have no stated expiration dates and are subject to actual and/or potential escheatment rights in several of the jurisdictions in which we operate. We recognize income from gift cards when redeemed by the customer or upon breakage. Gift cards that do not have activity for 2 years have a remote probability of being redeemed and are considered breakage. Recent Accounting Pronouncements Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have availed ourselves of this exemption from new or revised accounting standards. The effective dates of the recent accounting pronouncements noted below reflect the private company transition date. In August 2018, the FASB issued ASU 2018-15 Intangibles – Goodwill and Other – Internal – Use Software (Subtopic 350-40). The amendments in this ASU provide guidance on the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. We are evaluating the impact of implementing this update on our consolidated financial statements. In July 2018, the FASB issued ASU 2018-10, Leases (Topic 842), Codification Improvements and ASU 2018-11 Leases (Topic 842), Targeted Improvements, to provide additional guidance for the adoption of Topic 842. ASU 2018-10 clarifies certain provisions and correct unintended applications of the guidance such as the application of implicit rate, lessee reassessment of lease classification, and certain transition adjustments that should be recognized to earnings rather than to stockholders’ equity. ASU 2018-11 provides an alternative transition method and practical expedient for separating contract components for the adoption of Topic 842. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2018-11, ASU 2018-10, and ASU 2016-02 (collectively, “the new lease standards”) is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. On October 16, 2019, the FASB amended the effective date of the new lease standards for private companies. The new lease standard is effective for private companies for annual reporting periods beginning after December 15, 2020. This is a one-year deferral of the original effective date. Although early adoption is permitted, we anticipate adopting these provisions in the first quarter of 2021. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We had $40.4 million of operating lease obligations as of September 30, 2019, and upon adoption of this standard we will record a ROU asset and lease liability equal to the present value of these leases, which will have a material impact on the consolidated balance sheet. However, the recognition of lease expense in the consolidated statement of operations is not expected to change from the current methodology. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | 3. Acquisitions Our Company uses acquisitions as one of our strategies to grow our market share, quickly gain students and build on the operating momentum of the acquired businesses. No acquisitions were made during the three and nine months ended September 30, 2019. We completed two acquisitions in 2018, paying total consideration of $721,930, excluding earnouts of $159,000 . On April 30, 2018, we acquired Prana Power Yoga (three studios), The acquisitions were accounted for as a business acquisition in accordance with ASC 805, Business Combinations (“ASC 805”). Under the acquisition method of accounting, the total purchase price was allocated to the net tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values. Any excess amount paid over identifiable assets is recorded as goodwill. The associated goodwill is deductible for tax purposes. The process for estimating the fair values of the acquired studios involves the use of significant estimates and assumptions, including estimating average industry purchase price multiple and estimating future cash flows. In addition, ASC 805 requires adjustments to the provisional amounts recognized at the acquisition dates to reflect new information obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have affected the measurement of the amounts recognized as of that date. In 2018, we completed the valuations and allocations on the 2017 acquisitions that resulted in a $197,000 reduction in intangible assets and a corresponding increase to Goodwill. The condensed consolidated statement of operations through September 30, 2019 and the condensed consolidated balance sheet as of September 30, 2019 include the results of operations and the acquired assets and assumed liabilities related to our acquisitions and measurement period adjustments recorded during the period. For the nine months ended September 30, 2019, these acquisitions contributed $1,244,259 to our Company’s revenues. Net income contributed by these acquisitions was not separately identifiable due to our integration activities and the impact of corporate-level expenses and is impracticable to provide. Acquisition-related costs, including legal fees and all related professional fees, were expensed. The total purchase price consideration was allocated to the acquired assets and liabilities as follows: Amount Inventories $ 3,966 Property and equipment 670,060 Intangible assets 52,976 Goodwill 549,000 Other non-current assets 37,432 Total assets acquired 1,313,434 Accounts payable and accrued expenses 159,000 Deferred revenue 354,613 Deferred rent 77,891 Total liabilities assumed 591,504 Net assets acquired $ 721,930 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment The major classes of property and equipment are as follows: As of September 30,2019 As of December 31, 2018 Computer equipment and purchased software $ 678,666 $ 670,022 Furniture and fixtures 2,860,428 2,744,580 Leasehold improvements 28,568,865 26,792,887 Other equipment 225,239 213,546 Construction-in-progress 203,509 1,075,634 Total property and equipment 32,536,707 31,496,669 Less accumulated depreciation and amortization (23,412,461 ) (21,270,725 ) $ 9,124,246 $ 10,225,944 Depreciation and amortization expenses include property and equipment, leasehold improvements and purchased software. We incurred depreciation expense of $499,097 and $835,432 for the three months ended September 30, 2019 and 2018 and $2,144,453 and 2,421,159 for the nine months ended September 30, 2019 and 2018, respectively. During the three and nine months ended September 30, 2019, we recorded an impairment charge of $1,359,414 and $1,534,139, respectively, to the property and equipment for our studios that were either closed or the assets were no longer recoverable. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill | 5. The changes in the carrying amount of goodwill are as follows: As of September 30,2019 As of December 31, 2018 Goodwill, beginning of period $ 663,954 $ 12,768,773 Goodwill acquired in 2018 (See Note 3) — 352,000 Goodwill acquired in 2017 (See Note 3) — 197,000 Total goodwill 663,954 13,317,773 Less impairment (663,954 ) (12,653,819 ) Goodwill, end of period $ — $ 663,954 We performed a goodwill impairment test during 2018 that was triggered by the continued decrease in the Company’s market capitalization. We recorded an impairment to goodwill of $12.7 million in 2018, including $8.0 million for the nine months ended September 30, 2018. We performed an interim goodwill impairment test as of September 30, 2019 and recorded an additional $ 0.7 million of impairment. |
Deferred Revenue
