What changed in this filing

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Item 1. Financial Statements

2021-08-12 compared with 2021-05-17 · 976 added, 871 removed, 12 unchanged (99% of the section changed)

Financial Statements.

FOREST ROAD ACQUISITION CORP.

CONDENSED BALANCE SHEETS

(Unaudited)  

December 31, 2020  

Assets  

The Beachbody Company, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

As of June 30,

As of December 31,

Current assets:

$ 730,435  

$ 1,183,830  

Prepaid expenses  

254,931  

294,383  

Total current assets  

985,366  

1,478,213  

Marketable Securities Held in Trust account  

300,004,432  

300,000,000  

Total assets  

$ 300,989,798  

$ 301,478,213  

Liabilities and Stockholders’

Equity  

Cash and cash equivalents

Accounts receivable, net

Inventory, net

Prepaid expenses

Other current assets

Total current assets

Property and equipment, net

Content assets, net

Intangible assets, net

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued expenses  

$ 2,675,348  

$ 409,896  

Due to related party  

20,600  

Franchise tax payable  

54,149  

Total current liabilities  

2,695,948  

464,045  

Warrant Liabilities  

45,605,664  

31,735,421  

Deferred underwriters’

discount payable  

10,500,000  

Total liabilities  

58,801,612  

42,699,466  

Commitments  

Class A common stock subject to possible redemption, 23,718,818 and 25,377,874 shares at redemption value at March 31, 2021 and December 31, 2020, respectively  

237,188,180  

253,778,740  

Stockholders’

Accounts payable

Accrued expenses

Deferred revenue

Current portion of lease liabilities

Other current liabilities

Total current liabilities

Long-term lease liabilities, net

Deferred tax liabilities

Warrant liabilities

Other liabilities

Total liabilities

Commitments and contingencies (Note 14)

Stockholders’ equity:

Preferred stock, $ 0.0001 par value;

1,000,000 shares authorized;

none issued or outstanding  

Class A common stock, $0.0001 par value;

300,000,000 shares authorized;

6,281,182 shares and 4,622,126 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively (excluding 23,718,818 and 25,377,874 shares subject to possible redemption, respectively)  

Class B common stock, $0.0001 par value;

20,000,000 shares authorized;

7,500,000 shares issued and outstanding at March 31, 2021 and December 31, 2020  

Additional paid-in capital  

29,506,028  

12,915,634  

Accumulated deficit  

(24,507,400 )  

Total stockholders’

equity  

5,000,006  

5,000,007  

Total liabilities and stockholders’

equity  

$ 300,989,798  

$ 301,478,213  

The accompanying notes are an integral part of

these unaudited condensed financial statements.

FOREST ROAD ACQUISITION CORP.

CONDENSED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

Operating costs

Loss from operations

100,000,000 shares authorized, none issued and outstanding as of June 30, 2021 and December 31, 2020

Common stock, $ 0.0001 par value, 1,900,000,000 shares authorized ( 1,600,000,000 Class A, 200,000,000 Class X and 100,000,000 Class C);

166,925,632 and 101,762,614 Class A shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively;

141,250,310 Class X shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively and no Class C shares issued and outstanding at June 30, 2021 and December 31, 2020.

Additional paid-in

Accumulated other comprehensive loss

Retained earnings (accumulated deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

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

The Beachbody Company, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per

Three Months Ended

Six Months Ended

Nutrition and other

Total revenue

Cost of revenue:

Nutrition and other

Total cost of revenue

Operating expenses:

Selling and marketing

Enterprise technology and development

General and administrative

Total operating expenses

Operating loss

Other income (expense)

Interest income

Change in fair value of warrant liabilities

Interest income on marketable securities held in Trust account

Total other income (expense)

Weighted average shares outstanding - Class A common stock

Basic and diluted net income per share of common stock –

Class A common stock

Weighted average shares outstanding - Class B common stock

Basic and diluted net income per share of common stock –

Class B common stock

The accompanying notes are an integral part of

these unaudited condensed financial statements.

FOREST ROAD ACQUISITION CORP.

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’

FOR THE THREE MONTHS ENDED MARCH 31, 2021

Common Stock  

Additional  

Class A  

Class B  

Paid-In  

Accumulated  

Stockholders’

Amount  

Capital  

Deficit  

Equity  

Balance as of December 31, 2020  

4,622,126  

7,500,000  

$ 12,915,634  

$ (7,916,839 )  

$ 5,000,007  

Change in Class A common stock subject to possible redemption  

1,659,056  

16,590,394  

16,590,560  

Net loss  

(16,590,561 )  

Balance as of March 31, 2021  

6,281,182  

7,500,000  

$ 29,506,028  

$ (24,507,400 )  

$ 5,000,006  

The accompanying notes are an integral part of

these unaudited condensed financial statements.

FOREST ROAD ACQUISITION CORP.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

Interest expense

Other income, net

Loss before income taxes

Income tax benefit

Net loss per common share, basic

Net loss per common share, diluted

Weighted-average common shares outstanding, basic

Weighted-average common shares outstanding, diluted

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

The Beachbody Company, Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive income (loss):

Change in fair value of derivative financial instruments, net of tax

Reclassification of losses on derivative financial instruments included in net

Foreign currency translation adjustment

Total other comprehensive income (loss)

Total comprehensive loss

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

The Beachbody Company, Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

Comprehensive

Stockholders’

Income (Loss)

Balances at December 31, 2019, as previously reported

Retroactive application of recapitalization

Balance at December 31, 2019, after effect of reverse

Other comprehensive income

Equity-based compensation

Balances at March 31, 2020

Other comprehensive loss

Equity-based compensation

Balances at June 30, 2020

Comprehensive

Stockholders’

Income (Loss)

Balances at December 31, 2020, as previously reported

Retroactive application of recapitalization

Balance at December 31, 2020, after effect of reverse acquisition

Other comprehensive income

Equity-based compensation

Balances at March 31, 2021

Other comprehensive income

Equity-based compensation

Business Combination, net of redemptions and equity issuance costs of $ 47.0 million

Myx acquisition

Balances at June 30, 2021

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

The Beachbody Company, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

Six Months Ended June 30,

Cash flows from operating activities:

Net loss  

$ (16,509,561 )

Adjustments to reconcile net loss to net cash used in operating activities:

Change in fair value of warrant liabilities  

13,870,243  

Interest income on trust account  

Changes in current assets and current liabilities:

Prepaid assets  

39,452  

Accounts payable and accrued expenses  

2,265,452  

Due to related party  

20,600  

Franchise tax payable  

Net cash used in operating activities  

Net Change in Cash  

Cash - Beginning  

1,183,830  

Cash - Ending  

$ 730,435  

Supplemental Disclosure of Non-cash Financing Activities:

Change in value of Class A common stock subject to possible redemption  

$ (16,590,560 )

The accompanying notes are an integral part of

these unaudited condensed financial statements.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 —

Organization and Business Operations

Organization and General

Forest Road Acquisition Corp.

(the “Company”

or “Forest Road”) was incorporated in Delaware on September 24, 2020.

The Company was formed for the purpose of entering into

a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses

(the “Business Combination”).

The Company is not limited to a specific industry or sector for purposes of consummating a Business

however, the Company intends to concentrate its efforts on identifying businesses in the technology, media and telecommunications

The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated

with early stage and emerging growth companies.

On February 9, 2021, Forest Road entered

into an Agreement and Plan of Merger (the “Merger Agreement”) with BB Merger Sub, LLC, a Delaware limited liability company

and direct, wholly-owned subsidiary of Forest Road, MFH Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned

subsidiary of Forest Road, The Beachbody Company Group, LLC, a Delaware limited liability company, and Myx Fitness Holdings, LLC, a Delaware

limited liability company.

On February 9, 2021, Forest Road and certain investors entered into subscription agreements (the “Subscription Agreements”)

pursuant to which such investors have agreed to purchase in connection with the Closing an aggregate of 22.5 million shares of Class A

common stock for a purchase price of $10.00 per share, for an aggregate purchase price of $225 million (the “PIPE Investment”).

The obligations of each party to consummate the PIPE Investment are conditioned upon, among other things, customary closing conditions

and the consummation of the transactions contemplated by the Merger Agreement.

As of March 31, 2021 and December 31, 2020, the

Company had not yet commenced any operations.

All activity through March 31, 2021, relates to the Company’s formation and the initial

public offering (“IPO”) described below.

The Company will not generate any operating revenues until after the completion of

its initial business combination, at the earliest.

The Company will generate non-operating income in the form of interest income on cash

and cash equivalents from the proceeds derived from the IPO.

The Company’s sponsor is Forest Road Acquisition

Sponsor LLC, a Delaware limited liability company (the “Sponsor”).

The registration statement for the Company’s IPO

was declared effective by the U.S.

Securities and Exchange Commission (the “SEC”) on November 24, 2020 (the “Effective

Date”).

On November 30, 2020, the Company consummated the IPO of 30,000,000 units (the “Units”

and, with respect to

the shares of Class A common stock included in the Units sold, the “Public Shares”), including the issuance of 3,900,000 Units

as a result of the underwriters’

partial exercise of their over-allotment option.

Each Unit consists of one share of Class A common

stock, $0.0001 par value, and one-third of one redeemable warrant entitling its holder to purchase one share of Class A common

stock at a price of $11.50 per share.

The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $300,000,000

Simultaneously with the closing of the IPO, the

Company consummated the private placement (“Private Placement”) with the Sponsor of an aggregate of 5,333,333 warrants (“Private

Placement Warrants”) to purchase Class A common stock, each at a price of $1.50 per Private Placement Warrant, generating total

proceeds of $8,000,000 (Note 4).

Transaction costs amounted to $16,979,438, consisting

of $6,000,000 of underwriting discount, $10,500,000 of deferred underwriters’

fee and $479,438 of other offering costs.

Trust Account

Following the closing of the IPO on November 30,

2020, an amount of $300,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private

Placement Warrants was placed in a trust account (“Trust Account”) which was invested in money market funds meeting certain

conditions under Rule 2a-7 promulgated under the Investment Company Act, which invest only in direct U.S.

government treasury

obligations, until the earlier of (a) the completion of the Company’s initial Business Combination, (b) the redemption of any public

shares properly submitted in connection with a stockholder vote to amend the Company’s certificate of incorporation, or (c) the

redemption of the Company’s public shares if the Company is unable to complete the initial Business Combination within 24 months

from the closing of the IPO, or November 30, 2022 (the “Combination Period”).

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Initial Business Combination

The Company’s management has broad discretion

with respect to the specific application of the net proceeds of the IPO and the sale of the Private Placement Warrants, although substantially

all of the net proceeds are intended to be applied generally toward consummating a Business Combination.

