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F45, Functional Training Provider, Postpones Filing 2022 Annual Report

F45, Functional Training Provider, Postpones Filing 2022 Annual Report

A workout session at F45
Functional Fitness franchise F45 was slated to announce its earnings in mid-month. The fitness company expects to file its annual report within the fifteen-day extension period provided.

Functional fitness company F45 has announced it’s delaying the filing of its 2022 annual report and will revise its 2021 report with its 2022 filing.

The announcement was made on the fitness company’s website, where the notification of late filing was posted.

The fitness company claims it will be unable to file its annual report on Form 10-K for the fiscal year ending December 31, 2022, in a timely fashion because F45 and its independent registered public accounting firm need time to complete certain items related to its financial statement preparation and review processes.

This includes management’s “assessment of the effectiveness of the Company’s internal controls over financial reporting for the period covered by the Annual Report,” according to F45.

According to F45, based on “currently available information,” the fitness company expects to report a “material weakness” similar to the one reported in its annual report on Form 10-K for the fiscal year that ended in 2021, which was filed with the United States Securities and Exchange Commission on March 23, 2022.

F45 stated that previously disclosed transitions in its executive leadership team, including the recent appointment of its Interim Chief Financial Officer, have contributed to the Annual Report’s late filing.

The fitness company expects to file its annual report within the fifteen-day extension period provided.

The news of F45’s delayed filing comes after the functional fitness franchise announced it closed a deal last month to improve its balance sheet, restructure its board of directors, and appoint an interim CFO.

F45 also announced the opening of its first hotel studio, at the Hilton Austin, as part of its push into fitness hospitality.

F45 raised over $300 million and had a $1.4 billion valuation when it went public in 2021. By 2022, F45 was laying off employees and lowering revenue targets, its stock had plummeted to $1.25, and CEO Adam Gilchrist had left the fitness company.

Gilchrist had a goal of F45 surpassing competitor Planet Fitness at one point.

The F45 brand has also been plagued by lawsuits, including one filed by former soccer pro David Beckham, who sought $20 million in damages after alleging that F45 failed to pay him on time for a marketing campaign in 2021. Greg Norman, a professional golfer, made similar claims and joined Beckham in suing F45.

When F45 released its third-quarter 2022 financials, it announced that a special committee would review and evaluate alternatives to an unsolicited $385 million take-private bid by Kennedy Lewis Investment Management L.P.

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As 2022 ended and 2023 began, F45 announced the closing of a $90 million subordinated debt facility provided by a group of existing investors led by Kennedy Lewis Management L.P. affiliates.

According to the functional fitness franchise, the financing transaction was intended to improve F45’s balance sheet and increase liquidity for long-term growth.

F45’s Interim Chief Executive Officer, Ben Coates, stated at the time that the financing would allow the fitness franchise to increase its support to the F45 franchisee network.

The agreement has a term of five and a half years, and the proceeds will be used for general corporate purposes as well as a partial paydown of F45’s existing Senior Secured Revolving Credit Facility with JP Morgan Chase Bank, N.A.

In addition to the financing, F45 announced the appointment of current Board member Gene Davis as Chairman. Timothy Bernlohr, Lisa Gavales, Steven Scheiwe, and Ray Wallander were also appointed as new independent directors to the board. F45 has also selected Bob Madore as Interim Chief Financial Officer. 

Last month, a class action lawsuit was filed against F45 Training seeking to recover damages against the fitness franchise for alleged violations of federal securities laws.

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