Deferred Revenue | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue | 6. Deferred Revenue The following is a reconciliation of the changes in deferred revenue for the three and nine months ended September 30, 2019 and 2018: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Deferred revenue at beginning of period $ 8,736,650 $ 7,545,300 $ 7,276,578 $ 7,187,948 Cash receipts before deferred revenue 14,558,161 14,039,750 43,983,194 44,514,949 Net revenue for the period (16,528,694 ) (15,150,692 ) (46,133,728 ) (45,550,867 ) Deferred revenue from Loyalty Program — — 1,687,910 — Deferred revenue from acquisitions — — — 354,613 Change in gift card liabilities (60,309 ) (46,483 ) (108,146 ) (118,768 ) Deferred revenue at end of period $ 6,705,808 $ 6,387,875 $ 6,705,808 $ 6,387,875 |
Related Party Convertible Note
Related Party Convertible Note | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Convertible Note | 7. Related Party Convertible Note On September 26, 2019, the Company entered into a Note Purchase Agreement with Great Hill Equity Partners V, L.P. and Great Hill Investors, LLC (the “Noteholders”) pursuant to which the Noteholders purchased an aggregate of $5,000,000 of convertible notes (the “Convertible Notes”) from the Company. Great Hill Equity Partners V, L.P. and Great Hill Investors, LLC collectively hold approximately 68% of the Company’s outstanding common stock, par value $0.001 per share (“Common Stock”). The Convertible Notes were acquired by the Noteholders in transactions meeting the requirements of Section 4(2) and/or Regulation D under the Securities Act of 1933, as amended. The Convertible Notes bear interest at the rate of 12% per annum and have a maturity date of September 30, 2020 (the “Maturity Date”). The principal amount of the Convertible Notes, plus any accrued and unpaid interest, will be due on the Maturity Date. The Noteholders will have the option, at any time and from time to time, to convert the principal of and interest accrued on the Convertible Notes into shares of Common Stock at a conversion price equal to $0.60 per share (subject to appropriate adjustment to reflect any stock split, stock dividend, reverse stock split or similar corporate event affecting the Common Stock). The Note Purchase Agreement and the Convertible Notes contain customary affirmative and negative covenants and events of default relating to the Company. If an event of default occurs, the amounts due under the Convertible Notes may become immediately due and payable. The Convertible Notes are subject to prepayment at the option of the Company, in whole or in part. The proceeds of the Convertible Notes will be used for lease restructuring costs (including lease exits), general corporate restructuring costs and other general corporate purposes. The Company accounts for the Convertible Notes pursuant to the accounting standards for debt with conversion and other options. The Company has identified that the embedded conversion, redemption, and additional interest features of the Convertible Notes do not meet the definition of a derivative and do not require separate accounting. The Company incurred transaction costs of approximately $13,185 related to the issuance of the Convertible Notes. The issuance costs are recognized as a direct reduction to the debt and presented as a reduction to the carrying value of the Convertible Notes. Interest expense recognized and accrued related to the Convertible Notes for the three and nine months ended September 30, 2019 is $6,667. |
Loss per Share Attributable to
Loss per Share Attributable to Common Stockholders | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Loss per Share Attributable to Common Stockholders | 8. Loss per Share Attributable to Common Stockholders The components of basic and diluted loss per share attributable to common stockholders are as follows (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Numerator for basic and diluted loss per share attributable to common stockholders: Net loss $ (4,651,627 ) $ (13,899,304 ) $ (12,329,182 ) $ (24,510,873 ) Dividend attributable to participating securities — — — — Net loss attributable to YogaWorks, Inc. common stockholders $ (4,651,627 ) $ (13,899,304 ) $ (12,329,182 ) $ (24,510,873 ) Denominator: Weighted-average outstanding shares of common stock 16,807,366 16,468,085 16,649,375 16,401,589 Net loss per share attributable to common stockholders: Basic and diluted $ (0.28 ) $ (0.84 ) $ (0.74 ) $ (1.49 ) For the period ended September 30, 2019, and 2018, there were outstanding options to purchase 2,882,208 and 1,404,704 shares of Common Stock outstanding, respectively, which were excluded from the computation of diluted loss per share because it would be anti-dilutive. |
Accounting for Stock-Based Comp
Accounting for Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Accounting for Stock-Based Compensation | 9. Accounting for Stock-Based Compensation 2014 Plan In July 2014, our Company adopted the 2014 Stock Option and Grant Plan (the “2014 Plan”). Upon adoption of the 2014 Plan, the maximum aggregate number of shares issuable thereunder was 7,499 shares post-reverse split. In March 12, 2017, our Board amended the 2014 Plan to increase the shares of Common Stock reserved for issuance thereunder to 1,695,484. As of September 30, 2019, no shares were issuable under the 2014 Plan. 2017 Plan In connection with our IPO, we adopted the 2017 Incentive Award Plan (the “2017 Plan”), effective as of August 9, 2017. The aggregate number of shares of Common Stock reserved for issuance pursuant to awards granted under the 2017 Plan equals: (i) 3,904,580, plus (ii) any shares which, as of the effective date of the 2017 Plan, subject to awards under the 2014 Plan which forfeited or lapsed unexercised following the effective date of the 2017 Plan, plus (iii) an annual increase, which increases for 2018 and 2019 are reflected in the amount above, on the first day of each calendar year beginning on January 1, 2018 and ending on and including January 1, 2027 equal to the lesser of (a) 5% of the shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year, or (b) such smaller number of shares as determined by our Board. The 2017 Plan permits the grant of incentive stock options, restricted stock, restricted stock units, stock appreciation rights, performance-based awards to our employees, directors and consultants. Shares issued pursuant to awards under the 2017 Plan that are settled for cash by our Company or that expire or are forfeited will become available for future grant or sale. Shares used to pay the exercise price of an award or to satisfy the minimum tax withholding obligations related to an award will not be available for future grants under the 2017 Plan. As of September 30, 2019, 1,088,307 shares remained available for issuance under the 2017 Plan. With the exception of accelerated options, our typical options vest over four years from the grant date, with 25% of the award vesting on the first anniversary of the grant date and the remainder vesting over the next 36 months. Stock compensation expense related to these equity awards was recorded based upon the estimated fair value of the shares amortized over the vesting period. Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value (1) Outstanding at December 31, 2018 1,382,152 $ 7.28 8.37 $ — Granted 1,807,572 0.58 — — Exercised — — — — Forfeited (204,056 ) 4.80 — — Expired (103,460 ) 8.26 — — Outstanding at September 30, 2019 2,882,208 3.15 8.66 — Exercisable at September 30, 2019 1,545,112 4.89 8.19 — (1) The aggregate intrinsic value of the stock options is calculated as the maximum of the difference between the quoted price of the Company’s common stock Unamortized stock-based compensation expense relating to stock options was $0.5 million at September 30, 2019, which is expected to be recognized over a weighted-average period of 1.9 years. Valuation We use the Black-Scholes option pricing model to calculate the fair value of each option grant. The expected volatility is based on historical volatility of the stock price of comparable public companies. We estimate the expected term based upon the historical exercise behavior of employees. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. We estimated a zero-forfeiture rate for these stock option grants as the awards have short vesting terms and have a low probability of forfeiture based on the recipients of the stock options. The fair values of stock options granted have been estimated utilizing the following assumptions: Nine Months Ended September 30, 2019 2018 Risk-free interest rate 2.51 % 2.73 % Expected term (in years) 5.55 5.97-6.05 Dividend yield 0.00 % 0.00 % Expected volatility 49 % 45 % Restricted Stock Units Our Company granted 292,500 Restricted Stock Units (“RSU”) to our officers and board of directors during nine months ended September 30, 2019. There were no grants during the three months ended September 30, 2019. During the three and nine months ended September 30, 2018, the Company also granted 605,235 RSU to our officers and board of directors. All RSU grants vest on the satisfaction of only a service-based condition. As of September 30, 2019, there were 381,409 shares of our Common Stock issuable upon the vesting of outstanding RSU. Unrecognized compensation expenses related to shares of our Common Stock subject to unvested RSU was $0.6 million at September 30, 2019, which is expected to be recognized as expense over the weighted-average period of 1.3 years. The service conditions for the RSU granted to our officers and Board are generally satisfied over four years starting from such person’s hiring or grant date and the earlier to occur of the first anniversary of the grant date or the annual meeting of stockholders, respectively. For the three and nine months ended September 30, 2019, our Company withheld 7,069 and 68,731 shares of Common Stock (“Net Settlement”), and remitted $1,569 and $40,061, respectively, in cash to meet the related tax withholding requirements on behalf of our officers. For the three and nine months ended September 30, 2018, our Company also withheld 8,395 and 40,937 shares of Common Stock, and remitted $13,488 and $97,151, respectively, in cash to meet the related tax withholding requirements on behalf of our officers. Stock-Based Compensation Expense Our Company recognized stock-based compensation expense related to stock options and RSU, included in general and administrative expenses as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Stock-based compensation $ 227,525 $ 334,490 $ 904,432 $ 1,284,099 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes Our effective income tax rate for the three months ended September 30, 2019 and 2018 was 0.03% and (0.02)%, respectively. In addition, our effective income tax rate for the nine months ended September 30, 2019 and 2018 was (0.08) % and (0.08) %, respectively. Our effective income tax rate is evaluated and adjusted at each interim period as facts and circumstances warrant. The difference between federal income taxes computed at the federal statutory rate and reported income taxes for the three and nine months ended September 30, 2019 and 2018 was primarily related to the impact of the valuation allowance and state income taxes. At September 30, 2019, we have no unrecognized tax benefits. We believe that there are no uncertain tax positions for which it is reasonably possible that will produce a material effect to the financial statements over the next 12 months. We recognize interest and penalties on taxes, if any, related to unrecognized tax benefits as income tax expense. As of September 30, 2019, and 2018, we had no material uncertain tax positions to be accounted for in the financial statements; accordingly, no interest or penalties on taxes were recognized for the three and nine months ended September 30, 2019 and for the same period in 2018. Pursuant to Internal Revenue Code (“IRC”), Sections 382 and 383, annual use of our net operating loss carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurred within a three-year period. We have not completed an IRC Section 382 and 383 analysis regarding the limitation of net operating loss carryforwards. As there is a full valuation allowance applied to the deferred taxes, a Section 382 limitation will not have an effect on the deferred taxes or the income tax rate. We are currently not under examination by federal, state and local tax authorities. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies Legal Matters On June 5, 2017, a letter was sent to the California Labor & Workforce Development Agency alleging our itemized wage statements did not comply with the California Labor Code, which we refer to herein as the Wage Statement Claim. On August 7, 2017, we agreed to a class wide settlement for a maximum amount of $865,000 $865,000 On July 2, 2018, a former California employee (“Plaintiff”) filed a complaint against us in the Superior Court of the State of California for the County of Los Angeles (the “Complaint”). Plaintiff’s Complaint was filed pursuant to the California Labor Code purportedly on behalf of all Pilates instructors, yoga instructors and other employees who worked for us in California on a piece-rate basis within the four years preceding the date of the Complaint. The Complaint alleged that certain of our payroll-related practices with respect to California-based employees paid on a piece-rate did not comply with the California Labor Code. On March 21, 2019, we agreed to a class wide settlement for a maximum amount of $1.0 million, which would include settlement of all penalties under the Private Attorneys General Act of 2004 and California Labor Code, attorneys’ fees and costs, class representative enhancements and claims administration fees. As of December 31, 2018, we have reserved for the entire amount under accrued expenses. Four substantially similar putative class action complaints were filed in the Superior Court of the State of California, County of Los Angeles, captioned Salazar v. YogaWorks, Inc., et al. (filed November 26, 2018); Johnson v. YogaWorks, Inc., et al. (filed December 19, 2018); Lowinger v. YogaWorks, Inc. et al. (filed December 21, 2018); and Mirza v. YogaWorks, Inc., et al. (filed January 17, 2019). These four state court actions were consolidated into the Salazar case by the Court on April 17, 2019 and assigned to Judge Maren Nelson for all purposes. (“State Court of Action”). Additionally, two putative class action complaints, substantially similar to the state court securities actions, captioned Cohen v. YogaWorks, Inc., et al. (filed December 27, 2018) and Dellinger v. YogaWorks, Inc., et al. (filed February 8, 2019) were filed in the United States District Court for the District of Central California. On March 21, 2019, the federal court actions were consolidated, and Inter-Local Pension Fund GCC/IBT’s were appointed as Lead Plaintiff (“Federal Court Action”). The State Court Action and Federal Court Action were brought by purported stockholders of YogaWorks alleging violations of the Securities Act of 1933 for alleged misstatements and omissions in offering documents related to YogaWorks’ IPO that took place on August 11, 2017. The lawsuits name as defendants YogaWorks, certain of its current and former officers and directors, YogaWorks’ majority shareholder, and certain underwriters