There is no assurance that the

Company will be able to complete a Business Combination successfully.

The Company must complete a Business Combination with one or more

operating businesses or assets that together have an aggregate fair market value equal to at least 80% of the net assets held in the Trust

Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting

commissions) at the time of the Company’s signing a definitive agreement in connection with its initial Business Combination.

the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding

voting securities of the target or otherwise acquires an interest in the target business or assets sufficient for it not to be required

to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

The Company will provide its holders of the outstanding

Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the

completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or

(ii) by means of a tender offer.

The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct

a tender offer will be made by the Company.

The public stockholders will be entitled to redeem their Public Shares for a pro rata portion

of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the

funds held in the Trust Account and not previously released to the Company to pay its tax obligations).

There will be no redemption rights

upon the completion of a Business Combination with respect to the Company’s warrants.

The Company will only proceed with a Business

Combination if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination

and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination.

If a stockholder

vote is not required by applicable law or stock exchange rules and the Company does not decide to hold a stockholder vote for business

or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated

Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents

with the SEC prior to completing a Business Combination.

If, however, stockholder approval of the transaction

is required by applicable law or stock exchange rules, or the Company decides to obtain stockholder approval for business or other reasons,

the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender

If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder

Shares (as defined in Note 5), and any Public Shares purchased during or after the IPO in favor of approving a Business Combination.

Additionally,

each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction

or do not vote at all.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Notwithstanding the above, if the Company seeks

stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and

Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other

person with whom such stockholder is acting in concert or as a “group”

(as defined under Section 13 of the Securities Exchange

Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate

of 15% or more of the Public Shares, without the prior consent of the Company.

The Sponsor has agreed (a) to waive its redemption rights

with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not

to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s

obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of its Public Shares

if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to stockholders’

(including redemption rights) or pre-initial business combination activity, unless the Company provides the public stockholders with the

opportunity to redeem their Public Shares in conjunction with any such amendment.

There will be no redemption rights or liquidating

distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination

within the Combination Period.

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company

fails to complete a Business Combination within the Combination Period.

However, if the Sponsor acquires Public Shares in or after the

IPO, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business

Combination within the Combination Period.

In order to protect the amounts held in the Trust

Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or

products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,

reduce the amount of funds in the Trust Account to below the lesser of (1) $10.00 per Public Share and (2) the actual amount per Public

Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets,

less taxes payable, provided that such liability will not apply to claims by a third party or prospective target business who executed

a waiver of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity

of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities

Act”).

Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not

be responsible to the extent of any liability for such third-party claims.

The Company will seek to reduce the possibility that the Sponsor

will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the

Company’s independent registered public accounting firm), prospective target businesses and other entities with which the Company

does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the

Trust Account.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

As of March 31, 2021, the Company had cash outside

the Trust Account of $730,435 available for working capital needs.

All remaining cash held in the Trust Account is generally unavailable

for the Company’s use, prior to an initial Business Combination, and is restricted for use either in a Business Combination or to

redeem common stock.

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

Through March 31, 2021, the Company’s liquidity

needs were satisfied through receipt of $25,000 from the sale of the founder shares, advances from the Sponsor in an aggregate amount

of $141,881 and the remaining net proceeds from the IPO and the sale of Private Placement Warrants.

The Company anticipates that the $730,435 outside

of the Trust Account as of March 31, 2021 will be sufficient to allow the Company to operate for at least the next 12 months from the

issuance of the unaudited condensed financial statements, assuming that a Business Combination is not consummated during that time.

consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working

Capital Loans (as defined in Note 5) from the initial stockholders, the Company’s officers and directors, or their respective affiliates

(which is described in Note 5), for identifying and evaluating prospective acquisition candidates, performing business due diligence on

prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing

corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring,

negotiating and consummating the Business Combination.

The Company does not believe it will need to raise

additional funds in order to meet the expenditures required for operating its business.

However, if the Company’s estimates of the

costs of undertaking in-depth due diligence and negotiating business combination is less than the actual amount necessary to

do so, the Company may have insufficient funds available to operate its business prior to the business combination.

Moreover, the Company

will need to raise additional capital through loans from its Sponsor, officers, directors, or third parties.

None of the Sponsor, officers

or directors is under any obligation to advance funds to, or to invest in, the Company.

If the Company is unable to raise additional capital,

it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing

operations, suspending the pursuit of its business plan, and reducing overhead expenses.

The Company cannot provide any assurance that

new financing will be available to it on commercially acceptable terms, if at all.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Risks and Uncertainties

On January 30, 2020, the World Health Organization

(“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”).

In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

full impact of the COVID-19 outbreak continues to evolve.

The impact of the COVID-19 outbreak on the Company’s

financial position will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions.

These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain

and cannot be predicted.

If the financial markets and/or the overall economy are impacted for an extended period, the Company’s

financial position may be materially adversely affected.

Additionally, the Company’s ability to complete an initial Business Combination

may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak

or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s

ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors

and service providers to negotiate and consummate an initial Business Combination in a timely manner.

The Company’s ability to consummate

an initial business combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted

by the COVID-19 outbreak and the resulting market downturn.

Note 2 —

Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial

statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)

for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X of the SEC.

Certain information

or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant

to the rules and regulations of the SEC for interim financial reporting.

Accordingly, they do not include all the information and footnotes

necessary for a complete presentation of financial position, results of operations, or cash flows.

In the opinion of management, the accompanying

unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair

presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed financial

statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as amended, as of December 31, 2020 and

for the period from September 24, 2020 (inception) through December 31, 2020 as filed with the SEC on May 3, 2021, which contains the

audited financial statements and notes thereto.

The interim results for the three months ended March 31, 2021 are not necessarily indicative

of the results to be expected for the year ending December 31, 2021 or for any future interim periods.

Emerging Growth Company Status

The Company is an “emerging growth company,”

as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart

our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting

requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being

required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations

regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding

advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts

emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that

is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered

under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company

can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but

any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that

when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging

growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison

of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth

company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting

standards used.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization expense

Amortization of content assets

Provision for excess and obsolete inventory

Allowance for doubtful accounts

Change in fair value of derivative financial instruments

Gain on investment in convertible instrument

Change in fair value of warrant liabilities

Equity-based compensation

Deferred income taxes

Changes in operating assets and liabilities:

Accounts receivable

Content assets

Prepaid expenses

Accounts payable

Accrued expenses

Deferred revenue

Other liabilities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Purchase of property and equipment

Investment in convertible instrument

Equity investment

Cash paid for acquisition of Myx, net of cash acquired

Net cash used in investing activities

Cash flows from financing activities:

Borrowings under Credit Facility

Repayments under Credit Facility

Business Combination, net of issuance costs paid

Net cash provided by financing activities

Effect of exchange rates on cash

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosure of cash flow information:

Cash paid during the year for interest

Cash paid during the year for income taxes, net

Supplemental disclosure of noncash investing activities:

Property and equipment acquired but not yet paid for

Class A Common Stock issued in connection with the acquisition of Myx

Fair value of Myx instrument and promissory note held by Old Beachbody

Supplemental disclosure of noncash financing activities:

Business Combination transaction costs, accrued but

Net assets assumed from Forest Road in the Business Combination

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

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Organization, Business and Summary of Accounting Policies

, 2021 (the “Closing Date”), Forest Road Acquisition Corp.

(“Forest Road”), a special purpose acquisition company, consummated the Business Combination Agreement (the “Business Combination Agreement”) dated as of February 9, 2021, by and among Forest Road, the Beachbody Company Group, LLC (“Old Beachbody”), BB Merger Sub, LLC, (“BB Merger Sub”), MFH Merger Sub, LLC (“Myx Merger Sub”), and Myx Fitness Holdings, LLC (“Myx”).

Pursuant to the terms of the Business Combination Agreement, BB Merger Sub merged with and into Old Beachbody, with Old Beachbody surviving as a wholly-owned subsidiary of Forest Road (the “Surviving Beachbody Entity”);

(2) Myx Merger Sub merged with and into Myx, with Myx surviving as a wholly-owned subsidiary of Forest Road;

and (3) the Surviving Beachbody Entity merged with and into Forest Road, with Forest Road surviving such merger (the “Surviving Company”, and such mergers the “Business Combination”).

On the Closing Date, the Surviving Company changed its name to The Beachbody Company, Inc.

(the “Company”, “Beachbody”, “we” or “us”).

Beachbody is a leading subscription health and wellness company.

Beachbody is focused on digital platform development, fitness content and brand creation, proprietary nutritional product formulation and connected fitness across three brands:

Beachbody, Openfit and Myx.

The Beachbody On Demand streaming service with workouts from Beachbody’s programs such as P90X, Insanity, and 21 Day Fix, and Openfit, that includes live trainer-led workouts

and personalized nutrition, are each available as an app on iOS and Android mobile devices;

a streaming channel on OTT devices such as Apple TV, Roku, Amazon Fire, and Chromecast;

Myx’s interactive fitness platform provides commercial grade stationary bikes and accessories and on-demand

subscription-based instructor-led

fitness classes that enable customers to have an all-in-one

home fitness studio.

Beachbody’s revenue is primarily generated through a network of independent distributors (“Coaches” or “micro-influencers”), internet marketing channels, and direct response advertising.

Beachbody markets and sells its products primarily in the United States, United Kingdom, and Canada, and approximately 35% of Beachbody’s revenues for the three and six months ended June 30, 2021 are attributable to Shakeology, Beachbody’s premium nutritional shake.

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and pursuant to the regulations of the U.S.

Securities and Exchange Commission (“SEC”).

The merger between BB Merger Sub and Old Beachbody was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”).

Under this method of accounting, Forest Road is treated as the acquired company and Old Beachbody is treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Old Beachbody issuing stock for the net assets of Forest Road, accompanied by a recapitalization.

The net assets of Forest Road are stated at historical cost, with no goodwill or other intangible assets recorded, see Note 2.

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

Old Beachbody’s shareholders have the largest portion of the voting rights in the Company;

the board and management are primarily composed of individuals associated with Old Beachbody;

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

The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Old Beachbody.

The shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on shares reflecting the exchange ratio established in the Business Combination.

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Old Beachbody was determined to be the accounting acquirer in the acquisition of Myx.

As such, the acquisition is considered a business combination under ASC 805, Business Combinations

, and was accounted for using the acquisition method of accounting.

Beachbody recorded the fair value of assets acquired and liabilities assumed from Myx, see Note 9.

The presented financial information for the three months and six months ended June 30, 2021 includes the financial information and activities for Myx for the period from June 26, 2021 to June 30, 2021.

The unaudited condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries.

All intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of unaudited condensed financial

statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets

and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the

reported amounts of expenses during the reporting period.