of YogaWorks’ IPO. On July 31, 2019, the Court conducted a case management conference in the State Court Action in which it denied each of the plaintiffs’ dueling motions to appoint lead counsel, and ordered that plaintiffs’ counsels work together. A consolidated complaint was filed by those plaintiffs on August 21, 2019. The defendants are currently not obligated to respond to the operative complaint in the State Securities Class Action pursuant to a stipulated order issued on August 27, 2019 by Judge Maren Nelson. Under the ordered stipulation, the State Securities Class Action is stayed until the earlier of the following: (i) the Federal Securities Class Action is dismissed with prejudice as to each defendant, or (ii) the federal court, upon resolving the pending motions to dismiss, finds that the complaint in the Federal Securities Class Action states a claim. In the Federal Court Action, Lead Plaintiff filed an Amended Consolidated Complaint on May 21, 2019 and Defendants filed motions to dismiss on July 23, 2019; Plaintiffs’ opposition to the motions to dismiss was filed on September 24, 2019; Defendants filed replies in support of their motion(s) to dismiss on November 12, 2019; and the hearing on Defendants’ motion(s) to dismiss is set for December 9, 2019 at 1:30 p.m. The outcomes of the legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to YogaWorks’ financial condition, results of operations, and cash flows for a particular period. YogaWorks intends to vigorously defend the claims asserted against it. In addition to the aforementioned legal matters, from time to time, we are involved in legal proceedings arising in the ordinary course of business. There can be no assurance with respect to the outcome of any legal proceeding, and we could suffer monetary liability from the outcome of the legal matters described above or other claims that could be material to our results of operations. Other than the aforementioned legal matters, we believe there are no pending lawsuits or claims that may have a material adverse effect on our business, capital resources or results of operations. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. On October 31, 2019, |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Revenue Recognition after the adoption of Topic 606 beginning January 1, 2019 | Revenue Recognition after the adoption of Topic 606 beginning January 1, 2019 Our Company generates revenues primarily from the sale of yoga classes, workshops, teacher training programs and yoga-related retail merchandise, net of discounts, refunds and returns at the time they are granted. Membership, class package, workshop and teacher training revenues are generally paid in advance. Classes and workshops Classes are principally sold in two formats—class packages and memberships. Workshops are sold as a single class or as a class pack. Class packages are based on a fixed number of classes, while memberships provide unlimited classes over a certain time period. Class package revenue is recognized when the performance obligation is satisfied upon transfer of a promised service to a student or upon the redemption of a class pack for a class or upon breakage. The expected breakage amount is recognized as revenue in proportion to the pattern of rights exercised by the student. Memberships are offered to students in varying lengths. Membership revenue is recognized on a daily basis during the membership period. Teacher Training and Workshops Customers are offered teacher training and workshops in varying program formats and lengths. Revenue is recognized on a straight-line basis over the event period. MyYogaworks.com Subscription Subscription Revenue is recognized on a straight-line basis during the subscription period. Loyalty Program Revenue on its loyalty program is recognized when the performance obligation is satisfied upon the redemption of the loyalty points for retail products or classes, or upon breakage. Loyalty Points earned are valued at their relative standalone selling price that is calculated using the redemption value method adjusted to reflect the likelihood that some points will not be redeemed or breakage. The Company discontinued the loyalty program after September 30, 2019. Retail Revenue for retail merchandise is recognized at the time of sale when the customer receives and pays for the merchandise at the stores. Taxes collected from the customer are recorded on a net basis. Sales returns by customers for yoga-related retail merchandise sales have historically not been material. Our Company sells gift cards to our customers. The gift cards sold to customers have no stated expiration dates and are subject to actual and/or potential escheatment rights in several of the jurisdictions in which we operate. We recognize income from gift cards when redeemed by the customer or upon breakage. Practical Expedients For each revenue stream, excluding revenue from retail merchandise, the Company has elected the practical expedient to apply Topic 606 to a portfolio of similar contracts on each revenue stream, as it is not reasonably expected to result in materially different outcomes compared to individually accounting for the contracts. The services promised by the Company in exchange for consideration are identical with the only variability being the number of the memberships, number of class packs, and length or format of the training, respectively. In addition, the Company has elected the practical expedient that allows an entity to recognize revenue in the amount for which it has the right to invoice. The Company’s stand-ready obligation to provide access to its facilities for members to attend any class during the duration of their membership is a performance obligation satisfied over time, which can be measured using a time-based measurement. The Company bills the monthly membership fees and recognizes the revenue on a daily basis, which corresponds to the identified contractual period. |
Revenue Recognition prior to the adoption of Topic 606 on January 1, 2019 | Revenue Recognition prior to the adoption of Topic 606 on January 1, 2019 Our Company generates revenues primarily from the sale of yoga classes, workshops, teacher training programs and yoga-related retail merchandise, net of discounts, refunds and returns at the time they are granted. Yoga classes are principally sold in two formats—class packages and memberships. Class packages are based on a fixed number of classes, while memberships provide unlimited classes over a certain time period. Membership, class package, workshop and teacher training revenues are generally paid in advance. There are primarily two types of memberships, monthly memberships and paid-in-full memberships (for six or twelve months), and revenue is recognized over the membership period. Class package revenue is recognized based on aggregate usage patterns. Workshop and teacher training revenue is deferred until the date of the event or is recognized over the period the event takes place. The deferred revenue balance is reduced by refunds in the reporting period which results in less revenue recognized over the service term than originally anticipated. Revenue for retail merchandise is recognized at the time of sale when the customer receives and pays for the merchandise at the stores. Taxes collected from the customer are recorded on a net basis. Sales returns by customers for yoga-related retail merchandise sales have historically not been material. Our Company sells gift cards to our customers. The gift cards sold to customers have no stated expiration dates and are subject to actual and/or potential escheatment rights in several of the jurisdictions in which we operate. We recognize income from gift cards when redeemed by the customer or upon breakage. Gift cards that do not have activity for 2 years have a remote probability of being redeemed and are considered breakage. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have availed ourselves of this exemption from new or revised accounting standards. The effective dates of the recent accounting pronouncements noted below reflect the private company transition date. In August 2018, the FASB issued ASU 2018-15 Intangibles – Goodwill and Other – Internal – Use Software (Subtopic 350-40). The amendments in this ASU provide guidance on the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. We are evaluating the impact of implementing this update on our consolidated financial statements. In July 2018, the FASB issued ASU 2018-10, Leases (Topic 842), Codification Improvements and ASU 2018-11 Leases (Topic 842), Targeted Improvements, to provide additional guidance for the adoption of Topic 842. ASU 2018-10 clarifies certain provisions and correct unintended applications of the guidance such as the application of implicit rate, lessee reassessment of lease classification, and certain transition adjustments that should be recognized to earnings rather than to stockholders’ equity. ASU 2018-11 provides an alternative transition method and practical expedient for separating contract components for the adoption of Topic 842. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2018-11, ASU 2018-10, and ASU 2016-02 (collectively, “the new lease standards”) is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. On October 16, 2019, the FASB amended the effective date of the new lease standards for private companies. The new lease standard is effective for private companies for annual reporting periods beginning after December 15, 2020. This is a one-year deferral of the original effective date. Although early adoption is permitted, we anticipate adopting these provisions in the first quarter of 2021. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We had $40.4 million of operating lease obligations as of September 30, 2019, and upon adoption of this standard we will record a ROU asset and lease liability equal to the present value of these leases, which will have a material impact on the consolidated balance sheet. However, the recognition of lease expense in the consolidated statement of operations is not expected to change from the current methodology. |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Summary of Studio Locations by Regional Market | The following table illustrates the studio locations by regional market: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Regional Market Number of Studios(1) Percentage of Net Revenues(2) Number of Studios(1) Percentage of Net Revenues(2) Number of Studios(1) Percentage of Net Revenues(2) Number of Studios(1) Percentage of Net Revenues(2) Los Angeles 16 34 % 17 33 % 16 34 % 17 33 % Northern California 13 24 % 13 23 % 13 23 % 13 22 % Houston 7 8 % 7 8 % 7 8 % 7 9 % New York City 3 7 % 5 10 % 3 8 % 5 10 % Baltimore 7 6 % 7 6 % 7 7 % 7 6 % Boston 5 6 % 7 6 % 5 6 % 7 5 % Orange County (California) 4 6 % 4 6 % 4 6 % 4 6 % Washington, D.C. 4 5 % 6 4 % 4 5 % 6 5 % Atlanta 4 4 % 4 4 % 4 3 % 4 4 % Total Studios 63 70 63 70 (1) Number of studios as of September 30, 2019 and 2018. (2) For the three and nine months ended September 30, 2019 and 2018, assumes that any net revenues for teacher training, workshops and MyYogaWorks.com for such period are allocated to the regional markets on a proportional basis based on the market’s share of total studio net revenues for such period. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Topic 606 | |
Effect of Adoption under Topic 606 in Unaudited Condensed Consolidated Financial Statements | The following tables summarize the effect of the adoption of Topic 606 on the Company’s select line items, included in the unaudited condensed consolidated financial statements as of and for the quarter ended September 30, 2019, as if the previous accounting was in effect. As of September 30, 2019 As Reported (ASC 606) Impacts of Adoption Without Adoption (ASC 605) Liabilities Deferred revenue $ 6,705,808 $ 320,786 $ 7,026,594 Stockholders’ Equity Accumulated deficit (106,335,589 ) (320,786 ) (106,656,375 ) Three Months Ended September 30, 2019 As Reported (ASC 606) Impacts of Adoption Without Adoption (ASC 605) Net revenues $ 16,528,694 $ (1,804,352 ) $ 14,724,342 Cost of revenues and operating expenses 21,186,710 — 21,186,710 Loss from Operations (4,658,016 ) (1,804,352 ) (6,462,368 ) Interest income, net 4,970 — 4,970 Net loss before income taxes (4,653,046 ) (1,804,352 ) (6,457,398 ) Provision for income taxes (1,419 ) — (1,419 ) Net Loss $ (4,651,627 ) $ (1,804,352 ) $ (6,455,979 ) Net loss per share, basic and diluted $ (0.28 ) $ (0.38 ) Weighted average common stock outstanding, basic and diluted 16,807,366 16,807,366 Nine Months Ended September 30, 2019 As Reported (ASC 606) Impacts of Adoption Without Adoption (ASC 605) Net revenues $ 46,133,728 $ (2,100,339 ) $ 44,033,389 Cost of revenues and operating expenses 58,519,852 — 58,519,852 Loss from Operations (12,386,124 ) (2,100,339 ) (14,486,463 ) Interest income, net 67,317 — 67,317 Net loss before income taxes (12,318,807 ) (2,100,339 ) (14,419,146 ) Provision for income taxes 10,375 — 10,375 Net Loss $ (12,329,182 ) $ (2,100,339 ) $ (14,429,521 ) Net loss per share, basic and diluted $ (0.74 ) $ (0.87 ) Weighted average common stock outstanding, basic and diluted 16,649,375 16,649,375 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of Acquired Assets and Liabilities | The total purchase price consideration was allocated to the acquired assets and liabilities as follows: Amount Inventories $ 3,966 Property and equipment 670,060 Intangible assets 52,976 Goodwill 549,000 Other non-current assets 37,432 Total assets acquired 1,313,434 Accounts payable and accrued expenses 159,000 Deferred revenue 354,613 Deferred rent 77,891 Total liabilities assumed 591,504 Net assets acquired $ 721,930 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property Plant And Equipment [Abstract] | |
Summary of Major Classes of Property and Equipment | The major classes of property and equipment are as follows: As of September 30,2019 As of December 31, 2018 Computer equipment and purchased software $ 678,666 $ 670,022 Furniture and fixtures 2,860,428 2,744,580 Leasehold improvements 28,568,865 26,792,887 Other equipment 225,239 213,546 Construction-in-progress 203,509 1,075,634 Total property and equipment 32,536,707 31,496,669 Less accumulated depreciation and amortization (23,412,461 ) (21,270,725 ) $ 9,124,246 $ 10,225,944 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill are as follows: As of September 30,2019 As of December 31, 2018 Goodwill, beginning of period $ 663,954 $ 12,768,773 Goodwill acquired in 2018 (See Note 3) — 352,000 Goodwill acquired in 2017 (See Note 3) — 197,000 Total goodwill 663,954 13,317,773 Less impairment (663,954 ) (12,653,819 ) Goodwill, end of period $ — $ 663,954 |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Revenue Disclosure [Abstract] | |
Reconciliation of Changes in Deferred Revenue | The following is a reconciliation of the changes in deferred revenue for the three and nine months ended September 30, 2019 and 2018: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Deferred revenue at beginning of period $ 8,736,650 $ 7,545,300 $ 7,276,578 $ 7,187,948 Cash receipts before deferred revenue 14,558,161 14,039,750 43,983,194 44,514,949 Net revenue for the period (16,528,694 ) (15,150,692 ) (46,133,728 ) (45,550,867 ) Deferred revenue from Loyalty Program — — 1,687,910 — Deferred revenue from acquisitions — — — 354,613 Change in gift card liabilities (60,309 ) (46,483 ) (108,146 ) (118,768 ) Deferred revenue at end of period $ 6,705,808 $ 6,387,875 $ 6,705,808 $ 6,387,875 |
Loss per Share Attributable t_2
Loss per Share Attributable to Common Stockholders (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Components of Basic and Diluted Loss per Share Attributable to Common Stockholders | The components of basic and diluted loss per share attributable to common stockholders are as follows (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Numerator for basic and diluted loss per share attributable to common stockholders: Net loss $ (4,651,627 ) $ (13,899,304 ) $ (12,329,182 ) $ (24,510,873 ) Dividend attributable to participating securities — — — — Net loss attributable to YogaWorks, Inc. common stockholders $ (4,651,627 ) $ (13,899,304 ) $ (12,329,182 ) $ (24,510,873 ) Denominator: Weighted-average outstanding shares of common stock 16,807,366 16,468,085 16,649,375 16,401,589 Net loss per share attributable to common stockholders: Basic and diluted $ (0.28 ) $ (0.84 ) $ (0.74 ) $ (1.49 ) |
Accounting for Stock-Based Co_2
Accounting for Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Schedule of Stock Option Activity | Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value (1) Outstanding at December 31, 2018 1,382,152 $ 7.28 8.37 $ — Granted 1,807,572 0.58 — — Exercised — — — — Forfeited (204,056 ) 4.80 — — Expired (103,460 ) 8.26 — — Outstanding at September 30, 2019 2,882,208 3.15 8.66 — Exercisable at September 30, 2019 1,545,112 4.89 8.19 — (1) The aggregate intrinsic value of the stock options is calculated as the maximum of the difference between the quoted price of the Company’s common stock |
Schedule of Estimated Fair Values of Stock Options Granted | The fair values of stock options granted have been estimated utilizing the following assumptions: Nine Months Ended September 30, 2019 2018 Risk-free interest rate 2.51 % 2.73 % Expected term (in years) 5.55 5.97-6.05 Dividend yield 0.00 % 0.00 % Expected volatility 49 % 45 % |
Summary of Stock-Based Compensation Expense Related to Stock Options and Restricted Stock Units | Our Company recognized stock-based compensation expense related to stock options and RSU, included in general and administrative expenses as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Stock-based compensation $ 227,525 $ 334,490 $ 904,432 $ 1,284,099 |
Organization and Basis of Pre_3
Organization and Basis of Presentation - Additional Information (Details) | 9 Months Ended | ||
Sep. 30, 2019USD ($)YogaClassYogaStudioMarketsegmentshares | Dec. 31, 2018USD ($) | Sep. 30, 2018YogaStudio | |
Basis Of Presentation [Line Items] | |||
Number of yoga classes provided | YogaClass | 1,200 | ||
Number of studios owned and operated | YogaStudio | 63 | 70 | |
Number of regional markets | Market | 9 | ||
Accumulated deficit | $ 106,335,589 | $ 92,318,497 | |
Working capital | 10,700,000 | $ 600,000 | |
Reclassification of cash paid related to acquisition holdback and earnouts from investing activities to financing activities | $ 643,694 | ||
Accounting Standards Codification ("ASC") 280 | |||
Basis Of Presentation [Line Items] | |||
Number of reportable segments | segment | 1 | ||
Initial Public Offering | |||
Basis Of Presentation [Line Items] | |||
Common stock, shares sold | shares | 7,300,000 |
Organization and Basis of Pre_4
Organization and Basis of Presentation - Summary of Studio Locations by Regional Market (Details) - YogaStudio | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Basis Of Presentation [Line Items] | ||||
Number of Studios | 63 | 70 | 63 | 70 |
Los Angeles | ||||
Basis Of Presentation [Line Items] | ||||
Number of Studios | 16 | 17 | 16 | 17 |
Los Angeles | Sales Revenue Net | Geographic Concentration Risk | ||||
Basis Of Presentation [Line Items] | ||||
Percentage of Net Revenues | 34.00% | 33.00% | 34.00% | 33.00% |
Orange County (California) | ||||
Basis Of Presentation [Line Items] | ||||
Number of Studios | 4 | 4 | 4 | 4 |
Orange County (California) | Sales Revenue Net | Geographic Concentration Risk | ||||
Basis Of Presentation [Line Items] | ||||
Percentage of Net Revenues | 6.00% | 6.00% | 6.00% | 6.00% |
Northern California | ||||
Basis Of Presentation [Line Items] | ||||
Number of Studios | 13 | 13 | 13 | 13 |
Northern California | Sales Revenue Net | Geographic Concentration Risk | ||||
Basis Of Presentation [Line Items] | ||||
Percentage of Net Revenues | 24.00% | 23.00% | 23.00% | 22.00% |
Houston | ||||
Basis Of Presentation [Line Items] | ||||
Number of Studios | 7 | 7 | 7 | 7 |
Houston | Sales Revenue Net | Geographic Concentration Risk | ||||
Basis Of Presentation [Line Items] | ||||
Percentage of Net Revenues | 8.00% | 8.00% | 8.00% | 9.00% |
Atlanta | ||||
Basis Of Presentation [Line Items] | ||||
Number of Studios | 4 | 4 | 4 | 4 |
Atlanta | Sales Revenue Net | Geographic Concentration Risk | ||||
Basis Of Presentation [Line Items] | ||||
Percentage of Net Revenues | 4.00% | 4.00% | 3.00% | 4.00% |
Baltimore | ||||
Basis Of Presentation [Line Items] | ||||
Number of Studios | 7 | 7 | 7 | 7 |
Baltimore | Sales Revenue Net | Geographic Concentration Risk | ||||
Basis Of Presentation [Line Items] | ||||
Percentage of Net Revenues | 6.00% | 6.00% | 7.00% | 6.00% |
Washington D.C. | ||||
Basis Of Presentation [Line Items] | ||||
Number of Studios | 4 | 6 | 4 | 6 |
Washington D.C. | Sales Revenue Net | Geographic Concentration Risk | ||||
Basis Of Presentation [Line Items] | ||||
Percentage of Net Revenues | 5.00% | 4.00% | 5.00% | 5.00% |
New York City | ||||
Basis Of Presentation [Line Items] | ||||
Number of Studios | 3 | 5 | 3 | 5 |
New York City | Sales Revenue Net | Geographic Concentration Risk | ||||
Basis Of Presentation [Line Items] | ||||
Percentage of Net Revenues | 7.00% | 10.00% | 8.00% | 10.00% |
Boston | ||||
Basis Of Presentation [Line Items] | ||||
Number of Studios | 5 | 7 | 5 | 7 |
Boston | Sales Revenue Net | Geographic Concentration Risk | ||||
Basis Of Presentation [Line Items] | ||||
Percentage of Net Revenues | 6.00% | 6.00% | 6.00% | 5.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | Jan. 01, 2019USD ($) | Sep. 30, 2019USD ($)FormatMembership |
Summary Of Significant Accounting Policies [Line Items] | ||
Increase (decrease) in deferred revenue | $ 1,687,910 | |
Number of formats of yoga classes principally sold | Format | 2 | |
Number of types of memberships | Membership | 2 | |
Memberships terms | six or twelve months | |
Gift cards without activity redeemable term | 2 years | |
Operating lease obligations | $ 40,400,000 | |
Loyalty Program | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Increase (decrease) in deferred revenue | $ 1,687,910 | |
Topic 606 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Decrease in stockholders' equity effect of adoption | $ 1,700,000 | |
Topic 606 | Loyalty Program | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Increase (decrease) in deferred revenue | 1,700,000 | |
Topic 606 | Class Packages | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Increase (decrease) in deferred revenue | (100,000) | |