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes.

Significant estimates include, but are not limited to, the valuation of acquired intangible assets, revenue arrangements with multiple performance obligations, equity-based compensation, amortization of content assets, impairment of goodwill, and the useful lives and recoverability of long-lived assets.

The Company bases these estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgements about the carrying amounts of assets and liabilities.

Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments

with an original maturity of three months or less when purchased to be cash equivalents.

Marketable Securities Held in Trust Account

At March 31, 2021 and December 31, 2020, the assets

held in the Trust Account were money market funds.

During the three months ended March 31, 2021, the Company did not withdraw any interest

income from the Trust Account to pay its tax obligations.

Concentration of Credit Risk

Financial instruments that potentially subject

the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal

Depository Insurance Corporation limit of $250,000.

At March 31, 2021 and December 31, 2020, the Company has not experienced losses

on this account and management believes the Company is not exposed to significant risk on such accounts.

Common Stock Subject to Possible Redemption

The Company accounts for its Class A common

stock subject to possible redemption in accordance with the guidance in Accounting Standard Codification (“ASC”) Topic 480

“Distinguishing Liabilities from Equity.”

Class A common stock subject to mandatory redemption (if any) are classified

as a liability instrument and are measured at fair value.

Conditionally redeemable common stock (including common stock that feature

redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events

not solely within the Company’s control) are classified as temporary equity.

At all other times, common stock is classified

as stockholders’

The Company’s common stock features certain redemption rights that are considered to be

outside of the Company’s control and subject to the occurrence of uncertain future events.

Accordingly, as of March 31, 2021

and December 31, 2020, 23,718,818 and 25,377,874 shares of Class A common stock subject to possible redemption are presented at

redemption value as temporary equity, outside of the stockholders’

equity section of the Company’s condensed balance

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Net Income (Loss) per Common Stock

Net income (loss) per share of common stock is

computed by dividing net income (loss) by the weighted average number of common stock outstanding for the period.

The Company has not

considered the effect of warrants sold in the IPO and private placement to purchase 15,333,333 of Class A common stock in the calculation

of diluted income (loss) per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion

of such warrants would be anti-dilutive.

The Company complies with accounting and disclosure

requirements ASC Topic 260, “Earnings Per Share.” 

The Company’s statements of operations include a presentation

of income (loss) per share for common stock subject to possible redemption in a manner similar to the two-class method of income (loss)

Net income per share of common stock, basic and diluted for Class A redeemable common stock is calculated by dividing the interest

income earned on the Trust Account (totaling $4,432 for the three months ended March 31, 2021) by the weighted average number of Class

A redeemable common stock outstanding since original issuance.

Net loss per share of common stock, basic and diluted for Class B non-redeemable

common stock is calculated by dividing the net income, adjusted for income attributable to Class A redeemable common stock, by the weighted

average number of Class B non-redeemable common stock outstanding for the period.

Class B non-redeemable common stock includes the Founder

Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.

did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then

share in the earnings of the Company.

As a result, diluted loss per share is the same as basic loss per share for the period presented.

Warrant liabilities

The Company does not use derivative instruments

to hedge exposures to cash flow, market, or foreign currency risks.

The Company evaluates all of its financial instruments, including

issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives,

pursuant to ASC 480 and ASC 815-15.

The classification of derivative instruments, including whether such instruments should be recorded

as liabilities or as equity, is reassessed at the end of each reporting period.

The Company accounts for its 15,333,333 common

stock warrants issued in connection with its IPO (10,000,000) and Private Placement (5,333,333) as derivative warrant liabilities in accordance

with ASC 815-40.

Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments

to fair value at each reporting period.

The liabilities are subject to remeasurement at each balance sheet date until exercised, and any

change in fair value is recognized in the Company’s statement of operations.

The fair value of warrants issued by the Company in

connection with the IPO and Private Placement has been estimated using Monte Carlo simulations at each measurement date.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Fair Value of Financial Instruments

The fair value of the Company’s assets and

liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair

Value Measurements and Disclosures,”

approximates the carrying amounts represented in the balance sheet.

The Company follows the asset and liability method

of accounting for income taxes under ASC 740, “Income Taxes.”

Deferred tax assets and liabilities are recognized for the estimated

future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities

and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable

income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and

liabilities of a change in tax rates is recognized in income in the period that included the enactment date.

Valuation allowances are

established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC 740 prescribes a recognition threshold and

a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax

For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.

There were no unrecognized

tax benefits and no amounts accrued for interest and penalties as of March 31, 2021.

The Company is currently not aware of any issues

under review that could result in significant payments, accruals or material deviation from its position.

The Company is subject to income

tax examinations by major taxing authorities since inception.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Recent Accounting Standards

Management does not believe that any recently

issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed

financial statements.

Note 3 —

Initial Public Offering

On November 30, 2020, the Company sold 30,000,000 Units

at a price of $10.00 per Unit, including the issuance of 3,900,000 Units as a result of the underwriters’

partial exercise of their

over-allotment option. Each Unit consists of one share of Class A common stock, par value $0.0001 per share and one-third of

one redeemable warrant (each, a “Public Warrant”).

Each whole Public Warrant entitles the holder to purchase one share of

Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 8).

Note 4 —

Private Placement

Simultaneously with the closing of the IPO, the

Sponsor purchased an aggregate of 5,333,333 Private Placement Warrants, at a price of $1.50 per unit, for an aggregate purchase price

of $8,000,000.

A portion of the proceeds from the Private Placement Warrants was added to the net proceeds from the IPO held in the Trust

Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at $11.50 per share. A

portion of the proceeds from the Private Placement Warrants will be added to the proceeds from the IPO to be held in the Trust Account.

If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement

Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable

law), and the Private Placement Warrants will expire worthless.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 5 —

Related Party Transactions

Founder Shares

On September 29, 2020, the Sponsor paid $25,000

to cover certain offering costs of the Company in consideration of 7,187,500 shares of the Company’s Class B common stock (the

“Founder Shares”).

The Founder Shares included an aggregate of up to 937,500 shares subject to forfeiture by the Sponsor to

the extent that the underwriters’

over-allotment option was not exercised in full.

On November 24, 2020, as part of an upsizing

of the IPO, the Sponsor was issued an additional 316,250 Founder Shares by the Company, resulting in a increase in the total number of

shares of Class B common stock outstanding from 7,187,500 to 7,503,750 (of which 978,750 were subject to surrender for no consideration

depending on the extent to which the underwriters exercised their over-allotment option).

On November 30, 2020, the underwriters partially

exercised their over-allotment option and forfeited the remaining over-allotment option, hence, 975,000 Founder Shares were no longer

subject to forfeiture and 3,750 Founder Shares were forfeited, resulting in an aggregate of 7,500,000 Founder Shares outstanding at March

31, 2021 and December 31, 2020.

Promissory Note —

Related Party

The Sponsor had agreed to loan the Company an

aggregate of up to $300,000 to be used for the payment of costs related to the IPO.

The promissory note was non-interest bearing,

unsecured and was due on the earlier of June 30, 2021 and the closing of the IPO.

 The promissory note was paid in full out of the

IPO proceeds on November 30, 2020, As of March 31, 2021 and December 31, 2020, there was no balance outstanding under the promissory note.

Administrative Service Fee

The Company has agreed, commencing on the effective

date of the IPO through the earlier of the Company’s consummation of a Business Combination or its liquidation, to pay an affiliate

of the Sponsor a monthly fee of $10,000 for office space, administrative and support services.

Upon completion of the initial Business

Combination or the Company’s liquidation, the Company will cease paying these monthly fees.

For the three months ended March 31,

2020, the Company has paid $30,000 of administrative fees.

Related Party Loans

In addition, in order to finance transaction costs

in connection with a Business Combination, the Sponsor may, but is not obligated to, loan the Company funds as may be required (“Working

Capital Loans”).

If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds

of the Trust Account released to the Company.

Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust

In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account

to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans, other

than the interest on such proceeds that may be released for working capital purposes.

Except for the foregoing, the terms of such Working

Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.

The Working Capital Loans

would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000

of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant.

The warrants would be identical to the Private Placement Warrants.

As of March 31, 2021 and December 31, 2020, no Working Capital Loans

were outstanding.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 6 —

Commitments & Contingencies

Registration Rights

The holders of the Founder Shares, Private Placement

Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stock issuable upon the exercise

of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares)

are entitled to registration rights pursuant to a registration rights agreement signed on the effective date of the IPO requiring the

Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common

The holders of these securities will be entitled to make up to three demands, excluding short-form registration demands, that

the Company register such securities.

In addition, the holders will have certain “piggy-back”

registration rights with respect

to registration statements filed subsequent to the completion of a Business Combination.

The Company will bear the expenses incurred in

connection with the filing of any such registration statements. 

Underwriters Agreement

On November 30, 2020, the underwriters were paid

a cash underwriting fee of 2% of the gross proceeds of the IPO, totaling $6,000,000.

In addition, $0.35 per unit, or approximately $10,500,000

in the aggregate, will be payable to the underwriters for deferred underwriting commissions.

The deferred fee will become payable to the

underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject

to the terms of the underwriting agreement.

Note 7 —

Public Warrants may only be exercised for a whole

number of shares.

No fractional warrants will be issued upon separation of the Units and only whole warrants will trade.

The Public Warrants

will become exercisable on the later of (a) 12 months from the closing of the IPO and (b) 30 days after the completion of a Business

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant

and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the

Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company

satisfying its obligations with respect to registration.

No warrant will be exercisable and the Company will not be obligated to issue

any shares of Class A common stock upon exercise of a warrant unless the share of Class A common stock issuable upon such warrant

exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder

of the warrants.

The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of

a Business Combination, it will use its best efforts to file with the SEC a registration statement registering the registration, under

the Securities Act, of the Class A common stock issuable upon exercise of the warrants.

The Company will use its best efforts to

cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating

thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement.

If a registration statement

covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after

the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during

any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis”

in accordance with Section 3(a)(9) of the Securities Act or another exemption.

Notwithstanding the above, if the Class A common

stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of

a “covered security”

under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of

public warrants who exercise their warrants to do so on a “cashless basis”

in accordance with Section 3(a)(9) of the

Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration

statement, but will use its best efforts to qualify the shares under applicable blue sky laws to the extent an exemption is not available.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Redemption of warrants for cash.

Once the warrants

become exercisable, the Company may call the warrants for redemption:

in whole and not in part;

at a price of $0.01 per warrant;

upon not less than 30 days’

prior written notice of redemption to each warrant holder;

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

If and when the warrants become redeemable by

the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale

under all applicable state securities laws.

If the Company has not completed the initial Business

Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not

receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s

assets held outside of the Trust Account with the respect to such warrants.