Topic 606 | Full Memberships | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Increase (decrease) in deferred revenue | $ 100,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Effect of Adoption under Topic 606 in Condensed Consolidated Balance Sheets (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Liabilities | ||
Deferred revenue | $ 6,705,808 | $ 7,276,578 |
Stockholders’ equity | ||
Accumulated deficit | (106,335,589) | $ (92,318,497) |
Topic 606 | Impacts of Adoption | ||
Liabilities | ||
Deferred revenue | 320,786 | |
Stockholders’ equity | ||
Accumulated deficit | (320,786) | |
Topic 606 | Without Adoption (ASC 605) | ||
Liabilities | ||
Deferred revenue | 7,026,594 | |
Stockholders’ equity | ||
Accumulated deficit | $ (106,656,375) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Effect of Adoption under Topic 606 in Condensed Consolidated Statements of Operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | $ 16,528,694 | $ 15,150,692 | $ 46,133,728 | $ 45,550,867 |
Cost of revenues and operating expenses | 21,186,710 | 29,093,942 | 58,519,852 | 70,138,046 |
Loss from operations | (4,658,016) | (13,943,250) | (12,386,124) | (24,587,179) |
Interest income, net | 4,970 | 46,613 | 67,317 | 96,886 |
Net loss before income taxes | (4,653,046) | (13,896,637) | (12,318,807) | (24,490,293) |
Provision for income taxes | (1,419) | 2,667 | 10,375 | 20,580 |
Net loss | $ (4,651,627) | $ (13,899,304) | $ (12,329,182) | $ (24,510,873) |
Net loss per share, basic and diluted | $ (0.28) | $ (0.84) | $ (0.74) | $ (1.49) |
Weighted average common stock outstanding, basic and diluted | 16,807,366 | 16,468,085 | 16,649,375 | 16,401,589 |
Topic 606 | Impacts of Adoption | ||||
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | $ (1,804,352) | $ (2,100,339) | ||
Loss from operations | (1,804,352) | (2,100,339) | ||
Net loss before income taxes | (1,804,352) | (2,100,339) | ||
Net loss | (1,804,352) | (2,100,339) | ||
Topic 606 | Without Adoption (ASC 605) | ||||
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 14,724,342 | 44,033,389 | ||
Cost of revenues and operating expenses | 21,186,710 | 58,519,852 | ||
Loss from operations | (6,462,368) | (14,486,463) | ||
Interest income, net | 4,970 | 67,317 | ||
Net loss before income taxes | (6,457,398) | (14,419,146) | ||
Provision for income taxes | (1,419) | 10,375 | ||
Net loss | $ (6,455,979) | $ (14,429,521) | ||
Net loss per share, basic and diluted | $ (0.38) | $ (0.87) | ||
Weighted average common stock outstanding, basic and diluted | 16,807,366 | 16,649,375 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) | May 24, 2018Studio | Apr. 30, 2018Studio | Sep. 30, 2019Studio | Sep. 30, 2019USD ($)Studio | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)Studio |
Business Acquisition [Line Items] | ||||||
Number of acquisitions | Studio | 0 | 0 | 2 | |||
Cash paid for acquisitions, net of earnouts | $ 721,930 | $ 721,930 | ||||
Deferred payments | 159,000 | |||||
Prana Power | ||||||
Business Acquisition [Line Items] | ||||||
Number of studios acquired | Studio | 3 | |||||
Inner Strength | ||||||
Business Acquisition [Line Items] | ||||||
Number of studios acquired | Studio | 2 | |||||
Prana Power and Inner Strength | ||||||
Business Acquisition [Line Items] | ||||||
Decrease in intangible assets | 197,000 | |||||
Increase in Goodwill | $ 197,000 | |||||
Net revenues | $ 1,244,259 |
Acquisitions - Schedule of Acqu
Acquisitions - Schedule of Acquired Assets and Liabilities (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||
Goodwill | $ 663,954 | $ 12,768,773 | |
Prana Power and Inner Strength | |||
Business Acquisition [Line Items] | |||
Inventories | $ 3,966 | ||
Property and equipment | 670,060 | ||
Intangible assets | 52,976 | ||
Goodwill | 549,000 | ||
Other non-current assets | 37,432 | ||
Total assets acquired | 1,313,434 | ||
Accounts payable and accrued expenses | 159,000 | ||
Deferred revenue | 354,613 | ||
Deferred rent | 77,891 | ||
Total liabilities assumed | 591,504 | ||
Net assets acquired | $ 721,930 |
Property and Equipment - Summar
Property and Equipment - Summary of Major Classes of Property and Equipment (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Property Plant And Equipment [Line Items] | ||
Total property and equipment | $ 32,536,707 | $ 31,496,669 |
Less accumulated depreciation and amortization | (23,412,461) | (21,270,725) |
Property plant and equipment, net | 9,124,246 | 10,225,944 |
Computer Equipment and Purchased Software | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 678,666 | 670,022 |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 2,860,428 | 2,744,580 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 28,568,865 | 26,792,887 |
Other Equipment | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 225,239 | 213,546 |
Construction in Progress | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | $ 203,509 | $ 1,075,634 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property Plant And Equipment [Line Items] | ||||
Depreciation expense | $ 499,097 | $ 835,432 | $ 2,144,453 | $ 2,421,159 |
Property and Equipment | ||||
Property Plant And Equipment [Line Items] | ||||
Asset impairment | $ 1,359,414 | $ 1,534,139 |
Goodwill - Changes in Carrying
Goodwill - Changes in Carrying Amount of Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Sep. 30, 2019 | |
Restructuring Cost And Reserve [Line Items] | ||
Goodwill, beginning of period | $ 12,768,773 | |
Total goodwill | 13,317,773 | $ 663,954 |
Less impairment | (12,653,819) | $ (663,954) |
Goodwill, end of period | 663,954 | |
2018 | ||
Restructuring Cost And Reserve [Line Items] | ||
Goodwill acquired | 352,000 | |
2017 | ||
Restructuring Cost And Reserve [Line Items] | ||
Goodwill acquired | $ 197,000 |
Goodwill - Additional Informati
Goodwill - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||||
Goodwill impairment | $ 663,954 | $ 5,550,000 | $ 663,954 | $ 8,024,819 | $ 12,700,000 |
Goodwill, additional impairment loss | $ 700,000 |
Deferred Revenue - Reconciliati
Deferred Revenue - Reconciliation of Changes in Deferred Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Deferred Revenue [Line Items] | ||||
Deferred revenue at beginning of period | $ 8,736,650 | $ 7,545,300 | $ 7,276,578 | $ 7,187,948 |
Cash receipts before deferred revenue | 14,558,161 | 14,039,750 | 43,983,194 | 44,514,949 |
Net revenue for the period | (16,528,694) | (15,150,692) | (46,133,728) | (45,550,867) |
Effect of the adoption of Topic 606 on deferred revenue | 1,687,910 | |||
Deferred revenue from acquisitions | 354,613 | |||
Change in gift card liabilities | (60,309) | (46,483) | (108,146) | (118,768) |
Deferred revenue at end of period | $ 6,705,808 | $ 6,387,875 | 6,705,808 | $ 6,387,875 |
Loyalty Program | ||||
Deferred Revenue [Line Items] | ||||
Effect of the adoption of Topic 606 on deferred revenue | $ 1,687,910 |
Related Party Convertible Note
Related Party Convertible Note - Additional Information (Details) - USD ($) | Sep. 26, 2019 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Related Party Transaction [Line Items] | ||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |
Convertible notes interest percentage | 12.00% | |||
Debt instrument maturity date | Sep. 30, 2020 | |||
Convertible promissory notes conversion price per share | $ 0.60 | |||
Transaction cost incurred related to issuance of convertible notes | $ 13,185 | |||
Interest expense related to convertible notes accrued | $ 6,667 | $ 6,667 | ||
Great Hill Equity Partners, V, L.P. and Great Hill Investors, LLC | ||||
Related Party Transaction [Line Items] | ||||
Convertible Promissory note principal amount | $ 5,000,000 | |||
Controlling interest percentage of common stock owned | 68.00% | |||
Common stock, par value | $ 0.001 |
Loss per Share Attributable t_3
Loss per Share Attributable to Common Stockholders - Components of Basic and Diluted Loss Per Share Attributable to Common Stockholders (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Numerator for basic and diluted loss per share attributable to common stockholders: | ||||
Net loss | $ (4,651,627) | $ (13,899,304) | $ (12,329,182) | $ (24,510,873) |
Net loss attributable to YogaWorks, Inc. common stockholders | $ (4,651,627) | $ (13,899,304) | $ (12,329,182) | $ (24,510,873) |
Denominator: | ||||
Weighted-average outstanding shares of common stock | 16,807,366 | 16,468,085 | 16,649,375 | 16,401,589 |
Net loss per share attributable to common stockholders: | ||||
Net loss per share, basic and diluted | $ (0.28) | $ (0.84) | $ (0.74) | $ (1.49) |
Loss per Share Attributable t_4
Loss per Share Attributable to Common Stockholders - Additional Information (Details) - shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Options | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 2,882,208 | 1,404,704 |
Accounting for Stock-Based Co_3
Accounting for Stock-Based Compensation - Additional Information (Details) - USD ($) | Aug. 09, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Mar. 12, 2017 | Jul. 31, 2014 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Number of common stock withheld, net settlement | 7,069 | 8,395 | 68,731 | 40,937 | |||
Tax withholding remitted amount | $ 1,569 | $ 13,488 | $ 40,061 | $ 97,151 | |||
Restricted Stock Units | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Stock-based compensation expense, expected weighted average period for recognition | 1 year 3 months 18 days | ||||||
Number of common stock issuable upon nonvested shares | 381,409 | 381,409 | |||||
Unrecognized compensation expenses | $ 600,000 | $ 600,000 | |||||
Restricted Stock Units | Officers and Board of Directors | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Number of shares granted | 0 | 605,235 | 292,500 | 605,235 | |||
2014 Stock Option And Grant Plan | Employee Stock Option | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Options granted to purchase common stock | 0 | 0 | 7,499 | ||||
Common stock reserved for issuance | 1,695,484 | ||||||
2017 Incentive Award Plan | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Common stock reserved for issuance | 1,088,307 | 1,088,307 | |||||
2017 Incentive Award Plan | IPO | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Common stock reserved for issuance | 3,904,580 | ||||||
Annual increase in shares on first day of each calendar year, start date | Jan. 1, 2018 | ||||||
Annual increase in shares on first day of each calendar year, end date | Jan. 1, 2027 | ||||||
Proportion of shares outstanding | 5.00% | ||||||
Common stock reserved for issuance description | In connection with our IPO, we adopted the 2017 Incentive Award Plan (the “2017 Plan”), effective as of August 9, 2017. The aggregate number of shares of Common Stock reserved for issuance pursuant to awards granted under the 2017 Plan equals: (i) 3,904,580, plus (ii) any shares which, as of the effective date of the 2017 Plan, subject to awards under the 2014 Plan which forfeited or lapsed unexercised following the effective date of the 2017 Plan, plus (iii) an annual increase, which increases for 2018 and 2019 are reflected in the amount above, on the first day of each calendar year beginning on January 1, 2018 and ending on and including January 1, 2027 equal to the lesser of (a) 5% of the shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year, or (b) such smaller number of shares as determined by our Board. | ||||||
2017 Incentive Award Plan | Employee Stock Option | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Shares of common stock options awarded, remaining vesting period | 36 months | ||||||
Unamortized stock-based compensation expense | $ 500,000 | ||||||
Stock-based compensation expense, expected weighted average period for recognition | 1 year 10 months 24 days | ||||||
2017 Incentive Award Plan | Employee Stock Option | First Anniversary of Grant Date | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Percentage of awards vested | 25.00% |
Accounting for Stock-Based Co_4
Accounting for Stock-Based Compensation - Schedule of Stock Option Activity (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Shares | ||
Shares, Beginning balance | 1,382,152 | |
Shares, Granted | 1,807,572 | |
Shares, Forfeited | (204,056) | |
Shares, Expired | (103,460) | |
Shares, Ending balance | 2,882,208 | 1,382,152 |
Shares, Exercisable | 1,545,112 | |
Weighted-Average Exercise Price | ||
Weighted average exercise price, Beginning balance | $ 7.28 | |
Weighted average exercise price, Granted | 0.58 | |
Weighted average exercise price, Forfeited | 4.80 | |
Weighted average exercise price, Expired | 8.26 | |
Weighted average exercise price, Ending balance | 3.15 | $ 7.28 |
Weighted average exercise price, Exercisable | $ 4.89 | |
Weighted-Average Remaining Contractual Life (in Years) and Aggregate Intrinsic Value | ||
Weighted average remaining contractual life (in years), Outstanding | 8 years 7 months 28 days | 8 years 4 months 13 days |
Weighted average remaining contractual life (in years), Exercisable | 8 years 2 months 8 days |
Accounting for Stock-Based Co_5
Accounting for Stock-Based Compensation - Schedule of Estimated Fair Values of Stock Options Granted (Details) - Employee Stock Option | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Risk-free interest rate | 2.51% | 2.73% |
Expected term (in years) | 5 years 6 months 18 days | |
Dividend yield | 0.00% | 0.00% |
Expected volatility | 49.00% | 45.00% |
Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected term (in years) | 5 years 11 months 19 days | |
Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected term (in years) | 6 years 18 days |
Accounting for Stock-Based Co_6
Accounting for Stock-Based Compensation - Summary of Stock-Based Compensation Expense Related to Stock Options and Restricted Stock Units (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
General and Administrative Expense | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation | $ 227,525 | $ 334,490 | $ 904,432 | $ 1,284,099 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 0.03% | (0.02%) | (0.08%) | (0.08%) |
Unrecognized tax benefits | $ 0 | $ 0 | ||
Uncertain tax positions | 0 | $ 0 | 0 | $ 0 |
Interest or penalties on taxes | $ 0 | $ 0 | $ 0 | $ 0 |
Net operating loss carryforwards, limitation | Pursuant to Internal Revenue Code (“IRC”), Sections 382 and 383, annual use of our net operating loss carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurred within a three-year period. |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | Mar. 21, 2019USD ($) | Jan. 02, 2019USD ($) | Aug. 07, 2017USD ($) | Sep. 30, 2019Claim |
Loss Contingencies [Line Items] | ||||
Maximum litigation settlement amount | $ 1,000,000 | |||
Number of pending lawsuits or claims | Claim | 0 | |||
Wage Statement Claim | ||||
Loss Contingencies [Line Items] | ||||
Maximum litigation settlement amount | $ 865,000 | |||
Judicial Ruling | Wage Statement Claim | ||||
Loss Contingencies [Line Items] | ||||
Payments for legal settlements | $ 865,000 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) | Oct. 31, 2019USD ($) |
Employee Severance | Ms. Rosanna McCollough | Bonus | Subsequent Event | |
Subsequent Event [Line Items] | |
Target bonus payable | $ 100,000 |