Accordingly, the warrants may expire worthless. 

Note 8 —

Stockholder’s Equity

Preferred Stock —

is authorized to issue a total of 1,000,000 shares of preferred stock at par value of $0.0001 each.

At March 31, 2021 and December 31,

2020, there were no shares of preferred stock issued or outstanding. 

Class A Common Stock —

The Company is authorized to issue a total of 300,000,000 shares of Class A common stock at par value of $0.0001 each.

2021 and December 31, 2020, there were 6,281,182 and 4,622,126 shares issued and outstanding, respectively (excluding 23,718,818 and

25,377,874 shares, respectively on such dates, subject to possible redemption).

Class B Common Stock —

Company is authorized to issue a total of 20,000,000 shares of Class B common stock at par value of $0.0001 each.

At March 31, 2021 and

December 31, 2020, there were 7,500,000 shares of Class B common stock issued or outstanding.

Holders of Class A common stock and Class B

common stock will vote together as a single class on all matters submitted to a vote of stockholders except as required by law.

of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination

on a one-for-one basis, subject to adjustment.

In the case that additional shares of Class A common stock or equity-linked securities

are issued or deemed issued in connection with a Business Combination, the number of shares of Class A common stock issuable upon

conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A

common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public

stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion

or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the

consummation of a Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable

for or convertible into shares of Class A common stock issued, or to be issued, to any seller in a Business Combination and any Private

Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion

of Founder Shares will never occur on a less than one-for-one basis.

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 9 —

Unaudited Interim Condensed Financial Statements

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, include all adjustments consisting of only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of June 30, 2021, its results of operations for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020.

The financial data and other financial information disclosed in the notes to these condensed consolidated financial statements related to the three- and six-month

periods are also unaudited.

The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results expected for the full fiscal year or any other period.

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

Fair Value Option

The guidance in ASC 825, Financial Instruments

, provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities.

Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings.

The decision to elect the fair value option is determined on an instrument-by-instrument

basis, must be applied to an entire instrument, and is irrevocable once elected.

The Company elected to measure the investment in the convertible instrument from Myx using the fair value option at each reporting date.

Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in the unaudited condensed consolidated balance sheets or the footnotes from those instruments using another measurement method.

The Company applies fair value accounting for assets and liabilities measured on a recurring and nonrecurring basis.

For assets and liabilities that are measured using quoted prices in active markets for identical assets or liabilities, the total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs (Level 1).

Assets and liabilities that are measured using significant other observable inputs are valued by reference to similar assets or liabilities, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data (Level 2).

For all remaining assets and liabilities for which there are no significant observable inputs, fair value is derived using an assessment of various discount rates, default risk, credit quality, and the overall capital market liquidity (Level 3).

These valuations require significant judgment.

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Accounts Receivable, Net

The Company provides credit in the normal course of business to its customers.

Accounts receivable consist primarily of credit card receivables arising from the sale of products to customers on an installment basis, which generally have payment terms ranging from one to three months.

Receivables are individually insignificant and are due from a large number of geographically dispersed customers.

Accounts receivable is reported net of allowances for doubtful accounts which were approximately zero as of June 30, 2021 and December 31, 2020.

The allowance for doubtful accounts is evaluated and adjusted to reflect the Company’s expected credit losses based on collection history and an analysis of the accounts receivable aging.

The change in the allowance for doubtful accounts during the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Balance, beginning of period

Balance, end of period

Business Combinations

The Company accounts for business combinations under the acquisition method of accounting.

The cost of an acquired company is assigned to the tangible and identifiable assets purchased and the liabilities assumed on the basis of their fair values at the date of acquisition.

Any excess of the purchase price over the fair value of tangible and intangible assets acquired is assigned to goodwill.

The transaction costs associated with business combinations are expensed as they are incurred.

Common Stock Warrant Liability

The Company assumed 10,000,000 warrants originally issued in Forest Road’s initial public offering (the “Public Warrants”) and 5,333,333

warrants issued in a private placement that closed concurrently with Forest Road’s initial public offering, (the “Private Placement Warrants”) upon the Business Combination.

The Public and Private Placement Warrants entitle the holder to purchase

one share of Class A Common Stock at an exercise price of $

11.50 per share.

All of the Public and Private Placement Warrants remained outstanding as of June 30, 2021.

The Public Warrants are publicly traded and become exercisable on November 30, 2021 provided that the Company has an effective registration statement and are

exercisable for cash unless certain conditions occur, such as the failure to have an effective registration statement related to the shares issuable upon exercise or redemption by the Company under certain conditions, at which time the warrants may be cashless exercised.

The Private Placement Warrants are transferable, assignable or salable in certain limited exceptions.

The Private Placement Warrants were

not transferable, assignable or salable until July 25, 2021 , subject to certain limited exceptions.

The Private Placement Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable

so long as they are held by the initial purchasers or their permitted transferees.

If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will cease to be Private Placement Warrants, and become Public Warrants and will be redeemable by the Company and exercisable by such holders on the same basis as the other Public Warrants.

The Company evaluated the Public and Private Placement Warrants under ASC 815, Derivatives and Hedging—Contracts in Entity’s Own Equity

, and concluded they do not meet the criteria to be classified in stockholders’ equity.

Specifically, the exercise of the Public and Private Placement Warrants may be settled in cash upon the occurrence of a tender offer or exchange that involves 50% or more of our Class A stockholders.

Because not all of the voting stockholders need to participate in such tender offer or exchange to trigger the potential cash settlement and the Company does not control the occurrence of such an event, the Company concluded that the Public and Private Placement Warrants do not meet the conditions to be classified in equity.

Since the Public and Private Placement Warrants meet the definition of a derivative under ASC 815, the Company recorded these warrants as liabilities in the unaudited condensed consolidated balance sheets at fair value, with subsequent changes in their respective fair values recognized in the change in fair value of warrant liabilities within the unaudited condensed consolidated statements of operations at each reporting date.

The Public Warrants were publicly traded and thus had an observable market price to estimate fair value.

The Private Placement Warrants were valued using a Black-Scholes option-pricing model as described in Note 4 to the unaudited condensed consolidated financial statements.

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Investment in Convertible Instrument

In December 2020, the Company purchased a $ 10.0 million convertible instrument from Myx.

The convertible instrument was scheduled to mature 18 months

from issuance and bore interest of 11% per annum.

The principal and accrued interest on the convertible instrument was to automatically convert into preferred shares upon the closing by Myx of a convertible preferred equity financing with gross proceeds of at least $ 35.0 million (a “Qualified Financing”) at a conversion price equal to 85 % of the lowest price per unit paid in cash by investors in such Qualified Financing.

Upon a change in control involving the Company and a special purpose acquisition company, immediately prior to the change in control transaction, the principal and accrued interest was to be automatically converted into preferred equity units of Myx at a conversion price equal to 85% of the price per unit contemplated in the change of control transaction.

Such preferred equity units were to automatically convert into common shares of the surviving entity.

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

In connection with the Business Combination, the principal and interest were effectively settled at a fair value

of $ 18.4 million.

As of December 31, 2020, the convertible instrument wa s

included within other assets in the consolidated balance sheets.

Prior to the Business Combination, the Company elected to measure the investment in convertible instrument from Myx using the fair value option at each reporting date.

Under the fair value option, bifurcation of an embedded derivative was not necessary, and all related gains and losses on the host contract and derivative due to change in the fair value was reflected in other income, net in the condensed consolidated statements of operations.

Revenue Recognition

The Company’s primary sources of revenue are from sales of digital subscriptions, nutritional products and connected fitness equipment.

The Company records revenue when it fulfills its performance obligation to transfer control of the goods or services to its customer.

Control of shipped items is generally transferred when the product is delivered to the customer.

The amount of revenue recognized is the consideration that the Company expects it will be entitled to receive in exchange for transferring goods or services to its customers.

Control of services, which are primarily digital subscriptions, transfers over time, and as such, revenue is recognized ratably over the subscription period (up to 12 months), using a mid-month convention.

The Company sells a variety of bundled products that combine digital subscriptions, nutritional products, and/or other fitness products.

The Company considers these sales to be revenue arrangements with multiple performance obligations and allocates the transaction price to each performance obligation based on its relative stand-alone selling price.

The Company defers revenue when it receives payments in advance of delivery of products or the performance of services.

Revenue is recorded net of expected returns, discounts, and credit card chargebacks, which are estimated using the Company’s historical experience.

Revenue is presented net of sales taxes and value added taxes (VAT and GST/HST) which are collected from customers and remitted to applicable government agencies.

The Company is the principal in all its relationships where third parties sell or distribute the Company’s goods or services.

Payments made to the third parties are recorded in selling and marketing expenses within the unaudited condensed consolidated statements of operations.

Recently Adopted Accounting Pronouncements or Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12,

Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes

, which removes specific exceptions to the general principles in Topic 740 in addition to simplifying other areas of Topic 740.

The guidance in this update is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and is effective for all other entities for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted.

The Company adopted ASU 2019-12 in

the first quarter of 2021 and the adoption had no material impact to the Company’s unaudited condensed consolidated financial statements.

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Business Combination

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

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

value per share (the “Class A Common Stock”), and each equity unit of Old Beachbody held by Carl Daikeler and certain of his affiliated and related entities was canceled and converted into the right to receive the number of shares of the Company’s Class X Common Stock, par value

0.0001 per share, (the “Class X Common Stock,” and, together with the Class A Common Stock, the “Common Stock”) equal to the Exchange Ratio.

Pursuant to the Business Combination Agreement, 3,750,000 shares held by Forest Road Acquisition Sponsor LLC (the “Sponsor”) will be unvested and are subject to forfeiture if certain earnout conditions are not satisfied (“Forest Road Earn-out

Subject to certain other terms and conditions, the Forest Road Earn-out

Shares will vest, in equal tranches of 10 % each, commencing on December 22, 2021, upon the occurrence of the Company’s last sale price on the New York Stock Exchange (“NYSE”) exceeding each of the following price-per-share

thresholds for any 20 trading days within any consecutive 30 -day

trading period,:

$ 12.00 , $ 13.00 , $ 14.00 , $ 15.00 and $ 16.00 .

Any Sponsor Shares that do not vest within 10

years after Closing will be forfeited.

The Forest Road Earn-out

Shares are accounted for as equity-classified equity instruments, were included as merger consideration as part of the Reverse Recapitalization, and recorded in additional paid-in

As of June 30, 2021, all Forest Road Earn-out

Shares are unvested.

Upon the closing of the Business Combination, the Company’s certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 2,000,000,000 shares, $0.0001 par value per share, of which, 1,600,000,000 shares are designated as Class A Common Stock, 200,000,000 shares are designated as Class X Common Stock, 100,000,000 shares are designated as Class C Common Stock and 100,000,000 shares are designated as Preferred Stock.

The holder of each share of Class A C

tock is entitled to one vote , the holder of each share of Class X Common Stock is entitled to ten votes and except as otherwise required by law, the holder of each share of Class C Common Stock is not entitled to any voting powers.

connection with the Business Combination, a number of subscribers purchased an aggregate of

22,500,000 shares of Class A Common Stock (the

“PIPE”) from the Company,

for a purchase price of $ 10.00 per share and an aggregate purchase price of $ 225.0 million (the “PIPE Shares”), pursuant to separate subscription agreements entered into effective as of February 9, 2021.

At the Effective Time, and subject to the terms and conditions of the Business Combination Agreement, each Myx equity unit was canceled and converted into the right to receive approximately 13.5 million shares of Class A Common Stock;

provided, however, that certain holders of Myx units received an amount in cash equal to the value of such shares not to exceed $ 37.7

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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

Recapitalization

Cash- Forest Road trust and cash, net of redemptions

Cash- PIPE Financing

net assets assumed from Forest Road

Fair value of Public and Private Warrants

Transaction costs and advisory fees for Beachbody allocated to equity

Transaction costs and advisory fees for Forest Road

Net Business Combination

net assets assumed from Forest Road

Transaction costs and advisory fees for Beachbody allocated to warrants

fair value of Forest Road warrants

Accrued transaction costs and advisor fees

Net cash contributions from Business Combination

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

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

Common stock of Forest Road, net of redemptions

Forest Road shares held by the Sponsor (1)

Shares issued in PIPE Financing

Business Combination and PIPE Financing shares - Class A C

Myx equity units - Class A Common Stock

Old Beachbody equity units - Class A C

Old Beachbody equity units - Class X C

Total shares of common stock immediately after Business Combination

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

The number of Old Beachbody equity units - Class A Common Stock was determined from

20,220,589 common units and 10,068,841 preferred units of Old Beachbody outstanding immediately prior to the closing of the Business Combination converted at the Exchange Ratio.

The number of Old Beachbody equity units - Class X Common Stock was determined from

42,042,850 common units of Old Beachbody outstanding immediately prior to the closing of the Business Combination converted at the Exchange Ratio.

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

Three Months Ended June 30,

Six Months Ended June 30,

United States

Rest of world 1

Total revenue

Consists of Canada, United Kingdom and France.

Deferred Revenue

Deferred revenue is recorded for nonrefundable cash payments received for the Company’s performance obligation to transfer, or stand ready to transfer, goods or services in the future.

Deferred revenue consists of subscription fees billed that have not been recognized and physical products sold that have not yet been delivered.

During the three and six months ended June 30, 2021 the Company recognized $

23.6 million and $

79.2 million, respectively of revenue that was included in the deferred revenue balance as of December 31, 2020.

During the three and six months ended June 30, 2020, the Company recognized $

17.8 million and $

56.2 million, respectively of revenue that was included in the deferred revenue balance as of December 31, 2019.

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Fair Value Measurements

Fair value is defined as the price that would

be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The hierarchy gives

the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the

lowest priority to unobservable inputs (Level 3 measurements).

These tiers include:

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

- defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted

prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not

- defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own

assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value

drivers are unobservable.

At March 31, 2021, there were 10,000,000 Public

Warrants and 5,333,333 Private Placement Warrants outstanding.

The following table presents information about

the Company’s assets that are measured at fair value on a recurring basis at March 31, 2021 and indicates the fair value hierarchy

of the valuation inputs the Company utilized to determine such fair value:

Warrant Liability –

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

June 30, 2021

Derivative assets

Public Warrants

Warrant Liability –

Private Warrants

FOREST ROAD ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The Company utilizes a Monte Carlo simulation

model to value the warrants at each reporting period, with changes in fair value recognized in the statement of operations.

The estimated

fair value of the warrant liability is determined using Level 3 inputs.

Inherent in a binomial options pricing model are assumptions

related to expected share-price volatility, expected life, risk-free interest rate and dividend yield.

The Company estimates the volatility

of its shares of common stock based on historical volatility that matches the expected remaining life of the warrants.

The risk-free interest

rate is based on the U.S.

Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of

the warrants.

The expected life of the warrants is assumed to be equivalent to their remaining contractual term.

The dividend rate is

based on the historical rate, which the Company anticipates to remain at zero .

As of March 31, 2021, the public warrants were valued

using the actual closing trading price on March 31, 2021.

The aforementioned warrant liabilities are not subject to qualified

hedge accounting.

Transfers to/from Levels 1, 2 and 3 are recognized at the end of the

reporting period.

There were no transfers between levels for the three months ended March 31, 2021, other than the transfer of the Public

Warrants from Level 3 to Level 1.

The following table provides quantitative information regarding Level 3

fair value measurements:

As of March 31,

December 31,

Stock price  

$ 10.12  

$ 10.50  

Strike price  

$ 11.50  

Term (in years)  

Volatility  

43.3 %  

Risk-free rate  

0.92 %  

Dividend yield  

Note 10 —

Private Placement Warrants

Total Liabilities

December 31, 2020

Derivative assets

Investment in convertible instrument

Fair values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate the recorded value due to the short period of time to maturity.

The fair value of the Public Warrants, which trade in active markets, is based on quoted market prices for identical instruments.

The fair value of derivative instruments is based on Level 2 inputs such as observable forward rates, spot rates, and foreign currency exchange rates.

The Company’s Private Placement warrants and investment in the convertible instrument are classified within Level 3 of the fair value hierarchy because their fair values are is based on significant inputs that are unobservable in the market.

The fair value of goodwill and intangible assets is based on a valuation performed by a third-party using Level 3 inputs.

The valuation of the Private Placement Warrants and, prior to the Business Combination, the investment in convertible instrument use assumptions and estimates the Company believes would be made by a market participant in making the same valuations.

The Company assesses these assumptions and estimates on an on-going basis

as additional data impacting the assumptions and estimates are obtained.

The Company determined the fair value of the Private Placement Warrants using a Black-Scholes option-pricing model and the quoted price of the Company’s common stock.

Volatility was based on the implied volatility derived from the average of the actual market activity of the Company’s peer group.

The expected life was based on the remaining contractual term of the Private Placement Warrants, and the risk-free interest rate was based on the implied yield available on U.S.

Treasury Securities with a maturity equivalent to the warrants’ expected life.

The significant unobservable input used in the fair value measurement of the Private Placement Warrants is the implied volatility.

Significant changes in the implied volatility would result in a significantly higher or lower fair value measurement, respectively.

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

As of June 25,

As of June 30,

Risk-free rate

Dividend yield rate

Contractual term (in years)

Exercise price

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

Ended June 30,

Balance, beginning of period

Assumed in Business Combination

Change in fair value

Balance, end of period

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the three and six months ended June 30, 2021, the change in the fair value of Private Placement Warrants resulted from the change in fair value of the Company’s Class A Common Stock.

The changes in fair value are included in the unaudited condensed consolidated statements of operations as a component of change in fair value of warrant liabilities.

Prior to the Business Combination and as of December 31, 2020, the convertible instrument was valued using a scenario-based analysis.

Two primary scenarios were considered to arrive at the valuation conclusion for the convertible instrument.

The first scenario considers the probability-weighted value of conversion at the stated discount to the issue price in a change in control event.

The second scenario considers the probability-weighted value of conversion at the stated discount to the issue price in a Qualified Financing event.

As of the date of the investment in the convertible instrument, an implied yield was calculated such that the sum of the value of the straight debt and the value of the conversion feature was equal to the principal investment amount.

The implied yield of the investment is carried forward with a market adjustment and used as the primary discount rate for subsequent valuation dates.

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

Significant changes in the probabilities of the completion of the future Qualified Financing or change in control would result in a significantly higher or lower fair value measurement, respectively.

Significant changes in the probabilities as the period in which outcomes will be achieved would result in a significantly lower or higher fair value measurement, respectively.

The following table presents changes in the Level 3 investment in convertible investment from Myx measured at fair value for the three and six months ended June 30, 2021:

Three Months Ended

June 30, 2021

Six Months Ended June

Balance, beginning of period

Investment in convertible instrument

Change in fair value

Conversion of investment

Balance, end of period

For the three and six months ended June 30, 2021, the change in the fair value of the investment in convertible instrument resulted from the effective settlement of the instrument.

The changes in fair value are included in the unaudited

condensed consolidated statements of operations as a component of other income, net.

Inventory, net

Inventory, net consists of the follo w

ing (in thousands):

Raw materials and work in process

Finished goods

Total inventory

Adjustments to change the carrying value of excess and obsolete inventory to the lower of cost or net realizable value were $ 0.8 million and $ 2.8 million during the three and six months ended June 30, 2021, respectively and ($ 0.5 ) million and ($ 0.1 ) million during the three and six months ended June 30, 2020, respectively.

The gains in 2020 were attributable to increased demand on reserved excess inventory.

These adjustments are included in the unaudited condensed consolidated statements of operations as a component of nutrition and other

cost of revenue.

Other Current Assets

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

Deferred coach costs

Total other current assets

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Property and Equipment, Net

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

Computer software

Leasehold improvements

Computer equipment

Computer software and web development projects in-process

Furniture, fixtures and equipment

Property and equipment, gross

Accumulated depreciation

Property and equipment, net

The Company recorded depreciation expense related to property and equipment in the following e x

pense categories of its unaudited condensed consolidated statements o

f operations as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenue

Selling and marketing

Enterprise technology

and development

General and administrative

Total depreciation

Content Assets, Net

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

Released, less amortization

In production

Content assets, net

The Company expects $

14.8 million of content assets to be amortized during the next 12 months and

100 % of the balance

within four years.

The Company recorded amortization expense for content assets of $

3.3 million and $

6.1 million during the three and six months ended June 30, 2021, respectively and $

1.7 million and $

3.2 million during the three and six months ended June 30, 2020, respectively.

The Company acquired

100 % of the equity of Myx pursuant to the Business Combination Agreement.

The following summarizes the consideration transferred

on the Closing Date for

the Myx acquisition (in thousands):

Purchase Price

onsideration (1)

Share consideration (2)

Fair value of Myx instrument held by Old Beachbody (3)

Promissory note held by Old Beachbody (4)

Total consideration

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

Share consideration was calculated based on

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

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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

In April and June 2021, Old Beachbody entered into promissory note agreements with Myx.

Such promissory notes were effectively settled on the Closing Date.

The acquired assets and assumed liabilities of Myx were recorded at their preliminary acquisition date fair values.

The purchase price allocations are subject to material change as the Company continues to gather information relevant to its determination of the fair value of the assets and liabilities acquired primarily related to, but not limited to, inventory, intangible assets, deferred revenue, and deferred income taxes.

Any adjustments to the purchase price allocations will be made as soon as practicable but no later than one year from the acquisition date.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed (in thousands):

Intangible assets:

Trade name/ Trademark

Developed technology

Customer relationships

Cash acquired

Inventory, net

Content assets

Deferred revenue

Other liabilities

Deferred tax liabilities

The excess of the purchase price over the estimated fair values of the net assets acquired, including identifiable intangible assets, is recorded as goodwill.

Goodwill is primarily attributable to the assembled workforce of Myx and expected synergies from combining operations.

Goodwill recognized was allocated to the Other operating segment and is generally not deductible for tax purposes.

The fair values of the trade name and trademark intangible assets were determined using an “income approach”, specifically, the relief-from royalty approach, which is a commonly accepted valuation approach.

This approach is based on the assumption that in lieu of ownership, a firm would be willing to pay a royalty in order to exploit the related benefits of this asset.

Therefore, a portion of Myx’s earnings, equal to the after-tax royalty

that would have been paid for the use of the asset, can be attributed to the firm’s ownership.

The fair value of the developed technology intangible asset was also determined by the relief-from-royalty approach.

The fair values of the customer relationship intangible assets were determined by using an “income approach,” specifically a multi-period excess earnings approach, which is a commonly accepted valuation approach.

Under this approach, the net earnings attributable to the asset or liability being measured are isolated using the discounted projected net cash flows.

These projected cash flows are isolated from the projected cash flows of the combined asset group over the remaining economic life of the intangible asset or liability being measured.

Both the amount and the duration of the cash flows are considered from a market participant perspective.

Where appropriate, the net cash flows were adjusted to reflect the potential attrition of existing customers in the future, as existing customers are a “wasting” asset and are expected to decline over time.

The revenue and operating loss from Myx included in the Company’s unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021 was $ 0.1 million and $ 0.3 million, respectively.

During the three and six months ended June 30, 2021, Company incurred $ 1.7 million and $ 1.8

million in transaction expenses associated with the Myx acquisition, which are included in general and administrative expenses in the unaudited condensed consolidated statements of operations.

The following unaudited pro forma financial information presents the combined results of operations of the Company and Myx as if the companies had been combined as of January 1, 2020.

The pro forma financial information includes the accounting effects of the business combination, including amortization of intangible assets.

The unaudited pro forma financial information is presented for information purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented, nor should it be taken as indication of the Company’s future consolidated results of operations.

Three Months Ended June 30,

Six Months Ended June 30,

Pro forma combined:

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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

developed and endorsed by elite athletes.

The Company reco g

nized the assets and liabilities of Ladder bas e

d on its preliminary estimates of their acquisition date fair values.

The purchase price allocations are subject to change as the Company continues to gather information relevant to its determination of the fair value of the assets and liabilities acquired primarily related to, but not limited to, deferred income taxes.

Any adjustments to the purchase price allocations will be made as soon as practicable but no later than one year from the acquisition date.

There were no adjustments to the purchase price allocations during the three and six months ended June 30, 2021.

The following table summarizes the comp o

nents of consideration and the preliminary fair value estimates of assets acquired and liabilities assumed (in thousands):

Purchase Price

Common units issued in connection with acquisition (1)

Intangible assets:

Customer-related

Talent and representation contracts

Cash acquired

Other assets acquired

Liabilities acquired

Deferred tax liabilities

The fair value of common units issued in connection with the acquisition was calculated based on 1,449,537 common

units of Old Beachbody

multiplied by the estimated fair value per unit of $ 19.24 .

The excess of the purchase price over the estimated fair values of the net assets acquired, including identifiable intangible assets, is recorded as goodwill.

Goodwill is primarily attributable to the assembled workforce of Ladder and expected synergies from combining operations.

Goodwill recognized was allocated to the Company’s Other operating segment and is generally not deductible for tax purposes.

The revenue from Ladder included in the Company’s unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021 was $ 0.2 million and $ 0.5 million, respectively.

The operating loss from Ladder included in the Company’s unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021 was $ 0.1 million and $ 0.5 million, respectively.

The following unaudited pro forma financial information presents the combined results of operations as if Ladder had been combined with the Company as of January 1, 2020.

The pro forma financial information includes the accounting effects of the business combination, including amortization of intangible assets.

Ended June 30,

Six Months Ended

Pro forma combined:

Net loss income

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Goodwill and Acquired Intangible Assets

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

Goodwill, beginning of period

Acquisition of Myx

Goodwill, end of period

Intangible Assets, Net

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

June 30, 2021

December 31, 2020

Weighted-Average

Remaining Useful

Contract-based

Customer-related

Technology-based

Talent and representation contracts

Amortization expense for acquired intangible assets

1.7 million and $

3.3 million during the three and six months ended June 30, 2021 and $

0.9 million and $

million during the three and six months ended June 30, 2020, respectively.

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

Six months ended December 31, 2021

Year ended December 31, 2022

Year ended December 31, 2023

Year ended December 31, 2024

Year ended December 31, 2025

Accrued Expenses

Accrued expenses consist of the

followings (in thousands):

Employee compensation and benefits

Information technology

Inventory, shipping and fulfillment

Sales and income taxes

Other accrued expenses

Total accrued expenses

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Credit Facility

In December 2018, Beachbody, LLC, as borrower, and Old

Beachbody and certain of Beachbody, LLC’s subsidiaries, as guarantors, entered into a credit agreement with Bank of America, N.A., as lender, administrative agent and letter of credit issuer for a $

35 million revolving credit facility with a $

10 million sublimit for letters of credit (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Facility”).

The Credit Facility was amended in April 2020 to extend the maturity date to December 2021, amend certain pricing provisions and financial covenants, and amend other provisions including the definition of applicable rates based on consolidated EBITDA pricing levels.

The Credit Facility was further amended in September 2020, whereby Old Beachbody assumed the Company’s obligations under the Credit Facility, and in March 2021 to extend the maturity date to June 2022 , amend financial covenants, and temporarily increase the Credit Facility by $ 20 million

for a period of either 90 days, or until

the consummation of the Business Combination.

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

As of June 30, 2021 and December 31, 2020, there were

no borrowings outstanding, and a letter of credit was issued under the Credit Facility for $

Borrowings may be either Bloomberg Short-Term Bank Yield Index (“BSBY”)

rate loans or base rate loans at the Company’s election.

BSBY rate loans bear interest at an annual rate equal to the BSBY rate

1.75 % to 2.25 %.

Base rate loans are at the base rate, as defined in the amended Credit Facility, plus 0.75 % to 1.25 %.

The Company also pays a 1.75 % to 2.25 % fee on the letters of credit outstanding and a 0.375 % to 0.5 % commitment fee on the unused Credit Facility.

The Company incurred $ 0.2 million and $ 0.3 million of interest and approximately zero and $ 0.1 million of fees under the Credit Facility during the three and six months ended June 30, 2021 and $ 0.1 million and $ 0.2 million of interest and approximately zero and $ 0.1 million of fees under the Credit Facility during the three and six months ended June 30, 2020.

The Credit Facility contains certain reporting and financial covenants which require the Company to maintain a minimum consolidated EBITDA amount and comply with a maximum capital expenditures amount.

The Company was in compliance with all covenants as of June 30, 2021.

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

At June 30, 2021 and December 31, 2020, the Company had operating lease liabilities of $ 36.1 million and $ 41.2 million, respectively, and right-of-use

assets of $ 29.0 million and $ 32.9 million, respectively.

As of June 30, 202 1

and December 31, 2020, the Company had finance lease liabilities $ 0.4 million and $ 0.4 million, respectively, and right-of-use assets

of $ 0.4 million and $ 0.4 million, respectively.

The Company’s leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees.

Certain of the Company’s leases include renewal options and escalation clauses;

renewal options have not been included in the calculation of lease liabilities and right-of-use assets

as the Company is not reasonably certain to exercise these options.

Variable expenses generally represent the Company’s share of the landlord operating expenses.

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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

Three Months Ended June 30,

Six Months Ended June 30,

Finance lease costs:

Amortization of right-of-use

Interest on lease liabilities

Operating lease costs

Short-term lease costs

Variable lease costs

Total lease costs

Six Months Ended June 30,

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from finance leases

Operating cash flows from operating leases

Financing cash flows from finance leases

asset obtained in exchange for new operating lease liabilities

Weighted-average remaining lease term—finance leases

Weighted-average remaining lease term—operating leases

Weighted-average discount rate—finance leases

Weighted-average discount rate -

operating leases

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

Operating Leases

Finance Leases

Six Months Ended December 31, 2021

Year ended December 31, 2022

Year ended December 31, 2023

Year ended December 31, 2024

Year ended December 31, 2025

Less present value discount

Lease liabilities at June 30, 2021

As the Company’s lease agreements do not provide an implicit rate, the discount rates used to determine the present value of lease payments are generally based on the Company’s estimated incremental borrowing rate for a secured borrowing of a similar term as the lease.

Commitments and Contingencies

Inventory Purchase and Service Agreements

The Company has noncancelable inventory purchase and service agreements with multiple service providers which expire at varying dates through 2025.

Service agreement obligations include amounts related to fitness and nutrition trainers, future events, information systems support, and other technology projects.

Future minimum payments under noncancelable service and inventory purchase agreements for the periods succeeding June 30, 2021 are as follows (in thousands):

Six Months Ended December 31, 2021

Year ended December 31, 2022

Year ended December 31, 2023

Year ended December 31, 2024

Year ended December 31, 2025

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

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Contingencies

The Company is subject to litigation from time to time in the ordinary course of business.

Such claims typically involve its products, intellectual property, and relationships with suppliers, customers, distributors, employees, and others.

Contingent liabilities are recorded when it is both probable that a loss has occurred and the amount of the loss can be reasonable estimated.

Although it is not possible to predict how litigation and other claims will be resolved, the Company does not believe that any currently identified claims or litigation matters will have a material adverse effect on its consolidated financial position or results of operations.

Common Stock Warrant Liability

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

As part of Forest Road’s initial public offering,

10,000,000 Public Warrants were sold.

The Public Warrants entitle the holder thereof to purchase one share of Class A Common Stock at a price of $ 11.50 per share, subject to adjustments.

The Public Warrants may only be exercised for a whole number of shares of Class A Common Stock.

No fractional shares will be issued upon exercise of the warrants.

The Public Warrants will become exercisable on November 30, 2021, provided that the Company has an effective registration statement.

Simultaneously with Forest Road’s initial public offering, Forest Road consummated a private placement of 5,333,333 Private Placement Warrants with Forest Road’s sponsor.

Each Private Placement warrant is exercisable for one share of Class A Common Stock at a price of $ 11.50 per share, subject to adjustment.

The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the Class A Common Stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until July 25, 2021, subject to certain limited exceptions.

Additionally, the Private Placement Warrants will be non-redeemable

so long as they are held by the initial purchasers or such purchasers’ permitted transferees.

If the Private Placement Warrants are held by someone other than the initial shareholders or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

Once the warrants become exercisable, the Company may redeem the Public Warrants:

in whole and not in part;

at a price of $ 0.01 per warrant;

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

if, and only if, the closing price of Class A Common Stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading

day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

The Company will not redeem the warrants as described above unless an effective registration statement under the Securities Act covering the Class A Common Stock issuable upon exercise of the warrants is effective and a current prospectus relating to those Class A Common Stock is available throughout the 30-day

redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act.

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

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

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

In no event will the Company be required to net cash settle any warrant.

The Company concluded the Public Warrants and Private Placement Warrants meet the definition of a derivative under ASC 815 (as described in Note 1) and are recorded as liabilities.

Upon consummation of the Business Combination, the fair value of the Public Warrants and Private Placement Warrants were recorded in the unaudited condensed consolidated balance sheets.

The fair value of the Public Warrants and Private Placement Warrants was remeasured as of June 30, 2021, resulting in a

$ 10.7 million non-cash

change in fair value in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021.

Transaction costs and advisory fees allocated to the issuance of the Public and Private Placement Warrants of $ 5.3 million were also recorded as a component of change in fair value of warrant liabilities in the unaudited condensed consolidated statements of operations, resulting in a net change in fair value of warrant liabilities of $ 5.4 million.

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Stockholders’ Equity

As of June 30, 2021, 2,000,000,000 shares, $ 0.0001 par value per share are authorized, of which, 1,600,000,000 shares are designated as Class A Common Stock, 200,000,000 shares are designated as Class X Common Stock, 100,000,000 shares are designated as Class C Common Stock and 100,000,000 shares are designated as Preferred Stock.

Holders of each share of Class A Common Stock are entitled to dividends when, as and if declared by the Company’s board of directors, subject to the rights and preferences of any holders of outstanding series of Preferred Stock holders.

As of June 30, 2021, the Company had not declared any dividends.

The holder of each Class A Common Stock is entitled to one vote, the holder of each share of Class X Common Stock is entitled to ten votes and except as otherwise required by law, the holder of each share of Class C Common Stock is not entitled to any voting powers.

Old Beachbody

Prior to the Business Combination, Old Beachbody’s preferred units were convertible into common units, at the option of the holders at any time, with no additional consideration required.

The preferred units were to convert to common units at a rate

to adjustment for certain events including unit split, unit dividend or recapitalization.

The preferred units were subject to automatic conversion if the Company consummates an initial public offering that meets certain criteria.

The holders could redeem the preferred units at any time after December 14, 2024, at a price equal to the greater of (i) the fair market value of the common units into which such preferred units are convertible or (ii) approximately

9.93 per unit, or $

100.0 million in aggregate (the “Capital Contribution”), reduced by general distributions previously made to

plus any declared but unpaid distributions as of the date of the redemption notice.

The holders were entitled to distributions, in the amount, if any, of available cash flows, as determined by a majority of the Board of Managers.

Distributions were to be made to common unit members and preferred unit members in proportion to their percentage of ownership interests, with priority to certain tax distributions and distributions to reimburse Beachbody Holdings and the holders for certain third-party expenses that have not been previously paid.

The redemption by the holders or the completion of an initial public offering was not solely within the control of Old Beachbody, and as such, the preferred units were classified as mezzanine members’ equity.

In connection with the Business Combination

, 10,068,841 p

nits were converted into 33,828,030 shares of Class A Common Stock.

As of December 31, 2020, 100,000,000 common units of Old Beachbody were

authorized, and

62,263,439 common units were outstanding.

In connection with the Business Combination, 62,263,439

common units of Old Beachbody were converted into

67,934,584 shares of Class A Common Stock and 141,250,310 shares of Class X Common Stock.

Old Beachbody members’ personal liability for the obligations or debts of the Company were limited.

The Company’s operating agreement called for the Company to be dissolved and terminated upon the earliest occurrence of the following events:

bankruptcy of the Company, decision by a majority of both the common and preferred unit holders to dissolve the Company, or the date the Company may otherwise be dissolved by operation of law or judicial decree.

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Accumulated Other Comprehensive Income (Loss)

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

Gain (Loss) on

Balances at December 31, 2019

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive income (loss)

Balances at June 30, 2020

Balances at December 31, 2020

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive income (loss)

Balances at June 30, 2021

Equity-Based Compensation

Equity Compensation Plans

Prior to the Business Combination, the Company maintained its 2020 Beachbody Company Group LLC Equity Compensation Plan (the “2020 Plan”), under which, grants were awarded to certain employees, consultants, and members of the Company’s board of directors through the granting of one or more of the following types of awards:

(a) nonqualified unit options, (b) unit awards, and (c) unit appreciation rights.

The Company granted nonqualified unit options with vesting periods ranging from three to five years .

Upon closing of the Business Combination, awards under the 2020 Plan were converted at the Exchange Ratio, and the Company’s board of directors approved the 2021 Incentive Award Plan (the “2021 Plan”).

The 2021 Plan provides for the grant of stock options, including ISOs and nonqualified stock options (“NSOs”), SARs, restricted stock, dividend equivalents, restricted stock units (“RSUs”) and other stock or cash-based awards.

Under the 2021 Plan, up to 30,442,594 shares of Class A Common Stock will be available for issuance under the Plan.

In addition, the number of shares of Class A Common Stock available for issuance under the 2021 Plan will be increased on January 1 of each calendar year beginning in 2022 and ending in 2031 by an amount equal to the lesser of (i) five percent

( 5 %) of the total number of shares of Class A and Class X Common Stock outstanding on the final day of the immediately preceding calendar year and (ii) the

number of shares determined by the Company’s board of directors.

As of June 30, 2021, 30,442,594 shares of Class A Common Stock are available for issuance under the 2021 Plan.

All options and awards typically expire ten years from the date of grant if not exercised.

In the event of a termination of employment, all unvested options are forfeited immediately.

Generally, any vested options may be exercised within three months, depending upon the circumstances of termination, except for instances of termination “with cause” whereby any vested options or awards are forfeited immediately.

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

A summary of the activity under the plans are as follows:

Options Outstanding

Outstanding at December 31, 2020 (as previously reported)

Conversion of awards due to recapitalization

Outstanding at December 31, 2020, after

effect of reverse acquisition

Outstanding at June 30, 2021

Exercisable at June 30, 2021

The fair value of each award as of the date of grant is estimated using a Black-Scholes option-pricing model.

The following table summarizes the assumptions used to determine the fair value of option grants:

Six Months Ended June 30,

Risk-free rate

Dividend yield rate

Expected term (in years)

Weighted-average exercise price

The vesting periods are based on the terms of the option grant agreements.

The risk-free interest rates are based on the U.S.

Treasury rates as of the grant dates for the expected terms of the options.

Given the lack of public market for the Company’s common units prior to the Business Combination and minimal history as a public company subsequent to the Business Combination, the price volatilities represent calculated values based on the historical price volatilities of publicly traded companies within the Company’s industry group over the options’ expected terms.

The expected terms of the options granted were estimated using the simplified method by taking an average of the vesting periods and the original contractual terms.

Prior to the Business Combination, the exercise prices represent the estimated fair values of one common unit of the Company’s equity on the grant dates.

Subsequent to the Business Combination, the Company’s b

irectors determines the fair value of the Common Stock based on the closing market price on or around the date of grant.

A summary of the unvested option activity is as follows:

Unvested at December 31, 2020 (as previously reported)

Conversion of awards due to recapitalization

Unvested at December 31, 2020, after

effect of reverse acquisition

Unvested at June 30, 2021

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The fair value of options granted during the six months ended June 30, 2021 and 2020 was $ 4.4 million, (or $ 4.91 weighted average per option) and $ 4.4 million (or $ 1.29 weighted average per option), respectively.

The total fair value of awards which vested during the six months ended June 30, 2021 and 2020 was $ 2.2 million and $ 1.7 million, respectively.

Compensation Warrants

During the year ended December 31, 2020, the Company issued warrants for the purchase of 1,184,834 of Old Beachbody’s common units at an exercise price of $ 8.44 per unit.

The warrants vest 25 % at the grant date and 25 % at each of the first, second, and third anniversaries of the grant date.

The warrants have a 10 -year contractual

In connection with the Business Combination, the Old Beachbody warrants were exchanged for 3,980,656 warrants for the purchase of the Company’s Class A Common Stock at an exercise price of $ 2.52 per share.

As of June 30, 2021, 995,164 warrants were exercisable.

Compensation cost

associated with

the warrants will be recognized over the requisite service period, which is

Equity-Based Compensation Expense

Equity-based compensation expense for the three and six months ended June 30, 2021 and 2020 was as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenue

Selling and marketing

Enterprise technology

and development

General and administrative

Total equity-based compensation

As of June 30, 2021, the total unrecognized equity-based compensation expense was $ 31.9 million and has a weighted-average recognition period of 3.02 years.

Derivative Financial Instruments

As of June 30, 2021 and December 31, 2020, the notional amount of the Company’s outstanding foreign exchange options was $ 24.5 million and $ 34.0 million, respectively.

There were no outstanding forward contracts as of June 30, 2021 and December 31, 2020.

The following table presents the fair value of the Company’s derivative instruments which are included in other current assets in the unaudited condensed consolidated balance sheets (in thousands):

Derivatives designated as hedging instruments

Derivatives not designated as hedging instruments

Total derivative assets

There were no derivative liabilities as of June 30, 2021 and December 31, 2020.

The following table shows the pre-tax effects

of the Company’s derivative instruments on its unaudited condensed consolidated statements of operations (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Financial Statement Line Item

Unrealized (losses) gains

Other comprehensive income (loss)

(Losses) gains reclassified from

comprehensive

(loss) into net loss

Cost of revenue

General and administrative

Total amounts reclassified

(Losses) gains recognized derivatives not

designated as hedging instruments

Cost of revenue

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The Company expects that $ 0.2 million of existing losses recorded in accumulated other comprehensive income (loss) will be reclassified into net income (loss) over the next 12 months .

The Company assessed its derivative instruments and determined that they were effective during the three and six months ended June 30, 2021 and 2020.

The Company recorded a benefit for income taxes of $ 10.9 million and $

million for the three and six months ended June 30, 2021, respectively.

The Company recorded a benefit for income taxes of $ 2.7

million and $ 4.3

million for the three and six months ended June 30, 2020, respectively.

The Company’s effective benefit tax rate was 46.6 % and 20.9 % for the three and six months ended June 30, 2021, respectively.

The Company’s effective benefit tax rate was 21.1 % and 19.0 % for the three and six months ended June 30, 2020, respectively.

Our tax provision for interim periods is determined using an estimate of our annual effective

tax rate, adjusted for discrete items arising in that quarter.

Our effective tax rate differs from the U.S.

statutory tax rate in the three and six months ended June 30, 2021 primarily due to changes in valuation allowances on our deferred tax assets as it is more likely than not that some or all of our deferred tax assets will not be realized.

As a result of the Myx acquisition, which was a discrete second quarter 2021 event, the Company recorded deferred tax liabilities which partially reduced our need for a valuation allowance, resulting in an income tax benefit being recorded.

The Company evaluates its tax positions on a quarterly basis and revises its estimate accordingly.

There are no material changes to the Company’s uncertain tax positions, interest, or penalties during the three and six months ended June 30, 2021.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted into law, and the new legislation contains several key tax positions, including the five-year net operating loss carryback, an adjustment business interest limitation, and payroll tax deferral.

The Company is required to recognize the effect of tax law changes in the period of enactment.

The Company has assessed the applicability of the CARES Act and determined there to be no material impact to the Company other than its ability to use the entire $ 4.6 million of net operating loss carryback from 2020 to 2019 for federal income tax purposes.

On December 27, 2020 the Consolidated Appropriations Act, 2021 was signed into law.

It provides additional COVID-19 focused relief and extends certain provisions of the CARES Act.

At this time, the Company does not believe that the Consolidated Appropriations Act, 2021 will have a material impact on its consolidated financial statements.

Earnings per Share

Basic net loss per common share is calculated by dividing net loss allocable to common shareholders by the weighed-average number of common shares outstanding during the period.

Diluted net loss per common share adjusts net loss and net loss per common share for the effect of all potentially dilutive shares of the Company’s common stock.

Basic and diluted earnings per share are the same for each class of common stock because they are entitled to the same liquidation and dividend rights.

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

Three Months Ended June 30,

Six Months Ended June 30,

Net loss available to common shareholders-basic and diluted

Weighted-average common shares outstanding- basic and diluted

Net loss per common shareholder, basic

Net loss per common shareholder, diluted

Basic net loss per common share is the same as dilutive net loss per common share for the three and six months ended June 30, 2021 and 2020 as the inclusion of all potential common shares would have been antidilutive.

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

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Public and Private Placement Warrants

Forest Road Earn-out

Related Party Transactions

In 2018, the Company entered into a lease agreement with a company owned by the controlling shareholder.

Total payments to the related party were approximately zero

million for the three and six months ended June 30, 2021, respectively and $ 0.1

million and $ 0.1

million for the three and six months ended June 30, 2020, respectively.

There were no

material amounts due to the related party as of June 30, 2021 and December 31, 2020.

In July 2021, the Company purchased the building from the related party

for its appraised value of $

The Company has a royalty agreement with a company related to the

controlling shareholder.

The related party assisted the Company with the development of several products and receives royalties based on the sales of these products.

Total payments to the related party were $ 0.1

million and $ 0.9 million during the three and six months ended June 30, 2021, respectively and were approximately zero

million during the three and six months ended June 30, 2020, respectively.

As of June 30, 2021 and December 31, 2020, $ 0.1

million and $ 0.7

million, respectively, was due to the related party pursuant to the royalty agreement.

A minority shareholder and board member of Company is also a shareholder in a law firm that provides legal services to the Company.

Total payments to the related party were $ 1.1

million and $ 1.6

million during the three and six months ended June 30, 2021, respectively and were $ 0.5

million and $ 0.5

million during the three and six months ended June 30, 2020, respectively.

The Company’s accounts payable related to the firm was $ 0.2

million and $ 0.5

million as of June 30, 2021 and December 31,

2020, respectively

Segment Information

The Company applies ASC 280, Segment Reporting

, in determining reportable segments for financial statement disclosure.

Segment information is presented based on the financial information the Company uses to manage the business which is organized around our digital platforms.

The Company has two operating segments, Beachbody and Other, and one reportable segment, Beachbody.

The Beachbody segment primarily derives revenue from Beachbody on Demand digital subscriptions, nutritional products, and other fitness related products.

Other derives revenue primarily from Openfit digital subscriptions and nutritional products and Myx connected fitness equipment (bikes and accessories) and monthly subscription revenue for workout content.

The Company uses contribution as a measure of profit or loss, defined as revenue less directly attributable cost of revenue and certain selling and marketing expenses including media, Coach and social influencer compensation, royalties, and third-party sales commissions.

Contribution does not include allocated costs as described below as the CODM does not include these costs in assessing performance.

There are no inter-segment transactions.

The Company manages its assets on a consolidated basis, and, as such, does not report asset information by segment.

The Beachbody Company, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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

Three Months Ended

Six Months Ended

Consolidated:

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

Three Months Ended

Six Months Ended

Consolidated contribution

Amounts not directly related to segments:

Cost of revenue (1)

Selling and marketing (2)

Enterprise technology and development

General and administrative

Change in fair value of warrant liabilities

Interest expense

Other income, net

Loss before income taxes

Cost of revenue not directly related to segments includes certain allocated costs related to management, facilities, and personnel-related expenses associated with quality assurance and supply chain logistics.

Depreciation of certain software and production equipment and amortization of formulae and technology-based intangible assets are also included in this line.

Selling and marketing not directly related to segments includes indirect selling and marketing expenses and certain allocated personnel-related expenses for employees and consultants.

Depreciation of certain software and amortization of contract-based intangible assets are also included in this line.

Subsequent Events

The Company evaluated subsequent events and transactions

that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were issued.

Based upon this

review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

References to the “Company,”

“us,”

“our”

or “we”

refer Forest Road Acquisition Corp.

The following discussion and analysis of our

financial condition and results of operations should be read in conjunction with our audited financial statements and related notes included

Cautionary Note Regarding Forward-Looking Statements

All statements other than

statements of historical fact included in this report including, without limitation, statements under “Management’s Discussion

and Analysis of Financial Condition and Results of Operations”

regarding the Company’s financial position, business strategy

and the plans and objectives of management for future operations, are forward-looking statements.

When used in this report, words such

as “anticipate,”

“believe,”

“estimate,”

“expect,”

“intend”

and similar expressions,

as they relate to us or the Company’s management, identify forward-looking statements.

Such forward-looking statements are based

on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management.

Actual results could differ materially from those contemplated by the forward- looking statements as a result of certain factors detailed

in our filings with the SEC.

All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s

behalf are qualified in their entirety by this paragraph.

The following discussion and

analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes

thereto contained elsewhere in this report.

Certain information contained in the discussion and analysis set forth below includes forward-looking

statements that involve risks and uncertainties.

Results of Operations and Known Trends or Future

We have neither engaged in

any operations nor generated any revenues to date.

Our only activities since inception have been organizational activities, those necessary

to prepare for our initial public offering and identifying a target company for our initial business combination.

We do not expect to

generate any operating revenues until after completion of our initial business combination.

We generate non-operating income in the form

of interest income on cash and cash equivalents held in the trust account.

We incur expenses as a result of being a public company (for

legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

We have neither engaged in

any operations nor generated any revenues to date.

Our only activities since inception have been organizational activities, those necessary

to prepare for our initial public offering and identifying a target company for our initial business combination.

We do not expect to

generate any operating revenues until after completion of our initial business combination.

We generate non-operating income in the form

of interest income on cash and cash equivalents held in the trust account.

We incur expenses as a result of being a public company (for

legal, financial reporting, accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective business

combination candidates.

For the three months

ended March 31, 2021, we had a net loss of $16,590,561.

We incurred $2,724,770 of operating costs, consisting of public company

operating expenses and costs related to preparing for the initial business combination.

We had interest income of $20 of interest on

the bank account and investment income of $4,432 from marketable securities held in trust account.

For the three months ended March

31, 2021, the change in fair value of warrants resulted in an increase in the liability of approximately $13,870,243.

Liquidity and Capital Resources

As of March 31, 2021, we had

cash outside the trust account of $730,435 available for working capital needs.

All remaining cash held in the trust account are generally

unavailable for the Company’s use, prior to an initial business combination, and is restricted for use either in a business combination

or to redeem common stock.

Through March 31, 2021, the

Company’s liquidity needs were satisfied through receipt of $25,000 from the sale of the founder shares, advances from the sponsor

in an aggregate amount of $141,881 and the remaining net proceeds from the initial public offering and the sale of private placement warrants.

The Company anticipates that

the $730,735 of cash held outside of the trust account as of March 31, 2021, will be sufficient to allow the Company to operate for at

least the next 12 months, assuming that a business combination is not consummated during that time.

Until consummation of our business

combination, the Company will be using the funds not held in the trust account, and any additional Working Capital Loans (as defined in

Note 5 to our financial statements) from the initial stockholders, the Company’s officers and directors, or their respective affiliates

(which is described in Note 5 to our financial statements), for identifying and evaluating prospective acquisition candidates, performing

business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective

target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business

to acquire and structuring, negotiating and consummating the business combination.

The Company does not believe

it will need to raise additional funds in order to meet the expenditures required for operating its business.

However, if the Company’s

estimates of the costs of undertaking in-depth due diligence and negotiating business combination is less than the actual amount necessary

to do so, the Company may have insufficient funds available to operate its business prior to the business combination.

Moreover, the Company

will need to raise additional capital through loans from its sponsor, officers, directors, or third parties.

None of the sponsor, officers

or directors are under any obligation to advance funds to, or to invest in, the Company.

If the Company is unable to raise additional

capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to,

curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses.

The Company cannot provide any assurance

that new financing will be available to it on commercially acceptable terms, if at all.

Derivative Warrant Liabilities

We do not use derivative instruments

to hedge exposures to cash flow, market, or foreign currency risks.

We evaluate all of our financial instruments, including issued stock

purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant

to ASC 480 and ASC 815-15.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities

or as equity, is reassessed at the end of each reporting period.

We issued an aggregate of

15,333,333 warrants in connection with our initial public offering and private placement, which are recognized as derivative liabilities

in accordance with ASC 815-40.

Accordingly, we recognize the warrants as liabilities at fair value and adjust the instruments to fair

value at each reporting period.

The liabilities are subject to remeasurement at each balance sheet date until exercised, and any change

in fair value is recognized in the Company’s statement of operations.

The fair value of warrants issued in connection with our initial

public offering and private placement has been estimated using Monte Carlo simulations at each measurement date.

Quantitative and Qualitative Disclosures

About Market Risk

Not required for smaller reporting

The Company has evaluated subsequent events through August 12, 2021, the date which the unaudited condensed consolidated financial statements were issued.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements